AUBURN HILLS, Mich., Oct. 28 /PRNewswire-FirstCall/ -- BorgWarner
Inc. (NYSE:BWA) reported third quarter U.S. GAAP earnings of $0.15
per diluted share today compared with $(1.12) per diluted share in
the third quarter of 2008. The sequential gain in income from
second quarter 2009 is attributable to continuous improvement in
operational efficiency in combination with higher sales. Positive
free cash flow of $13.6 million in the quarter (net cash provided
by operating activities less capital expenditures, including
tooling outlays), further strengthened the balance sheet. Third
Quarter Highlights: -- Sales were $1,027.8 million. -- U.S. GAAP
earnings were $0.15 per diluted share. -- Operating income was
$27.5 million, or 2.7% of sales. -- Net cash provided by operating
activities was $226.3 million for the first nine months of 2009. --
Net debt decreased $88.0 million since the end of 2008. -- Net debt
to capital ratio was 21.3%. Comment and Outlook: "BorgWarner's
continued focus on execution generated positive results during the
quarter," said Timothy Manganello, Chairman and CEO. "Our earnings
performance in the third quarter, which has lifted us to near
breakeven levels year to date on a recurring basis, is a direct
result of resizing our business for profitability at these sales
levels. Our decremental margin in the quarter was approximately
15%, significantly better than our target range of 20% to 25%. As a
result of actions taken over the last twelve months, BorgWarner is
a much leaner company now with a renewed commitment to operational
excellence and efficiency." Commenting on the remainder of the
year, Manganello noted, "We continue to be cautiously optimistic
about the fourth quarter. We expect production volumes to be
incrementally higher than third quarter levels in North America,
while visibility in Europe remains limited due to uncertainty
surrounding consumer demand, the impact of expiring
government-sponsored incentive programs and other market dynamics.
Ultimately, we expect it to be another profitable quarter for our
company. Furthermore, our leadership in fuel-efficient
technologies, combined with the company's diversified customer base
and broad geographic presence should enable BorgWarner to achieve
sustained profitable growth over the long term." Financial Results:
For the third quarter 2009, sales were $1,027.8 million, down 22.0%
compared with $1,316.9 million in the third quarter 2008. Excluding
the negative impact of currency, the decline would have been
approximately 18%. Net income in the quarter was $17.2 million, or
$0.15 per diluted share, compared with a loss of $(130.4) million,
or $(1.12) per diluted share, in third quarter 2008. The third
quarter 2008 loss included a restructuring charge of $(0.16) per
diluted share, a charge of $(1.27) per diluted share for a goodwill
adjustment related to the BERU acquisition, a valuation adjustment
for foreign tax credits of $(0.12) per diluted share, and a charge
related to the outcome of retiree healthcare benefits litigation of
$(0.03) per diluted share. The impact of foreign currencies,
primarily the lower Euro, lowered sales by approximately $50
million in third quarter 2009 compared with third quarter 2008, and
reduced earnings by approximately $(3) million, or $(0.03) per
diluted share. For the first nine months of 2009, sales were
$2,763.5 million, down 36.2% compared with $4,332.4 million in the
first nine months of 2008. Excluding the negative impact of
currency, the decline would have been approximately 31%. Net income
in the first nine months of 2009 was a loss of $(25.7) million, or
$(0.22) per diluted share, compared with income of $45.8 million,
or $0.39 per diluted share, in the first nine months of 2008. The
loss in the first nine months of 2009 included a $(0.29) per
diluted share loss related to restructuring activities, a $(0.03)
per diluted share net loss from interest rate derivative
agreements, a $(0.03) per diluted share loss upon adoption of Topic
805, Business Combinations (formerly referred to as FAS 141R), for
the treatment of on-going acquisition-related activity, and a $0.15
per diluted share net gain related to retiree obligations resulting
from the closure of the Muncie, Indiana, Drivetrain facility. The
first nine months of 2008 net income included a third quarter
restructuring charge of $(0.16) per diluted share, a charge of
$(1.24) per diluted share for a goodwill adjustment related to the
BERU acquisition, a valuation adjustment for foreign tax credits of
$(0.11) per diluted share, a charge related to the outcome of
retiree healthcare benefits litigation of $(0.03) per diluted
share, and purchase accounting adjustments related to the
acquisition of BERU of $(0.04) per diluted share. The impact of
foreign currencies, primarily the lower Euro, reduced sales by
approximately $232 million in the first nine months of 2009
compared with first nine months of 2008, and reduced the loss in
earnings by approximately $(3) million, or $(0.03) per diluted
share. The following table reconciles the company's non-U.S. GAAP
amounts included in the press release to the most directly
comparable U.S. GAAP amounts and is provided for comparisons with
other results: Net earnings or (loss) per diluted share Third
Quarter First Nine Months 2009 2008 2009 2008 Non - U.S. GAAP $0.15
$0.44 $(0.03) $1.97 Reconciliations: Restructuring activities
(0.16) (0.29) (0.16) Goodwill impairment charge (1.27) (1.24) Tax
valuation allowance (0.12) (0.11) DTP retiree outcome (0.03) (0.03)
BERU purchase accounting (0.04) Interest rate derivative agreements
(0.03) Topic 805, Business Combinations, adoption (0.03) Change in
retiree obligations related to Muncie closure 0.15 U.S. GAAP $0.15
$(1.12)* $(0.22)* $0.39 *Column does not add due to rounding The
Company's operating income was $27.5 million in third quarter 2009
versus an operating loss of $(103.9) million in third quarter 2008.
