BorgWarner Announces First Quarter Results; Delivers Positive Cash Flow Despite Industry Turmoil

Apr 25, 2001, 01:00 ET from BorgWarner Inc.

    CHICAGO, April 25 /PRNewswire/ -- BorgWarner Inc. (NYSE:   BWA) today
 reported that it earned $.80 per share on sales of $606.8 million in the
 2001 first quarter.  Results were affected by severely reduced and erratic
 North American vehicle production, delayed launches of key customer programs
 and weak European and Asian currencies.  Despite a $20 million decline in
 income from the record 2000 first quarter, operating cash flow was positive
 and the company improved its debt-to-capital ratio.
     Financial Results:  The company reported net earnings for the 2001 first
 quarter of $21.1 million, or $.80 per share, compared with  $41.0 million, or
 $1.53 per share, in the record 2000 first quarter.  Sales were $606.8 million
 compared with $730.2 million in the prior first quarter.
     Comments and Outlook:  "As we went into this difficult quarter, we
 challenged ourselves to maintain our strong balance sheet, and we did," said
 John F. Fiedler, Chairman and CEO.  "We have continued to invest in research
 and development but have reduced other administrative expenses, have delayed
 capital spending and are ready to take additional actions if industry
 conditions deteriorate further.  Our industry faces another difficult quarter
 and perhaps a slow recovery.  With the combination of our propriety
 technology, solid new business expectations and strong balance sheet, however,
 BorgWarner expects to resume its growth as the industry and overall economy
 improves.  If opportunities arise during this downturn to expand our global
 reach or strategic technology, we also believe that we have the ability to
 take advantage of them."
     Mr. Fiedler noted that the outlook for the remainder of the year remains
 uncertain.  "Looking at our markets around the world, we hope the direction of
 the North American auto industry will become clearer by mid-year.  While
 European production has softened, demand for our products is strong, driven by
 new engine programs and the need for fuel efficiency and improved emissions.
 Asia remains stable.  By developing technology for automakers around the
 world, including those non-U.S. automakers that manufacture engines and
 transmissions in North America, we are well positioned to benefit from
 changing market dynamics."
 
     Operating Group Results:  Sales in each of the company's operating groups
 were down from the record first quarter of 2000.  Revenue at Morse TEC, the
 company's chain and turbocharger business, was $220.6 million.  North American
 production cuts hurt sales of the group's chain products for automatic
 transmissions and four-wheel drive systems.  This weakness was partially
 offset by strong demand in Europe for engine timing systems and turbochargers.
     Sales for Air/Fluid Systems of $90.9 million were reduced by severe
 production cuts at Chrysler, its major customer, and an absence of one-time
 emission controls sales that boosted results in the 2000 first quarter.
 TorqTransfer Systems sales were $125.4 million, negatively impacted by the
 delayed launch of the new Ford Explorer but aided by strong export sales
 to Korea.  Sales for Transmission Systems of $104.0 million reflected the
 10% decline in automatic transmission production in North America during the
 quarter, partially offset by improved U.S. productivity and good demand in
 Europe for transmission products, particularly for models exported to the U.S.
 Sales of $58.3 million from Cooling Systems were adversely affected by a
 number of factors, including reduced production of light and heavy-duty trucks
 and business lost prior to the group being acquired by BorgWarner.
 
     Recent Highlights:  During the quarter, the company announced a strategic
 alliance with Hitachi Automotive Products (USA), one of the world's largest
 electronics companies, for the production of electronic control units,
 including new generation units that can be integrated into the harsh
 environment for its four-wheel drive systems.  The company has also developed
 a new range of turbochargers for small diesel engines, and will supply the
 turbochargers to Renault over the next several years under a contract worth
 approximately $125 million.  To continue to meet the demand for turbochargers,
 the company announced that it is establishing two new facilities in Asheville,
 North Carolina and Oroszlany, Hungary.  The global market for turbochargers is
 expected to grow 30% over the next five years.
     At the start of the second quarter, the company sold its Fuel Systems
 business, a non-core business it acquired with the purchase of Kuhlman
 Corporation in 1999.  With the sale completed, BorgWarner is fully focused on
 its strategy of building product leadership in core engine and driveline
 technologies.
 
