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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~March 3031, ~~2019~~2020

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission file number 1-33332

WABCO Holdings Inc.

(Exact name of Registrant as specified in its charter)



Delaware			20-8481962
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
1 Giacomettistrasse	Bern	Switzerland	3000-31
1220 Pacific Drive	Auburn Hills	Michigan	48326-1589
(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code +41 315 813-300

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.01 per share	WBC	New York Stock Exchange

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting company, and emerging growth company in Rule 12b-2 of the Exchange Act.



Large Accelerated Filer	x		Accelerated Filer	o

Non-Accelerated Filer	o	(Do not check if a smaller reporting company)	Smaller Reporting Company	☐

			Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes x No

Table of Contents

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common stock, $.01 par value, outstanding at ~~November~~April 120, ~~2019~~2020 51,~~254~~375,~~686~~551

Table of Contents

WABCO HOLDINGS INC. AND SUBSIDIARIES

FORM 10-Q

For the Quarter ended ~~September~~March 3031, ~~2019~~2020

Contents
FORM 10-Q		2
PART I. FINANCIAL INFORMATION		3
Item 1.	Financial Statements	3
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS		3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME		4
CONDENSED CONSOLIDATED BALANCE SHEETS		5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS		6
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY		8
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS		9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2724
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	3832
Item 4.	Controls and Procedures	3832
PART II. OTHER INFORMATION		3933
Item 1.	Legal Proceedings	3933
Item 1A.	Risk Factors	3933
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3933
Item 6.	Exhibits	4234
SIGNATURE		4335

Table of Contents

PART I. FINANCIAL INFORMATION


Item 1.	Financial Statements

WABCO HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three MonthsEnded September 30,						Nine MonthsEnded September 30,
	Three MonthsEnded March 31,
(Amounts in millions, except share and per share data)	~~2019~~2020			~~2018~~2019			~~2019~~			~~2018~~
Sales	$	~~798~~745.47		$	~~914~~932.89		$	~~2,644.0~~		$	~~2,919.4~~
Cost of sales	~~559~~533.58			~~639~~660.70			~~1,863.5~~			~~2,025.0~~
Gross profit	~~238~~211.9			~~275~~272.19			~~780.5~~			~~894.4~~
Operating expenses:
Selling and administrative expenses	~~110~~114.51			~~116~~120.54			~~351.4~~			~~349.0~~
Research, development and engineering expenses	5051.43			4948.54			~~144.2~~			~~147.7~~
Other operating (income)/expense, net	(2.9		)	2.1			(3.5		)	(2.8		)
Other operating income, net	(0.2		)	(1.1		)
Operating income	8046.97			~~107~~105.02			~~288.4~~			~~400.5~~
Equity income of unconsolidated joint ventures, net	0.5			(0.16		)	~~1.6~~			~~0.7~~
Other non-operating expense, net	(412.43		)	(125.9		)	~~(17.7~~		)	~~(35.3~~		)
Interest expense, net	(0.3		)	(0.7		)	—			(6.8		)
Interest (expense)/income, net	(0.1		)	0.1
Income before income taxes	7634.78			93100.30			~~272.3~~			~~359.1~~
Income tax expense	157.94			1312.51			~~48.9~~			~~63.3~~
Net income including noncontrolling interests	6027.84			7987.89			~~223.4~~			~~295.8~~
Less: net income attributable to noncontrolling interests	2.82			5.3.7			~~10.7~~			~~16.2~~
Net income attributable to Company	$	5825.02		$	7484.52		$	~~212.7~~		$	~~279.6~~
Net income attributable to Company per common share
Basic	$	10.1349		$	1.4264		$	~~4.15~~		$	~~5.25~~
Diluted	$	10.1349		$	1.4164		$	~~4.14~~		$	~~5.24~~
Cash dividends per share of common stock	$	—		$	—		$	—		$	—
Weighted average common shares outstanding
Basic	51,~~245~~321,~~534~~512			5251,~~607~~233,~~825~~141			~~51,237,820~~			~~53,223,823~~
Diluted	51,~~389~~395,~~008~~851			5251,~~773~~330,~~998~~942			~~51,378,982~~			~~53,403,774~~

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

WABCO HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	Three MonthsEnded September 30,						Nine MonthsEnded September 30,
	Three MonthsEnded March 31,
(Amounts in millions)	~~2019~~2020			~~2018~~2019			~~2019~~			~~2018~~
Net income including noncontrolling interests	$	6027.84		$	7987.89		$	~~223.4~~		$	~~295.8~~
Other comprehensive income:
Currency translation adjustments	(3663.42		)	~~(34~~14.4		)	~~(28.2~~		)	~~(80.2~~		)
Pension and post-retirement benefit plan adjustments, net	1312.30			27.67			~~23.7~~			~~19.6~~
Unrealized gains on hedges, net	—			—			—			0.8
Total other comprehensive (loss)/ income	(51.2		)	22.1
Total other comprehensive income	(23.1		)	(31.8		)	(4.5		)	(59.8		)
Comprehensive income	(23.8		)	110.0
Comprehensive income	37.7			48.0			218.9			236.0
Less: comprehensive (loss)/income attributable to noncontrolling interests	(2.0		)	3.7
Less: comprehensive income attributable to noncontrolling interests	1.0			1.7			9.9			7.9
Comprehensive (loss)/income attributable to Company	$	(21.8	)	$	106.3
Comprehensive income attributable to Company	$	36.7		$	46.3		$	209.0		$	228.1

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

WABCO HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Amounts in millions, except share data)	~~September~~March 3031, ~~2019~~2020			December 31, ~~2018~~2019
ASSETS
Current assets:
Cash and cash equivalents	$	~~817~~549.19		$	~~503~~891.8
Short-term investments	6665.04			~~135~~67.86
Accounts receivable, less allowance for doubtful accounts of $12.4 in 2019 and $10.7 in 2018	580.7			611.5
Accounts receivable, less allowance for doubtful accounts of $11.7 in 2020 and $12.3 in 2019	524.6			523.3
Inventories, net	~~341~~361.35			~~319~~292.19
Guaranteed notes receivable	3453.8			4435.10
Investments in repurchase agreements	—			85.8
Other current assets	125.3			103.7
Other current assets	105.4			96.8
Total current assets	1,680.5			1,914.3
Total current assets	1,945.3			1,796.9
Property, plant and equipment, net	573.5			593.0
Property, plant and equipment, net	561.1			553.6
Operating lease right–of–use assets	94.6			100.8
Operating lease right–of–use assets	102.0			—
Goodwill	792.1			802.5
Goodwill	793.5			809.4
Deferred tax assets	280.4			275.0
Deferred tax assets	237.2			236.7
Investments in unconsolidated joint ventures	11.9			11.5
Investments in unconsolidated joint ventures	12.6			10.4
Intangible assets, net	482.0			226.9
Intangible assets, net	231.0			246.6
Other assets	101.9			113.1
Other assets	96.1			85.0
TOTAL ASSETS	$	4,016.9		$	4,037.1
TOTAL ASSETS	$	3,978.8		$	3,738.6
LIABILITIES AND EQUITY
Current liabilities:
Loans payable to banks	$	27.4		$	—
Accounts payable	$	217.6		$	185.0
Accounts payable	214.9			232.5
Accrued payroll	113.7			108.3
Accrued payroll	112.1			111.2
Current portion of warranties	32.8			28.1
Current portion of warranties	26.5			23.3
VAT payable	21.6			11.4
VAT payable	15.9			15.7
Accrued expenses	63.4			68.7
Accrued expenses	69.0			73.8
Promotion and customer incentives	18.8			24.8
Promotion and customer incentives	29.3			26.6
Accrued income tax	30.2			24.1
Accrued income tax	43.7			28.2
Other accrued liabilities	113.2			121.1
Other accrued liabilities	107.6			84.7
Total current liabilities	611.3			571.5
Total current liabilities	646.4			596.0
Long-term debt	813.9			828.3
Long-term debt	808.2			845.2
Operating lease liabilities	69.2			74.2
Operating lease liabilities	75.9			—
Pension and post-retirement benefits	808.9			821.8
Pension and post-retirement benefits	698.4			716.0
Deferred tax liabilities	72.0			71.2
Deferred tax liabilities	75.1			75.4
Long-term income tax liabilities	156.8			156.9
Long-term income tax liabilities	144.7			156.8
Other liabilities	75.4			77.1
Other liabilities	76.3			84.0
TOTAL LIABILITIES	2,607.5			2,601.0
TOTAL LIABILITIES	2,525.0			2,473.4
Shareholders’ equity:
Preferred stock, 4,000,000 shares authorized; none issued and outstanding	—			—
Common stock, $.01 par value, 400,000,000 shares authorized; shares issued: 79,142,874 in 2019; 79,018,266 in 2018; and shares outstanding: 51,254,164 in 2019; 51,364,925 in 2018	0.8			0.8
Common stock, $.01 par value, 400,000,000 shares authorized; shares issued: 79,237,625 in 2020; 79,147,135 in 2019; and shares outstanding: 51,374,175 in 2020; 51,267,324 in 2019	0.8			0.8
Capital surplus	~~901~~899.23			~~898~~902.51
Treasury stock, at cost: 27,888,710 shares in 2019; 27,653,341 shares in 2018	(2,187.0		)	(2,159.3		)
Treasury stock, at cost: 27,863,450 shares in 2020; 27,879,811 shares in 2019	(2,185.0		)	(2,186.3		)
Retained earnings	3,~~179~~237.40			23,~~960~~212.83
Accumulated other comprehensive loss	(~~536~~635.19		)	(~~524~~588.07		)
Total shareholders’ equity	1,~~358~~316.32			1,~~176~~340.82
Noncontrolling interests	9593.52			8895.49
Total equity	1,~~453~~409.84			1,~~265~~436.21
TOTAL LIABILITIES AND EQUITY	$	34,~~978~~016.89		$	34,~~738~~037.61

See Notes to Condensed Consolidated Financial Statements.

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WABCO HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine MonthsEnded September 30,
	Three MonthsEnded March 31,
(Amounts in millions)	~~2019~~2020			~~2018~~2019
Operating activities:
Net income including noncontrolling interests	$	~~223~~27.4		$	~~295~~87.89
Adjustments to reconcile net income to net cash provided by operating activities:
Adjustments to reconcile net income to net cash (used)/provided by operating activities:
Depreciation	7123.15			7325.19
Change in fair value of non-marketable equity securities	(24.27		)	~~5.5~~—
Amortization of intangibles	216.71			216.06
Equity in earnings of unconsolidated joint ventures, net of dividends received	(10.65		)	(0.76		)
Non-cash stock compensation	8.2.6			154.21
Non-cash interest expense and debt issuance cost amortization	72.46			102.96
Deferred income tax benefit	(1711.9		)	(510.64		)
Pension and post-retirement benefit expense	4818.0			4716.54
Foreign currency effects on changes in monetary assets/liabilities	15.85			(4.49		)
Unrealized (gain)/loss on revaluation of foreign currency forward contracts	(1.7		)	1.9
Unrealized loss/(gain) on revaluation of foreign currency forward contracts	0.3			(1.6		)
Loss on debt extinguishment	—			2.3
Other	1.9			(0.4		)
Other	0.1			0.4
Changes in assets and liabilities:
Accounts receivable, net	12(16.18		)	(1068.36		)
Inventories, net	(3279.32		)	(5540.46		)
Accounts payable	(242.64		)	—47.3
Other accrued liabilities and taxes	2017.68			~~(25~~17.72		)
Other current and long-term assets	(1551.42		)	(3824.89		)
Other long-term liabilities	~~(15~~0.54		)	(121.84		)
Pension and post-retirement benefit contributions	(175.7		)	(195.46		)
Net cash provided by operating activities	307.5			300.5
Net cash (used)/provided by operating activities	(12.1		)	58.8
Investing activities:
Purchases of property, plant and equipment	(~~107~~33.98		)	(8339.81		)
Investments in capitalized software	(71.42		)	(91.04		)
Purchases of short-term investments and repurchase agreements	(~~595~~155.13		)	(~~388~~267.79		)
Sales and maturities of short-term investments and repurchase agreements	~~738~~153.61			~~372~~298.76
Investments in unconsolidated joint ventures	~~(0.7~~—		)	(30.13		)
Acquisition of businesses	—			(8.6		)
Acquisition of assets	(265.0		)	—
Net cash provided/(used) by investing activities	27.5			(120.5		)
Net cash used by investing activities	(302.2		)	(10.1		)
Financing activities:
Borrowings of long-term debt	—			368.5
Net borrowings of short-term debt	—			85.2
Repayments of long-term debt	—			(500.0		)
Purchases of treasury stock	—			(30.6		)
Net borrowings/(repayments) of short-term debt	29.3			(114.3		)
Taxes withheld and paid on employee stock award vestings	(5.5		)	(4.8		)
Purchases of treasury stock	(30.6		)	(210.1		)
Dividends to noncontrolling interest holders	(0.6		)	(2.3		)
Taxes withheld and paid on employee stock award vestings	(4.8		)	(4.9		)
Proceeds from noncontrolling interest holders	—			3.9
Dividends to noncontrolling interest holders	(5.6		)	(5.7		)
Proceeds from exercise of stock options	0.3			0.5
Proceeds from noncontrolling interest holders	3.9			—
Net cash (used)/provided by financing activities	(5.8		)	51.9
Proceeds from exercise of stock options	0.7			0.5
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(21.9		)	(1.0		)
Net cash used by financing activities	(7.1		)	(466.0		)
Net (decrease)/increase in cash, cash equivalents and restricted cash	(342.0		)	99.6
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(14.4		)	(23.0		)
Cash, cash equivalents and restricted cash at beginning of period	892.4			504.2
Net increase/(decrease) in cash, cash equivalents and restricted cash	313.5			(309.0		)
Cash, cash equivalents and restricted cash at end of period	$	550.4		$	603.8
Cash, cash equivalents and restricted cash at beginning of period	504.2			1,141.5
Cash, cash equivalents and restricted cash at end of period	$	817.7		$	832.5

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	Nine MonthsEnded September 30,
	Three MonthsEnded March 31,
(Amounts in millions)	~~2019~~2020		~~2018~~2019
Supplemental cash flow disclosures
Cash paid during the period for:
Interest	$	95.25	$	196.82
Income taxes	$	6516.53	$	8212.94
Non cash activity:
Increase in capital expenditures included in accounts payable and other accrued liabilities	$	10.64	$	109.27
Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheets:
Cash and cash equivalents	$	~~817~~549.19	$	~~832~~603.23
Restricted cash, included in other assets	0.65		0.35
Cash, cash equivalents and restricted cash at end of period	$	~~817~~550.74	$	~~832~~603.58

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

WABCO HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(Unaudited)

	Three MonthsEnded September 30,						Nine MonthsEnded September 30,
	Three MonthsEnded March 31,
(Amounts in millions)	~~2019~~2020			~~2018~~2019			~~2019~~			~~2018~~
Total equity, beginning balance	$	1,~~419~~436.01		$	1,~~278~~265.32		$	~~1,265.2~~		$	~~1,201.1~~
Common stock and capital surplus
Balance, beginning of period	~~901~~903.70			~~890~~899.73			~~899.3~~			~~884.0~~
Stock options exercised	—0.1			—0.1			~~0.2~~			~~0.1~~
Tax withheld on stock award vestings	—			—			(4.7		)	(4.5		)
Share-based compensation	(2.9		)	(0.6		)
Share-based compensation	0.1			3.8			8.2			14.9
Changes in ownership of noncontrolling interests	—			(1.2		)
Deferred compensation	0.2			—			0.2			—
Balance, end of period	900.2			897.6
Changes in ownership of noncontrolling interests	—			—			(1.2		)	—
Treasury stock
Balance, end of period	902.0			894.5			902.0			894.5
Balance, beginning of period	(2,186.3		)	(2,159.3		)
Treasury stock
Treasury shares purchased	—			(30.6		)
Balance, beginning of period	(2,187.2		)	(1,979.2		)	(2,159.3		)	(1,861.3		)
Treasury shares reissued	1.3			2.7
Treasury shares purchased	—			(90.2		)	(30.6		)	(210.0		)
Balance, end of period	(2,185.0		)	(2,187.2		)
Treasury shares reissued	0.2			—			2.9			1.9
Retained earnings
Balance, end of period	(2,187.0		)	(2,069.4		)	(2,187.0		)	(2,069.4		)
Balance, beginning of period	3,212.3			2,960.8
Retained earnings
Adoption of ASU 2016-13 and ASU 2018-02	0.8			8.4
Balance, beginning of period	3,121.5			2,772.0			2,960.8			2,563.2
Net income attributable to Company	25.2			84.2
Adoption of ASU 2018-02 (Note 2) and ASU 2016-16	—			—			8.4			5.3
Treasury shares reissued	(1.3		)	(2.5		)
Net income attributable to Company	58.0			74.5			212.7			279.6
Balance, end of period	3,237.0			3,050.9
Treasury shares reissued	(0.1		)	(0.2		)	(2.5		)	(1.8		)
Accumulated other comprehensive loss
Balance, end of period	3,179.4			2,846.3			3,179.4			2,846.3
Balance, beginning of period	(588.7		)	(524.0		)
Accumulated other comprehensive loss
Other comprehensive (loss)/income	(47.3		)	22.1
Balance, beginning of period	(514.8		)	(487.9		)	(524.0		)	(464.5		)
Adoption of ASU 2018-02	—			(8.4		)
Other comprehensive loss	(21.3		)	(28.2		)	(3.7		)	(51.6		)
Balance, end of period	(636.0		)	(510.3		)
Adoption of ASU 2018-02 (Note 2)	—			—			(8.4		)	—
Noncontrolling interests
Balance, end of period	(536.1		)	(516.1		)	(536.1		)	(516.1		)
Balance, beginning of period	95.9			88.4
Noncontrolling interests
Net income attributable to noncontrolling interests	2.2			3.7
Balance, beginning of period	97.8			82.7			88.4			79.7
Dividends paid	(0.7		)	(2.3		)
Net income attributable to noncontrolling interests	2.8			5.3			10.7			16.2
Contribution from noncontrolling interests	—			3.9
Dividends paid	(3.3		)	(2.7		)	(5.6		)	(5.7		)
Changes in ownership of noncontrolling interests	—			(1.0		)
Contribution from noncontrolling interests	—			—			3.9			—
Other comprehensive income/(loss)	(4.2		)	0.7
Changes in ownership of noncontrolling interests	—			—			(1.0		)	—
Balance, end of period	93.2			93.4
Other comprehensive loss	(1.8		)	(3.7		)	(0.9		)	(8.6		)
Total equity, ending balance	$	1,409.4		$	1,344.4
Balance, end of period	95.5			81.6			95.5			81.6
Total equity, ending balance	$	1,453.8		$	1,236.9		$	1,453.8		$	1,236.9

See Notes to Condensed Consolidated Financial Statements.

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WABCO HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~September~~March 3031, ~~2019~~2020

(Unaudited)


NOTE 1.	Basis of Financial Statement Presentation

WABCO Holdings Inc. and its subsidiaries (collectively WABCO, Company, we, or our) engineer, develop, manufacture and sell integrated systems controlling advanced braking, stability, suspension, steering, transmission automation, as well as air compression and processing primarily for commercial vehicles. WABCO’s largest selling products are pneumatic anti-lock braking systems (ABS), electronic braking systems (EBS), electronic stability control (ESC) systems, brake controls, automated manual transmission systems (AMT), air disc brakes and a large variety of conventional mechanical products such as actuators, air compressors and air control valves for medium- and heavy-duty trucks, buses and trailers. In addition, we supply commercial vehicle aftermarket distributors and service partners as well as fleet operators with replacement parts, fleet management solutions, diagnostic tools, training and other expert services. WABCO sells its products primarily to two groups of customers around the world: original equipment manufacturers (OEMs) including truck and bus, trailer, car and off-highway, and commercial vehicle aftermarket distributors of replacement parts and services as well as commercial vehicle fleet operators for management solutions and services. We also provide remanufacturing services globally.

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments, including normal recurring items, considered necessary for a fair presentation of financial data have been included. The results of operations for interim periods are not necessarily indicative of the results that may be expected for the entire year. The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes for the year ended December 31, ~~2018~~2019, included in the Company’s Annual Report on Form 10-K.

AsOn ~~previously announced, on~~ March 28, 2019, WABCO entered into an Agreement ~~and Plan of Merger~~ (the Merger Agreement) and Plan of Merger with ZF Friedrichshafen AG (ZF), a stock corporation organized and existing under the laws of the Federal Republic of Germany, and Verona Merger Sub Corp., a Delaware corporation and indirect wholly owned subsidiary of ZF, pursuant to which ZF will acquire 100% of the issued and outstanding shares of WABCO common stock (the Merger). The Merger Agreement was adopted by WABCO’s shareholders at the June 27, 2019 special meeting of shareholders, whereby holders representing 68.4% ~~Consummation~~of the Company’s outstanding shares voted in favor of adopting the Merger isAgreement. All approvals from regulatory authorities required to close the Merger have been received with the exception of the Chinese State Administration for Market Regulation (SAMR). The consummation of the Merger remains subject to customary closing conditions and the remaining regulatory ~~approvals~~approval ~~and~~from isthe ~~expected~~Chinese SAMR. In connection with the Antitrust Division of the United States Department of Justice's review of the Merger and pursuant to ~~close~~the insettlement ~~early~~order ~~2020~~approved by the U.S. ~~Due~~District toCourt for the ~~pending~~District ~~Merger~~of Columbia, WABCO is divesting the Company's ~~has~~steering ~~suspended~~components ~~previously~~business, ~~announced~~R.H. ~~changes~~Sheppard toCo., ~~its~~Inc., ~~internal~~for ~~reporting.~~which ~~The~~the Company ~~will~~entered ~~maintain~~into ~~its~~a ~~current~~definitive ~~internal~~agreement ~~reporting~~ to ~~the~~sell ~~chief~~on ~~operating~~January ~~decision~~30, ~~maker~~2020. ~~and~~The ~~continue~~closing of the divestiture is subject to ~~operate~~the asconsummation ~~one~~of ~~reportable~~the ~~segment~~Merger and other customary closing conditions.

~~All~~The ~~majority-owned~~Company ~~subsidiaries~~has ofincurred ~~WABCO~~$3.5 ~~are~~million ~~included in the condensed consolidated financial statements~~ and ~~intercompany transactions are eliminated upon consolidation~~$4.1 ~~WABCO’s~~million ~~investments~~of incosts ~~unconsolidated~~related ~~joint~~to ~~ventures~~the ~~are~~Merger ~~included at cost plus its equity in undistributed earnings less dividends~~ and ~~changes in foreign currency in accordance with~~ the ~~equity~~divestiture ~~method~~ of ~~accounting~~Sheppard ~~and~~for ~~reflected as investments in unconsolidated joint ventures in~~ the ~~condensed~~three ~~consolidated~~months ~~balance~~ended ~~sheets.~~March 31, ~~Certain~~2020 ~~amounts~~and in2019, ~~the~~respectively, ~~prior~~primarily ~~year’s~~for ~~condensed~~legal ~~consolidated~~and financial ~~statements~~advisory ~~and~~services ~~related~~that ~~footnotes~~are ~~thereto~~included ~~have~~in ~~been~~selling, ~~reclassified~~general toand ~~conform~~administrative ~~with the current year presentation~~expenses.