Excluding non-recurring items, operating income in third quarter
2008 was $71.9 million, or 5.5% of sales. Research and development
spending was $41.4 million, or 4.0% of sales, versus $50.7 million,
or 3.8% of sales, in third quarter 2008. Net cash provided by
operating activities was $226.3 million in the first nine months of
2009 versus $265.1 million in the first nine months of 2008.
Investments in capital expenditures, including tooling outlays,
totaled $127.2 million during the first nine months of 2009,
compared with $265.6 million for the same period in 2008. Balance
sheet debt increased by $67.4 million at the end of the quarter
compared with the end of 2008 primarily due to the net impact of
the issuance of $373.8 million in convertible senior notes, the
retirement of $136.7 million in senior notes and payments related
to other short term debt obligations. Cash on hand increased by
$155.4 million during the same period. Engine Group Results: Demand
for the company's engine products in the third quarter was an
improvement over the second quarter, but was still weak compared
with the same period a year ago. Engine segment net sales decreased
to $735.3 million, or 24.5%, compared with $974.1 million in the
prior year's quarter. Excluding the negative impact of currency,
sales were down approximately 21%. Earnings before interest and
income taxes were $56.6 million. Drivetrain Group Results:
Drivetrain segment third quarter sales were relatively strong
considering the weakened state of the industry. Sales were $296.8
million, down only 14.5% compared with $347.2 million in third
quarter 2008. Excluding the negative impact of currency, sales were
down approximately 10%. Earnings before interest and income taxes
were $7.5 million. Recent Highlights: During the quarter, the
company announced it has been selected to supply turbochargers and
exhaust gas recirculation (EGR) valves for various cars and light
commercial vehicles manufactured by First Automotive Works (FAW),
China's oldest and largest vehicle manufacturer, beginning in 2010.
Located in Changchun, China, FAW sold 1.5 million vehicles in 70
countries last year. BorgWarner's proven turbocharging and EGR
technologies will help FAW meet China 4 emissions standards, which
are equivalent to Euro 4 emissions standards. Also, BorgWarner has
been selected to supply its friction materials and plates for the
new ZF 8-speed automatic transmission (8HP), debuting on the 2010
BMW 760i. BorgWarner's friction technology helps reduce drag
losses, allowing the transmission to achieve improved fuel economy
and outstanding performance. The Company also announced the supply
of collated friction packs and roller one-way clutch assemblies for
the new generation of six-speed front-wheel drive automatic
transmissions from the Hyundai-Kia Automotive Group. Consisting of
five variants, the new transmission family will ultimately drive 16
Hyundai and Kia vehicles powered by 2.0- to 3.8-liter gasoline and
diesel engines. Debuting on the Hyundai Grandeur/Azera near-luxury
sedans earlier this year, future applications for the new
transmission family will include Hyundai's new Tucson, Sonata and
Santa Fe, as well as Kia's new Sorento and Borrego (Mohave), among
others. Additionally, BorgWarner was chosen to supply variable
turbine geometry (VTG) turbochargers to boost John Deere Power
Systems Interim Tier 4/Stage III B PowerTech(TM) PVX and
PowerTech(TM) PSX 4.5L, 6.8L and 13.5L diesel engines for
agricultural, construction, forestry and OEM applications.
