BorgWarner Earns $5.01 Per Share on 8% Sales
Increase in 2000
CHICAGO, Feb. 7 BorgWarner Inc. today reported
that it earned $5.01 per share, before charges, on sales of $2.65 billion in
2000. Sales increased 8% over 1999 levels. As anticipated, results were
affected by the impact of a continuing weak Euro on strong European sales,
weakening car and truck production during the second half of the year and
industry uncertainty. The impact of the Euro reduced earnings by 15 cents per
share.
Financial Results: For the 2000 fourth quarter, net income was
$26.8 million, or $1.02 per share before a restructuring charge, compared with
$36.4 million, or $1.36 per share in 1999. Sales for the quarter were
$596 million compared with $677 million in the 1999 fourth quarter. The
charge, recognized in the fourth quarter, totaled $19.1 million or
$.72 per share resulting in net income for the quarter of $7.7 million or
$.30 per share.
Full-year 2000 net income was $132.7 million, or $5.01 per share before
restructuring charges, compared with $132.3 million or $5.07 per share for the
1999 year. Sales for 2000 totaled $2.65 billion compared with $2.46 billion
in 1999. The restructuring charges totaled $1.47 per share and included a
variety of actions to adjust the company's workforce, cost structure and asset
base to anticipated future business levels. As a result, full-year net income
was $94.0 million or $3.54 per share.
Comments and Outlook: "Despite a weak ending to the year, we clearly
demonstrated the viability of our technology driven growth strategy with new
business wins in 2000 which we expect will put us in a strong position as the
industry recovers," said John F. Fiedler, Chairman and CEO. "This new
business includes major multi-year contracts for engine timing systems with
Ford and Honda, next generation turbocharger and cooling systems business,
significant four-wheel drive business with General Motors and Honda, and our
first European customer for new concept, fuel-efficient transmission
technology.
"We took action early in the 2000 third quarter, and again in the fourth
quarter, to deal with what we expect to be a very difficult first half of
2001. Our focus is on cash flow and maintaining our strong financial
position. We believe that we should begin to see some improvement in our
business in the second half of the year as car and truck inventories are
reduced. Our customers still have very real needs to improve fuel economy and
air quality worldwide, and there is emerging concern about vehicle stability
throughout the industry, all of which drive our growth."
Commenting on the outlook, Fiedler said: "It is extremely difficult to
give useful guidance for the first quarter, considering that results toward
the end of the first quarter are usually significant in determining that
period's performance, and the fact that the industry is currently very
uncertain and volatile. We expect a better second half of the year, however,
assuming an improvement in North American production during that time." The
main factors that continue to put pressure on earnings are ongoing production
cuts at major North American customers and general industry instability.
Operating Results: Revenue at Morse TEC, the company's chain and
turbocharger business, was down 1% to $209.4 million for the 2000 fourth
quarter and up 11% to $885.8 million for the full year. Results for the group
were driven by demand for engine timing systems and turbochargers in both
North America and Europe. Sales for Air/Fluid Systems, excluding a business
unit to be sold, were $91.4 million for the quarter, down 19%, and
$427.8 million for the year, up 3%. In the later part of the year, the group
was impacted by weak vehicle sales at a major customer that reduced demand for
the group's air management and control products.
TorqTransfer Systems' sales were down from the prior quarter and year to
$120.3 million and $526.7 million respectively. Transmission Systems' sales
were down 3% to $104.9 million for the fourth quarter, and up 6% to
$437.5 million compared with 1999, excluding sold product lines. The
company's newest operating group, Cooling Systems, reported sales of
$57.6 million for the quarter and $281.3 million for the year, including
results from the acquisition of the Fluid Power Division of Eaton Corporation.
Chicago-based BorgWarner is a product leader in highly engineered
components and systems for vehicle powertrain applications worldwide. The
company operates 56 manufacturing and technical facilities in 13 countries.
Customers include Ford, DaimlerChrysler, General Motors, Toyota, Caterpillar,
Navistar International, PSA and VW Group. The Internet address for BorgWarner
is: http://www.bwauto.com . Investor conference calls are webcast over
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, 1999.
BorgWarner Inc.