~~The~~Based ~~preparation~~on of the ~~financial~~organizational ~~statements~~structure, ~~requires~~as ~~management~~well toas ~~make estimates and assumptions that affect~~ the ~~reported~~nature ~~amounts~~ of ~~assets~~financial ~~and~~information ~~liabilities~~available and ~~the~~reviewed ~~disclosure~~by ofthe ~~contingent~~Company’s ~~assets~~chief ~~and~~operating ~~liabilities~~decision atmaker ~~the~~to ~~date~~assess ofperformance ~~the financial statements~~ and ~~the~~make ~~reported~~decisions ~~amounts~~about ofresource ~~revenues~~allocations, ~~and expenses during~~ the ~~period.~~Company ~~Management~~has ~~believes~~concluded ~~the~~that ~~most~~WABCO ~~complex~~has ~~and~~one ~~sensitive~~reportable ~~judgments,~~segment. All ~~because~~majority-owned subsidiaries of ~~their~~WABCO ~~significance~~are toincluded in the condensed consolidated financial statements, ~~result~~and ~~primarily~~intercompany ~~from~~transactions ~~the need to make estimates about the effects of matters that~~ are ~~inherently~~eliminated ~~uncertain~~upon consolidation. ~~Management~~WABCO’s ~~Discussion~~investments ~~and~~in ~~Analysis~~unconsolidated ofjoint ~~Financial~~ventures ~~Condition~~are ~~and~~included ~~Results~~at ofcost ~~Operations~~plus ~~and~~its ~~Notes~~equity 2in ~~and~~undistributed 16earnings toless ~~the~~dividends ~~Consolidated~~and ~~Financial~~changes ~~Statements~~in ~~for~~foreign ~~the~~currency ~~year ended December 31, 2018,~~ in ~~the~~accordance ~~Company’s~~with ~~Annual Report on Form 10-K, describe~~ the ~~most~~equity ~~significant~~method of accounting ~~estimates~~ and ~~policies~~reflected ~~used~~as ininvestments ~~the preparation of the Consolidated Financial Statements. Actual results~~ in ~~these~~unconsolidated ~~areas~~joint ~~could~~ventures ~~differ materially from management’s estimates. There have been no significant changes~~ in the ~~Company’s~~condensed ~~assumptions~~consolidated ~~regarding~~balance ~~critical accounting estimates during the first nine months of 2019~~sheets.

The preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Management believes the most complex and sensitive judgments, because of their significance to the condensed consolidated financial statements, result primarily from the need to make estimates

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about the effects of matters that are inherently uncertain. Management’s Discussion and Analysis of Financial Condition and Results of Operations and Notes 2 and 17 to the Consolidated Financial Statements for the year ended December 31, 2019, in the Company’s Annual Report on Form 10-K, describe the most significant accounting estimates and policies used in the preparation of the Consolidated Financial Statements. Actual results in these areas could differ materially from management’s estimates. After consideration of the COVID-19 pandemic, the Company calculated its interim income tax expense for the three months ended March 31, 2020 based on the actual year-to-date effective tax rate as discussed in Note 14. Aside from this and the adoption of ASC 326 as described in Note 6, there have been no other significant changes in the Company’s assumptions regarding critical accounting estimates during the first three months of 2020.


NOTE 2.	Recently Issued Accounting Standards

Recently Adopted Accounting Standards

In ~~June~~November ~~2018~~2019, the FASB issued Accounting Standards Update (ASU) ~~2018~~2019-0708 Compensation - Stock Compensation (~~Topic~~ASC 718), toand ~~simplify~~Revenue ~~the~~from ~~accounting~~Contracts ~~for~~with Customers (ASC 606). This ASU requires an entity measure and classify share–-based ~~payments~~payment awards granted to ~~nonemployees~~a customer by ~~aligning~~applying the ~~accounting~~guidance ~~with~~in ~~the~~ASC ~~requirements~~718. ~~for~~The ~~employee~~amount of the share–-based ~~compensation.~~payment ~~ASU~~award ~~2018-07~~that is ~~effective~~recorded ~~for~~as a reduction of the ~~Company~~transaction ~~beginning~~price inis ~~fiscal~~required ~~2019,~~to ~~including~~be ~~interim~~measured ~~periods~~at ~~within~~the ~~that~~grant-date ~~fiscal~~fair ~~year~~value in accordance with ASC 718. The ~~Company~~amendments ~~adopted~~in this update were effective for the ~~guidance~~Company asfor ofannual ~~January~~and 1,interim ~~2019~~periods beginning in fiscal 2020. There was no ~~material~~ impact on the Company's condensed consolidated financial statements resulting from the adoption of this guidance.

In ~~February~~August 2018, the FASB issued ASU 2018-0213 ~~Reclassification~~Fair ofValue ~~Certain~~Measurement ~~Tax~~(Topic ~~Effects~~820): ~~from~~Disclosure ~~Accumulated~~Framework ~~Other~~- ~~Comprehensive~~Changes ~~Income~~to the Disclosure Requirements for Fair Value Measurement. The ~~standard~~ASU ~~allows~~removes the requirement to disclose: the amount of and reasons for ~~certain~~transfers ~~stranded~~between ~~tax~~Level ~~effects~~1 ~~within~~and ~~Accumulated~~Level ~~Other~~2 ~~Comprehensive~~of ~~Income~~the ~~(AOCI),~~fair ~~resulting~~value ~~from~~hierarchy; the ~~U.S.~~policy ~~Tax~~for ~~Cuts~~timing of transfers between levels; and ~~Jobs~~the ~~Act,~~valuation toprocesses befor ~~reclassified~~Level to3 ~~retained~~fair ~~earnings~~value measurements. The ASU ~~2018-02~~requires isdisclosure ~~effective~~of changes in unrealized gains and losses for the ~~Company~~period ~~beginning~~included in ~~fiscal~~other ~~2019,~~comprehensive ~~including~~income ~~interim~~(loss) ~~periods~~for ~~within~~recurring ~~that~~Level ~~fiscal~~3 ~~year.~~fair ~~The~~value ~~Company~~measurements ~~adopted~~held at the ~~provisions~~end of ~~ASU~~the ~~2018–02~~reporting asperiod and the range and weighted average of ~~January~~significant 1,unobservable ~~2019~~inputs used to develop Level 3 fair value measurements. ~~There~~The ~~was~~amendments aon ~~one–time~~changes ~~reclassification~~in unrealized gains and losses, the range and weighted average of ~~$8.4~~significant ~~million~~unobservable ~~from~~inputs ~~AOCI~~used to ~~retained~~develop ~~earnings~~Level ~~related~~3 tofair value measurements, and the ~~remeasurement~~narrative description of ~~deferred~~measurement ~~taxes~~uncertainty ~~recorded~~should inbe ~~other~~applied ~~comprehensive~~prospectively ~~income~~for ~~based~~only onthe most recent interim or annual period presented in the ~~newly~~initial ~~enacted~~fiscal ~~corporate~~year ~~tax~~of ~~rate~~adoption. ~~Refer~~ All other amendments should be applied retrospectively to ~~Note~~all 13periods presented upon their effective date. This guidance was effective for ~~additional~~the ~~detail~~Company ~~regarding~~for annual and interim periods beginning in fiscal 2020. There was no material impact on the ~~components~~Company's ofcondensed consolidated financial statements resulting from the ~~reclassification~~adoption of this guidance.

In ~~August~~January 2017, the FASB issued ASU 2017-1204 ~~Targeted~~Intangibles ~~Improvements~~- toGoodwill ~~Accounting~~and Other: Simplifying the Test for ~~Hedging~~Goodwill ~~Activities,~~Impairment. ~~which~~The ~~aims~~standard ateliminates ~~improving~~the requirement to measure the ~~financial~~implied ~~reporting~~fair value of ~~hedging~~goodwill ~~relationships~~by assigning the fair value of a reporting unit to ~~better~~all ~~portray~~assets ~~the~~and ~~economic~~liabilities ~~results~~within ofthat anunit ~~entity’s~~(the ~~risk~~Step ~~management~~2 ~~activities~~test) infrom ~~its~~the ~~financial~~goodwill ~~statements,~~impairment bytest. ~~expanding~~Instead, ~~and~~if ~~refining~~the ~~hedge~~carrying ~~accounting~~amount ~~for~~of ~~both~~a ~~nonfinancial~~reporting ~~and~~unit ~~financial~~exceeds ~~risk~~its ~~components~~fair ~~and~~value, ~~aligning~~an ~~the~~impairment ~~recognition~~loss ~~and~~is ~~presentation~~recognized ofin ~~the~~an ~~effects~~amount ofequal ~~the~~to ~~hedging~~that ~~instrument~~excess, ~~and~~limited by the ~~hedged~~amount ~~item~~of goodwill in ~~the~~that ~~financial~~reporting ~~statements~~unit. ~~ASU~~The ~~2017-12~~standard iswas effective for the Company beginning inJanuary ~~fiscal 2019~~1, ~~including~~2020 ~~interim~~and ~~periods~~will ~~within~~be ~~that~~applied ~~fiscal~~to ~~year. The Company adopted~~ the ~~provisions~~annual ofor ~~ASU~~any ~~2017–12~~interim asgoodwill ofimpairment ~~January~~assessment 1,after ~~2019~~that date. There was no material impact on the Company's condensed consolidated financial statements resulting from the adoption of this guidance.

In ~~February~~June 2016, the FASB issued ASU No. 2016~~-02~~–13 ~~and~~Financial ~~subsequent~~Instruments–Credit ~~amendments,~~Losses ~~collectively~~(Topic ~~known~~326) asto ~~ASC~~replace ~~842~~the ~~Leases.~~incurred ~~ASC~~loss ~~842~~model ~~requires~~for ~~recognition~~financial ofassets ~~operating~~measured ~~leases~~at asamortized ~~lease~~cost ~~assets~~ and ~~liabilities~~require onentities ~~the~~to ~~balance~~measure ~~sheet~~all ~~and~~expected ~~also~~credit ~~requires~~losses ~~the~~for ~~disclosure~~financial ofassets ~~key~~held ~~information~~at ~~about~~the ~~leasing~~reporting ~~arrangements.~~date ~~The~~based ~~Company~~on ~~has~~historical ~~elected~~experience, tocurrent ~~adopt~~conditions, ~~ASC~~and ~~842~~reasonable byand ~~applying~~supportable ~~the~~forecasts. ~~modified~~For ~~transition~~trade ~~method~~ and ~~has~~other ~~elected~~receivables, toloans ~~use~~and ~~the~~other ~~effective~~financial ~~date of January 1~~instruments, ~~2019 as~~ the ~~initial~~Company ~~date~~will ofbe ~~application.~~required ~~The~~to ~~Company~~use ~~elected~~a ~~the~~forward-looking ~~package~~expected ofloss ~~practical~~model ~~expedients~~rather ~~and~~than ~~did~~the ~~not~~incurred ~~elect~~loss ~~the~~model ~~use~~for ofrecognizing ~~the~~credit ~~hindsight~~losses ~~practical~~which ~~expedient.~~reflects Aslosses athat ~~result,~~are ~~the~~probable. ~~Company~~The ~~will~~new ~~continue~~guidance towas ~~account~~effective for ~~existing~~the ~~leases~~Company inbeginning ~~accordance~~January ~~with~~1, ~~previous~~2020 ~~accounting~~and ~~guidance~~was ~~throughout~~applied ~~the~~through ~~entire~~a ~~lease~~cumulative-effect ~~term~~adjustment ~~including~~to ~~periods~~retained ~~after~~earnings ~~the~~as ~~effective~~of ~~date.~~the ~~The~~period ~~remeasurement or modification~~ of aadoption. ~~lease~~Upon ~~after~~adoption, the ~~effective~~Company ~~date~~recorded ~~requires~~an ~~application~~adjustment of ~~the new guidance~~$0.8 ~~The~~million ~~Company~~to ~~has~~retained ~~also~~earnings ~~elected~~and the ~~practical~~allowance ~~expedient~~for ~~under~~doubtful ~~ASU~~accounts. ~~2018-01~~There ~~Land~~was ~~Easement~~no ~~and~~material ~~will~~impact ~~apply~~on ~~previous~~the ~~judgments~~Company's ~~under~~other ~~previous~~financial ~~guidance~~assets asresulting tofrom the ~~recognition~~adoption of ~~land~~this ~~easements as a lease~~guidance.

The adoption of ASC 842 resulted in the recognition of operating lease right-of-use (ROU) assets of $110.1 million and operating lease liabilities of $111.2 million on the effective date. The new guidance did not have a material impact on the condensed consolidated statement of operations or statement of cash flow. The accounting for finance leases under ASC 842 remained substantially unchanged from previous accounting guidance and are not material. See Note 11 for the disclosures required by ASC 842 and accounting policy information for leases.

Pending Adoption of Recently Issued Accounting Standards

In ~~August~~January ~~2018~~2020, the FASB issued ASU ~~2018~~2020-1401 ~~Compensation~~Investments—Equity -Securities ~~Retirement~~(Topic ~~Benefits~~321), -Investments—Equity ~~Defined~~Method ~~Benefit~~and ~~Plans~~Joint Ventures ~~- General~~ (Topic ~~715-20~~323):, ~~Disclosure~~and ~~Framework~~Derivatives -and ~~Changes~~Hedging to(Topic ~~the Disclosure Requirements for Defined Benefit Plans~~815). This ASU ~~modifies~~clarifies the ~~disclosure~~interaction ~~requirements~~of ~~for employers that sponsor defined benefit pension or other postretirement plans. The ASU removes~~ the ~~requirements~~accounting tofor ~~disclose:~~equity ~~amounts~~securities inunder ~~accumulated~~Topic ~~other~~321 ~~comprehensive income (loss) expected to be recognized as components of net periodic benefit cost over the next fiscal year; the amount~~ and ~~timing~~investments ofaccounted ~~plan~~for ~~assets~~under ~~expected to be returned to~~ the ~~employer;~~equity ~~and~~method ~~the effects~~ of aaccounting ~~one-percentage point change~~ in ~~assumed~~Topic ~~health~~323 ~~care~~and ~~cost trend rates. The ASU requires disclosure of an explanation of~~ the ~~reasons~~accounting for ~~significant~~certain ~~gains~~forward contracts and ~~losses~~purchased ~~related~~options toaccounted ~~changes in the benefit obligation~~ for ~~the~~under ~~period~~Topic 815. ~~This~~The guidance is effective for ~~fiscal~~the ~~years,~~Company ~~and~~for ~~interim periods within those~~ fiscal years, beginning after December 15, 2020., ~~Early adoption is permitted for all entities~~ and ~~the~~interim ~~amendments~~periods inwithin ~~this~~those ~~update~~fiscal ~~are required to be applied on a retrospective basis to all periods presented~~years. ~~The~~Early ~~Company~~adoption is ~~currently evaluating this guidance to determine the impact on its disclosures.~~

In August 2018, the FASB issued ASU 2018-13 Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The ASU removes the requirement to disclose: the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy; the policy for timing of transfers between levels; and the valuation processes for Level 3 fair value measurements. The ASU requires disclosure of changes in unrealized gains and

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~~losses~~permitted ~~for~~including ~~the~~early ~~period~~adoption ~~included~~ in ~~other~~an ~~comprehensive~~interim ~~income (loss) for recurring Level 3 fair value measurements held at the end of the reporting~~ period ~~and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements~~. The ~~amendments~~Company ondoes ~~changes~~not inexpect ~~unrealized gains and losses,~~ the ~~range~~adoption ~~and weighted average~~ of ~~significant~~this ~~unobservable~~guidance ~~inputs used~~ to ~~develop~~have ~~Level~~a 3material ~~fair~~impact ~~value~~on ~~measurements, and~~ the ~~narrative~~condensed ~~description~~consolidated offinancial ~~measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption~~statements. All other amendments should be applied retrospectively to all periods presented upon their effective date. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. The Company is currently evaluating this guidance to determine the impact on its disclosures.

In ~~January~~December ~~2017~~2019, the FASB issued ASU ~~2017~~2019-0412 ~~Intangibles - Goodwill and Other:~~ Simplifying the ~~Test~~Accounting for ~~Goodwill~~Income ~~Impairment~~Taxes (ASC740). ~~The~~This ~~standard~~ASU ~~eliminates~~enhances ~~the~~and ~~requirement~~simplifies tovarious ~~measure~~aspects ~~the implied fair value~~ of ~~goodwill by assigning~~ the ~~fair~~income ~~value~~tax ofaccounting aguidance ~~reporting~~in ~~unit~~ASC to740, ~~all~~including ~~assets~~requirements ~~and~~related ~~liabilities~~to ~~within~~hybrid ~~that~~tax ~~unit~~regimes, (the ~~Step~~tax 2basis ~~test)~~step-up ~~from~~in ~~the~~ goodwill ~~impairment~~obtained ~~test.~~in ~~Instead,~~a iftransaction ~~the~~that ~~carrying~~is ~~amount~~not of a ~~reporting~~business ~~unit~~combination, ~~exceeds~~separate ~~its~~financial ~~fair~~statements ~~value,~~of anentities ~~impairment~~not ~~loss~~subject isto ~~recognized~~tax, inthe anintraperiod ~~amount~~tax ~~equal~~allocation exception to ~~that~~the ~~excess~~incremental approach, ~~limited~~ownership bychanges ~~the~~in ~~amount~~investments of- ~~goodwill~~changes infrom ~~that~~a ~~reporting~~subsidiary ~~unit.~~to ~~The~~an ~~standard~~equity ismethod ~~effective~~investment, interim-period accounting for ~~the~~enacted ~~Company~~changes ~~beginning~~in ~~January~~tax 1law, ~~2020~~ and ~~will~~the ~~be applied~~ year-to-date ~~any~~loss ~~annual~~limitation orin interim-period ~~goodwill~~tax ~~impairment~~accounting. This ~~assessment~~guidance ~~after~~is ~~that~~effective ~~date.~~for ~~Early~~the ~~adoption~~Company ~~is permitted~~ for ~~interim~~annual and ~~annual~~interim ~~impairment~~periods ~~testing~~in ~~after~~fiscal ~~January~~2021; 1however, ~~2017~~early adoption is permitted. The Company does not expect the adoption of this guidance to have a material impact on the ~~Company's~~ condensed consolidated financial statements.

In ~~June~~August ~~2016~~2018, the FASB issued ASU ~~No.~~2018-14 ~~2016–13~~Compensation ~~Financial~~- ~~Instruments–Credit~~Retirement ~~Losses~~Benefits to- ~~replace~~Defined ~~the~~Benefit ~~incurred~~Plans ~~loss~~- ~~model~~General ~~for~~(Topic ~~financial~~715-20): ~~assets~~Disclosure ~~measured~~Framework at- ~~amortized~~Changes ~~cost and require entities~~ to ~~measure~~the ~~all~~Disclosure ~~expected~~Requirements ~~credit~~for ~~losses~~Defined ~~for~~Benefit ~~financial~~Plans. ~~assets~~This ~~held~~ASU atmodifies the ~~reporting~~disclosure ~~date~~requirements ~~based~~for onemployers ~~historical~~that ~~experience,~~sponsor ~~current~~defined ~~conditions,~~benefit ~~and~~pension ~~reasonable~~or ~~and~~other ~~supportable~~postretirement ~~forecasts~~plans. ~~For~~The ~~trade~~ASU ~~and~~removes ~~other receivables, loans and other financial instruments,~~ the ~~Company~~requirements ~~will~~to bedisclose: ~~required~~amounts toin ~~use~~accumulated aother ~~forward-looking~~comprehensive ~~expected~~income (loss) ~~model~~expected ~~rather~~to ~~than~~be ~~the~~recognized ~~incurred~~as ~~loss~~components ~~model~~of ~~for~~net ~~recognizing~~periodic ~~credit~~benefit ~~losses~~cost ~~which~~over ~~reflects~~the ~~losses~~next ~~that~~fiscal ~~are~~year; ~~probable.~~the ~~The~~amount ~~new~~and ~~guidance~~timing isof ~~effective~~plan ~~for~~assets ~~fiscal~~expected ~~years~~to ~~beginning~~be ~~after~~returned ~~December~~to ~~15,~~the ~~2019~~employer; and ~~must~~the beeffects ~~applied~~of ~~through~~ a ~~cumulative~~one-~~effect~~percentage ~~adjustment~~point tochange ~~retained~~in ~~earnings~~assumed ashealth ofcare ~~the~~cost ~~period~~trend ~~of adoption~~rates. The ~~Company~~ASU ~~has~~requires ~~established~~disclosure aof ~~team~~an toexplanation ~~evaluate the application~~ of the ~~current~~reasons ~~expected~~for ~~credit~~significant ~~loss~~gains ~~model~~and ~~(CECL),~~losses asrelated ~~required~~to bychanges ~~this~~in ~~standard,~~the tobenefit ~~its~~obligation ~~financial~~for ~~assets~~the ~~subject~~period. toThis ~~credit~~guidance ~~losses.~~is ~~Based~~effective onfor ~~the~~fiscal ~~scoping~~years, and ~~gap~~interim ~~analysis~~periods ~~performed~~within ~~for~~those ~~its~~fiscal ~~financial assets~~years, ~~implementation~~beginning ~~efforts~~after ~~are~~December ~~primarily~~15, ~~focused~~2020. onEarly ~~the~~adoption ~~application~~is ofpermitted ~~CECL~~for toall ~~trade~~entities ~~accounts~~and ~~receivable,~~the ~~including incorporating~~amendments ~~CECL~~in ~~into~~this ~~the~~update ~~methodology,~~are ~~model~~required ~~and~~to ~~assumptions~~be ~~used~~applied inon ~~determining~~a ~~the~~retrospective ~~allowance~~basis ~~for~~to ~~doubtful~~all ~~accounts~~periods presented. The Company ~~has~~ ~~not~~is ~~completed~~currently ~~the~~evaluating ~~analysis for determining the impact that~~ this ~~new~~ guidance ~~will~~to ~~have~~determine on the ~~condensed~~impact ~~consolidated~~on ~~financial~~its ~~statements~~disclosures.

We do not expect the pending adoption of other recently issued accounting standards to have an impact on the condensed consolidated financial statements.


NOTE 3.	Revenue from Contracts with Customers

The Company follows the guidance under ASC 606 effective January 1, 2018. Revenue under ASC 606 is measured based on consideration specified in a contract with a customer, and excludes any sales incentives and amounts collected on behalf of third parties. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer, which is typically at a point in time. Estimates of variable consideration are included in revenue to the extent that it is probable that a significant reversal of cumulative revenue will not occur once the uncertainty is resolved.

Disaggregation of Revenue

The following table presents product sales disaggregated by end-market:

Three MonthsEnded September 30,

Nine MonthsEnded September 30,

Three MonthsEnded March 31,

(Amount in millions)

~~2019~~2020

~~2018~~2019

~~2019~~

~~2018~~

OEM

~~578~~549.39

~~677~~703.78

~~1,974.7~~

~~2,200.1~~

Aftermarket

~~220~~195.18

~~237~~229.1

~~669.3~~

~~719.3~~

Total sales

~~798~~745.47

~~914~~932.89

~~2,644.0~~

~~2,919.4~~

The following table presents product sales disaggregated by geography, based on the billing addresses of customers:



	Three Months Ended March 31,
(Amount in millions)	2020		2019
United States	$	160.1	$	219.7
Europe	384.4		461.7
Other⁽¹⁾	201.2		251.5
Total sales	$	745.7	$	932.9


⁽¹⁾	Sales to other regions includes revenues primarily from Japan, China, Brazil and India.

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	Three MonthsEnded September 30,				Nine MonthsEnded September 30,
(Amount in millions)	2019		2018		2019		2018
United States	$	215.5	$	228.8	$	657.9	$	666.0
Europe	390.9		448.2		1,320.6		1,471.1
Other (1)	192.0		237.8		665.5		782.3
Total sales	$	798.4	$	914.8	$	2,644.0	$	2,919.4

(1) Sales to other regions includes revenues primarily from Japan, China, Brazil and India.

Contract Balances

Timing of revenue recognition may differ from the timing of invoicing to customers. Contract assets primarily relate to the Company’s rights to consideration for work completed but not billed at the reporting date. The contract assets are transferred to receivables when the rights become unconditional. Contract liabilities primarily relate to performance obligations to be satisfied in the future. Contract assets and contract liabilities were not material as of ~~September~~March 3031, ~~2019~~2020 and December 31, ~~2018~~2019.

Transaction Price Allocated to the Remaining Performance Obligations

The aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied (or partially unsatisfied) as of ~~September~~March 3031, ~~2019~~2020 and ~~2018~~2019 were not material. The Company has elected to apply the practical expedient in paragraph ASC 606-10-50-14 and does not disclose information about remaining performance obligations that have original expected durations of one year or less.

NOTE 4. Accumulated Other Comprehensive Loss

The table below presents the changes in accumulated other comprehensive loss for the three ~~and nine~~ month periods ended ~~September~~March 3031, ~~2019~~2020 and ~~2018~~2019.