BorgWarner's turbocharging technology helps these new industrial
engines meet stringent Interim Tier 4/Stage III B regulations for
off-highway applications. These regulations require up to a 50%
reduction in nitrogen oxide (NOx) emissions compared with previous
standards. And, BorgWarner announced another eGearDrive(TM)
transmission application on the all-electric CODA sedan, scheduled
for introduction in California in 2010. Ideally suited for full
performance electric vehicles on either front-wheel drive or
rear-wheel drive transverse driveline applications, the BorgWarner
31-03 eGearDrive(TM) single-speed transmission delivers high torque
capacity, high efficiency, and low noise, vibration and harshness
(NVH) in a compact package. At 9:00 a.m. ET today, a brief
conference call concerning third quarter results will be webcast
at: http://www.borgwarner.com/invest/webcasts.shtml Auburn Hills,
Michigan-based BorgWarner Inc. (NYSE:BWA) is a product leader in
highly engineered components and systems for vehicle powertrain
applications worldwide. The FORTUNE 500 company operates
manufacturing and technical facilities in 60 locations in 18
countries. Customers include VW/Audi, Ford, Toyota, Renault/Nissan,
General Motors, Hyundai/Kia, Daimler, Chrysler, Fiat, BMW, Honda,
John Deere, PSA, and MAN. The Internet address for BorgWarner is:
http://www.borgwarner.com/. Additional Important Information
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
"outlook", "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, many of which are difficult to predict and generally
beyond our control, that could cause actual results to differ
materially from those expressed, projected or implied in or by the
forward-looking statements. Such risks and uncertainties include:
fluctuations in domestic or foreign vehicle production, the
continued use of outside suppliers, fluctuations in demand for
vehicles containing our products, changes in general economic
conditions, and other risks detailed in our filings with the
Securities and Exchange Commission, including the Risk Factors,
identified in our most recently filed Annual Report on Form 10-K.
We do not undertake any obligation to update any forward-looking
statements. Financial Tables Follow BorgWarner Inc. Condensed
Consolidated Statements of Operations (Unaudited)
------------------------------------------------------------------------
(millions of dollars, except share and per share data) Three Months
Ended Nine Months Ended September 30, September 30, 2009 2008 2009
2008 ---- ---- ---- ---- Net sales $1,027.8 $1,316.9 $2,763.5
$4,332.4 Cost of sales 876.0 1,114.6 2,415.9 3,567.8 ----- -------
------- ------- Gross profit 151.8 202.3 347.6 764.6 Selling,
general and administrative expenses 125.9 134.8 315.4 450.4
Restructuring expense - 25.0 50.3 25.0 Goodwill impairment charge -
146.8 - 146.8 Other (income) expense (1.6) (0.4) (1.6) 2.8 ----
---- ---- --- Operating income (loss) 27.5 (103.9) (16.5) 139.6
Equity in affiliates' earnings, net of tax (6.5) (9.2) (11.5)
(30.2) Interest income (0.5) (2.2) (1.7) (6.4) Interest expense and
finance charges 13.0 11.2 41.1 28.5 ---- ---- ---- ---- Earnings
(loss) before income taxes and noncontrolling interest 21.5 (103.7)
(44.4) 147.7 Provision (benefit) for income taxes 1.5 24.3 (24.2)
87.7 --- ---- ----- ---- Net earnings (loss) 20.0 (128.0) (20.2)
60.0 Net earnings attributable to the noncontrolling interest 2.8
2.4 5.5 14.2 --- --- --- ---- Net earnings (loss) attributable to
BorgWarner Inc. $17.2 $(130.4) $(25.7) $45.8 ===== ======= ======
===== Earnings (loss) per share - diluted $0.15 $(1.12) $(0.22)
$0.39 Weighted average shares outstanding (millions) - Diluted
117.5 116.0 116.4 118.0 Supplemental Information (Unaudited)
----------------------------------------------------------------
(millions of dollars) Three Months Ended Nine Months Ended
September 30, September 30, 2009 2008 2009 2008 ---- ---- ---- ----
Capital expenditures, including tooling outlays $38.9 $103.4 $127.2
$265.6 ===== ====== ====== ====== Depreciation and amortization:
Fixed assets and tooling $58.8 $66.8 $172.9 $202.3 Other 7.2 6.7
19.1 21.1 --- --- ---- ---- $66.0 $73.5 $192.0 $223.4 ===== =====
====== ====== BorgWarner Inc. Net Sales by Reporting Segment
(Unaudited)
-------------------------------------------------------------------------
(millions of dollars) Three Months Ended Nine Months Ended
September 30, September 30, 2009 2008 2009 2008 ---- ---- ---- ----
Engine $735.3 $974.1 $2,030.2 $3,181.2 Drivetrain 296.8 347.2 743.8
1,171.4 Inter-segment eliminations (4.3) (4.4) (10.5) (20.2) ----