     BorgWarner Inc. (NYSE:   BWA) is a product leader in highly engineered
 components and systems for vehicle powertrain applications worldwide.
 The company operates manufacturing and technical facilities in 46 locations
 in 13 countries.  Customers include Ford, DaimlerChrysler, General Motors,
 Toyota, Honda, Caterpillar, Navistar International, PSA and VW Group.  The
 Internet address for BorgWarner is: http://www.bwauto.com .   For further
 information contact BorgWarner Corporate Communications at 312-322-8500.
 Investor conference calls are webcast at: http://www.vcall.com .
     Statements contained in this news release may contain forward-looking
 statements as contemplated by the 1995 Private Securities Litigation Reform
 Act that are based on management's current expectations, estimates and
 projections.  Words such as "expects," "anticipates," "intends," "plans,"
 "believes," "estimates," variations of such words and similar expressions
 are intended to identify such forward-looking statements.  Forward-looking
 statements are subject to risks and uncertainties, which could cause
 actual results to differ materially from those projected or implied in the
 forward-looking statements.  Such risks and uncertainties include:
 fluctuations in domestic or foreign automotive production, the continued use
 of outside suppliers by original equipment manufacturers, fluctuations in
 demand for vehicles containing the Company's products, general economic
 conditions, as well as other risks detailed in the Company's filings with the
 Securities and Exchange Commission, including the Cautionary Statements filed
 as Exhibit 99.1 to the Form 10-K for the fiscal year ended December 31, 2000.
 
 
     BorgWarner Inc.
     Consolidated Statement of Operations (Unaudited)
     (millions of dollars, except per
     share data)                                        Three Months Ended
                                                             March 31,
                                                      2001              2000
 
 
     Net sales                                       $606.8            $730.2
     Cost of sales                                    471.1             550.3
     Depreciation                                      27.0              26.2
     Selling, general and administrative
      expenses                                         55.6              63.5
     Minority interest                                  0.7               0.7
     Goodwill amortization                             10.6              11.0
     Equity in affiliate earnings and
      other income                                     (4.5)             (3.5)
 
     Earnings before interest expense,
      finance charges and
        taxes                                          46.3              82.0
     Interest expense and finance charges              12.8              15.9
 
     Earnings before income taxes                      33.5              66.1
     Provision for income taxes                        12.4              25.1
 
     Net earnings                                     $21.1             $41.0
 
     Net earnings per share - basic                   $0.80             $1.54
 
     Net earnings per share - diluted                 $0.80             $1.53
 
     Average shares outstanding - basic
      (in millions)                                    26.3              26.7
 
     Average shares outstanding - diluted
      (in millions)                                    26.4              26.8
 
 
     BorgWarner Inc.
     Selected Financial Information (Unaudited)
     (millions of dollars)                          March 31,      December 31,
                                                      2001              2000
 
     Receivables                                     $202.8            $168.9
 
     Inventories                                     $153.5            $161.6
 
     Debt                                            $795.1            $794.8
 
     Stockholders' equity                          $1,104.6          $1,087.1
 
 
                                                        Three Months Ended
                                                              March 31,
                                                       2001              2000
 
     Capital spending                                 $17.2             $28.3
 
 
     BorgWarner Inc.
     Sales by Operating Group (Unaudited)
     (millions of dollars)                              Three Months Ended
                                                             March 31,
                                                      2001              2000
     Air/Fluid Systems                                $90.9            $124.1
 
     Cooling Systems                                   58.3              80.1
 
     Morse TEC                                        220.6             234.7
 
     TorqTransfer Systems                             125.4             147.3
 
     Transmission Systems                             104.0             115.6
 
     Divested Operations                               18.0              41.3
 
       Subtotal                                       617.2             743.1
 
     Eliminations                                     (10.4)            (12.9)
 
     Total Sales by Operating Group                  $606.8            $730.2
 
 
     BorgWarner Inc.
     Earnings Before Interest and Taxes by Operating Group (Unaudited)
     (millions of dollars)                               Three Months Ended
                                                              March 31,
                                                       2001              2000
     Air/Fluid Systems                                 $3.0             $15.6
 
     Cooling Systems                                    2.0              11.0
 
     Morse TEC                                         27.8              33.4
 
     TorqTransfer Systems                               4.0              10.4
 
     Transmission Systems                              12.0              14.7
 
     Divested Operations                               (0.2)              2.2
 
     Total EBIT by Operating Group                    $48.6             $87.3
 
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                http://tbutton.prnewswire.com/prn/11690X55084472
 