Consolidated Statement of Operations (Unaudited)
(millions of dollars,
except per share data) Three Months Twelve Months
Ended Ended
December 31, December 31,
2000 1999 2000 1999
Net sales $596.3 $676.8 $2,645.9 $2,458.6
Cost of sales 448.5 513.9 2,003.1 1,888.5
Depreciation 24.9 25.3 102.2 91.3
Selling, general and administrative
expenses 65.3 56.4 244.1 203.3
Minority interest 0.8 0.1 2.7 1.3
Goodwill amortization 10.8 11.0 43.3 32.1
Restructuring and other non-recurring
charges 30.3 0.0 62.9 0.0
Equity in affiliate earnings and other
income (11.4) (3.1) (23.8) (14.1)
Earnings before interest expense,
finance charges and taxes 27.1 73.2 211.4 256.2
Interest expense and finance charges 14.9 17.6 62.6 49.2
Earnings before income taxes 12.2 55.6 148.8 207.0
Provision for income taxes 4.5 19.2 54.8 74.7
Net earnings $7.7 $36.4 $94.0 $132.3
Net earnings per share - basic $0.30 $1.36 $3.56 $5.10
Net earnings per share - diluted $0.30 $1.36 $3.54 $5.07
Average shares outstanding - basic
(in millions) 26.2 26.7 26.4 25.9
Average shares outstanding - diluted
(in millions) 26.3 26.8 26.5 26.1
BorgWarner Inc.
Selected Financial Information (Unaudited)
(millions of dollars) December 31, December 31,
2000 1999
Receivables $177.9 $216.2
Inventories $166.5 $164.4
Debt $795.0 $980.3
Stockholders' equity $1,084.8 $1,057.5
Three Months Ended Twelve Months Ended
December 31, December 31,
2000 1999 2000 1999
Capital spending $55.6 $50.6 $167.1 $143.4
BorgWarner Inc.
Net Earnings Reconciliation (Unaudited)
(millions of dollars, except per
share data) Three Months Ended,
December 31, 2000
Restructuring From
Consolidated Charge Operations
Net sales $596.3 $596.3
Cost of sales 448.5 448.5
Depreciation 24.9 24.9
Selling, general and administrative
expenses 65.3 65.3
Minority interest 0.8 0.8
Goodwill amortization 10.8 10.8
Restructuring and other non-recurring
charges 30.3 30.3 0.0
Equity in affiliate earnings and
other income (11.4) (11.4)
Earnings before interest expense,
finance charges and taxes 27.1 (30.3) 57.4
Interest expense and finance charges 14.9 14.9
Earnings before income taxes 12.2 (30.3) 42.5
Provision for income taxes 4.5 (11.2) 15.7
Net earnings $7.7 ($19.1) $26.8
Net earnings per share - basic $0.30 ($0.72) $1.02
Net earnings per share - diluted $0.30 ($0.72) $1.02
Average shares outstanding - basic
(in millions) 26.2 26.2 26.2
Average shares outstanding - diluted
(in millions) 26.3 26.3 26.3
Twelve Months Ended,
December 31,2000
Restructuring From
Consolidated Charge Operations
Net sales $2,645.9 $2,645.9
Cost of sales 2,003.1 2,003.1
Depreciation 102.2 102.2
Selling, general and administrative
expenses 244.1 244.1
Minority interest 2.7 2.7
Goodwill amortization 43.3 43.3
Restructuring and other non-recurring
charges 62.9 62.9 0.0
Equity in affiliate earnings and
other income (23.8) (23.8)
Earnings before interest expense,
finance charges and taxes 211.4 (62.9) 274.3
Interest expense and finance charges 62.6 62.6
Earnings before income taxes 148.8 (62.9) 211.7
Provision for income taxes 54.8 (24.2) 79.0
Net earnings $94.0 ($38.7) $132.7
Net earnings per share - basic $3.56 ($1.47) $5.03
Net earnings per share - diluted $3.54 ($1.47) $5.01
Average shares outstanding - basic
(in millions) 26.4 26.4 26.4
Average shares outstanding - diluted
(in millions) 26.5 26.5 26.5
BorgWarner Inc.
Sales by Operating Group (Unaudited)
(millions of dollars) Three Months Ended Twelve Months Ended
December 31, December 31,
2000 1999 2000 1999
Air/Fluid Systems $91.4 $113.3 $427.8 $413.9
Cooling Systems 57.6 75.1 281.3 142.8
Morse TEC 209.4 212.3 885.8 796.9
TorqTransfer Systems 120.3 142.8 526.7 563.3
Transmission Systems 104.9 108.3 437.5 413.4
Divested Operations 23.6 36.8 132.9 178.0
Subtotal 607.2 688.6 2,692.0 2,508.3
Eliminations (10.9) (11.8) (46.1) (49.7)
Total Sales by Operating
Group $596.3 $676.8 $2,645.9 $2,458.6
BorgWarner Inc.
Earnings Before Interest and Taxes by Operating Group (Unaudited)
Three Months Twelve Months
(millions of dollars) Ended Ended
December 31, December 31,
2000 1999 2000 1999
Air/Fluid Systems $5.2 $12.8 $35.7 $36.5
Cooling Systems 4.0 9.2 32.1 17.9
Morse TEC 31.2 27.6 127.4 109.7
TorqTransfer Systems 10.5 11.7 37.2 41.2
Transmission Systems 8.6 12.4 46.0 54.1
Divested Operations (0.8) 0.5 3.2 6.9
Total EBIT by Operating Group $58.7 $74.2 $281.6 $266.3