---- ----- ----- Net Sales $1,027.8 $1,316.9 $2,763.5 $4,332.4
======== ======== ======== ======== Segment Earnings (Loss) Before
Interest and Income Taxes (Unaudited)
---------------------------------------------------------------------
(millions of dollars) Three Months Ended Nine Months Ended
September 30, September 30, 2009 2008 2009 2008 ---- ---- ---- ----
Engine $56.6 $94.1 $136.5 $358.4 Drivetrain 7.5 (2.9) (34.0) 37.2
--- ---- ----- ---- Segment earnings before interest and income
taxes ("Segment EBIT") 64.1 91.2 102.5 395.6 Muncie closure retiree
obligation net gain - - 27.9 - Corporate, including equity in
affiliates' earnings and stock-based compensation (30.1) (14.1)
(85.1) (54.0) ----- ----- ----- ----- Consolidated earnings before
interest and taxes ("EBIT") 34.0 77.1 45.3 341.6 Restructuring
expense - 25.0 50.3 25.0 Goodwill impairment charge - 146.8 - 146.8
Interest income (0.5) (2.2) (1.7) (6.4) Interest expense and
finance charges 13.0 11.2 41.1 28.5 ---- ---- ---- ---- Earnings
(loss) before income taxes and noncontrolling interest 21.5 (103.7)
(44.4) 147.7 Provision (benefit) for income taxes 1.5 24.3 (24.2)
87.7 --- ---- ----- ---- Net earnings (loss) 20.0 (128.0) (20.2)
60.0 Net earnings attributable to the noncontrolling interest 2.8
2.4 5.5 14.2 --- --- --- ---- Net earnings (loss) attributable to
BorgWarner Inc. $17.2 $(130.4) $(25.7) $45.8 ===== ======= ======
===== BorgWarner Inc. Condensed Consolidated Balance Sheets
(Unaudited)
-----------------------------------------------------------------------
(millions of dollars) September 30, 2009 December 31, 2008 Assets
------ Cash $258.8 $103.4 Receivables, net 779.6 607.1 Inventories,
net 314.6 451.2 Other current assets 151.9 146.5 ----- ----- Total
current assets 1,504.9 1,308.2 Property, plant and equipment, net
1,525.0 1,586.2 Other non-current assets 1,761.3 1,749.6 -------
------- Total assets $4,791.2 $4,644.0 ======== ========
Liabilities and Stockholders' Equity
------------------------------------ Notes payable $76.8 $183.8
Current portion of long-term debt - 136.9 Accounts payable and
accrued expenses 973.2 923.0 Income taxes payable 4.6 6.3 --- ---
Total current liabilities 1,054.6 1,250.0 Long-term debt 770.9
459.6 Other non-current liabilities 795.0 896.9 Total BorgWarner
Inc. stockholders' equity 2,137.2 2,006.0 Noncontrolling interest
33.5 31.5 ---- ---- Total stockholders' equity 2,170.7 2,037.5
------- ------- Total liabilities and stockholders' equity $4,791.2
$4,644.0 ======== ======== BorgWarner Inc. Condensed Consolidated
Statements of Cash Flows (Unaudited)
--------------------------------------------------------------------
(millions of dollars) Nine Months Ended September 30, 2009 2008
---- ---- Operating --------- Net earnings (loss) $(20.2) $60.0
Non-cash charges (credits) to operations: Depreciation and
amortization 192.0 223.4 Convertible bond premium amortization 8.3
- Restructuring expense, net of cash paid 39.4 17.8 Goodwill
impairment charge - 146.8 Deferred income tax benefit (46.1) (25.2)
Other non-cash items 36.0 15.3 ---- ---- Net earnings adjusted for
non-cash charges to operations 209.4 438.1 Changes in assets and
liabilities 16.9 (173.0) ---- ------ Net cash provided by operating
activities 226.3 265.1 Investing --------- Capital expenditures,
including tooling outlays (127.2) (265.6) Payments for business
acquired, net of cash acquired (23.0) (58.8) Net proceeds from
asset disposals 20.5 4.2 Net proceeds from sale of business - 5.5
Proceeds from sales of marketable securities - 14.6 - ---- Net cash
used in investing activities (129.7) (300.1) Financing ---------
Net change in notes payable (109.3) 80.7 Net change in long-term
debt 218.9 (7.3) Payment for purchase of bond hedge, net of
proceeds from warrant issuance (25.2) - Reduction in accounts
receivable securitization facility (50.0) - Payment for purchase of
treasury stock - (48.4) Proceeds from interest rate swap
termination 30.0 - Proceeds from stock options exercised, including
the tax benefit 5.8 16.2 Dividends paid to BorgWarner stockholders
(13.8) (38.3) Dividends paid to noncontrolling stockholders (8.7)
(12.9) ---- ----- Net cash provided by (used in) financing
activities 47.7 (10.0) Effect of exchange rate changes on cash 11.1
(7.7) ---- ---- Net increase (decrease) in cash 155.4 (52.7) Cash
at beginning of year 103.4 188.5 ----- ----- Cash at end of period
$258.8 $135.8 ====== ====== DATASOURCE: BorgWarner Inc. CONTACT:
Ken Lamb of BorgWarner Inc. , +1-248-754-0884 Web Site:
http://www.borgwarner.com/
Copyright