[BORGWARNER Logo]
Immediate Release
Contact: Mary Brevard
312/322-8683
BORGWARNER EARNS $1.30 PER SHARE FOR Q303;
ENGINE AND FOUR-WHEEL DRIVE SYSTEMS CONTINUE TO SPUR GROWTH
Chicago, Illinois, October 27, 2003 BorgWarner Inc. (NYSE: BWA) delivered
earnings of $1.30 per share in the third quarter of 2003 on a 6% sales
increase.
Increased demand for the company's fuel-efficient engine technology and
four-wheel drive systems continued to drive growth.
Financial Results: The company reported 2003 third quarter net earnings of
$35.9 million or $1.30 per share, compared with $31.9 million, or $1.18 per
share last year. Third quarter 2003 sales were $725.2 million compared with
$684.0 million in the 2002 third quarter. These results came in the face of a
very weak automotive market, with production soft in all regions, especially
North America which was off 5%.
Net earnings for the first nine months of 2003 were $124.9 million or $4.59
per share compared with $109.1 million or $4.07 per share for the 2002 period
before the cumulative effect of the change in accounting for goodwill. Sales
were $2,270.4 million, up 12% over 2002 nine-month sales of $2,030.3 million.
Comments and Outlook: "We continue to see strong sales growth for our
turbochargers and four-wheel drive systems," said Timothy M. Manganello,
Chairman and CEO. "These include our electronic all-wheel systems for crossover
vehicles such as those from Honda, Acura and Hyundai, and four-wheel drive
systems for new GM applications. In Europe, the demand for fuel-efficient cars
is driving the growth of our engine-related products, while our Asian customers
are experiencing significant growth in North America."
Manganello tightened the company's full-year 2003 guidance to a range of
$6.25 to $6.35 per share. Commenting on the company's 2004 outlook, Mr.
Manganello noted that the company expects overall stability but little growth in
the global auto market. "We expect BorgWarner's performance to continue to
outpace that of the global auto industry because our powertrain technology
serves the fastest growing areas of the market. With our fuel-efficient
products for Europe and new business among Japanese and Korean automakers, we
expect to achieve our growth targets of 8% to 11% in sales, and 12% to 16% in
earnings in 2004. We will release our pipeline of new business for 2004 through
2006 in early November, and we expect this business to provide the platform for
our growth."
- -more-
BorgWarner 2003 Third Quarter Results Page 2
Operating Group Results: The company's Engine Group registered an 8% sales
gain to $451.4 million with an increase in operating income. Strong sales of
turbochargers boosted the group's results. The group continues to benefit from
demand for the company's products for European passenger cars and commercial
vehicles, and sales growth for a variety of products in emerging markets such as
India and China, which more than offset weak North American markets.
Sales for the Drivetrain Group were up 3% while operating income declined
compared with last year's third quarter. Increased sales came from four-wheel
drive systems. The impact of start-up costs for the group's new fuel-efficient
transmission technology being introduced in Europe and mix changes combined to
cause the short-term operating income decline. The company expects operating
income improvements in the fourth quarter as new programs expand and cost
reductions begin to be realized.
Recent Highlights: During the quarter, the company announced a commitment
for the first use of its patented Morse TEC Gemini(TM) chain system in a
four-wheel drive transfer-case application for the 2004 Dodge Durango.
In addition,
BorgWarner TorqTransfer Systems will supply its InterActive Torque Management
(ITM)(TM) system to the new Hyundai Santa Fe CM crossover utility vehicle,
beginning in June 2005.
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 43 locations in 14
countries. Customers include Ford, DaimlerChrysler, General Motors, Toyota,
Honda, Hyundai/Kia, Caterpillar, Navistar International, Renault/Nissan, Peugeot
and VW/Audi. 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: Thomson / PR Newswire.
Financial Tables Follow
###
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, 2002.
BorgWarner Inc.