	Three Months Ended March 31,
(Amount in millions)	2020			2019
Foreign currency translation adjustments:
Balance at beginning of period	$	(257.9	)	$	(243.0	)
Adoption of ASU 2018-02	—			(7.1		)
Adjustment for the period	(58.6		)	14.4
Balance at end of period ⁽¹⁾	(316.5		)	(235.7		)

Losses on intra-entity transactions:
Balance at beginning of period	(12.1		)	(11.9		)
Adjustment for the period	(0.6		)	—
Balance at end of period ⁽²⁾	(12.7		)	(11.9		)

Pension and post-retirement plans:
Balance at beginning of period	(318.7		)	(269.1		)
Adoption of ASU 2018-02	—			(1.3		)
Other comprehensive loss before reclassifications	6.7			3.1
Amounts reclassified to earnings, net⁽³⁾	5.3			4.6
Balance at end of period	(306.7		)	(262.7		)

Accumulated other comprehensive loss at end of period	$	(635.9	)	$	(510.3	)

⁽¹⁾ Includes an accumulated loss of $2.2 million, net of taxes of $0.9 million as of March 31, 2020 and an accumulated loss of $9.7 million, net of taxes of $1.2 million, as of March 31, 2019 related to foreign currency gains and losses on Euro-denominated debt and foreign currency contracts designated and qualifying as partial hedges of a net investment. This includes the one-time adjustment of currency translation related to the adoption of ASU 2018-02 of $7.1 million disclosed above.


⁽²⁾	Relates to intra-entity foreign currency transactions that are of a long term investment nature, when the entities to the transaction are consolidated, combined or accounted for by the equity method in the Company's financial statements.


⁽³⁾	Consists of amortization of prior service cost and actuarial losses that are included as a component of pension and post-retirement expense within other non-operating expenses. The amounts reclassified to earnings are recorded net of tax of $2.2 million and $1.9 million for the three month periods ended March 31, 2020 and 2019, respectively.

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	Three MonthsEnded September 30,						Nine MonthsEnded September 30,
(Amount in millions)	2019			2018			2019			2018
Foreign currency translation adjustments :
Balance at beginning of period	$	(242.9	)	$	(218.3	)	$	(243.0	)	$	(177.6	)
Adoption of ASU 2018-02 (Note 2)	—			—			(7.1		)	—
Adjustment for the period	(34.6		)	(31.0		)	(27.4		)	(71.7		)
Balance at end of period (1)	(277.5		)	(249.3		)	(277.5		)	(249.3		)
Losses on intra-entity transactions:
Balance at beginning of period	(11.9		)	(12.2		)	(11.9		)	(11.8		)
Adjustment for the period	—			0.2			—			(0.2		)
Balance at end of period (2)	(11.9		)	(12.0		)	(11.9		)	(12.0		)
Unrealized gains on investments:
Balance at beginning of period	—			—			—			0.1
Adjustment for the period	—			—			—			(0.1		)
Balance at end of period	—			—			—			—
Unrealized losses on hedges:
Balance at beginning of period	—			—			—			(0.8		)
Adjustment for the period	—			—			—			—
Amounts reclassified to earnings, net	—			—			—			0.8
Balance at end of period	—			—			—			—
Pension and post-retirement plans:
Balance at beginning of period	(260.0		)	(257.4		)	(269.1		)	(274.4		)
Adoption of ASU 2018-02 (Note 2)	—			—			(1.3		)	—
Other comprehensive loss/(income) before reclassifications	9.3			(1.8		)	10.6			6.5
Amounts reclassified to earnings, net (3)	4.0			4.4			13.1			13.1
Balance at end of period	(246.7		)	(254.8		)	(246.7		)	(254.8		)
Accumulated other comprehensive loss at end of period	$	(536.1	)	$	(516.1	)	$	(536.1	)	$	(516.1	)

(1) Includes an accumulated gain of $0.5 million, net of taxes of $1.6 million as of September 30, 2019 and an accumulated loss of $23.2 million, net of taxes of $14.1 million, as of September 30, 2018 related to foreign currency gains and losses on Euro-denominated debt and foreign currency contracts designated and qualifying as partial hedges of a net investment. This includes the one-time adjustment of currency translation related to the adoption of ASU 2018-02 of $7.1 million disclosed above.

(2) Relates to intra-entity foreign currency transactions that are of a long term investment nature, when the entities to the transaction are consolidated, combined or accounted for by the equity method in the Company's financial statements.

(3) Consists of amortization of prior service cost and actuarial losses that are included as a component of pension and post-retirement expense within other non-operating expenses. The amounts reclassified to earnings are recorded net of tax of $1.6 million and $1.8 million for the three month periods ended September 30, 2019 and 2018, respectively, and $5.2 million and $5.4 million for the nine month periods ended September 30, 2019 and 2018, respectively.

NOTE 5. Inventories, net

The components of inventories are as follows:



(Amounts in millions)	As of March 31, 2020			As of December 31, 2019
Finished products	$	190.0		$	153.9
Products in process	13.8			11.9
Raw materials	174.8			143.1
Inventories, gross	378.6			308.9
Less: inventory allowances	(17.1		)	(16.0		)
Inventories, net	$	361.5		$	292.9

Inventory costs are primarily comprised of direct material and labor costs, as well as material overhead such as inbound freight and custom and excise duties.

NOTE 6. Allowance for Credit Losses

The Company adopted the guidance under ASC 326 as of January 1, 2020, whereby an estimate of the lifetime expected credit loss will be recognized immediately upon the origination of a financial asset, and will be adjusted for subsequently in each reporting period. The calculation of the loss allowance under ASC 326 represents the Company's current expected loss based on historical information, current conditions and future expectations of these conditions.

The Company estimates and measures its allowance for credit losses considering the credit ratings of its customers for trade receivables or issuing banks for guaranteed notes receivables, the market-implied probability of default (MIPD) for each credit rating level, as well as the Company's historical experience with defaults on its financial assets. Credit ratings are developed based on credit scores obtained from external credit agencies. The MIPD is determined based on short-term market debt yields and option-adjusted credit spreads observed in publicly traded debt issued by companies within similar industries. The Company also considers various other factors to adjust the reserve balance including current economic conditions, future expectations and knowledge of asset specific risk characteristics.

As of March 31, 2020, the allowance for credit losses over trade accounts receivables under ASC 326 amounted to $11.7 million. Allowances for credit losses on other financial assets including guaranteed notes receivables were immaterial. The following table summarizes the activity in the allowance for credit losses over trade accounts receivables for the three months ended March 31, 2020 and 2019:



	Three Months Ended March 31,
(Amount in millions)	2020			2019
Balance at beginning of period	$	12.3		$	10.7
Provisions	1.1			0.3
Write-offs, net	(0.6		)	(0.2		)
Adoption of ASC 326	(0.8		)	—
FX translation	(0.3		)	(0.1		)
Balance at end of period	$	11.7		$	10.7

The increase in provision for the allowance for credit losses for the three months ended March 31, 2020 was primarily driven by the Company’s estimate of the impact on its own expected credit losses of recent increased industry MIPD rates and downgraded credit ratings for certain of the Company’s customers due to the higher credit risks and uncertainties resulting from the COVID-19 pandemic.

NOTE 7. Guaranteed Notes Receivable

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(Amounts in millions)	As of September 30, 2019			As of December 31, 2018
Finished products	$	172.9		$	185.2
Products in process	13.6			15.3
Raw materials	171.6			137.1
Inventories, gross	358.1			337.6
Less: inventory allowances	(16.8		)	(18.5		)
Inventories, net	$	341.3		$	319.1

These guaranteed drafts are available for discounting with banking institutions in China or transferring to suppliers to settle liabilities. The total amount of notes receivable discounted or transferred for the first three months of 2020 and 2019 were $36.9 million and $41.7 million, respectively. The expenses related to discounting were immaterial for the three months ended March 31, 2020 and 2019. The fair value of these guaranteed notes receivable is determined based on Level 2 inputs including credit ratings and other criteria observable in the market and was equal to their carrying amounts of $53.8 million and $35.0 million as of March 31, 2020 and December 31, 2019, respectively. The increase in the carrying amount of the guaranteed notes receivable as of March 31, 2020 is primarily due to a lower volume of notes receivable that were discounted or transferred during the first quarter of 2020.

~~Inventory~~The ~~costs~~Company ~~are~~monitors ~~primarily~~the ~~comprised~~credit quality of ~~direct~~both ~~material~~the drawers of the drafts and ~~labor~~guarantors ~~costs~~on a monthly basis by reviewing various factors such as payment history, level of state involvement in the institution, size, national importance as well as ~~material~~current ~~overhead~~economic ~~such~~conditions asin ~~inbound~~China. ~~freight~~The ~~and~~Company ~~custom~~is not expecting future credit losses based on a review of the various credit quality indicators described above and, ~~excise~~as ~~duties~~discussed in Note 6, the expected credit loss related to the guaranteed notes receivable as of March 31, 2020 was immaterial. No loss provision against these receivables was established as of December 31, 2019 as the Company has not experienced any historical losses.

NOTE 68. ~~Guaranteed~~Net ~~Notes~~Income ~~Receivable~~Attributable to Company per Share

The Company holds guaranteed notes receivable from reputable state owned and public enterprises in China that are settled through bankers acceptance drafts, which are registered and endorsed to the Company. These notes receivable are fully guaranteed by banks and generally have contractual maturities of six months or less, but the ultimate recourse remains against the trade debtor. These guaranteed drafts are available for discounting with banking institutions in China or transferring to suppliers to settle liabilities. The total amount of notes receivable discounted or transferred for the first nine months of 2019 and 2018 were $190.1 million and $216.1 million, respectively. The expenses related to discounting were $0.3 million and $1.3 million for the three and nine months ended September 30, 2019, respectively, and $0.2 million and $1.8 million, for the three and nine months ended September 30, 2018, respectively. The fair value of these guaranteed notes receivable is determined based on Level 2 inputs including credit ratings and other criteria observable in the market and was equal to their carrying amounts of $34.8 million and $44.1 million as of September 30, 2019 and December 31, 2018, respectively.

The Company monitors the credit quality of both the drawers of the drafts and guarantors on a monthly basis by reviewing various factors such as payment history, level of state involvement in the institution, size, national importance as well as current economic conditions in China. Since the Company has not experienced any historical losses nor is expecting future credit losses based on a review of the various credit quality indicators described above, we have not established a loss provision against these receivables as of September 30, 2019 or December 31, 2018.

NOTE 7. Net Income Attributable to Company per Share

Basic net income attributable to Company per share has been computed using the weighted average number of common shares outstanding. The average number of outstanding shares of common stock used in computing diluted net income attributable to Company per share includes weighted average incremental shares when the impact is not anti-dilutive. The weighted average incremental shares represent the net amount of shares the Company would issue upon the assumed exercise of in-the-money stock options and vesting of restricted stock units (RSUs) and deferred stock units (DSUs) after assuming that the Company would use the proceeds from the exercise of options to repurchase stock. The weighted average incremental shares also includes the net amount of shares issuable for performance stock units (PSUs) at the end of the reporting period, if any, based on the number of shares issuable if the end of the period were the end of the vesting period.

Anti-dilutive shares, if applicable, are excluded and represent those options, RSUs, DSUs and PSUs whose assumed proceeds were greater than the average price of the Company’s common stock.

	Three MonthsEnded September 30,		Nine MonthsEnded September 30,
	Three MonthsEnded March 31,
	2019	2018	2019	2018
	2020	2019
Weighted average incremental shares included	~~143~~74,~~474~~339	~~166~~97,~~173~~801	~~141,163~~	~~179,951~~
Shares excluded due to anti-dilutive effect	—	—33,655	51	—

NOTE 9. Capital Stock

The following is a summary of the number of shares of common stock issued, treasury stock and common stock outstanding for the three month periods ended March 31, 2020 and 2019:



	Three Months Ended March 31,
	2020				2019
	Total Shares	Treasury Stock		Net Shares Outstanding	Total Shares	Treasury Stock		Net Shares Outstanding
Balance at beginning of period	79,147,135	(27,879,811	)	51,267,324	79,018,266	(27,653,341	)	51,364,925
Shares issued upon exercise of stock options	1,228	4,291		5,519	8,294	16,500		24,794
Shares issued upon vesting of RSUs	35,832	4,581		40,413	38,213	6,143		44,356
Shares issued for DSUs	—	—		—	901	—		901
Shares issued upon vesting of PSUs	53,430	7,489		60,919	56,470	11,771		68,241
Shares purchased for treasury	—	—		—	—	(272,000	)	(272,000	)
Balance at end of period	79,237,625	(27,863,450	)	51,374,175	79,122,144	(27,890,927	)	51,231,217

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~~NOTE~~The 8Company accounts for purchases of treasury stock under the cost method with the costs of such share purchases reflected in treasury stock in the accompanying condensed consolidated balance sheets. ~~Capital~~Upon ~~Stock~~the exercise or vesting of an equity incentive award, the Company may reissue shares from treasury stock or may elect to issue new shares. When treasury shares are reissued, they are recorded at the average cost of the treasury shares acquired since the inception of the share buy back programs, net of shares previously reissued. Gains on the reissuance of treasury shares are recorded as capital surplus. Losses on the reissuance of treasury shares are charged to capital surplus to the extent of previous gains recorded, and to retained earnings for any losses in excess. The Company has reissued, on a cumulative basis, a total of 172,722 treasury shares related to certain employee vestings under its equity incentive program through March 31, 2020.

~~The~~On ~~following~~December is7, a2018, ~~summary~~the Board of Directors authorized the ~~number~~repurchase of shares of common stock ~~issued~~for an amount of $600.0 million through December 31, ~~treasury~~2020. ~~stock~~As ~~and~~of ~~common~~March 31, ~~stock~~2020, ~~outstanding~~the Company has $569.4 million remaining under this repurchase authorization. There was no repurchase activity for the ~~nine~~first ~~month~~three ~~periods~~months ~~ended~~of ~~September 30,~~2020 ~~2019~~as ~~and~~the ~~2018:~~ Company has suspended its share repurchase program due to the pending Merger.

	Nine MonthsEnded September 30,
	2019					2018
	Total Shares	Treasury Stock		Net SharesOutstanding		Total Shares	Treasury Stock		Net SharesOutstanding
Balance at beginning of period	79,018,266	(27,653,341	)	51,364,925		78,937,828	(25,202,342	)	53,735,486
Shares issued upon exercise of stock options	10,689	18,582		29,271		10,795	11,459		22,254
Shares issued upon vesting of RSUs	41,361	6,226		47,587		19,198	8,326		27,524
Shares issued for deferred compensation	9,730	—		9,730		—	—		—
Shares issued for DSUs	6,307	—		6,307		7,833	—		7,833
Shares issued upon vesting of PSUs	56,521	11,823		68,344		37,712	6,009		43,721
Shares purchased for treasury	—	(272,000	)	(272,000	)	—	(1,669,490	)	(1,669,490	)
Balance at end of period	79,142,874	(27,888,710	)	51,254,164		79,013,366	(26,846,038	)	52,167,328

NOTE 10. Stock-Based Compensation

The Company ~~accounts~~records ~~for purchases of treasury~~ stock-based ~~under~~compensation ~~the~~expense ~~cost method with the costs of such share purchases reflected~~ in ~~treasury stock in~~ the ~~accompanying~~ condensed consolidated ~~balance~~statements ~~sheets. Upon the exercise or vesting~~ of anoperations for equity ~~incentive~~awards ~~award,~~based ~~the~~on ~~Company may reissue shares from treasury stock or may elect to issue new shares. When treasury shares are reissued, they are recorded at~~ the ~~average~~grant ~~cost~~date offair ~~the treasury shares acquired since the inception of the share buy back programs~~value, ~~net~~determined ofby ~~shares previously reissued. Gains on~~ the ~~reissuance~~closing ofmarket ~~treasury~~price ~~shares are recorded as capital surplus. Losses on the reissuance~~ of ~~treasury shares are charged to capital surplus to~~ the ~~extent of previous gains recorded, and to retained earnings for any losses in excess. The~~ Company’s ~~has~~common ~~reissued,~~stock on athe ~~cumulative~~date ~~basis, a total~~ of ~~147,462 treasury shares related to certain employee vestings under its equity incentive program through September 30, 2019~~grant.

OnAs ~~December~~part 7of its equity incentive program, ~~2018~~the Company grants PSUs, the ~~Board~~vesting of ~~Directors~~which ~~authorized~~would occur, if at all, at levels that depend upon the ~~repurchase~~achievement of ~~shares~~three-year ofcumulative ~~common~~goals ~~stock~~tied ~~for~~to anearnings. ~~amount~~The Company assesses the expected achievement levels at the end of ~~$600~~each reporting period.0 ~~million~~The ~~through~~grant ~~December~~date ~~31,~~fair ~~2020.~~value Asof the number of ~~September 30,~~awards ~~2019~~expected to vest based on the Company’s ~~has~~best ~~purchased~~estimate ~~272,000~~of ~~shares~~ultimate ~~for~~performance ~~$30.6~~against ~~million~~the ~~and~~respective ~~has~~targets ~~$569.4~~is ~~million~~recognized ~~remaining~~as ~~under~~compensation ~~this~~expense ~~repurchase~~on ~~authorization~~a straight-line basis over the requisite vesting period of the awards. ~~The~~As of March 31, 2020, the Company ~~suspended~~has ~~its~~accrued ~~share~~for ~~repurchase~~compensation ~~program~~expense ~~due~~on tothe PSUs based on the ~~pending~~expected ~~Merger~~achievement levels for the outstanding awards.

NOTE 9. Stock-Based Compensation

The Company records stock-based compensation expense in the condensed consolidated statements of operations for stock options and RSUs based on the grant date fair value, determined by the closing market price of the Company’s common stock on the date of grant. RSUs vest in equal annual installments over three years. As of September 30, 2019, the stock option awards are fully vested.

As part of its equity incentive program, the Company grants PSUs, the vesting of which would occur, if at all, and at levels that depend upon the achievement of three-year cumulative goals tied to earnings per share. The Company assesses the expected achievement levels at the end of each reporting period. The grant date fair value of the number of awards expected to vest based on the Company’s best estimate of ultimate performance against the respective targets is recognized as compensation expense on a straight-line basis over the requisite vesting period of the awards. As of September 30, 2019, the Company believes it is probable that the performance conditions will be met and has recognized compensation expense accordingly.

The Company also grants DSUs to its non-management directors as part of the equity portion of their annual retainer and are fully vested at grant. Each DSU provides the right to the issuance of a share of our common stock, within ten days after the earlier of the director’s death or disability, the 13-month anniversary of the grant date or the director’s separation from service. Each director may also elect within a month after the grant date to defer the receipt of shares for five or more years. No election can be made to accelerate the issuance of stock from a DSU.

Total stock-based compensation cost recognized during the three month periods ended March 31, 2020 and 2019 was as follows:



	Three Months Ended March 31,
(Amount in millions)	2020		2019
Stock-based compensation	$	2.6	$	4.1

The total number and type of awards granted during the periods presented and the related weighted-average grant-date fair values were as follows:



	Three Months Ended March 31,
	2020			2019
	Underlying Shares	Weighted Average Grant Date Fair Value		Underlying Shares	Weighted Average Grant Date Fair Value
RSUs Granted	58,976	$	135.96	66,877	$	117.49
PSUs Granted	58,976	$	135.96	66,877	$	117.49
Total Awards	117,952			133,754

The RSUs granted during the periods presented above vest in equal annual installments over three years.

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~~Total~~NOTE ~~stock-based~~11. ~~compensation cost recognized during the three and nine month periods ended September 30, 2019 and 2018 was as follows:~~Debt

	Three MonthsEnded September 30,				Nine MonthsEnded September 30,
(Amount in millions)	2019		2018		2019		2018
Stock-based compensation	$	0.1	$	3.9	$	8.2	$	15.2

The total number and type of awards granted during the periods presented and the related weighted-average grant-date fair values were as follows:

	Nine MonthsEnded September 30,
	2019			2018
	UnderlyingShares	WeightedAverageGrant DateFair Value		UnderlyingShares	WeightedAverageGrant DateFair Value
RSUs Granted	67,119	$	117.54	66,263	$	138.05
PSUs Granted	67,119	$	117.59	58,694	$	140.64
DSUs Granted	6,174	$	130.50	7,208	$	127.77
Total Awards	140,412			132,165

The RSUs granted during the periods presented above have vesting terms as follow:

	Nine MonthsEnded September 30,
	2019	2018
Vest in equal annual installments over three years	67,119	64,172
Vest after three years	—	2,091
Total RSUs granted	67,119	66,263

NOTE 10. Debt

Schuldschein Loans

On March 22, 2018 the Company, through a European subsidiary, entered into a series of six individual senior unsecured loan agreements with an aggregate principal amount of €300.0 million (collectively, the Schuldschein Loans), as follows :



(Amounts in millions)	Face value		Coupon	Maturity date
Fixed rate term loan - Series A	€	10.0	0.85%	March 31, 2021
Fixed rate term loan - Series B	60.0		1.15%	March 31, 2022
Fixed rate term loan - Series C	80.0		1.43%	March 31, 2023
Floating rate term loan - Series A	50.0		6-month EURIBOR plus 80 bps	March 31, 2021
Floating rate term loan - Series B	60.0		6-month EURIBOR plus 90 bps	March 31, 2022
Floating rate term loan - Series C	40.0		6-month EURIBOR plus 100 bps	March 31, 2023
	€	300.0

The Company paid approximately €1.1 million of debt issuance costs in connection with the Schuldschein Loans, which has been presented in the condensed consolidated balance sheets as a direct reduction of the related debt liability. Interest under the fixed rate tranches is paid on March 31 of each year, and commenced on March 31, 2019. Interest under the floating rate tranches is paid semi-annually on March 31 and September 30 of each year, and commenced on September 30, 2018.

As of ~~September~~March 3031, ~~2019~~2020, the outstanding debt balance net of unamortized debt issuance costs was €299.34 million ($~~327~~329.69 million at ~~September~~March 3031, ~~2019~~2020 exchange rates) of which €100.0 million ($~~109~~110.52 million at ~~September~~March 3031, ~~2019~~2020 exchange rates) was used for the recapitalization of affiliated entities. The remaining proceeds were used to fund the acquisition of the distribution rights from Meritor as discussed in Note 19.

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was used for the recapitalization of affiliated entities. The remaining proceeds will be utilized to meet general financing requirements.

Subject to certain conditions, the Company may, at its option, prepay all or any part of the Schuldschein Loans in an amount equal to the higher of the outstanding nominal amount of such loans (or the part of it) and the discounted value.

The Schuldschein Loans contain customary affirmative and negative covenants, and financial covenants consisting of a consolidated net indebtedness to consolidated EBITDA (earnings before interest, taxes, depreciation and amortization adjusted for certain items) ratio of not more than three times at the end of each fiscal quarter based upon the preceding twelve consecutive months, as well as a consolidated EBITDA to consolidated net interest expense ratio of not less than three times at the end of each fiscal quarter based upon the preceding twelve consecutive months. The Company was in compliance with all of the covenants as of ~~September~~March 3031, ~~2019~~2020.

Senior EUR Notes

On November 15, 2016, the Company issued an aggregate amount of €440 million of senior unsecured notes (collectively, the Senior EUR Notes) as follows:



(Amounts in millions)	Face value		Coupon		Maturity date
Series D Notes	€	190.0	0.84	%	November 15, 2023
Series E Notes	80.0		1.20	%	November 15, 2026
Series F Notes	170.0		1.36	%	November 15, 2028
	€	440.0

The Company paid approximately $1.4 million of debt issuance costs in connection with the Senior EUR Notes, which has been presented in the condensed consolidated balance sheets as a direct reduction of the related debt liability. Interest on the Senior EUR Notes is payable semi-annually on January 1 and July 1 of each year, and commenced on July 1, 2017. As of ~~September~~March 3031, ~~2019~~2020, the outstanding debt balance net of unamortized debt issuance costs was €439.12 million ($~~480~~483.69 million at ~~September~~March 3031, ~~2019~~2020 exchange rates). This debt balance included a revaluation loss of $68.59 million, net of taxes of $3.4.1 million, that has been recognized in cumulative translation adjustment within accumulated other comprehensive income. See Note 4 for further discussion.