 

SOURCE BorgWarner Inc.
    CHICAGO, April 25 /PRNewswire/ -- BorgWarner Inc. (NYSE:   BWA) today
 reported that it earned $.80 per share on sales of $606.8 million in the
 2001 first quarter.  Results were affected by severely reduced and erratic
 North American vehicle production, delayed launches of key customer programs
 and weak European and Asian currencies.  Despite a $20 million decline in
 income from the record 2000 first quarter, operating cash flow was positive
 and the company improved its debt-to-capital ratio.
     Financial Results:  The company reported net earnings for the 2001 first
 quarter of $21.1 million, or $.80 per share, compared with  $41.0 million, or
 $1.53 per share, in the record 2000 first quarter.  Sales were $606.8 million
 compared with $730.2 million in the prior first quarter.
     Comments and Outlook:  "As we went into this difficult quarter, we
 challenged ourselves to maintain our strong balance sheet, and we did," said
 John F. Fiedler, Chairman and CEO.  "We have continued to invest in research
 and development but have reduced other administrative expenses, have delayed
 capital spending and are ready to take additional actions if industry
 conditions deteriorate further.  Our industry faces another difficult quarter
 and perhaps a slow recovery.  With the combination of our propriety
 technology, solid new business expectations and strong balance sheet, however,
 BorgWarner expects to resume its growth as the industry and overall economy
 improves.  If opportunities arise during this downturn to expand our global
 reach or strategic technology, we also believe that we have the ability to
 take advantage of them."
     Mr. Fiedler noted that the outlook for the remainder of the year remains
 uncertain.  "Looking at our markets around the world, we hope the direction of
 the North American auto industry will become clearer by mid-year.  While
 European production has softened, demand for our products is strong, driven by
 new engine programs and the need for fuel efficiency and improved emissions.
 Asia remains stable.  By developing technology for automakers around the
 world, including those non-U.S. automakers that manufacture engines and
 transmissions in North America, we are well positioned to benefit from
 changing market dynamics."
 
     Operating Group Results:  Sales in each of the company's operating groups
 were down from the record first quarter of 2000.  Revenue at Morse TEC, the
 company's chain and turbocharger business, was $220.6 million.  North American
 production cuts hurt sales of the group's chain products for automatic
 transmissions and four-wheel drive systems.  This weakness was partially
 offset by strong demand in Europe for engine timing systems and turbochargers.
     Sales for Air/Fluid Systems of $90.9 million were reduced by severe
 production cuts at Chrysler, its major customer, and an absence of one-time
 emission controls sales that boosted results in the 2000 first quarter.
 TorqTransfer Systems sales were $125.4 million, negatively impacted by the
 delayed launch of the new Ford Explorer but aided by strong export sales
 to Korea.  Sales for Transmission Systems of $104.0 million reflected the
 10% decline in automatic transmission production in North America during the
 quarter, partially offset by improved U.S. productivity and good demand in
 Europe for transmission products, particularly for models exported to the U.S.
 Sales of $58.3 million from Cooling Systems were adversely affected by a
 number of factors, including reduced production of light and heavy-duty trucks
 and business lost prior to the group being acquired by BorgWarner.
 
     Recent Highlights:  During the quarter, the company announced a strategic
 alliance with Hitachi Automotive Products (USA), one of the world's largest
 electronics companies, for the production of electronic control units,
 including new generation units that can be integrated into the harsh
 environment for its four-wheel drive systems.  The company has also developed
 a new range of turbochargers for small diesel engines, and will supply the
 turbochargers to Renault over the next several years under a contract worth
 approximately $125 million.  To continue to meet the demand for turbochargers,
 the company announced that it is establishing two new facilities in Asheville,
 North Carolina and Oroszlany, Hungary.  The global market for turbochargers is
 expected to grow 30% over the next five years.
     At the start of the second quarter, the company sold its Fuel Systems
 business, a non-core business it acquired with the purchase of Kuhlman
 Corporation in 1999.  With the sale completed, BorgWarner is fully focused on
 its strategy of building product leadership in core engine and driveline
 technologies.
 