Consolidated Statements of Operations (Unaudited)
(millions of dollars, except per share data)
Three Months Ended Nine Months Ended
September 30, % September 30, %
2003 2002 Change 2003 2002 Change
Net sales $725.2 $684.0 6.0% $2,270.4 $2,030.3 11.8%
Cost of sales 595.9 556.1 7.2% 1,842.8 1,621.6 13.6%
------ ----- ----- -------- ------- ------
Gross profit 129.3 127.9 1.1% 427.6 408.7 4.6%
Selling, general and admini-
strative expenses 72.7 73.2 -0.7% 233.4 224.3 4.1%
Other, net 0.1 (0.2)-150.0% 0.2 (0.6)-133.3%
---- ----- ------ ------ ----- -------
Operating Income 56.5 54.9 2.9% 194.0 185.0 4.9%
Equity in affiliate earnings,
net of tax (3.6) (4.5) -20.0% (15.3) (13.9) 10.1%
Interest expense and
finance charges 8.1 9.3 -12.9% 25.8 28.7 -10.1%
---- ---- ----- ----- ----- -------
Earnings before income
taxes 52.0 50.1 3.8% 183.5 170.2 7.8%
Provision for income
taxes 14.2 16.4 -13.4% 52.3 56.2 -6.9%
Minority interest,
net of tax 1.9 1.8 5.6% 6.3 4.9 28.6%
----- ----- ----- ----- ---- -----
Net earnings before
cumulative effect of
accounting change $35.9 $31.9 12.5% $124.9 $109.1 14.5%
Cumulative effect of change
in accounting principle,
net of tax - - - (269.0)
------- ------- ------ --------
Net earnings/(loss) $35.9 $31.9 $124.9 ($159.9)
======= ======== ======== ========
Net earnings per share before
cumulative effect of
accounting change -
Diluted $1.30 $1.18 $4.59 $4.07
Per share charge due to
cumulative effect of
accounting change -
Diluted - - - (10.03)
------- ------- ------- --------
Net earnings/(loss) per
share - Diluted $1.30 $1.18 $4.59 ($5.97)
======== ======== ======== =========
Average shares outstanding
- Diluted (in millions) 27.5 27.0 27.2 26.8
======== ======= ======== =========
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
Capital expenditures $39.3 $26.1 $104.1 $81.4
====== ====== ====== ======
Tooling outlays, net
of customer
reimbursements $8.0 $1.3 $28.8 $17.3
====== ====== ====== ======
Depreciation and amortization:
Fixed asset depreciation $30.3 $26.7 $90.5 $80.8
Amortization of tooling 9.9 7.5 25.6 21.2
----- ----- ------ ------
$40.2 $34.2 $116.1 $102.0
===== ===== ====== ======
BorgWarner Inc.
Sales by Operating Group (Unaudited)
(millions of dollars)
Three Months Ended Nine Months Ended
September 30, % September 30, %
2003 2002 Change 2003 2002 Change
Drivetrain $284.3 $277.5 2.5% $915.3 $819.5 11.7%
Engine 451.4 416.6 8.4% 1,388.8 1,240.1 12.0%
------ ------ ----- ------- -------- ------
Subtotal 735.7 694.1 6.0% 2,304.1 2,059.6 11.9%
Eliminations (10.5) (10.1) N/A (33.7) (29.3) N/A
------ ------ ----- ------- -------- ------
Total Sales by
operating
group $725.2 $684.0 6.0% $2,270.4 $2,030.3 11.8%
====== ======= ====== ========= ======== ======
BorgWarner Inc.
Earnings Before Interest and Taxes by Operating Group (Unaudited)
(millions of dollars)
Three Months Ended Nine Months Ended
September 30, % September 30, %
2003 2002 Change 2003 2002 Change
----- ----- ------- ----- ----- -------
Drivetrain $16.7 $22.2 -24.8% $66.5 $71.7 -7.3%
Engine 55.6 47.9 16.1% 178.3 158.7 12.4%
----- ----- ------- ------ ------ -------
Total EBIT by
operating
group $72.3 $70.1 3.1% $244.8 $230.4 6.3%
Corporate (12.2)(10.7) 14.0% (35.5) (31.5) 12.7%
------ ------ ------ ------- ------- ------
Consolidated 60.1 59.4 1.2% 209.3 198.9 5.2%
Interest and
finance charges(8.1) (9.3) -12.9% (25.8) (28.7) -10.1%
----- ------ ------- ------- ------- ------
Earnings before
income taxes 52.0 50.1 3.8% 183.5 170.2 7.8%
====== ====== ====== ======= ======= =======
Condensed Consolidated Balance Sheets (Unaudited)
(millions of dollars)
September 30, 2003 December 31, 2002
ASSETS
Cash and cash
equivalents $106.8 $36.6
Receivables 381.0 292.1
Inventories 198.4 180.3
Other current
assets 67.0 57.5
------- --------
Total current
assets 753.2 566.5
Property, plant,
and equipment 927.6 894.9
Other long-term
assets 1,258.7 1,221.5
-------- --------
Total assets $2,939.5 $2,682.9
========= =========
LIABILITIES
Notes payable $12.8 $14.4
Accounts payable
and accrued
expenses 448.8 435.6
Accrued income
taxes payable 25.3 1.2
------- -------
Total current
liabilities 486.9 451.2
Long-term debt 635.0 632.3
Other long-term
liabilities 638.2 618.0
STOCKHOLDERS' EQUITY
Stockholders' equity 1,179.4 981.4
-------- -------
Total liabilities and
stockholders'
equity $2,939.5 $2,682.9
========= ===========