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The proceeds from the Senior EUR Notes were utilized to repay outstanding balances on our revolving credit facilities, fund our share repurchase program, finance acquisitions and meet general financing requirements.

Subject to certain conditions, the Company may, at its option, prepay all or part of the Senior EUR Notes plus any accrued and unpaid interest to the date of prepayment and certain penalties as defined in the note purchase agreement (the EUR Note Purchase Agreement). The Company may also be required, subject to certain events and conditions, to make an offer to prepay all of the Senior EUR Notes including any accrued and unpaid interest to the date of prepayment. Each holder has the option to accept or reject such offer to prepay.

The EUR Note Purchase Agreement contains customary affirmative and negative covenants, and financial covenants consisting of a consolidated net indebtedness to consolidated EBITDA ratio of not more than three times at the end of each fiscal quarter based upon the preceding twelve consecutive months, as well as a consolidated EBITDA to consolidated net interest expense ratio of not less than three times at the end of each fiscal quarter based upon the preceding twelve consecutive months. The EUR Note Purchase Agreement also provides for customary events of default, the occurrence of which could result in an acceleration of the Company's obligations under the EUR Note Purchase Agreement. The Company was in compliance with all of the covenants as of ~~September~~March 3031, ~~2019~~2020.

The Company also agreed to indemnify the note purchasers holding Senior EUR Notes that are subject to a swap agreement for certain potential losses associated with swap breakage resulting from a prepayment of the Senior EUR Notes or from an acceleration of the Senior EUR Notes as a result of an event of default.

Senior USD Notes

On June 25, 2015, the Company issued an aggregate amount of $500.0 million of senior unsecured notes (the Senior USD Notes). On April 30, 2018, the Company prepaid the outstanding principal amount of $500.0 million on the Senior USD Notes,

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and recognized a loss on debt extinguishment of $2.3 million net of taxes, of which the pretax amount, $2.6 million, was included in other non-operating expenses in the condensed consolidated statement of operations.

Revolving Credit Facilities

Effective June 28, 2018, the Company amended its existing multi–currency unsecured revolving credit facility, increasing the maximum principal amount of borrowings under the facility from $400 million ~~(the 2015 Facility)~~ to $600 million (the 2018 Facility), with an option to increase up to an additional $250 million. The 2018 Facility also extended the ~~previously~~ scheduled maturity date of ~~September~~our ~~30,~~revolving ~~2022~~credit ~~for~~facility ~~the 2015 Facility~~ to June 28, 2023, subject to two one–year extension options, of which the first one was exercised on May 28, 2019, ~~extending~~and extended the maturity date ~~by one year~~ to June 28, 2024. Concurrent with entering into the 2018 Facility, the Company also terminated the $100 million multi-currency five-year unsecured revolving credit facility (the 2014 Facility) that was due to expire on December 17, 2019.

On the effective date of the 2018 Facility, the Company repaid the outstanding balance of €104.0 million and €52.0 million under the 2015 Facility and 2014 Facility and commenced borrowing under the 2018 Facility. Under the 2018 Facility, the Company may borrow, on a revolving basis, outstanding loans in an aggregate principal amount at any one time not in excess of $600 million and the 2018 Facility also provides for up to $50 million for standby letters of credit and swing line loans.

AtAs ~~September~~of March 3031, ~~2019,~~2020 ~~there~~and ~~was €25.0 million ($27.4 million at September~~December 3031, 2019, ~~exchange rates) outstanding under the 2018 Facility and~~ there were no outstanding ~~letters~~borrowings ofon ~~credit~~the orrevolving ~~swing~~credit ~~line loans~~facility. There were also no ~~borrowings,~~outstanding letters of credit or swing line loans ~~outstanding as of December 31, 2018~~. The proceeds from borrowings under the 2018 Facility are available to fund acquisitions, provide working capital and for other general corporate purposes.

Interest on loans under the 2018 Facility is calculated at a rate per annum equal to an applicable margin which can vary from 0.30% to 0.85% based on the Company's leverage ratio plus LIBOR for loans denominated in U.S. Dollars and EURIBOR for loans denominated in Euros (SIBOR for loans denominated in Singapore Dollars and HIBOR for loans denominated in Hong Kong Dollars).

The 2018 Facility contains terms and provisions (including representations, covenants and conditions) customary for transactions of this type. Financial covenants include a leverage test (consolidated net indebtedness not to exceed three times adjusted four quarter trailing consolidated EBITDA) and a maximum subsidiary indebtedness test. The maximum subsidiary indebtedness test limits the total aggregate amount of indebtedness of the Company's subsidiaries, excluding indebtedness under the 2018 Facility, to 20% ~~percent~~ of consolidated total assets as at the end of the most recently ended financial year, of which not more than $150 million may be secured, provided however that the Company may incur additional subsidiary indebtedness subject to, inter alia, providing additional corporate guarantees. Other undertakings and covenants include delivery of financial reports and other information, compliance with laws including environmental laws and permits, the Employee Retirement Income Security Act (ERISA) and U.S. regulations, the Foreign Account Tax Compliance Act (FATCA), sanctions-related obligations, negative pledge, limitations on mergers and sales of assets, change of business and use of proceeds. We were in compliance with all of the covenants as of ~~September~~March 3031, ~~2019~~2020.

Other Debt

As of ~~September~~March 3031, 2020 and December 31, 2019, the Company had no additional borrowings from banks. ~~This is in comparison to $0.5 million as of December 31, 2018 which was fully classified as long-term debt.~~

~~NOTE~~ ~~11. Leases~~17

The Company has operating leases for warehouses, corporate offices, cars, forklifts and certain equipment. On January 1, 2019, the Company adopted the accounting and transition guidance in ASC 842 for its operating leases resulting in the recognition of operating lease right-of-use (ROU) assets and lease liabilities on the effective date. The Company measures ROU assets throughout the lease term at the carrying amount of the lease liability, plus initial direct costs, plus (minus) any prepaid (accrued) lease payments, less the unamortized balance of lease incentives received. The lease liabilities are measured at the present value of the unpaid lease payments at the lease commencement date. Leases that include both lease and non-lease components are accounted for as a single lease component for each asset class.

The minimum payments under operating leases are recognized on a straight-line basis over the lease term in the condensed consolidated statements of operations. Operating lease expenses related to variable lease payments are recognized in cost of sales or as operating expenses in a manner consistent with the nature of the underlying lease and as the events, activities, or circumstances

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inNOTE ~~the lease agreement occur~~12. Leases with a term of less than 12 months are not recognized on the condensed consolidated balance sheets and the related lease expenses are recognized in the condensed consolidated statements of operations on a straight-line basis over the lease term and are recorded as operating expenses.

The ~~accounting~~Company ~~for~~has operating leases ~~requires~~for ~~management~~warehouses, tocorporate ~~exercise judgment and make estimates in determining the applicable discount rate~~offices, ~~lease term and payments due under a lease. If a lease does not provide an implicit rate~~cars, ~~the~~forklifts ~~Company uses the incremental borrowing rate to determine the present value of future lease payments. The incremental borrowing rate is applied to leases on a portfolio basis~~ and iscertain ~~determined~~equipment ~~from a rate for borrowings~~ with ~~a term equal to one-half the total~~ lease ~~term~~terms ~~and~~ranging anfrom ~~amount~~1 ~~equal~~year to ~~the~~15 ~~total minimum lease payments~~years. ~~A Euro (EUR) and United States Dollar (USD) quote are used because these currencies represent the majority of the lease population.~~

The ~~lease~~operating ~~term includes the non-cancellable period of the~~ lease ~~plus~~expense ~~any~~for ~~additional periods covered by either an option to extend (or not terminate) that~~ the ~~Company~~three ismonths ~~reasonably~~ended ~~certain to exercise~~March 31, or2020 anand ~~option~~2019 towas ~~extend~~$7.9 ~~(or~~million ~~not~~and ~~to terminate) a lease controlled by the lessor~~$7.8 ~~The~~million, ~~Company has leases with a lease term ranging from 1 year to 15 years~~respectively. Lease ~~payments~~expenses ~~are~~related ~~generally~~to ~~comprised~~variable oflease ~~fixed~~ payments ~~including~~and ~~in-substance~~short ~~fixed~~term ~~payments,~~leases ~~payments~~were ~~that~~immaterial. ~~depend~~Other oninformation anrelated ~~index or rate, any amounts payable under residual value guarantees, as well as any exercise price for a Company option~~ to ~~purchase~~operating ~~the~~leases ~~underlying asset if it~~ is ~~reasonably~~as ~~certain the Company will exercise the option. The Company generally does not provide residual value guarantees.~~follows:

The operating leases of the Company do not contain major restrictions or covenants such as those relating to dividends or additional financial obligations. Finance leases and income related to subleasing are immaterial to the condensed consolidated financial statements. There were no lease transactions with related parties as of September 30, 2019.



	Three Months Ended March 31,
(Amount in millions)	2020			2019
Operating Lease Expense
Cash paid for amounts included in the measurement of lease liabilities	$	7.8		$	7.8
ROU assets obtained in exchange for new lease liabilities	$	1.7		$	12.0

Weighted-average remaining lease term (in years)	6.2			6.4
Weighted-average discount rate	1.4		%	1.6		%

~~The~~Future ~~operating~~minimum lease ~~expense~~payments ~~for~~under ~~the~~non-cancellable ~~three~~operating ~~and~~leases ~~nine~~as ~~months~~of ~~ended September~~March 3031, ~~2019~~2020 ~~was $7.7 million and $23.3 million, respectively. Lease expenses related to variable lease payments and short term leases~~ were ~~immaterial. Other information related to operating leases is~~ as follows:

	Three MonthsEnded September 30,			Nine MonthsEnded September 30,
(Amount in millions)
(Amount in millions)	2019			2019
2020 (excluding three months ended March 31, 2020)	$	22.2
Operating Lease Expense
2021	20.6
Cash paid for amounts included in the measurement of lease liabilities	$	7.6		$	23.1
2022	16.0
ROU assets obtained in exchange for new lease liabilities	$	0.5		$	16.0
2023	12.2
Weighted-average remaining lease term (in years)	6.4			6.4
2024	6.0
Weighted-average discount rate	1.6		%	1.6		%
Thereafter	25.0
Total lease payments	102.0
Less: imputed interest	5.5
Total	$	96.5
Amounts recognized in the condensed consolidated balance sheet:
Current liabilities, included in other accrued liabilities	$	27.3
Long-term liabilities, as operating lease liabilities	$	69.2

~~Future~~NOTE ~~minimum~~13. ~~lease~~Warranties, ~~payments under non-cancellable operating leases as of September 30~~Guarantees, ~~2019~~Commitments ~~were~~and ~~as follows:~~Contingencies

(Amount in millions)
2019 (excluding nine months ended September 30, 2019)	$	6.0
2020	27.8
2021	18.8
2022	14.8
2023	11.4
Thereafter	30.7
Total lease payments	109.5
Less: imputed interest	6.8
Total	$	102.7
Amounts recognized in the condensed consolidated balance sheet:
Current liabilities, included in other accrued liabilities	$	26.8
Long-term liabilities, as operating lease liabilities	$	75.9

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NOTE 12. Warranties, Guarantees, Commitments and Contingencies

Warranties

Products sold by the Company are covered by a basic limited warranty with terms and conditions that vary depending upon the product and country in which it was sold. The limited warranty covers the equipment, parts and labor (in certain cases) necessary to satisfy the warranty obligation generally for a period of two years. Estimated product warranty expenses are accrued in cost of goods sold at the time the related sale is recognized. Estimates of warranty expenses are based primarily on warranty claims experience and specific customer contracts. Warranty expenses include accruals for basic warranties for product sold, as well as accruals for product recalls, service campaigns and other related events when they are known and estimable. Recoveries from suppliers are recognized when an arrangement with the supplier exists and collectibility is assured. Amounts recognized as recoveries do not exceed related warranty costs accrued. To the extent the Company experiences changes in warranty claim activity or costs associated with servicing those claims, its warranty accrual is adjusted accordingly. Warranty accrual estimates and the allocation of warranty between short and long term are updated based upon the most current warranty claims information available.

The following is a summary of changes in the Company’s product warranty liability for the three ~~and nine~~ month periods ended ~~September~~March 3031, ~~2019~~2020 and ~~2018~~2019.

	Three MonthsEnded September 30,						Nine MonthsEnded September 30,
(Amount in millions)	2019			2018			2019			2018
Balance of warranty costs accrued, beginning of period	$	44.9		$	53.9		$	43.7		$	50.9
Warranty costs accrued	8.2			5.1			25.1			25.9
Warranty claims settled	(4.5		)	(8.4		)	(20.1		)	(24.7		)
Foreign exchange translation effects	(1.3		)	0.1			(1.4		)	(1.4		)
Balance of warranty costs accrued, end of period	$	47.3		$	50.7		$	47.3		$	50.7
Current liability, disclosed as current portion of warranties	$	26.5		$	29.9		$	26.5		$	29.9
Long-term liability, included in other liabilities	$	20.8		$	20.8		$	20.8		$	20.8
Warranty costs accrued	$	8.2		$	5.1		$	25.1		$	25.9
Less: received and anticipated recoveries from suppliers	—			(0.2		)	—			(0.5		)
Warranty costs net of received and anticipated recoveries	$	8.2		$	4.9		$	25.1		$	25.4

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	Three Months Ended March 31,
(Amount in millions)	2020			2019
Balance of warranty costs accrued, beginning of period	$	48.6		$	43.7
Warranty costs accrued	13.6			10.3
Warranty claims settled	(8.9		)	(6.9		)
Foreign exchange translation effects	(0.8		)	(0.5		)
Balance of warranty costs accrued, end of period	$	52.5		$	46.6
Current liability, disclosed as current portion of warranties	$	32.8		$	26.5
Long-term liability, included in other liabilities	$	19.7		$	20.1

Warranty costs accrued	$	13.6		$	10.3
Less: received and anticipated recoveries from suppliers	—			—
Warranty costs net of received and anticipated recoveries	$	13.6		$	10.3

Guarantees and Commitments

The Company has uncollateralized bank guarantees for $2723.39 million, of which $1613.42 million is related to statutorily-required guarantees for tax and other litigation, $32.09 million is related to letters of credit, and $7.98 million is related to other individually immaterial items.

As disclosed in our 2018 Form 10-K, the Company entered into a distribution agreement with Meritor Inc. (Meritor) to serve as the exclusive distributor for a certain range of WABCO Aftermarket products in the U.S. and Canada and also its non-exclusive distributor in Mexico. The agreement provided Meritor with the option to sell these distribution rights to the Company for an exercise price between $225 million and $265 million, based on the earnings of the distribution business, during certain time periods and under certain circumstances, including a change in control of the Company. On September 13, 2019, Meritor exercised its option to terminate the distribution agreement and sell the distribution rights to the Company due to the announcement of the Merger. The purchase price for the distribution rights is payable in cash and will result in an increase to the intangible assets balance. The Company is expected to complete the acquisition in the first quarter of 2020.

Right of Recourse

As discussed in Note 67, the Company may receive bank acceptance drafts from customers in China in payment of outstanding accounts receivable in the ordinary course of business. These bank acceptance drafts are non-interest bearing obligations of the issuing bank and generally have contractual maturities of six months or less. The Company may use these banker's acceptance drafts prior to the scheduled maturity date to settle outstanding accounts payable with vendors. Bank acceptance drafts transferred to vendors are subject to customary right of recourse provisions prior to their scheduled maturity date. As of ~~September~~March 3031, ~~2019~~2020 and December 31, ~~2018~~2019, the Company had approximately $1718.51 million and $2815.28 million, respectively, of bankers acceptance drafts subject to customary right of recourse provisions, which were transferred to vendors and had not reached their scheduled maturity date. Historically, the bankers acceptance drafts have settled upon maturity without any claim of recourse against the Company.

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drafts subject to customary right of recourse provisions, which were transferred to vendors and had not reached their scheduled maturity date. Historically, the bankers acceptance drafts have settled upon maturity without any claim of recourse against the Company.

Contingencies

We are subject to proceedings, lawsuits and other claims related to products and other matters. We are required to assess the likelihood of any adverse judgments or outcomes to these matters as well as potential ranges of probable and reasonably possible losses. A determination of the amount of liability to be recorded, if any, for these contingencies is made after careful analysis of each individual issue.

Under an indemnification agreement, WABCO Brazil is responsible for certain claims related to Trane's (formerly called American Standard) business for periods prior to the Company's spin-off from Trane in 2007. In particular, there are tax claims pending in various stages of the Brazilian legal process related to income, social contribution and/or value added taxes for which a contingency exists and which may or may not ultimately be incurred by the Company.

As previously disclosed, this includes one particular case for which an accrual of BRL 38.9 million including interest ($97.45 million based on ~~September~~March 3031, ~~2019~~2020 exchange rates) was recorded based on management's assessment after considering advice of external legal counsel with respect to the likelihood of loss in this case. A corresponding deposit was made in the first quarter of 2017 into an escrow account with the Brazilian government, representing substantially all of the potential liability for the case. In March 2018, our appeal to have this case heard at the Brazilian Superior Court of Justice (the Court) was accepted. The Court subsequently heard the case and rejected our position ultimately ruling in favor of the tax authorities during the first quarter of 2018. There will be no further appeals. Accordingly, management expects this case to be closed by the Brazilian authorities within the next twelve months and has classified the accrual and deposit within other current liabilities and other current assets, respectively, as of ~~September~~March 3031, ~~2019~~2020.

~~The~~ estimated total amount of other remaining contingencies for tax claims under the indemnification agreement as of September 30, 2019 was $15.9 million including interest. However, based on management’s assessment following advice of our external legal counsel, the Company believes that it has valid arguments in all of these cases and thus no accrual is required at this time. 19

Merger Litigation

Following the announcement of the execution of the Merger Agreement, two putative class action complaints and two individual complaints were filed against the Company and the Board of Directors. On April 23, 2019, the first putative class action complaint was filed against the Company and the Board of Directors in the United States District Court for the District of Delaware under the caption Collier v. WABCO Holdings Inc., et al., No. 1:19-cv-00729 (D. Del.). On April 24, 2019, the second putative class action complaint was filed against the Company and the Board of Directors in the United States District Court for the District of Delaware under the caption Kent v. WABCO Holdings Inc., et al., No. 1:19-cv-00735 (D. Del.). On April 29, 2019, a third complaint was filed against the Company and the Board of Directors in the United States District Court for the District of Delaware under the caption Stein v. WABCO Holdings Inc., et al., No. 1:19-cv-00782 (D. Del.). On May 2, 2019, a fourth complaint was filed against the Company and the Board of Directors in the United States District Court for the District of Delaware under the caption Kengchoon v. WABCO Holdings Inc., et al., No. 1:19-cv-00816 (D. Del.).

The defendants believed that these four lawsuits were without merit and the defendants specifically denied all allegations that any supplemental disclosure was required. However, to moot certain disclosure claims in these lawsuits, to avoid nuisance, potential expense and delay and to provide additional information to WABCO’s shareholders, on June 17, 2019, WABCO voluntarily supplemented its definitive proxy statement by publicly filing additional disclosures.

In August 2019, each of the plaintiffs in these four lawsuits filed a notice of voluntary dismissal that reserved the right to seek an award of attorneys’ fees. While these plaintiffs have dismissed these actions, it is possible that additional lawsuits related to the Merger may be filed in the future in the same or other courts that name the same or additional defendants, in which case we could be similarly materially and adversely affected by such additional litigation. We cannot assure you as to the outcome of any future lawsuits, including the costs associated with defending such claims or any other liabilities that may be incurred in connection with litigation or settlement of such claims.

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~~NOTE~~The 13estimated total amount of other remaining contingencies for tax claims under the indemnification agreement as of March 31, 2020 was $16.5 ~~Income~~million ~~Taxes~~including interest. However, based on management’s assessment following advice of our external legal counsel, the Company believes that it has valid arguments in all of these cases and thus no accrual is required at this time.

~~Income~~NOTE tax expense is the net result of taxes on the mix of earnings in multiple tax jurisdictions, foreign tax credits and rulings, the assessment and accrual of uncertain tax positions resulting from tax authority audits or changes in the interpretation of the law14. ~~For~~Income interim income tax reporting, we estimate our annual effective tax rate and apply it to our year-to-date ordinary income (loss). Tax jurisdictions with a projected or year-to-date loss for which a tax benefit cannot be realized are excluded. The tax effects of unusual or infrequently occurring items, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, are reported in the interim period in which they occur.Taxes

~~The~~Income ~~income~~ tax expense ~~was~~is ~~$15.9~~the ~~million~~net ~~and~~result ~~$48.9~~of ~~million~~taxes on ~~pretax~~the ~~income~~mix of ~~$76.7~~earnings ~~million~~in ~~and~~multiple ~~$272.3~~tax ~~million~~jurisdictions, ~~before~~foreign ~~adjusting~~tax ~~for~~credits ~~noncontrolling~~and ~~interest~~rulings, ~~for~~ the ~~three~~assessment and ~~nine~~accrual ~~months~~of ~~ended~~uncertain ~~September 30,~~tax ~~2019,~~positions ~~and~~resulting ~~$13.5~~from ~~million~~tax ~~and~~authority ~~$63.3~~audits ~~million~~or onchanges ~~pretax~~in ~~income~~the interpretation of ~~$93.3~~the ~~million and $359~~law.1 ~~million~~Ordinarily, ~~before~~interim ~~adjusting~~income ~~for~~tax ~~noncontrolling~~expense ~~interest~~is ~~for~~calculated using the ~~three~~annual ~~and~~estimated ~~nine~~effective ~~months~~tax ~~ended~~rate ~~September 30,~~(AETR) ~~2018.~~expected ~~The~~to ~~increase~~be inapplicable ~~income tax expense~~ for the ~~three~~full ~~month~~year. ~~period~~However, iswhen ~~primarily~~a ~~the~~reliable ~~result~~estimate of ~~discrete~~the ~~tax~~AETR ~~benefits~~cannot ~~during~~be made, the ~~third~~actual ~~quarter~~effective oftax ~~2018~~rate ~~related~~(ETR) for the year-to-date ~~changes~~period inmay ~~uncertain~~be ~~tax~~the ~~positions~~best ~~and~~estimate ~~return~~of tothe ~~provision~~AETR. ~~adjustments~~For ~~partially~~the ~~offset~~three bymonths ~~lower~~ended ~~pre-tax~~March ~~income~~31, in2020 ~~2019.~~we ~~The~~used ~~decrease~~the actual year-to-date ETR in computing our income tax expense ~~for~~as a reliable estimate of the ~~nine~~AETR ~~month~~cannot ~~period~~be ismade ~~primarily~~due to the ~~result~~uncertainty of ~~lower~~the ~~pre~~impact of COVID-~~tax~~19 ~~income~~on infull ~~2019~~year results.