     BorgWarner Inc. (NYSE:   BWA) is a product leader in highly engineered
 components and systems for vehicle powertrain applications worldwide.
 The company operates manufacturing and technical facilities in 46 locations
 in 13 countries.  Customers include Ford, DaimlerChrysler, General Motors,
 Toyota, Honda, Caterpillar, Navistar International, PSA and VW Group.  The
 Internet address for BorgWarner is: http://www.bwauto.com .   For further
 information contact BorgWarner Corporate Communications at 312-322-8500.
 Investor conference calls are webcast at: http://www.vcall.com .
     Statements contained in this news release may contain forward-looking
 statements as contemplated by the 1995 Private Securities Litigation Reform
 Act that are based on management's current expectations, estimates and
 projections.  Words such as "expects," "anticipates," "intends," "plans,"
 "believes," "estimates," variations of such words and similar expressions
 are intended to identify such forward-looking statements.  Forward-looking
 statements are subject to risks and uncertainties, which could cause
 actual results to differ materially from those projected or implied in the
 forward-looking statements.  Such risks and uncertainties include:
 fluctuations in domestic or foreign automotive production, the continued use
 of outside suppliers by original equipment manufacturers, fluctuations in
 demand for vehicles containing the Company's products, general economic
 conditions, as well as other risks detailed in the Company's filings with the
 Securities and Exchange Commission, including the Cautionary Statements filed
 as Exhibit 99.1 to the Form 10-K for the fiscal year ended December 31, 2000.
 
 
     BorgWarner Inc.
     Consolidated Statement of Operations (Unaudited)
     (millions of dollars, except per
     share data)                                        Three Months Ended
                                                             March 31,
                                                      2001              2000
 
 
     Net sales                                       $606.8            $730.2
     Cost of sales                                    471.1             550.3
     Depreciation                                      27.0              26.2
     Selling, general and administrative
      expenses                                         55.6              63.5
     Minority interest                                  0.7               0.7
     Goodwill amortization                             10.6              11.0
     Equity in affiliate earnings and
      other income                                     (4.5)             (3.5)
 
     Earnings before interest expense,
      finance charges and
        taxes                                          46.3              82.0
     Interest expense and finance charges              12.8              15.9
 
     Earnings before income taxes                      33.5              66.1
     Provision for income taxes                        12.4              25.1
 
     Net earnings                                     $21.1             $41.0
 
     Net earnings per share - basic                   $0.80             $1.54
 
     Net earnings per share - diluted                 $0.80             $1.53
 
     Average shares outstanding - basic
      (in millions)                                    26.3              26.7
 
     Average shares outstanding - diluted
      (in millions)                                    26.4              26.8
 
 
     BorgWarner Inc.
     Selected Financial Information (Unaudited)
     (millions of dollars)                          March 31,      December 31,
                                                      2001              2000
 
     Receivables                                     $202.8            $168.9
 
     Inventories                                     $153.5            $161.6
 
     Debt                                            $795.1            $794.8
 
     Stockholders' equity                          $1,104.6          $1,087.1
 
 
                                                        Three Months Ended
                                                              March 31,
                                                       2001              2000
 
     Capital spending                                 $17.2             $28.3
 
 
     BorgWarner Inc.
     Sales by Operating Group (Unaudited)
     (millions of dollars)                              Three Months Ended
                                                             March 31,
                                                      2001              2000
     Air/Fluid Systems                                $90.9            $124.1
 
     Cooling Systems                                   58.3              80.1
 
     Morse TEC                                        220.6             234.7
 
     TorqTransfer Systems                             125.4             147.3
 
     Transmission Systems                             104.0             115.6
 
     Divested Operations                               18.0              41.3
 
       Subtotal                                       617.2             743.1
 
     Eliminations                                     (10.4)            (12.9)
 
     Total Sales by Operating Group                  $606.8            $730.2
 
 
     BorgWarner Inc.
     Earnings Before Interest and Taxes by Operating Group (Unaudited)
     (millions of dollars)                               Three Months Ended
                                                              March 31,
                                                       2001              2000
     Air/Fluid Systems                                 $3.0             $15.6
 
     Cooling Systems                                    2.0              11.0
 
     Morse TEC                                         27.8              33.4
 
     TorqTransfer Systems                               4.0              10.4
 
     Transmission Systems                              12.0              14.7
 
     Divested Operations                               (0.2)              2.2
 
     Total EBIT by Operating Group                    $48.6             $87.3
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X55084472
 
 SOURCE  BorgWarner Inc.

RELATED LINKS

http://www.bwauto.com