OnThe ~~February~~income ~~14,~~tax ~~2019,~~expense ~~the~~was ~~General~~$7.4 ~~Court~~million ofon ~~the~~pretax ~~European~~income ~~Union~~of ~~(the~~$34.8 ~~General~~million ~~Court)~~before ~~issued~~adjusting afor ~~judgment~~noncontrolling ~~annulling~~interest afor ~~European Commission decision which had previously declared~~ the ~~Belgium~~three ~~Excess~~months ~~Profit~~ended ~~Ruling~~March 31, ~~(EPR)~~2020, ~~regime~~and as$12.1 ~~illegal~~million ~~and~~on ~~incompatible~~pretax ~~with~~income ~~European~~of ~~State~~$100.0 ~~Aid~~million ~~law.~~before ~~The~~adjusting ~~General~~for ~~Court~~noncontrolling ~~ruled~~interest ~~that~~for the ~~European~~three ~~Commission~~months ~~had~~ended ~~wrongly~~March 31, ~~considered~~2019. ~~that~~The ~~the~~decrease ~~Belgian~~in ~~provisions~~income ~~allowing~~ tax ~~exemptions~~expense offor ~~multinational~~this ~~companies’~~period ~~excess~~is ~~profit~~primarily ~~granted~~the byresult ~~means~~ of ~~rulings~~lower ~~could~~pretax ~~constitute~~income anduring ~~illegal~~the ~~state~~first ~~aid~~quarter ~~scheme.~~of ~~On April 24~~2020, ~~2019,~~partially ~~the~~offset ~~European~~by ~~Commission~~discrete ~~appealed~~tax ~~that~~benefits ~~decision. On~~during ~~September 16, 2019,~~ the ~~European~~first ~~Commission~~quarter ~~announced~~of ~~that~~2019 ~~they~~related ~~opened separate in-depth investigations~~ to ~~assess~~reversal ~~whether~~of ~~excess~~a ~~profit~~deferred ~~rulings~~tax ~~granted~~liability byof ~~Belgium~~$6.5 tomillion ~~thirty-nine~~for ~~multinational~~earnings ~~companies~~not ~~(including~~permanently ~~WABCO) gave those companies an unfair advantage over their competitors~~reinvested, ~~in breach of European Union State aid rules~~$1.1 Atmillion ~~September 30,~~related ~~2019,~~to ~~the~~amended ~~Company~~state ~~maintained~~income a tax ~~reserve~~filings, ofand $291.3 million ~~pending~~ ~~further~~related ~~European~~to ~~Court~~vested ~~developments~~stock ~~regarding European Union State Aid cases~~awards.

~~Unrecognized~~On ~~tax~~February ~~benefits at September 30~~14, 2019, ~~including~~ the ~~$29.3~~General ~~million~~Court of ~~EPR~~the ~~clawback,~~European ~~amounted~~Union to(the ~~$34.4~~General ~~million,~~Court) ofissued a judgment annulling a European Commission decision which ~~$31.2~~had ~~million~~previously ~~has~~declared ~~been~~the ~~offset~~Belgium ~~against~~Excess ~~deferred~~Profit ~~tax~~Ruling ~~assets~~(EPR) regime as illegal and incompatible with European State Aid law. The ~~remaining~~General ~~unrecognized~~Court ruled that the European Commission had wrongly considered that the Belgian provisions allowing tax ~~benefits~~exemptions of $3multinational companies’ excess profit granted by means of rulings could constitute an illegal state aid scheme.2 ~~million~~On ~~were~~April ~~classified~~24, as2019, ~~either~~the aEuropean ~~short~~Commission appealed that decision. On September 16, 2019, the European Commission announced that they opened separate in-~~term~~depth orinvestigations ~~long~~to assess whether excess profit rulings granted by Belgium to thirty-~~term~~nine ~~liability~~multinational ~~depending~~companies (including WABCO) gave those companies an unfair advantage over their competitors, in breach of European Union State aid rules. During the three months ended March 31, 2020 there were no further developments on the ~~expected~~ ~~timing~~European Commission appeal of the ~~resolution~~General Court decision nor separate in-depth investigations into excess profit rulings. ~~The~~At March 31, 2020, the Company ~~recognizes~~maintained ~~interest~~a ~~and~~tax ~~penalties~~reserve ~~accrued~~of ~~related~~$29.6 tomillion pending ~~unrecognized~~further ~~tax~~European ~~benefits~~Court indevelopments ~~income~~regarding ~~tax~~European ~~expense~~Union State Aid cases.

InUnrecognized ~~February 2018, the Company received a final~~ tax ~~and~~benefits ~~interest~~at ~~assessment~~March 31, in2020 ~~India~~including ~~for~~ the ~~2013~~$29.6 ~~tax~~million ~~year related to a capital gain on an intercompany transfer~~ of anEPR ~~Indian~~clawback, ~~subsidiary.~~amounted ~~The~~to ~~assessment was for INR 3.5 billion (~~$5034.26 million ~~at September 30~~, ~~2019~~of ~~exchange~~which ~~rates)~~$31.5 Inmillion ~~addition,~~has abeen ~~penalty~~offset ~~assessment~~against ~~was~~deferred ~~issued~~tax inassets. ~~March~~The ~~2018~~remaining ~~for~~unrecognized ~~INR~~tax ~~2.1~~benefits ~~billion~~of ($303.41 million atwere ~~September 30,~~classified ~~2019~~as ~~exchange~~either ~~rates).~~a ~~The~~short-term ~~Company~~or ~~believes~~long-term ~~that~~liability nodepending ~~tax~~on ~~is due under~~ the ~~relevant~~expected ~~double~~timing ~~tax~~of ~~treaty between~~ the ~~Netherlands and India and therefore no amount has been accrued~~resolution. The Company ~~appealed~~recognizes ~~both~~interest ~~the tax~~ and ~~penalty~~penalties ~~assessments. As~~accrued ofrelated ~~September 30,~~to ~~2019,~~unrecognized ~~the~~tax ~~Company~~benefits ~~has deposited installments totaling INR 706.4 million ($10.0 million at September 30, 2019 exchange rates)~~ in ~~order~~income ~~to proceed with the appeal. The remaining~~ tax ~~demand and penalty is currently held in abeyance~~expense.

AsIn ~~described~~February 2018, the Company received a final tax and interest assessment in ~~Note~~India for the 2013 tax year related to a capital gain on an intercompany transfer of an Indian subsidiary. The assessment was for INR 3.5 billion ($46.5 million at March 31, 2020 exchange rates). In addition, a penalty assessment was issued in March 2018 for INR 2.1 billion ($27.9 million at March 31, 2020 exchange rates). The Company believes that no tax is due under the relevant double tax treaty between the Netherlands and India and therefore no amount has been accrued. The Company ~~adopted~~appealed both the ~~provisions~~tax ofand ~~ASU~~penalty assessments. In May 2018~~–02~~, asthe Commissioner of ~~January~~Income 1,Tax ~~2019~~granted ~~which~~a ~~was~~partial ~~applicable~~stay of demand requiring the Company to ~~deferred~~pay ~~taxes~~15% onof ~~pension~~the ~~obligations~~assessment ~~and~~(INR ~~unrealized~~531.4 ~~foreign~~million, ~~currency~~equivalent ~~losses~~to on$7.1 ~~net~~million ~~investment~~at ~~hedges~~March ~~that~~31, ~~had~~2020 ~~been~~exchange ~~previously~~rates). ~~recognized~~On inMarch ~~other~~31, ~~comprehensive~~2019, ~~income~~the partial stay expired. ~~This~~The ~~resulted~~Commissioner inof Income Tax directed the ~~reclassification~~authority to recover an additional five of the assessment or INR 175.0 million ($82.43 million ~~from~~at ~~accumulated~~March ~~other~~31, ~~comprehensive~~2020 ~~income~~exchange torates) ~~retained~~and ~~earnings~~granted a further stay pending resolution of the appeal. During the three months ended March 31, ~~representing~~2020 there were no substantive developments on the ~~stranded~~India tax and interest assessment related to a capital gain on an intercompany transfer of an Indian subsidiary. ~~The~~As of March 31, 2020, the Company’s ~~policy~~has isdeposited installments totaling INR 706.4 million ($9.4 million at March 31, 2020 exchange rates) in order to ~~follow~~proceed with the ~~portfolio~~appeal. ~~approach~~The ~~for~~remaining ~~releasing~~tax ~~income~~demand ~~tax~~and ~~effects~~penalty ~~recorded~~is currently held in ~~AOCI~~abeyance.

NOTE 1415. Streamlining Expenses

The Company accounts for employee-related streamlining charges as either a one-time benefit arrangement or an ongoing benefit arrangement as appropriate under the applicable accounting guidance. From time to time the Company also has streamlining charges that are not related to employees, such as facility exit costs. Based on the Company’s efforts to maintain our global footprint,

In the third quarter of 2015, the Company announced proposals to cease manufacturing at two production facilities to preserve the Company's global competitiveness for certain mechanical products. These proposals resulted in a workforce reduction of 316 positions and includes a smaller program initiated in the fourth quarter of 2014 (the 2014/2015 Program). As of September 30, 2019, production at both facilities has been transferred to other facilities within the Company's globally integrated supply chain. The cumulative costs incurred as of September 30, 2019 related to the 2014/2015 Program was $65.7 million, which approximates the total expected costs to be incurred under this program. 20

Based on the Company’s efforts to maintain our global footprint, the Company has periodically entered into other streamlining programs as deemed necessary which may include workforce reductions, site closures and rotation of manufacturing footprint to

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~~low~~the ~~cost~~Company ~~regions~~has ~~(Other~~periodically ~~Programs).~~entered Ininto ~~2019~~other streamlining ~~costs~~programs ~~incurred~~as ~~for~~deemed ~~Other~~necessary ~~Programs~~which ~~related~~may toinclude ~~the~~workforce ~~relocation of corporate functions to the new global headquarters~~reductions, ~~headcount~~site ~~reductions~~closures and ~~the~~rotation ~~transfer~~ of ~~certain~~manufacturing ~~product~~footprint ~~lines and business processes~~ to ~~best~~low cost ~~countries~~regions.

The following is a summary of changes in the Company’s streamlining program liabilities for the three ~~and nine~~ month periods ended ~~September~~March 3031, ~~2019~~2020 and ~~2018~~2019.

	Three MonthsEnded September 30,						Nine MonthsEnded September 30,
	Three MonthsEnded March 31,
(Amounts in millions)	~~2019~~2020			~~2018~~2019			~~2019~~			~~2018~~
Balance at beginning of period	$	1832.98		$	2926.64		$	~~26.4~~		$	~~43.7~~
Charges	76.47			5.49			~~13.3~~			~~5.7~~
Payments	(35.94		)	(8.0		)	~~(17.3~~		)	~~(21.7~~		)
Foreign exchange effects	(0.96		)	(0.24		)	~~(0.9~~		)	~~(0.5~~		)
Balance at end of period (1)	$	21.5		$	27.2		$	21.5		$	27.2
Balance at end of period	$	33.5		$	23.9
Current liabilities, included in other accrued liabilities	$	1013.9		$	1912.39		$	~~10.9~~		$	~~19.3~~
Long-term liability, included in other liabilities	$	1019.6		$	711.90		$	~~10.6~~		$	~~7.9~~

(1) Includes $3.3 million and $6.9 million related to the 2014/2015 Program as of September 30, 2019 and 2018 respectively.

A summary of the streamlining costs related to the above programs is as follows:

	Three MonthsEnded September 30,				Nine MonthsEnded September 30,
	Three MonthsEnded March 31,
(Amounts in millions)	~~2019~~2020		~~2018~~2019		~~2019~~			~~2018~~
Employee-related charges – cost of sales	$	63.80	$	1.97	$	~~9.5~~		$	~~1.8~~
Employee-related charges – selling and administrative	02.60		24.61		~~4.0~~			~~2.8~~
Other streamlining charges	—1.7		0.91		~~(0.2~~		)	~~1.1~~
Total streamlining costs	$	76.47	$	5.49	$	~~13.3~~		$	~~5.7~~

~~For~~Streamlining costs for the three ~~month~~months ~~period~~ ended ~~September~~March 3031, ~~2019,~~2020 ~~the~~were ~~Company~~primarily ~~recorded costs of $7.2 million~~ related to ~~headcount~~continued ~~reductions~~cost optimization and ~~$0.2~~workforce ~~million~~reductions ~~related~~in response to ~~the~~reduced ~~2014/2015~~customer ~~Program~~demand. ~~For~~Streamlining costs for the three ~~month~~months ~~period~~ ended ~~September~~March 3031, ~~2018,~~2019 include ~~the~~charges ~~Company recorded costs of $4.4 million~~ related to headcount reductions, site closures and footprint ~~relocation~~relocations ~~and~~including ~~$1.0~~the ~~million~~move ~~related~~of to the ~~2014/2015~~Company's ~~Program~~corporate headquarters.

For the nine month period ended September 30, 2019, the Company recorded costs of $12.8 million related to headcount reductions and $0.5 million related to the 2014/2015 Program and for the nine month periods ended September 30, 2018, the Company recorded costs of $4.4 million related to headcount reductions and footprint relocation and $1.3 million related to the 2014/2015 Program.



	Three Months Ended March 31,
(Amounts in millions)	2020		2019
Headcount reduction	$	4.9	5.1
Site closures and footprint relocation	1.8		0.8
Total streamlining costs	$	6.7	$	5.9

~~NOTE~~ ~~15. Pension and Post-retirement Benefits~~21

Post-retirement pension, health and life insurance costs had the following components for the three and nine month periods ended September 30, 2019 and 2018:

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	Three MonthsEnded September 30,
	2019					2018
(Amounts in millions)	PensionBenefits			Health& LifeIns.Benefits		PensionBenefits			Health& LifeIns.Benefits
Service cost-benefits earned during period	$	6.0		$	0.2	$	6.3		$	0.2
Interest cost on the projected benefit obligation	4.0			0.1		3.9			0.1
Less: expected return on plan assets	(1.2		)	—		(1.2		)	—
Amortization of prior service cost	0.1			—		—			—
Amortization of net loss	5.9			0.1		6.0			0.1
Pension and post-retirement benefit plan cost	$	14.8		$	0.4	$	15.0		$	0.4
	Nine MonthsEnded September 30,
	2019					2018
(Amounts in millions)	PensionBenefits			Health& LifeIns.Benefits		PensionBenefits			Health& LifeIns.Benefits
Service cost-benefits earned during period	$	19.7		$	0.5	$	19.4		$	0.6
Interest cost on the projected benefit obligation	12.3			0.3		12.2			0.3
Less: expected return on plan assets	(3.6		)	—		(3.8		)	—
Amortization of prior service cost	0.4			—		—			—
Amortization of net loss	18.0			0.4		18.5			0.3
Pension and post-retirement benefit plan cost	$	46.8		$	1.2	$	46.3		$	1.2

NOTE 16. Pension and Post-retirement Benefits

~~The weighted~~Post-~~average~~retirement ~~expected~~pension, ~~rates~~health ofand ~~return~~life oninsurance ~~plan~~costs ~~assets~~had ~~used to determine~~ the ~~pension~~following ~~and~~components ~~post-retirement benefit plan cost~~ for the three ~~and nine~~ month periods ended ~~September~~March 3031, ~~2019~~2020 and ~~2018 were based on the rates determined as of the beginning of each of the fiscal years of 2.40% and 2.75%, respectively.~~2019:

The Company makes contributions to funded pension plans that, at a minimum, meet all statutory funding requirements. Contributions in 2019, as well as payments of benefits incurred by unfunded plans, were in line with the expectations for 2019 and also in line with the contributions made during 2018.



	Three Months Ended March 31,
	2020					2019
(Amounts in millions)	Pension Benefits			Health & Life Ins. Benefits		Pension Benefits			Health & Life Ins. Benefits
Service cost-benefits earned during period	$	8.3		$	—	$	6.7		$	0.2
Interest cost on the projected benefit obligation	2.8			—		4.1			0.1
Less: expected return on plan assets	(0.8		)	—		(1.2		)	—
Amortization of prior service cost	0.1			—		0.1			—
Amortization of net loss	7.5			0.1		6.3			0.1
Pension and post-retirement benefit plan cost	$	17.9		$	0.1	$	16.0		$	0.4

The weighted-average expected rates of return on plan assets used to determine the pension and post-retirement benefit plan cost for the three month periods ended March 31, 2020 and 2019 were based on the rates determined as of the beginning of each of the fiscal years of 2.34% and 2.93%, respectively.

The Company makes contributions to funded pension plans that, at a minimum, meet all statutory funding requirements. Contributions in 2020, as well as payments of benefits incurred by unfunded plans, were in line with the expectations for 2020 and also in line with the contributions made during 2019.

Pension and post-retirement benefit plan cost is included in cost of sales, selling and administrative expenses and non-operating expenses on the condensed consolidated statements of operations.

NOTE 1617. Derivative Instruments and Hedging Activities

ASC 815, Derivatives and Hedging, requires a company to recognize all of its derivative instruments as either assets or liabilities on the balance sheet at fair value. The accounting for changes in the fair value of a derivative instrument depends on whether it qualifies and has been designated as a hedge for accounting purpose. For those derivative instruments that are designated and qualify as hedging instruments, a company must designate the hedging instrument based upon the exposure being hedged as a fair value hedge, cash flow hedge, or a hedge of a net investment in a foreign operation.

The Company recognizes all derivative financial instruments in the condensed consolidated balance sheet at fair value using Level 2 inputs and these are classified as other current assets, other assets, other accrued liabilities or other liabilities on the condensed consolidated balance sheets. The impact resulting from changes in the fair value of derivative instruments is recorded in the same line item in the condensed consolidated statements of operations as the underlying exposure being hedged or in accumulated other comprehensive income (AOCI) for derivatives that qualify and have been designated as cash flow hedges or hedges of a net investment in a foreign operation. Any ineffective portion of a financial instrument's change in fair value is recognized in earnings together with changes in the fair value of any derivatives not designated as relationship hedges.

Net Investment Hedges

The 24Company designated borrowings under its revolving credit facilities and Senior EUR Notes to partially hedge the foreign currency exposure of its net investment in certain Euro-denominated wholly-owned subsidiaries. As of March 31, 2020 and December 31, 2019, the Company had designated Euro-denominated loans of €440.0 million ($483.9 million at March 31, 2020 exchange rates and $493.5 million at December 31, 2019 exchange rates) as hedges of its net investment in these subsidiaries.

For the three month periods ended March 31, 2020 and 2019, the Company recorded a gain of $6.8 million, net of taxes of $1.9 million, and a gain of $8.2 million, net of taxes of $2.3 million, respectively, in cumulative translation adjustment within AOCI.

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The Company designated borrowings under its revolving credit facilities and Senior EUR Notes to partially hedge the foreign currency exposure of its net investment in certain Euro-denominated wholly-owned subsidiaries. As of September 30, 2019 and December 31, 2018, the Company designated Euro-denominated loans of €465.0 million (approximately $509.0 million at September 30, 2019 exchange rate) and €440.0 million (approximately $503.6 million at December 31, 2018 exchange rate) as hedges of its net investment in these subsidiaries.

For the three month periods ended September 30, 2019 and 2018, the Company recorded a gain of $15.4 million, net of taxes of $4.3 million, and a loss of $4.7 million, net of taxes of $1.4 million, respectively, in cumulative translation adjustment within AOCI. For the nine month periods ended September 30, 2019 and 2018, the Company recorded a gain of $18.5 million, net of taxes of $5.2 million, and a gain of $4.3 million, net of taxes of $1.2 million, respectively, in cumulative translation adjustment within AOCI.

Derivatives Not Designated as Hedges

Foreign exchange contracts are also used by the Company to offset the earnings impact relating to the variability in exchange rates on certain assets and liabilities denominated in non-functional currencies and have not been designated as relationship hedges. As of ~~September~~March 3031, ~~2019~~2020 and December 31, ~~2018~~2019, the Company had the following outstanding notional amounts related to foreign currency forward contracts:

(Amounts in millions)

As of ~~September~~March 3031, ~~2019~~2020

As of December 31, ~~2018~~2019

Foreign Currency

Unit of Measure

Hedged against

Quantity Hedged

Notional Amount (USD Equivalent)

Quantity Hedged

Notional Amount (USD Equivalent)

Chinese Yuan

CNY

EUR

~~863~~1,019.0

~~121~~144.12

~~849~~930.0

~~123~~133.41

Hong Kong Dollar

HKD

EUR

~~267~~259.0

3433.12

~~285~~267.0

3634.4

Polish Zloty

PLN

EUR

5746.0

1411.2

*45.0

*11.8

British Pound

GBP

EUR

11.7

14.9

*The NoCompany ~~significant~~had ~~outstanding~~additional foreign currency forward contracts with notional amounts that individually amounted to less than $10 million. As of March 31, 2020 and December 31, 2019, forward contracts for an aggregate notional amount of €193.9 million ($213.6 million at March 31, 2020 exchange rates) and €180.8 million ($202.7 million at December 31, 2019 exchange rates), respectively, were outstanding with average durations of less than one month. These foreign exchange contracts have offset the revaluation of assets and liabilities. The Company recognized non-operating gains of $2.4 million and $1.2 million for the three months ended March 31, 2020 and 2019, respectively. The fair value of these derivatives were immaterial as of March 31, 2020 and December 31, 2019, respectively.

~~The~~NOTE ~~Company had additional foreign currency forward contracts with notional amounts that individually amounted to less than $10 million~~18. As ofFair ~~September 30,~~Value 2019 and December 31, 2018, forward contracts for an aggregate notional amount of €180.3 million ($197.3 million at September 30, 2019 exchange rates) and €170.2 million ($194.8 million at December 31, 2018 exchange rates), respectively, were outstanding with average durations of less than one month. The majority of these exchange contracts were entered into on September 27, 2019 and December 27, 2018, respectively. These foreign exchange contracts have offset the revaluation of assets and liabilities. The Company recognized non-operating gains of $3.7 million and $2.2 million for the nine months ended September 30, 2019 and 2018, respectively. The fair value of these derivatives was an asset of $1.1 million and $0.6 million at September 30, 2019 and at December 31, 2018, respectively. Measurements

~~NOTE~~Assets ~~17.~~and ~~Fair~~liabilities ~~Value~~measured ~~Measurements~~at fair value on a recurring basis as of March 31, 2020 and December 31, 2019 were as follow:

Assets and liabilities measured at fair value on a recurring basis as of September 30, 2019 and December 31, 2018 were as follow:



	As of March 31, 2020
(Amounts in millions)	Level 1		Level 2		Level 3		Total
Cash equivalents	$	—	$	72.0	$	—	$	72.0
Short-term investments	—		65.4		—		65.4
Other investments (included in other assets)	—		2.8		—		2.8

	As of December 31, 2019
(Amounts in millions)	Level 1		Level 2		Level 3		Total
Cash equivalents	$	—	$	83.1	$	—	$	83.1
Short-term investments	—		67.6		—		67.6
Other investments (included in other assets)	—		2.8		—		2.8

	As of September 30, 2019
(Amounts in millions)	Level 1		Level 2		Level 3		Total
Short-term and other investments(a)	$	—	$	200.7	$	—	$	200.7
Foreign currency derivative assets(b)	—		1.1		—		1.1
	As of December 31, 2018
(Amounts in millions)	Level 1		Level 2		Level 3		Total
Short-term and other investments(a)	$	—	$	209.4	$	—	$	209.4
Foreign currency derivative assets(b)	—		0.6		—		0.6

Short-term and other investments consist of mutual funds or deposit funds holding primarily term deposits, certificates of deposit and short-term bonds. The Company considers highly liquid investments with maturities of three months or less when purchased to be cash and cash equivalents. The fair value of short-term and other investments is determined based on pricing sources for identical instruments in less active markets. The unrealized gains and losses on short–term and other investments still held at the reporting date were immaterial for the three month periods ended March 31, 2020 and 2019.

(a) Short-term and other investments consist of mutual funds or deposit funds holding primarily term deposits, certificates of deposit and short-term bonds. The Company considers highly liquid investments with maturities of three months or less

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when purchased to be cash and cash equivalents. The fair value of short-term and other investments is determined based on pricing sources for identical instruments in less active markets. The unrealized gains and losses on short–term and other investments still held at the reporting date were immaterial for the three and nine month periods ended September 30, 2019 and 2018.

(b) Fair value of derivative instruments determined based on Level 2 inputs including credit ratings and other criteria observable

in the market.

Other Fair Value Disclosures

As of ~~September~~March 3031, ~~2019~~2020 and December 31, ~~2018~~2019, the carrying amount of the Company's ~~investments in repurchase agreements,~~ guaranteed notes receivable and long-term debt were determined to approximate their fair values based on Level 2 inputs.

~~During~~The Company measures its non-marketable investments at cost, less impairment and adjusts for observable price changes for identical or similar investments of the ~~three~~investee ~~months~~when available. During the quarter ended ~~September~~March 3031, ~~2019~~2020, the Company ~~increased~~decreased the carrying value of one of its non-marketable ~~equity~~ investments by $24.27 million ~~based~~due onto an ~~observable~~estimated ~~price~~decline ~~change~~in ~~for~~its afair ~~similar investment of the same issuer~~value. The ~~Company~~reduction ~~had~~in ~~previously~~fair ~~recognized~~value anbelow ~~impairment~~carrying ofvalue ~~$5.5~~was ~~million~~initially ~~during~~identified ~~the~~from ~~three~~a ~~months~~downward ~~ended~~revision ~~September~~in ~~30,~~the ~~2018~~financial ~~based~~projections onof the ~~estimated~~investee ~~decline~~that infollowed the ~~fair~~commencement ~~value~~ of ~~one~~the ~~of its other non~~COVID-~~marketable~~19 ~~equity investments~~pandemic. ~~Both~~In the ~~upward~~absence ~~and~~of ~~downward~~quoted ~~adjustments~~market ~~were~~prices, ~~reflected~~the infair ~~other~~value of the non-~~operating~~marketable ~~income/expense.~~investment ~~There~~was ~~have~~measured ~~been~~using noLevel ~~other~~3 ~~upward~~inputs orwith ~~downward~~reference ~~adjustments~~ to ~~non-marketable~~the ~~equity~~most ~~investments.~~recent Astransaction in equity of ~~September 30,~~the ~~2019~~investee. ~~and~~Significant ~~December 31,~~inputs ~~2018,~~into the ~~carrying~~fair ~~amount~~value ofdetermination ~~the~~included ~~non-marketable~~market ~~equity~~multiples ~~investments~~primarily ~~was~~related ~~$27.6~~to ~~million~~industry ~~and~~comparable ~~$25.4 million, respectively.~~

2623

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companies. The write-down of the investment was reflected in other non-operating income/expense. There were no other upward or downward adjustments to non-marketable equity investments and we did not identify any indicators of impairment on other non-marketable equity investments. As of March 31, 2020 and December 31, 2019, the carrying amount of the non-marketable equity investments was $22.9 million and $27.6 million, respectively.

NOTE 19. Acquisitions and Divestitures

On January 30, 2020, the Company entered into a definitive agreement to sell its steering components business R.H. Sheppard Co., Inc. (Sheppard) to Bendix Commercial Vehicle Systems LLC (Bendix) for $149.5 million. The transaction is subject to closing conditions and regulatory approvals, and is contingent upon the closing of the ZF acquisition of WABCO, which is expected in the second quarter of 2020 following receipt of the final regulatory approval from the Chinese State Administration for Market Regulation. As the transaction is contingent on the completion of the Merger with ZF, the assets and liabilities of our Sheppard business were not classified as held for sale in our condensed consolidated balance sheet as of March 31, 2020.

On March 13, 2020, the Company terminated its distribution agreement with Meritor Inc. (Meritor) to serve as the exclusive distributor for a certain range of WABCO Aftermarket products in the U.S. and Canada and also its non-exclusive distributor in Mexico, and acquired these rights for cash consideration of $265.0 million. The transaction was accounted for as an asset acquisition with the full amount of consideration allocated to distribution rights and customer-based intangible assets and amortized over useful lives of 7.5 years and 20 years, respectively. Transaction-related costs incurred for the acquisition were immaterial.


Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations

Executive Overview

The worldwide truck and bus, trailer, car and off-highway markets continued to weaken in the ~~third~~first quarter of 2020 due to athe ~~softening~~slowdown in the global ~~economic~~economy ~~outlook~~which aswas ~~well~~amplified asby ~~increasing~~the ~~geopolitical~~COVID-19 ~~uncertainty~~pandemic. This ~~slowdown in~~ economic ~~growth~~slowdown ~~expectations~~ affected all regions ~~and all major markets~~ in which we operate. We ~~continued to~~ partially offset the impact of this deceleration through agile management of our variable cost structure and reduction of discretionary operating expenses ~~to protect the Company’s profitability in this environment~~. ~~However due to the sustained size and speed of the drop in markets in the third quarter, we were unable to fully mitigate this headwind.~~

Our sales for the ~~third~~first quarter of ~~2019~~2020 decreased compared to one year ago by 1220.71% on a reported basis and by 1017.58% excluding foreign currency translation effects. The global production of new trucks and buses shrank by an estimated 1024.59% driven by significant decreases in India, down 6159.92% and Europe, down 723.41%. The global trailer market also experienced a significant decline, down 2425.36% in the ~~third~~first quarter. We continued to leverage the WABCO Operating System to drive swift and flexible responses to these market disruptions and maintained focus on materials and conversion productivity during the first quarter. We benefit from our flexible operating model and we continue to invest in engineering to ensure the successful execution of the Company's long-term strategy.

WeImpact continued to leverage the WABCO Operating System to drive fast and flexible responses to these major market changes and delivered strong materials and conversion productivity during the third quarter, a continued solid performance for us. Operating expenses for the quarter also dropped by $10.1 million, reflecting the mitigating actions taken to address the drop in the markets. We remain committed to our operating framework and continue to increase our investment in engineering to ensure the successful execution of ~~the Company's long~~COVID-~~term strategy.~~19

AsIn ~~previously~~December ~~announced~~2019, onan ~~March~~outbreak 28of a novel strain of coronavirus, COVID-19, ~~2019~~was reported to have surfaced in China. Since then, COVID-19 ~~WABCO~~has ~~entered~~spread ~~into~~across anthe ~~Agreement~~globe, (including the ~~Merger~~U.S., ~~Agreement)~~Europe and ~~Plan~~Asia, ofregions ~~Merger~~in ~~with~~which ZFthe ~~Friedrichshafen~~Company ~~AG (ZF)~~operates, aand ~~stock~~was ~~corporation~~recognized ~~organized~~as ~~and~~a ~~existing~~pandemic ~~under~~by the ~~laws~~World Health Organization on March 11, 2020. The impact of the ~~Federal~~COVID-19 ~~Republic~~pandemic ofaccelerated ~~Germany,~~during the first quarter and ~~Verona~~has ~~Merger~~reduced ~~Sub~~customer ~~Corp~~demand in most geographies., aGovernment-mandated ~~Delaware~~shutdowns ~~corporation~~across ~~and~~different ~~indirect~~geographies ~~wholly~~including ~~owned~~India ~~subsidiary~~and ofChina ~~ZF,~~have ~~pursuant~~also toresulted ~~which~~in ZFreduced ~~will~~production ~~acquire~~capacity ~~100%~~but ofdid ~~the~~not ~~issued~~affect ~~and~~our ~~outstanding~~ability ~~shares~~to ofmeet ~~WABCO~~customer ~~common~~demands ~~stock~~in (the ~~Merger)~~first quarter. The ~~Merger~~Company ~~Agreement~~decreased ~~was~~the ~~adopted~~carrying byvalue ~~WABCO’s~~of ~~shareholders~~one atof ~~the~~its ~~June~~non-marketable ~~27,~~equity ~~2019~~investments ~~special~~during ~~meeting~~the offirst ~~shareholders,~~quarter ~~whereby~~following ~~holders~~a ~~representing~~downward ~~68.4%~~revision of the ~~Company’~~entity's ~~outstanding~~financial ~~shares~~outlook ~~voted~~and inmarket ~~favor~~multiples ofused ~~adopting~~to value the ~~Merger~~investment ~~Agreement~~due to the COVID-19 pandemic. ~~Consummation~~We ofdo ~~the~~not ~~Merger~~currently isexpect ~~subject~~any toimpairment ~~customary~~on ~~closing~~our ~~conditions~~other long-lived assets including other non-marketable equity investments, goodwill, tangible and ~~regulatory~~intangible ~~approvals~~assets, and we will continue to monitor this in future periods.

~~The~~Due ~~Company~~to ~~suspended~~the ~~its~~rapidly ~~share~~evolving ~~repurchase~~nature ~~program~~of ~~due to~~ the ~~pending~~COVID-19 ~~Merger,~~pandemic and wethe dofluid ~~not~~nature ~~expect~~of tolocal ~~reinstate~~and ~~the~~national ~~program~~government ~~this~~responses, ~~year. The~~the Company’s ~~guidance~~is ~~for~~not ~~2019,~~able ~~communicated~~to onpredict ~~February~~when ~~15,~~customer ~~2019,~~demand ~~assumed~~will ~~that~~begin ~~the~~to ~~Company~~recover. ~~would~~The ~~continue~~ultimate ~~this~~impact ~~share~~of ~~repurchase~~this ~~program~~pandemic ~~through~~will ~~2019.~~be ~~This~~dependent ~~suspension~~on ~~will~~various ~~negatively~~factors ~~impact~~including ~~the~~government ~~Company’s~~responses ~~earnings~~that ~~per~~may ~~share~~restrict ~~performance~~or ~~however;~~reduce ~~due~~operational toactivity ~~the~~and ~~pending~~capacity ~~Merger,~~and the ~~Company~~speed ~~will~~at ~~not~~which bethe ~~updating~~global ~~its~~economy ~~guidance~~may recover.

OnIn ~~September~~response ~~13,~~to ~~2019, Meritor, our exclusive distributor for a certain range of WABCO aftermarket products in~~ the ~~U.S. and Canada, and our non~~COVID-~~exclusive~~19 ~~distributor in Mexico~~pandemic, ~~exercised~~many anjurisdictions ~~option,~~have ~~triggered~~implemented bylegislation ~~the~~or ~~announcement~~measures ofwhich the ~~Merger,~~Company tois ~~terminate~~in the ~~distribution~~process ~~agreement~~of ~~and~~evaluating ~~sell~~or ~~the~~currently ~~distribution~~implementing ~~rights back~~ to ~~WABCO.~~improve ~~The~~liquidity ~~Company~~including, ~~will~~but ~~acquire~~not ~~the~~limited ~~distribution rights from Meritor at an exercise price ranging from $225 million~~ to ~~$265 million~~, ~~depending on~~ the ~~earnings~~deferral of ~~the~~income ~~distribution~~tax ~~business.~~and ~~The~~payroll ~~purchase~~tax ~~price~~payments, ~~for~~payroll ~~the~~tax ~~distribution~~credits, ~~rights~~refunds isof ~~payable~~value inadded ~~cash~~taxes and ~~will~~government ~~result~~co-funding inof anwages ~~increase~~for toreduced ~~the intangible assets balance. The Company is expected to complete the acquisition in the first quarter of 2020.~~

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hour programs. The Company has proactively taken measures to adjust its activities in affected regions to the level of demand as well as implemented decisive actions to reduce the level of expenses and capital expenditures while securing our technology leadership. The Company will leverage its flexible and lean operating model to adopt its variable costs structure as necessary in order to respond to future changes in the market environment.

Acquisitions and Divestitures

On March 28, 2019, WABCO entered into an Agreement (the Merger Agreement) and Plan of Merger with ZF Friedrichshafen AG (ZF), a stock corporation organized and existing under the laws of the Federal Republic of Germany, and Verona Merger Sub Corp., a Delaware corporation and indirect wholly owned subsidiary of ZF, pursuant to which ZF will acquire 100% of the issued and outstanding shares of WABCO common stock (the Merger). The Merger Agreement was adopted by WABCO’s shareholders at the June 27, 2019 special meeting of shareholders, whereby holders representing 68.4% of the Company’s outstanding shares voted in favor of adopting the Merger Agreement. All approvals from regulatory authorities required to close the Merger have been received with the exception of the Chinese State Administration for Market Regulation (SAMR). The consummation of the Merger remains subject to customary closing conditions and the remaining regulatory approval from the Chinese SAMR. The Company expects that the Merger will close in the second quarter of 2020 when this final regulatory clearance is anticipated to be received.

In connection with the Antitrust Division of the United States Department of Justice's review of the Merger and pursuant to the settlement order approved by the U.S. District Court for the District of Columbia, WABCO is divesting the Company's steering components business, R.H. Sheppard Co., Inc., for which the Company entered into a definitive agreement to sell on January 30, 2020. The closing of the divestiture is subject to the consummation of the Merger and other customary closing conditions.

Results of Operations

Approximately 7379% of our sales are outside the United States, and therefore changes in exchange rates can have a significant impact on the reported results of our operations, which are presented in U.S. dollars. Quarter-over-quarter changes in sales, cost of sales, gross profit and expenses for ~~2019~~2020 compared with ~~2018~~2019 are presented both with and without the effects of foreign currency translation. Changes in sales, cost of sales, gross profit and expenses excluding foreign exchange effects are calculated using current year sales, cost of sales, gross profit and expenses translated at prior year exchange rates. Presenting changes in sales, cost of sales, gross profit and expenses excluding the effects of foreign currency translation is not in conformity with U.S. GAAP, but management analyzes the data in this manner because it is useful to us in understanding the operating performance of our business. We believe this data is also useful to shareholders for the same reason. The changes in sales, cost of sales, gross profit and expenses excluding the effects of foreign exchange translation are not meant to be a substitute for measurements prepared in conformity with U.S. GAAP, nor to be considered in isolation.

First 27Quarter Results of Operations for 2020 Compared with 2019



	Three Months Ended March 31,								Excluding foreign exchange translation *
(Amounts in millions)	2020			2019			% change reported		2020 adjusted amount			% change adjusted
Sales	$	745.7		$	932.9		(20.1	)%	$	767.3		(17.8	)%
Cost of sales	533.8			660.0			(19.1	)%	549.1			(16.8	)%
Gross profit	211.9			272.9			(22.4	)%	218.2			(20.0	)%

Operating expenses	165.2			167.7			(1.5	)%	169.5			1.1	%
Other non-operating expense, net	(12.3		)	(5.9		)	108.5	%	(12.6		)	113.6	%
Income tax expense	7.4			12.1			(38.8	)%	7.8			(35.5	)%


*	Amounts translated using average exchange rates for the three month period ended March 31, 2019

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Third Quarter Results of Operations for 2019 Compared with 2018

	Three MonthsEnded September 30,								Excluding foreignexchange translation *
(Amounts in millions)	2019			2018			% changereported		2019adjustedamount			% changeadjusted
Sales	$	798.4		$	914.8		(12.7	)%	$	818.8		(10.5	)%
Cost of sales	559.5			639.7			(12.5	)%	572.6			(10.5	)%
Gross profit	238.9			275.1			(13.2	)%	246.2			(10.5	)%
Operating expenses	158.0			168.1			(6.0	)%	163.4			(2.8	)%
Other non-operating expense, net	(4.4		)	(12.9		)	(65.9	)%	(4.9		)	(62.0	)%
Interest expense, net	(0.3		)	(0.7		)	(57.1	)%	(0.3		)	(57.1	)%
Income tax expense	15.9			13.5			17.8	%	15.8			17.0	%

* Amounts translated using average exchange rates for the three month period ended September 30, 2018

Sales

Our sales for the ~~third~~first quarter of ~~2019~~2020 were $~~798~~745.47 million, a decrease of 1220.71% (1017.58% excluding foreign currency translation effects) from $~~914~~932.89 million in ~~2018~~2019, as a result of a further deceleration in truck and bus and trailer markets as well as an economic slowdown in all our key regions in part due to the COVID-19 pandemic.

Total sales in Europe, our largest market, decreased 1217.83% (914.08% excluding foreign currency translation effects) for the ~~third~~first quarter of ~~2019~~2020 ~~while the production of new trucks and buses decreased 7~~.~~4%.~~ Our sales to truck and bus OEMs also declined 1421.27% (1019.39% excluding foreign currency translation effects) ~~due~~following tothe ~~unfavorable~~downturn ~~customer~~in ~~mix~~the production of new truck and ~~continued~~buses ~~phase~~of ~~out~~23.1% year over year in the first quarter. We were able to outperform the declining market by increasing penetration of AMT, atAir aDisc ~~major~~Brake, ~~gearbox~~ADAS ~~supplier~~and the ramp up of the E-APU technology. The production of trailers in Europe dropped by 2527.92% year over year, however our sales were down 18.2% (15.05% excluding foreign currency translation effects), outperforming this market.

Total sales in North America decreased 525.90% (524.37% excluding foreign currency translation effects). Our sales to truck and bus OEMs decreased 227.69% (227.06% excluding foreign currency translation effects). ~~Although~~slightly below the truck and bus market ~~grew~~of ~~by 3~~25.76%,. weOur ~~were~~sales ~~not~~in ~~able~~car ~~to offset the headwinds from an unfavorable customer mix~~ and ~~insourcing~~off-highway ofmarkets asaw ~~product at~~ a ~~major~~steep ~~OEM.~~year Weover ~~were~~year ~~also~~decline ~~impacted~~driven by ~~a decline in~~ the ~~production~~lower ofcar ~~passenger~~demand, ~~cars~~decelerated inby the ~~U.S.~~uncertainty ascaused ~~well~~by asthe ~~a weakening off~~COVID-~~highway~~19 ~~market~~pandemic.

Total sales in South America ~~increased~~decreased 138.24% (13increased 6.31% excluding foreign currency translation effects) while the truck and bus production ~~increased~~remained 6flat.~~7%.~~ Our sales to truck and bus OEMs ~~increased~~decreased by 149.09% (14increased 3.43% excluding foreign currency translation effects)., ~~Our~~outperforming ~~outperformance in~~ this market ~~included a share of market gain in braking controls at a global OEM~~.

Total sales in Asia decreased 2324.91% (22.84% excluding foreign currency translation effects) compared to an estimated 1726.6% decrease in new vehicle production in the region.

Total sales in China decreased 2217.45% (1914.97% excluding foreign currency translation effects). Our sales to truck and bus OEMs declined by 1310.05% (1013.26% excluding foreign currency translation effects) while the production of new trucks and buses decreased 1by 19.57%. The ~~decline~~outperformance in the truck and bus sales in China was driven primarily ~~due~~by toa ~~the~~one-time ~~impact~~order ~~from~~for ~~lower~~EBS ~~pricing~~with ESC and anECAS ~~unfavorable~~package for a bus customer ~~mix~~and increased penetration of ADAS.

Total sales in India decreased 5350.48% (5349.29% excluding foreign currency translation effects) driven by a 6159.92% decrease in vehicle production. ~~The production of new trucks and buses dropped due to continued economic uncertainty in India driven by access to liquidity, reduced truck utilization and record levels of truck inventory at OEMs.~~ Our sales to truck and bus OEMs declined by 6259.08% (6160.85% excluding foreign currency translation effects), inline with the market trend.

Total sales in Korea ~~increased~~decreased 713.03% (129.72% excluding foreign currency translation effects), ~~nicely~~ outperforming the production of trucks and buses which ~~increased~~decreased 027.10%. Our sales to truck and bus OEMs grew by 230.17% (29decreased 3.02% excluding foreign currency translation effects), with this outperformance being driven by athe ~~safety~~ramp ~~stock~~up ~~accumulation~~ for a new platform launch at a major OEM. Sales in Japan increased 100.49% (6decreased 0.62% excluding foreign currency translation effects) compared to a decrease in truck and bus production of 73.64% supported by a favorable model mix and a share of market gain in braking controls at a major OEM.

WABCO's 28aftermarket sales, included in the geographic numbers provided above, decreased 14.5% (11.8% excluding foreign currency translation effects) in the first quarter of 2020, driven by the reduction in the usage of commercial vehicles due to the COVID-19 pandemic. Our aftermarket sales in Europe in the first quarter of 2020 declined by 13.1% (10.7% excluding foreign currency translation effects) and in North America of 27.8% (27.6% excluding foreign currency translation effects) on a year over year basis.

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WABCO's aftermarket sales, included in the geographic numbers provided above, decreased 7.1% (4.7% excluding foreign currency translation effects) in the third quarter of 2019. Our aftermarket sales in Europe declined by 10.4% (6.8% excluding foreign currency translation effects) on a year over year basis, which was a result of overall market drop as well as one time campaign in 2018. We are also facing a decline in India of 13.0% (12.6% excluding foreign currency translation effects) due to the sharp economic decline in the country, resulting in overstocking at distributors. Softening U.S. market conditions contributed to a decline in North America of 3.3% (3.3% excluding foreign currency translation effects). The overall decline in market conditions was partially offset by a solid sales growth of 5.8% within our fleet management portfolio.

Cost of Sales and Gross Profit

Within cost of sales, our largest expense is material costs, which mainly represents the purchase of components and parts. Our continued focus on productivity continued to deliver a strong performance for the third quarter of 2019. Management uses material productivity as one of the internal measures of our cost reduction efforts.



(Amounts in millions)	Cost of Sales			Gross Profit
Cost of sales / gross profit for the three months ended March 31, 2019	$	660.0		$	272.9

Increase/(decrease) due to:
Sales pricing, volume and mix				(165.5		)
Cost of materials	(110.8		)	110.8
Cost of manufacturing workforce	(4.6		)	4.6
Streamlining costs	1.2			(1.2		)
Warranty accruals	5.0			(5.0		)
Foreign exchange translational effects	(15.2		)	(6.4		)
Other	(1.7		)	1.7
Net decrease	(126.1		)	(61.0		)

Cost of sales / gross profit for the three months ended March 31, 2020	$	533.8		$	211.9

(Amounts in millions)	Cost of Sales			Gross Profit
Cost of sales / gross profit for the three months ended September 30, 2018	$	639.7		$	275.1
Increase/(decrease) due to:
Sales price reductions				(11.6		)
Sales price reductions as % of sales				(1.4		)%
Volume, mix and absorption	(59.5		)	(24.9		)
Material productivity	(10.0		)	10.0
Labor inflation	4.2			(4.2		)
Streamlining costs	5.3			(5.3		)
Foreign exchange effects (1)	(18.4		)	(2.0		)
Warranty accruals	4.1			(4.1		)
Other (2)	(5.9		)	5.9
Net decrease	(80.2		)	(36.2		)
Cost of sales / gross profit for the three months ended September 30, 2019	$	559.5		$	238.9

Within cost of sales, our largest expense is material costs, which mainly represents the purchase of components and parts. The lower materials cost is primarily due to lower volume as a result of the decrease in sales levels. Our continued focus on materials productivity also contributed to this decrease in materials cost. Management uses material productivity as one of the internal measures of our cost reduction efforts.

(The decrease in gross profit is mainly driven by lower sales volumes, as well as sales price reductions of approximately 1~~) Foreign~~.0%. ~~exchange~~These ~~effects~~decreases ~~include~~were ~~both~~partially ~~translational~~offset ~~and~~by ~~transactional~~reduced ~~effects~~costs as discussed above.

(2) Includes conversion productivity realized partially offset by U.S. tariffs imposed on imports.

Operating Expenses

Operating expenses include selling and administrative expenses, product engineering expenses and other operating expenses.



(Amounts in millions)
Operating expenses for the three months ended March 31, 2019	$	167.7

Increase/(decrease) due to:
Labor inflation	3.8
Acquisition-related costs	1.2
Employee and stock compensation costs	(1.8		)
Streamlining expenses	(0.4		)
Foreign exchange translation	(4.3		)
Other	(1.0		)
Net decrease	(2.5		)

Operating expenses for the three months ended March 31, 2020	$	165.2

~~Table~~Acquisition-related costs comprise primarily of ~~Contents~~legal and financial advisory fees related to the Merger and the divestiture of Sheppard, as well as ramp-up costs incurred for the acquisition of distribution rights from Meritor.

(Amounts in millions)
Operating expenses for the three months ended September 30, 2018	$	168.1
Increase/(decrease) due to:
Labor inflation	4.4
Sell-side M&A activity(1)	3.9
Employee-related costs	(2.6		)
Headquarters relocation costs	1.1
Streamlining expenses	(2.9		)
Environmental reserve reduction	(3.8		)
Foreign exchange translation	(5.4		)
Savings net of investments	(4.8		)
Net decrease	(10.1		)
Operating expenses for the three months ended September 30, 2019	$	158.0

(1) Consists primarily of legal and financial advisory fees related to the Merger.

Other non-operating expense, net

Other non-operating expenses ~~decreased~~increased by $86.54 million from $125.9 million for the ~~third~~first quarter of ~~2018~~2019 to $412.43 million for the ~~third~~first quarter of ~~2019~~2020. ~~The~~This ~~decrease~~increase ~~results~~is ~~from~~primarily andriven ~~upward~~by ~~fair~~the ~~value~~sale ~~adjustment~~of ~~to a non~~short-~~marketable~~term ~~equity~~investments ~~investment~~where ofnet ~~$2.2~~gains ~~million~~were ~~during~~realized in the ~~third~~first quarter of 2019. ~~This~~but ~~compares~~not toin an2020, ~~impairment~~as ofwell as a downward fair value adjustment to a non-marketable equity investment of $54.57 million ~~during~~in the ~~third~~first quarter of ~~2018~~2020. Non-marketable equity investments are recorded at cost and adjusted for changes in observable prices at each reporting period less any impairment, as discussed in Note 17 of Notes to Condensed Consolidated Financial Statements.

~~Interest~~ ~~expense, net~~27

Interest expense, net decreased by $0.4 million to $0.3 million for the third quarter of 2019 as compared to $0.7 million for the third quarter of 2018. The decrease in interest expense is the result of a reduction in borrowings for the third quarter of 2019 when compared to the third quarter of 2018.

Income Taxes

The income tax expense for the third quarter of 2019 was $15.9 million on pre-tax income of $76.7 million before adjusting for noncontrolling interest, compared with an income tax expense of $13.5 million on pre-tax income of $93.3 million before adjusting for noncontrolling interest in the third quarter of 2018. The increase in income tax expense for the three month period is primarily the result of discrete tax benefits during the third quarter of 2018 related to changes in uncertain tax positions and return to provision adjustments partially offset by lower pre-tax income in 2019.

On February 14, 2019, the General Court of the European Union (the General Court) issued a judgment annulling a European Commission decision which had previously declared the Belgium Excess Profit Ruling (EPR) regime as illegal and incompatible with European State Aid law. The General Court ruled that the European Commission had wrongly considered that the Belgian provisions allowing tax exemptions of multinational companies’ excess profit granted by means of rulings could constitute an illegal state aid scheme. On April 24, 2019, the European Commission appealed that decision. On September 16, 2019, the European Commission announced that they opened separate in-depth investigations to assess whether excess profit rulings granted by Belgium to thirty-nine multinational companies (including WABCO) gave those companies an unfair advantage over their competitors, in breach of European Union State aid rules. At September 30, 2019, the Company maintained a tax reserve of $29.3 million pending further European Court developments regarding European Union State Aid cases.

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Year to Date Results of Operations for 2019 Compared with 2018

	Nine MonthsEnded September 30,								Excluding foreignexchange translation *
(Amounts in millions)	2019			2018			% changereported		2019adjustedamount			% changeadjusted
Sales	$	2,644.0		$	2,919.4		(9.4	)%	$	2,772.2		(5.0	)%
Cost of sales	1,863.5			2,025.0			(8.0	)%	1,951.4			(3.6	)%
Gross profit	780.5			894.4			(12.7	)%	820.8			(8.2	)%
Operating expenses	492.1			493.9			(0.4	)%	517.3			4.7	%
Other non-operating expense, net	(17.7		)	(35.3		)	(49.9	)%	(20.1		)	(43.1	)%
Interest (expense)/income net	—			(6.8		)	(100.0	)%	0.3			(104.4	)%
Income tax expense	48.9			63.3			(22.7	)%	50.3			(20.5	)%

* Amounts translated using average exchange rates for the nine month period ending September 30, 2018

Sales

Our sales for the first nine months of 2019 were $2,644.0 million, a decrease of 9.4% (5.0% excluding foreign currency translation effects) from $2,919.4 million in 2018 following the continued downturn in the global truck and bus and trailer markets, as well as a contraction in car and off-highway markets.

Total sales in Europe, our largest market, decreased 10.6% (4.6% excluding foreign currency translation effects) for the first nine months of 2019, while the production of new trucks and buses decreased 3.9%. Our sales to truck and bus OEMs declined 11.1% (5.3% excluding foreign currency translation effects), driven by the phase out of AMT at a major gearbox supplier in Western Europe. The trailer market deteriorated 14.7% year over year which also contributed to the sales decline in the region.

Total sales in North America decreased 1.3% (0.5% excluding foreign currency translation effects). Our sales to truck and bus OEMs increased 3.8% (4.8% excluding foreign currency translation effects) while the production of new trucks and buses increased 11.1%. The sales decline in North America was driven by a major OEM insourcing production as well as continued weakness in the passenger car and off-highway markets.

Total sales in South America increased 13.6% (22.6% excluding foreign currency translation effects) while the truck and bus production increased 5.7%. Our sales to truck and bus OEMs increased by 11.4% (19.9% excluding foreign currency translation effects). This included share of market gains in braking controls and AMT at a major OEM.

Total sales in Asia decreased 18.5% (14.8% excluding foreign currency translation effects) compared to an estimated 10.9% decrease in new vehicle production in the region.

Total sales in China decreased 17.5% (12.8% excluding foreign currency translation effects). Our sales to truck and bus OEMs declined by 10.6% (5.4% excluding foreign currency translation effects) primarily driven by the decline in truck and bus production of 3.7%, continued pricing pressure and an unfavorable customer mix.

Total sales in India decreased 35.8% (32.3% excluding foreign currency translation effects) driven by the 34.4% decrease in the production of new trucks and buses. Our sales to truck and bus OEMs declined by 39.9% (36.4% excluding foreign currency translation effects). We continue to benefit from the outperformance initiatives launched in prior quarters, but those impacts were offset by a negative mix from a decline in the production of multi-axle vehicles, while the production of twin-axle vehicles which typically have lower content per vehicle, increased.

Total sales in Korea increased 9.5% (16.3% excluding foreign currency translation effects) while the truck and bus production only increased 0.7%. Our sales to truck and bus OEMs grew by 36.3% (44.6% excluding foreign currency translation effects) following a favorable vehicle model mix. Sales in Japan increased 1.7% (1.3% excluding foreign currency translation effects) compared to a decrease in truck and bus production of 5.0%.

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WABCO's aftermarket sales, included in the geographic numbers provided above, decreased 7.0% (2.3% excluding foreign currency translation effects) in the first nine months of 2019. Aftermarket sales grew in South America and the Middle East 3.6% and 9.4%, respectively (11.9% and 16.3% excluding foreign currency translation effects, respectively). This was offset by a 10.5% decline (4.6% excluding foreign currency translation effects) in our main market of Europe, a 16.4% decline (12.4% excluding foreign currency translation effects) in India and flattish sales growth in North America. In these regions dealers are facing uncertainty in the market leading to cautious order behavior. The overall decline in market conditions was partially offset by a solid sales growth of 5.9% within our fleet management portfolio.

Cost of Sales and Gross Profit

Within cost of sales, our largest expense is material costs, which mainly represents the purchase of components and parts. Our continued focus on productivity continued to deliver a strong performance for the first nine months of 2019. Management uses materials productivity as one of the internal measures of our cost reduction efforts.

(Amounts in millions)	Cost of Sales			Gross Profit
Cost of sales / gross profit for the nine months ended September 30, 2018	$	2,025.0		$	894.4
Increase/(decrease) due to:
Sales price reductions				(35.5		)
Sales price reductions as % of sales				(1.3		)%
Volume, mix and absorption	(71.4		)	(40.4		)
Material productivity	(30.0		)	30.0
One-time supplier-related settlement in 2018	10.5			(10.5		)
Labor inflation	14.4			(14.4		)
Streamlining costs	8.4			(8.4		)
Foreign exchange effects (1)	(102.2		)	(25.9		)
Other(2)	8.8			(8.8		)
Net decrease	(161.5		)	(113.9		)
Cost of sales / gross profit for the nine months ended September 30, 2019	$	1,863.5		$	780.5

(1) Foreign exchange effects include both translational and transactional effects.

(2) Includes increased depreciations, U.S. tariffs imposed on imports as well as a one-time positive inventory adjustment of $6.7 million in 2018, partially offset by conversion productivity realized.

Operating Expenses

Operating expenses include selling and administrative expenses, product engineering expenses and other operating expenses.

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(Amounts in millions)
Operating expenses for the nine months ended September 30, 2018	$	493.9
Increase/(decrease) due to:
Labor inflation	14.2
Sell-side M&A activity (1)	14.2
Employee-related costs	(3.8		)
Headquarters relocation costs	3.9
Streamlining expenses	0.3
Environmental reserve reduction	(3.8		)
Foreign exchange translation	(25.2		)
Savings net of investments	(1.6		)
Net decrease	(1.8		)
Operating expenses for the nine months ended September 30, 2019	$	492.1

(1) Consists primarily of legal and financial advisory fees related to the Merger.

Other non-operating expense, net

Other non-operating expense, net decreased by $17.6 million from $35.3 million for the first nine months of 2018 to $17.7 million for the first nine months of 2019. The decrease essentially results from an upward fair value adjustment to a non-marketable equity investment of $2.2 million during the third quarter of 2019 compared to an impairment loss recognized on a non-marketable equity investment of $5.5 million during the third quarter of 2018. The decrease from the prior year also reflects a favorable impact from fluctuations in foreign exchange rates of $3.7 million during the first nine months of 2019 and considers that the Company recognized a $2.6 million loss on debt extinguishment during the first nine months of 2018 from prepayment of the Senior USD Notes, as discussed in Note 10 of the Notes to Condensed Consolidated Financial Statements.

Interest expense, net

Interest expense approximated interest income for the first nine months of 2019 compared to interest expense, net of $6.8 million for the first nine months of 2018. Interest expense decreased the first nine-months of 2019 as borrowings declined when compared to the prior year. Interest expense in the prior year also included the interest amounts due under the Senior USD Notes up through the date of prepayment in the second quarter of 2018, as discussed in Note 10 of the Notes to Condensed Consolidated Financial Statements.

Income Taxes

The income tax expense for the ~~nine~~first ~~months~~quarter ~~ended~~of ~~September 30,~~2020 ~~2019~~ was $487.94 million on pre-tax income of $~~272~~34.38 million before adjusting for noncontrolling interest, compared with an income tax expense of $6312.31 million on pre-tax income of $~~359~~100.10 million before adjusting for noncontrolling interest ~~for~~in the ~~nine~~first ~~months~~quarter ~~ended~~of ~~September 30, 2018~~2019. The decrease in income tax expense for this period is primarily the result of lower ~~pre-tax~~pretax income induring the first quarter of 2020, partially offset by discrete tax benefits during the first quarter of 2019 related to reversal of a deferred tax liability of $6.5 million for earnings not permanently reinvested, $1.1 million related to amended state income tax filings, and $1.3 million related to vested stock awards.

On February 14, 2019, the General Court of the European Union (the General Court) issued a judgment annulling a European Commission decision which had previously declared the Belgium Excess Profit Ruling (EPR) regime as illegal and incompatible with European State Aid law. The General Court ruled that the European Commission had wrongly considered that the Belgian provisions allowing tax exemptions of multinational companies’ excess profit granted by means of rulings could constitute an illegal state aid scheme. On April 24, 2019, the European Commission appealed that decision. On September 16, 2019, the European Commission announced that they opened separate in-depth investigations to assess whether excess profit rulings granted by Belgium to thirty-nine multinational companies (including WABCO) gave those companies an unfair advantage over their competitors, in breach of European Union State aid rules. During the three months ended March 31, 2020, there were no further developments on the European Commission appeal of the General Court decision nor separate in-depth investigations into excess profit rulings. At ~~September~~March 3031, ~~2019~~2020, the Company maintained a tax reserve of $29.36 million pending further European Court developments regarding European Union State Aid cases.

When we provided guidance for 2019, our projected results assumed an 18% effective tax rate for 2019, driven in part by the establishment of a regulated insurance company to better manage our unfunded pension liabilities. Due to the pending Merger,

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this initiative has been suspended. We continue to anticipate an annual effective tax rate below 20% due to other tax savings and initiatives that the Company is anticipating in 2019.

Liquidity and Capital Resources

The Company’s cash generation in the first quarter was affected by the ~~build-up~~overall ofslowdown ~~working~~in ~~capital~~the economy as well as the pay-out of cash incentive programs related to 2019. During the ~~second~~first ~~and third~~ quarter of ~~2019~~2020, we ~~leveraged~~continued ~~our~~to ~~working~~focus ~~capital~~on ~~by enhancing~~ our collections from customers to efficiently manage our working capital. ~~This~~Our ~~helped~~collection usefforts did not fully offset the ~~impacts~~impact of reduced customer demand in the first quarter, ~~and~~resulting ~~achieve~~in a net cash ~~from~~used by operating activities of $~~307~~12.51 million for the ~~nine~~three months ended ~~September~~ March 3031, ~~2019~~2020 compared to ~~$300.5~~cash ~~million~~provided inby ~~the~~operating ~~prior~~activities ~~year,~~of ~~despite~~$58.8 amillion ~~lower net income~~ in ~~2019. During~~ the ~~first~~prior ~~quarter of 2019 we also suspended our share repurchase program due to the pending Merger, and do not expect to reinstate the share repurchase program this~~ year.

~~The~~As ~~Company~~discussed ~~was~~above, ~~notified~~the ~~that~~COVID-19 itpandemic ~~will~~may betemporarily ~~required~~affect the Company's cash generation as we adjust to ~~purchase~~a ~~the~~new ~~distribution~~operational ~~rights~~environment. Our sources of financing include cash flows from ~~Meritor~~operations, ~~for~~cash ~~WABCO~~and ~~aftermarket~~cash ~~products~~equivalents, inand our revolving credit facility which remains committed until 2024. As of March 31, 2020, the ~~United~~Company ~~States~~had ~~and~~cash, ~~Canada~~cash ~~for~~equivalents, anand ~~amount~~short-term ~~between~~investments of $~~225~~615.3 million ~~and~~as well as $~~265~~600 million in unused lines under our revolving credit facility that is available for general corporate purposes. We have implemented actions to reduce our level of operating expenses and capital expenditures, ~~payable~~and incontinue ~~cash~~to inevaluate ~~early~~all ~~2020~~aspects of our spending. ~~The~~We ~~Company~~are ~~believes~~not ~~its~~dependent ~~available~~upon ~~cash~~any ~~on-hand~~one source of financing and ~~availability~~we ~~under~~believe ~~its~~that ~~existing~~our ~~credit~~current ~~facilities~~liquidity ~~adequately~~position, ~~provide~~along ~~for~~with the ~~funding~~combination of ~~this~~funding ~~acquisition~~sources available to us, will continue to provide us with adequate liquidity to support our operating activities and cash commitments for investing and financing activities. We also currently do not anticipate difficulties in maintaining compliance with our debt covenants.

Cash Flows for the ~~Nine~~Three Months Ended ~~September~~March 3031, ~~2019~~2020

Operating activities - Net cash ~~provided~~used by operating activities was $~~307~~12.51 million ~~and $300.5 million~~ for the first ~~nine~~three months of ~~2019~~2020 ~~and~~compared ~~2018,~~to ~~respectively~~net cash provided of $58.8 million for 2019. Cash ~~flow~~used ~~from~~by operating activities for the first ~~nine~~three months of ~~2019~~2020 consisted primarily of net income including noncontrolling interests of $~~223~~27.4 million, increased by $~~134~~52.98 million for non-cash charges mainly composed of depreciation and amortization, pension and post-retirement benefit expenses, deferred income tax benefit, change in fair value of non-marketable equity securities, stock compensation and non-cash interest expense and debt issuance cost amortization. This was ~~partially~~ offset by $5092.83 million related to changes in operating assets and liabilities including $979.2 million related to increases in inventory, $19.7 million for guaranteed notes receivable, $1.4 million of payments made related to the Merger, as well as post-retirement benefit payments.

Cash flow from operating activities for the first ~~nine~~three months of ~~2018~~2019 consisted primarily of net income including noncontrolling interests of $~~295~~87.89 million, increased by $~~167~~47.15 million for non-cash charges mainly composed of depreciation and amortization, pension and post-retirement benefit expenses, change in fair value of non-marketable equity securities, stock compensation and non-cash interest expense and debt issuance cost amortization. This was partially offset by $~~162~~76.46 million related to changes in operating assets and liabilities as well as pension contributions.

~~Investing~~ activities - Net cash provided by investing activities amounted to $27.5 million in the first nine months of 2019 compared to net cash used by investing activities balance of $120.5 million in the first nine months of 2018. 28

Capital expenditures in property, plant and equipment was $107.9 million and $83.8 million in 2019 and 2018, respectively. This increase is primarily driven by the timing of investments compared to prior year. On a full year basis, we expect capital expenditures to be slightly above last year's level.

Aside from capital expenditures in tooling, equipment and software, we had investing cash flows related to our investments and redemptions in repurchase agreements and short-term investments as follows:

	Nine MonthsEnded September 30,
	2019						2018
(Amounts in millions)	Repurchase Agreements		Short-term Investments		Total		Repurchase Agreements		Short-term Investments			Total
Investments	$	113.3	$	481.8	$	595.1	$	—	$	388.7		$	388.7
Sales and redemptions	198.4		540.2		738.6		135.3		237.4			372.7
Net cash received/(invested)	$	85.1	$	58.4	$	143.5	$	135.3	$	(151.3	)	$	(16.0	)

Financing activities - Net cash used by financing activities amounted to $7.1 million for the nine months ended September 30, 2019 compared to $466.0 million for the first nine months of 2018. The cash used by financing activities for the nine months ended September 30, 2019 primarily results from the shares we repurchased for a total amount of $30.6 million, partially offset by net borrowings of short-term debt under the revolving credit facilities of $29.3 million. The Company suspended its share

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~~repurchase~~Investing ~~program~~activities ~~during~~- Net cash used for investing activities amounted to $302.2 million in the first ~~quarter~~three months of ~~2019~~2020 ~~due~~compared to $10.1 million in the ~~pending~~first ~~Merger,~~three ~~and~~months weof do2019. ~~not~~The ~~expect~~increase in the cash used for investing activities is primarily due to $265.0 ~~reinstate~~million paid to reacquire the ~~share~~exclusive ~~repurchase~~distribution ~~program~~rights ~~this~~from ~~year~~Meritor for WABCO aftermarket products in the United States and Canada.

InCapital ~~2018,~~expenditures ~~the~~in ~~cash~~property, ~~used~~plant byand ~~financing~~equipment ~~activities~~amounted ~~mainly~~to ~~resulted~~$33.8 ~~from~~million ~~the~~and $~~500~~39.01 million ~~prepayment~~in of2020 ~~the~~and ~~Senior~~2019, ~~USD~~respectively. ~~Notes, the~~On ~~repayment~~a offull ~~our~~year ~~revolving~~basis, ~~credit~~we ~~facilities~~expect ~~for~~capital ~~$114.3~~expenditures ~~million,~~to asbe ~~well~~below aslast ~~the~~year's ~~shares~~level wedue ~~repurchased~~to ~~for~~reduced ancapital ~~amount~~spending in consideration of ~~$210~~the COVID-19 pandemic.1 ~~million~~Aside from capital expenditures in tooling, ~~partially~~equipment ~~offset~~and bysoftware, we had investing cash ~~receipts~~flows ~~from~~related ~~other~~to ~~long~~our ~~term~~investments ~~loans~~and ~~(the~~redemptions ~~Schuldschein~~in ~~Loans)~~repurchase ~~for~~agreements ~~$368.5~~and ~~million.~~short-term investments as follows:



	Three Months Ended March 31,
	2020								2019
(Amounts in millions)	Repurchase Agreements		Short-term Investments			Total			Repurchase Agreements		Short-term Investments		Total
Investments	$	—	$	155.3		$	155.3		$	113.3	$	154.6	$	267.9
Sales and redemptions	—		153.1			153.1			142.2		156.4		298.6
Net cash received/(invested)	$	—	$	(2.2	)	$	(2.2	)	$	28.9	$	1.8	$	30.7

Financing activities - Net cash used by financing activities amounted to $5.8 million for the three months ended March 31, 2020 compared to net cash provided by financing activities of $51.9 million for the first three months of 2019. The cash used by financing activities for the three months ended March 31, 2020 is primarily related to payments of employee taxes withheld on equity award vestings and dividends to noncontrolling interests, partially offset by proceeds from stock option exercises. In 2019, the cash provided by financing activities primarily results from the net borrowings of short term debt under the revolving credit facilities of $85.2 million, partially offset by the shares we repurchased for a total amount of $30.6 million. The Company suspended its share repurchase program during the first quarter of 2019 due to the pending Merger and we do not expect to reinstate the share repurchase program this year.

Schuldschein Loans

On March 22, 2018, the Company entered through a European subsidiary into a series of six individual senior unsecured loan agreements with an aggregate principal amount of €300.0 million, as follows:



(Amounts in millions)	Face value		Coupon	Maturity date
Fixed rate term loan - Series A	€	10.0	0.85%	March 31, 2021
Fixed rate term loan - Series B	60.0		1.15%	March 31, 2022
Fixed rate term loan - Series C	80.0		1.43%	March 31, 2023
Floating rate term loan - Series A	50.0		6-month EURIBOR plus 80 bps	March 31, 2021
Floating rate term loan - Series B	60.0		6-month EURIBOR plus 90 bps	March 31, 2022
Floating rate term loan - Series C	40.0		6-month EURIBOR plus 100 bps	March 31, 2023
	€	300.0

~~Senior Notes (~~EUR ~~and~~Senior ~~USD)~~Notes

On November 15, 2016, the Company issued €440.0 million in aggregate principal amount of senior unsecured notes, comprised of €190 million of 0.84% senior unsecured notes due 2023, €80 million of 1.20% senior unsecured notes due 2026 and €170 million of 1.36% senior unsecured notes due 2028. The Company paid $1.4 million of debt issuance costs in connection with these senior unsecured notes. Interest on these notes is payable semi-annually on January 1 and July 1 of each year, and commenced on July 1, 2017. The proceeds from the senior notes were utilized to repay outstanding balances on the revolving credit facilities, fund our share repurchase program, finance acquisitions and meet general financing requirements.

On June 25, 2015, the Company issued $500 million in aggregate principal amount of senior unsecured notes, comprised of $150 million of 2.83% senior unsecured notes due 2022, $200 million of 3.08% senior unsecured notes due 2025 and $150 million of 3.18% senior unsecured notes due 2027. The Company paid $2.1 million of debt issuance costs in connection with these senior unsecured notes.

The proceeds from the Senior Notes were utilized to repay outstanding balances on the revolving credit facilities, fund our share repurchase program, finance acquisitions and meet general financing requirements.

On April 30, 2018, the Company prepaid the outstanding principal amount of $500.0 million on the Senior USD Notes, and recognized a loss on debt extinguishment of $2.3 million net of taxes, of which the pretax amount, $2.6 million, was included in other non-operating expenses in the condensed consolidated statement of operations.

Credit Facilities

Effective June 28, 2018, the Company amended its existing multi–currency unsecured revolving credit facility, increasing the maximum principal amount of borrowings under the facility from $400 million ~~(the 2015 Facility)~~ to $600 million (the 2018 Facility), with an option to increase up to an additional $250.0 million. The 2018 Facility also extended the ~~previously~~ scheduled maturity date of ~~September~~our ~~30,~~revolving ~~2022~~credit ~~for~~facility ~~the 2015 Facility~~ to June 28, 2023, subject to two one–year extension options, of which the first one was exercised on May 28, 2019, ~~extending the maturity date by one year to June 28, 2024.~~

~~Concurrent~~ with entering into the 2018 Facility, the Company also terminated the $100 million multi-currency five-year unsecured revolving credit facility (the 2014 Facility) that was due to expire on December 17, 2019.29

Under the 2018 Facility, the Company may borrow, on a revolving basis, loans in an aggregate principal amount at any one time outstanding not in excess of $600.0 million, of which $572.6 million was available for borrowing at September 30, 2019.

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Asand ofextended ~~September 30~~the maturity date to June 28, ~~2019~~2024. Under the 2018 Facility, the Company ~~had~~may noborrow, ~~additional~~on ~~borrowings~~a ~~from~~revolving ~~banks.~~basis, ~~This~~loans isin an aggregate principal amount at any one time outstanding not in ~~comparison~~excess toof $0600.50 million, as of ~~December 31,~~which ~~2018~~$600.0 ~~which~~million was ~~fully~~available ~~classified~~for asborrowing ~~long-term~~at ~~debt~~March 31, 2020.

As of March 31, 2020 and December 31, 2019, the Company had no additional borrowings from banks.

Derivative Instruments and Hedging Activities

The Company designated borrowings under its revolving credit facilities and Senior EUR Notes to partially hedge the foreign currency exposure of its net investment in certain Euro-denominated wholly-owned subsidiaries. As of ~~September~~March 3031, ~~2019~~2020, the Company designated borrowings under ~~the~~its ~~revolving credit facility and~~ Euro-denominated loans of €~~465.0 million ($509.0 million at September 30, 2019 exchange rates) and €~~440.0 million ($~~503~~483.69 million at ~~December~~March 31, ~~2018~~2020 exchange rates) ~~of Euro-denominated loans~~ as hedges of its net investment in these subsidiaries.

For the three month periods ended ~~September~~March 3031, ~~2019~~2020 and ~~2018~~2019, the Company recorded a gain of $156.48 million, net of taxes of $~~4.3 million, and a loss of $4.7 million, net of taxes of $~~1.49 million, ~~respectively, in cumulative translation adjustment within AOCI. For the nine month periods ended September 30, 2019~~ and ~~2018, the Company recorded~~ a gain of ~~$18.5~~ ~~million, net of taxes of~~ $58.2 million, ~~and a gain of $4.3 million,~~ net of taxes of $1.2.3 million, respectively, in cumulative translation adjustment within AOCI.

Aggregate Contractual Obligations

The Company has contractual obligations for debt, operating leases, tax indemnifications, purchase obligations, unfunded pension and post-retirement benefit plans and tax liabilities that were summarized in a table of aggregate contractual obligations for the year ended December 31, ~~2018~~2019 disclosed in the Annual Report on Form 10-K. Subsequent to December 31, ~~2018~~2019, the Company ~~adopted~~purchased ~~ASC 842, Leases on January 1, 2019 resulting in~~ the recognition of right-of-use assets and operating liabilities as discussed in Note 11 of the Condensed Consolidated Financial Statements. The Company also received notice that it will be required to purchase the distribution rights held by Meritor ~~in early 2020~~ for ~~an amount between~~ $~~225 million and $~~265.0 million, as discussed in Note 1219 of the Condensed Consolidated Financial Statements. There have been no other material changes to the contractual obligations of the Company since December 31, ~~2018~~2019.

Information Concerning Forward Looking Statements

Certain of the statements contained in this report (other than the historical financial data and other statements of historical fact), including, without limitation, statements as to management’s expectations and beliefs, are forward-looking statements. These forward-looking statements were based on various facts and were derived utilizing numerous important assumptions and other important factors, and changes in such facts, assumptions or factors could cause actual results to differ materially from those in the forward-looking statements. Forward-looking statements include the information concerning our future financial performance, financial condition, liquidity, business strategy, projected plans and objectives. Statements preceded by, followed by or that otherwise include the words “believes”, “expects”, “anticipates”, “strategies”, “prospects”, “intends”, “projects”, “estimates”, “continues”, “evaluates”, “forecasts”, “seeks”, “plans”, “goals”, “potential”, “may increase”, “may fluctuate” and similar expression or future or conditional verbs such as “will,” “should,” “would,” “may” and “could” are generally forward looking in nature and not historical facts. This report includes important information as to risk factors in “Item 1A. Risk Factors”, and “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019. Many important factors could cause actual results to differ materially from management’s expectations, including:


•	the extent, duration and severity of the spread of the COVID-19 pandemic and related impact on the economy, including the impact on our business, financial condition and results of operations, the demand for our products, and the measures taken by governmental authorities to address the pandemic which may precipitate or exacerbate other risks and/or uncertainties;


•	the actual level of commercial vehicle production in our end-markets;


•	adverse developments in the business of our key customers;


•	periodic changes to contingent liabilities;

• adverse developments in general business, economic and political conditions or any ~~outbreak~~pandemic or escalation of hostilities on a national, regional or international basis;


•	changes in international or U.S. economic conditions, such as inflation, interest rate fluctuations, foreign exchange rate fluctuations or recessions in our markets;


•	difficulties in international trade caused by geopolitical developments including tariffs, sanctions and the United Kingdom’s exit from the European Union;

• ~~cybersecurity threats, including the potential misappropriation of assets or sensitive information, corruption of data or operational disruption;~~30

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•	cybersecurity threats, including the potential misappropriation of assets or sensitive information, corruption of data or operational disruption;


•	unpredictable difficulties or delays in the development of new product technology;


•	pricing changes to our products or those of our competitors, and other competitive pressures on pricing and sales;


•	our ability to receive components and parts from our suppliers of a reasonable quality level or to obtain them at reasonable price levels due to fluctuations in the costs of the underlying raw materials;


•	our ability to access credit markets or capital markets on a favorable basis or at all;


•	our ability to service our debt obligations;


•	changes in the environmental regulations that affect our current and future products;


•	competition in our existing and future lines of business and the financial resources of competitors;


•	our failure to comply with regulations and any changes in regulations;


•	our failure to complete potential future acquisitions, collaborations and cooperations or to realize benefits from completed acquisitions, collaborations and cooperations;


•	our inability to implement our growth plan;


•	our ability to service our pension obligations;


•	the loss of any of our senior management;


•	difficulties in obtaining or retaining the management and other human resource competencies that we need to achieve our business objectives;


•	the success of, and costs and savings associated with, our current streamlining initiatives;


•	labor relations;


•	our ability to complete and realize the tax benefits associated with certain projects relating to the reorganization of our treasury function;


•	our ability to mitigate any tax risks, including, but not limited to, those risks associated with changes in legislation, tax audits and the loss of the benefits associated with our tax rulings and incentives in certain jurisdictions;


•	risks inherent in operating in foreign countries, including exposure to local economic conditions, government regulation, currency restrictions and other restraints, changes in tax laws and rulings, expropriation, political instability and diminished ability to legally enforce our contractual rights;


•	conditions to the closing of the Merger, including obtaining required regulatory approvals, may not be satisfied or waived on a timely basis or otherwise;


•	a governmental entity or a regulatory body may prohibit, delay or refuse to grant approval for the consummation of the Merger and may require conditions, limitations or restrictions in connection with such approvals that can adversely affect the anticipated benefits of the proposed Merger or cause the parties to abandon the proposed Merger;


•	the Merger may involve unexpected costs, liabilities or delays;


•	our business may suffer as a result of uncertainty surrounding the Merger or the potential adverse changes to business relationships resulting from the proposed Merger;


•	legal proceedings that may be initiated related to the Merger and the outcome of any legal proceedings related to the Merger, which may be adverse to us;

• our inability to complete the acquisition of the North American aftermarket distribution rights from Meritor within the timeframe called for under the contract and on the terms required under the contract;


•	we may be adversely affected by other general industry, economic, business and/or competitive factors;


•	there may be unforeseen events, changes or other circumstances that could give rise to the termination of the Merger Agreement or affect the ability to recognize benefits of the Merger;


•	risks that the proposed Merger may disrupt current plans and operations and present potential difficulties in employee retention as a result of the Merger;


•	risks related to diverting management’s attention from WABCO's ongoing business operations; and


•	there may be other risks to consummation of the Merger, including the risk that the Merger will not be consummated within the expected time period or at all which may affect our business and the price of our common stock.

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We undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events unless we are required to do so by law.

Critical Accounting Policies and Estimates

Preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Management believes the most complex and sensitive judgments, because of their significance to the consolidated financial statements, result primarily from the need to make estimates about the effects of matters that are inherently uncertain. Readers should also refer to Management’s Discussion and Analysis and Notes 2 and 1617 of Notes to the Consolidated Financial Statements for the year ended December 31, ~~2018~~2019 in the Company’s Annual Report on Form 10-K for a description of the most significant accounting estimates and policies used in preparation of the Consolidated Financial Statements. Actual results in these areas could differ materially from management’s estimates. ~~There~~After consideration of the COVID-19 pandemic, the Company calculated its interim income tax expense for the three months ended March 31, 2020 based on the actual year-to-date effective tax rate as discussed in Note 14 of Notes to the Condensed Consolidated Financial Statements. Aside from this and the adoption of ASC 326 as described in Note 6 of Notes to the Condensed Consolidated Financial Statements, there have been no significant changes in the Company’s assumptions regarding critical accounting estimates during the first ~~nine~~three months of ~~2019~~2020.


Item 3.	Quantitative and Qualitative Disclosures about Market Risk

There were no material changes to the disclosure on this matter for the year ended December 31, ~~2018~~2019 made in the Company’s Annual Report on Form 10-K. While it is not possible at this time to estimate the effect that the COVID-19 pandemic will have on our foreign exchange, interest rate and commodity exposures, we do not expect a material overall impact considering the Company's flexible operating model and low level of net debt.


Item 4.	Controls and Procedures

The Company has established a Disclosure Controls Committee that assists the Chief Executive Officer and Chief Financial Officer in their evaluation of the Company’s disclosure controls and procedures. Our Chief Executive Officer and Chief Financial Officer have concluded, based on their evaluation as of the end of the period covered by this report, that our disclosure controls and procedures, as defined in the Securities Exchange Act of 1934, as amended (the Exchange Act), Rule 13a-15(e), are effective to ensure that the information required to be disclosed in the reports that the Company files or submits under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and (ii) is accumulated and communicated to the Company’s management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

~~Beginning~~There ~~January~~have 1,been ~~2019,~~no wechanges ~~implemented~~in ~~ASC~~the ~~842~~Company’s internal control over financial reporting during the three months ended March ~~Leases.~~31, We2020 ~~developed~~that ~~new~~have ~~policies~~materially ~~and~~affected, ~~trainings~~or are reasonably likely to materially affect, ~~and~~the ~~enhanced~~Company’s internal ~~controls~~control over financial reporting. Subsequent to ~~ensure~~March we31, ~~adequately~~2020, ~~evaluated~~the ~~our~~Company ~~contracts~~has ~~and~~not ~~properly~~experienced ~~assessed~~any ~~the~~material impact to internal controls over financial reporting even though most of ~~the~~our ~~new~~employees ~~accounting~~are ~~standards~~working remotely due to the COVID-19 pandemic. ~~These~~Management ~~enhancements~~will continue to ~~our~~assess risks and impacts on internal controls ~~are~~over ~~not~~financial ~~considered~~reporting ~~significant~~as they arise.

~~There~~ have been no other changes in the Company’s internal control over financial reporting during the nine months ended September 30, 2019 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.32

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PART II. OTHER INFORMATION


Item 1.	Legal Proceedings

We may be party to a variety of legal proceedings with respect to environmental related, employee related, product related, and general liability and automotive litigation related matters that arise in the normal course of our business. While the results of these legal proceedings cannot be predicted with certainty, management believes that the final outcome of these proceedings will not have a material adverse effect on our combined results of operations or financial position. For more information on current legal proceedings, refer to Note 1213 and Note 1314 of Notes to the Condensed Consolidated Financial Statements.


Item 1A.	Risk Factors

Other than as noted below, there have been no new material risks identified that were not disclosed in the Company’s risk factor disclosure in its Annual Report on Form 10-K for the fiscal year ended December 31, ~~2018~~2019.

~~The~~Our ~~proposed~~business ~~Merger~~has ~~may~~been ~~not~~affected beby ~~consummated~~the onrecent aCOVID-19 ~~timely~~pandemic ~~basis,~~and ormay atbe ~~all,~~materially and ~~the~~adversely ~~failure~~affected toby ~~close or delays in closing~~ the ~~Merger~~COVID-19 ~~could~~pandemic ~~adversely affect our business, financial results and stock price.~~

AsIn ~~previously~~December ~~announced~~2019, onan ~~March~~outbreak ~~28,~~of ~~2019,~~a ~~WABCO~~novel ~~entered~~strain ~~into~~of coronavirus, COVID-19, anwas ~~Agreement~~reported ~~and~~to ~~Plan~~have ofsurfaced ~~Merger~~in ~~(the~~China. ~~Merger~~Since ~~Agreement)~~then, COVID-19 ~~with~~has ZFspread ~~Friedrichshafen~~across AGthe ~~(ZF)~~globe, aincluding ~~stock~~the ~~corporation~~U.S., ~~organized~~Europe and ~~existing~~Asia, ~~under~~regions ~~the~~in ~~laws~~which of the ~~Federal~~Company ~~Republic of Germany~~operates, and ~~Verona~~was ~~Merger~~recognized ~~Sub~~as ~~Corp.,~~ a ~~Delaware~~pandemic ~~corporation~~by ~~and~~the ~~indirect~~World ~~wholly~~Health ~~owned~~Organization ~~subsidiary~~on ofMarch ZF11, ~~pursuant~~2020. toThe COVID-19 ~~which~~pandemic ZFhas ~~will~~severely ~~acquire~~restricted ~~100% of~~ the ~~issued~~level ~~and outstanding shares~~ of ~~WABCO~~global ~~common~~economic ~~stock (the Merger)~~activity. WeIn ~~can~~response ~~provide~~to ~~no assurance that~~ the COVID-19 ~~Merger~~pandemic, ~~will~~governments beacross ~~consummated~~multiple orcountries ~~consummated~~ in which the ~~timeframe~~Company oroperates ~~manner~~have ~~currently~~taken ~~anticipated.~~actions ~~The Merger is subject~~ to aprotect ~~number~~the ofsafety ~~conditions~~and ~~including~~health ~~the receipt~~ of ~~regulatory approvals~~individuals, ~~which~~and isto ~~not~~financially ~~within~~support ~~our~~companies ~~control.~~and ~~Although~~industries ~~WABCO’s~~during ~~shareholders approved~~ the ~~adoption~~crisis. ofHowever, the ~~Merger~~local, ~~Agreement~~national atand ainternational ~~special~~response ~~meeting~~to ofthe ~~shareholders~~virus onremains ~~June~~fluid ~~27,~~and ~~2019,~~uncertain. ~~there~~Governments ~~can~~in bemany nocountries ~~assurance~~have asalso toinitiated ~~when,~~actions orto ~~if,~~relaunch ~~the~~economic ~~other~~activity ~~conditions~~as tosoon ~~closing~~as of the ~~Merger~~pandemic ~~will~~is beunder ~~satisfied~~control orin ~~waived~~their orcountries ~~that~~although ~~other~~the ~~events~~timing ~~will~~of ~~not~~any ~~intervene~~return to ~~delay~~normalized ~~the~~levels ~~Merger or result in the termination~~ of ~~the~~economic ~~Merger~~activity ~~Agreement~~remains uncertain.

~~Any~~As ~~delay~~disclosed in ~~closing~~“Management’s orDiscussion aand ~~failure~~Analysis of Financial Condition and Results of Operations – Results of Operations,” an economic slowdown began during the first quarter, in part due to ~~close~~the ~~could~~COVID-19 ~~have~~pandemic, that impacted our sales in the truck and bus and trailer markets in all of our key regions, and the reduced usage of commercial vehicles during the quarter as a ~~negative~~result of the COVID-19 pandemic reduced our aftermarket sales as well. While it is not possible at this time to estimate the impact that COVID-19 could have on our business, ~~financial~~the ~~results~~continued spread of COVID-19 and ~~stock~~the ~~price~~measures astaken ~~well~~by asgovernmental ~~our~~authorities ~~relationships~~worldwide ~~with~~has resulted in reduced customer demand, and disrupted the manufacture and sale of our ~~customers~~products. In response to reduced customer demand, ~~suppliers~~we orhave furloughed employees, and atemporarily ~~negative~~reduced ~~impact~~the onshifts at several of our ~~ability~~facilities. If the COVID-19 pandemic continues for an extended period of time, we may experience disruptions to ~~pursue~~our ~~alternative~~supply ~~strategic~~chain ~~transactions~~and the availability of shipping and~~/or~~ distribution channels, and there may be further declines in customer demand for our ~~ability~~products. The extent to ~~implement~~which ~~alternative~~COVID-19 could impact our business ~~plans~~depends on future developments which that are highly uncertain and cannot be predicted and are outside of our control, including new information which may quickly emerge concerning the severity of the virus, the scope of the outbreak and the actions to contain the virus or treat its impact, among others.

~~Our~~Potential ~~business~~effects of COVID-19 and ~~financial~~other ~~results~~similar ~~could~~pandemics be(some ~~adversely~~of ~~impacted~~which ~~during~~we ~~the~~have ~~pendency~~already ofbegun to experience) may include, but are not limited to, the ~~Merger.~~following:

~~The~~• ~~Merger~~Reduced ~~may~~investor ~~cause~~confidence, ~~disruptions~~instability toin ~~our~~the ~~business~~credit orand ~~business~~financial ~~relationships~~markets, ~~and~~volatile ~~create~~corporate ~~uncertainty~~profits, ~~surrounding~~and ~~our~~reduced ~~ongoing~~ business ~~operations~~and consumer spending, which ~~could~~may ~~have~~adversely anaffect ~~adverse impact on~~ our ~~financial condition,~~ results of operations ~~and~~by ~~cash~~reducing ~~flows~~our sales, ~~regardless~~margins ofand/or ~~whether~~net ~~the~~income ~~Merger is completed, including~~ as a result of ~~the~~a ~~following~~slowdown ~~(all~~in ofcustomer ~~which~~orders ~~could~~or beorder ~~exacerbated~~cancellations. byIn aaddition, ~~delay~~volatility in ~~consummation~~the offinancial markets could increase the ~~Merger):~~cost of capital and/or limit its availability;

• ~~matters~~Economic ~~relating~~uncertainty toin the ~~Merger~~global ~~may~~markets ~~require~~which ~~substantial~~could ~~commitments~~make ofit ~~time~~difficult for our customers, suppliers and ~~effort~~the byCompany ~~our~~to ~~management~~accurately forecast and plan future business activities, ~~which~~and could ~~divert~~thus ~~employees'~~impact ~~attention~~the ~~away~~demand ~~from~~and ~~the~~supply ~~day-to-day~~for ~~operations~~our ofproducts as well as our ~~business~~ability to ensure our manufacturing ability and capacity;

• Governmental actions that may require or continue to require full or partial shutdowns which could restrict our employees ~~may~~engaged ~~experience~~in ~~uncertainty~~production ~~about~~and ~~their~~distribution ~~future~~facilities ~~roles~~from ~~with~~coming to work or require us to close our manufacturing facilities, ~~which~~and ~~may~~thus ~~adversely~~prevent ~~affect~~us from being able to meet our customer demands. Such governmental actions could also impact our ability to ~~hire,~~maintain ~~retain~~our ~~and~~workforce ~~motivate~~at ~~key~~the ~~personnel~~levels required to properly manage our business and ~~other~~operational ~~employees~~risks;

• customers, suppliers, strategic partners or other third parties that we maintain business relationships with may experience uncertainty prior to the closing of the Merger and seek alternative relationships with other third parties or seek to terminate or re-negotiate their relationships with us; and33

• the Merger Agreement restricts us from engaging in certain actions without the consent of ZF, which could delay or prevent us from realizing certain business opportunities or taking certain actions with respect to our operations that WABCO would otherwise take.

In addition, we have incurred, and will continue to incur, significant costs, expenses, and fees for professional services and other transaction costs in connection with the Merger, and we are required to pay many of these costs regardless of whether or not the Merger is consummated.

We could also be subject to litigation related to failure to close the Merger or to enforce our obligations under the Merger Agreement.

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• The ~~Merger~~potential ~~Agreement~~to ~~contains~~further ~~restrictions~~weaken onthe ~~our~~financial ~~ability~~position toof ~~pursue~~some anof ~~acquisition~~our ~~proposal~~customers. orIf ancircumstances ~~offer~~surrounding orour ~~proposal~~customers’ ~~that~~financial ~~could~~capabilities ~~reasonably~~were beto ~~expected~~deteriorate, towrite-downs ~~lead~~or towrite-offs ancould ~~acquisition~~negatively ~~proposal.~~affect ~~The~~our ~~adoption~~operating ofresults ~~the~~and, ~~Merger~~if ~~Agreement~~large, bycould ~~WABCO’s~~have ~~shareholders~~a ~~eliminated~~material ~~our~~adverse ~~right~~effect toon ~~terminate~~our ~~the~~business, ~~Merger~~financial ~~Agreement~~condition, inresults ~~response~~of tooperations anand ~~acquisition~~cash ~~proposal~~flow.

Regulatory authorities may enjoin consummation of the Merger or seek divestitures of certain interests and assets in connection with the Merger.

Pursuant to the Merger Agreement, WABCO and ZF have agreed to use their respective reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate the Merger and the other transactions contemplated by the Merger Agreement, including obtaining any requisite approvals, subject to certain specified limitations under the Merger Agreement. This includes using reasonable best efforts to obtain all requisite approvals, clearances, orders, decisions, decrees or authorizations or expirations of any waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended and from the Committee on Foreign Investment in the United States and each member agency thereof acting in such capacity under the Defense Production Act of 1950, as amended. The Merger is also conditioned upon receipt of certain foreign approvals.

We cannot assure you that these regulatory clearances and approvals will be timely obtained or obtained at all, or that the granting of these regulatory clearances and approvals will not involve the imposition of additional conditions on the closing of the Merger including the requirement to divest assets. In furtherance thereof, pursuant to the Merger Agreement, WABCO and ZF have also agreed to work together and use their respective reasonable best efforts to cause WABCO to divest certain interests and assets. ZF has agreed, subject to certain exceptions, to make divestitures and take remedial actions required by regulators so long as such actions do not result in a material adverse effect on the combined company, after giving effect to the Merger. ZF is not required to divest a portion of, or certain assets primarily related to, specific product lines or business divisions.

The delay or failure to obtain regulatory approvals or the imposition of conditions to obtain regulatory approvals could result in a delay or failure to close the Merger or a termination of the Merger Agreement.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On December 7, 2018, the Board of Directors authorized the repurchase of shares of common stock for an amount of $600.0 million through December 31, 2020. AAs ~~summary~~ of March 31, 2020 the Company has $569.4 million remaining under this repurchase authorization. There was no repurchase activity for the first ~~nine~~three months of ~~2019~~2020 is as ~~follows:~~the Company has suspended its share repurchase program due to the pending Merger.

ISSUER PURCHASES OF EQUITY SECURITIES

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Period	Total Number of Shares Purchased (a)	Average price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (a)	Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (a)
Total through December 31, 2018	3,511,454	$119.60	3,511,454	$0
January 1 - January 31	208,000	$111.53	208,000	$576,800,982
February 1 - February 28	64,000	$115.62	64,000	$569,401,085
March 1 - March 31	—	-	—	$569,401,085
Total first quarter	272,000	$112.50	272,000	$569,401,085
Total through March 31, 2019	3,783,454	$119.09	3,783,454	$569,401,085
April 1 - April 30	—	-	—	$569,401,085
May 1 - May 31	—	-	—	$569,401,085
June 1 - June 30	—	-	—	$569,401,085
Total second quarter	—	-	—	$569,401,085
Total through June 30, 2019	3,783,454	$119.09	3,783,454	$569,401,085
July 1 - July 31	—	-	—	$569,401,085
August 1 - August 31	—	-	—	$569,401,085
September 1 - September 30	—	-	—	$569,401,085
Total third quarter	—	-	—	$569,401,085
Total through September 30, 2019	3,783,454	$119.09	3,783,454	$569,401,085

(a) Relates to the approved share repurchase program as discussed above.

All share repurchases were effected in accordance with the safe harbor provisions of Rule 10b-18 of the Exchange Act.

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Item 6.	Exhibits

ExhibitNo.		Description
31.1		Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101		The following financial information from WABCO Holdings Inc.'s Quarterly Report on Form 10-Q for the period ended ~~September~~March 3031, ~~2019~~2020, filed with the SEC on ~~November~~May 61, ~~2019~~2020, formatted in Inline eXtensible Business Reporting Language (iXBRL): (i) the Condensed Consolidated Statements of Operations, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statements of Cash Flows, (v) the Condensed Consolidated Statements of Shareholders' Equity, and (vi) Notes to Condensed Consolidated Financial Statements.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

WABCO HOLDINGS INC.

/S/ SEAN DEASON

Sean Deason

Chief Financial Officer and Controller

(Principal Financial Officer and Principal Accounting Officer)

~~November~~May 61, ~~2019~~2020

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Filing Compare · WABCO Holdings Inc.