BorgWarner Earns $0.70 Per Share in Third Quarter

CHICAGO, Oct. 23 -- BorgWarner Inc. today announced third quarter results in line with stated company expectations. The company reported that it earned $0.70 per share on sales of $559.9 million in the 2001 third quarter. The company's results were bolstered by its broad customer base, geographic growth and key technology for more efficient engines and transmissions, which helped offset renewed industry instability.

Financial Results: The company reported 2001 third quarter net earnings of $18.4 million, or $0.70 per share, compared with $24.9 million, or $0.95 per share last year, before a restructuring charge. Third quarter 2001 sales were $559.9 million compared with $618.5 million in the 2000 third quarter, which included sales from divested units of $28.7 million.

Net earnings for the first nine months of 2001 were $64.2 million, or $2.43 per share, compared with $105.9 million, or $4.00 per share, for the 2000 period, excluding a restructuring charge of $0.75 per share. Sales were $1,768.8 million in 2001 and $2,049.6 million in 2000. Sales for the businesses currently owned were $1,750.8 million in 2001 and $1,940.3 million in 2000.

Comments and Outlook: ``While the tragic events of the past quarter have pushed the industry into another period of uncertain production schedules and a longer downturn, BorgWarner is focused on managing its operations and financial strengths to accommodate the current situation while positioning the company to capitalize on new business anticipated in 2002,'' said John F. Fiedler, Chairman and CEO.

Fiedler continued: ``Given current industry conditions, we now anticipate that fourth quarter results will be similar to those in this third quarter, with earnings expectations for the year in the range of $3.10 to $3.20 per share. Having been among the first suppliers to reduce costs in anticipation of the North American auto industry slowdown, we expect to end the year in a strong financial position, with reduced and strong cash flow. Our company provides solutions that create cleaner, more efficient yet comfortable cars and trucks, which allows us to win new business around the world. We expect to announce our new business pipeline at the end of October.''

Operating Group Results: During the third quarter, revenue at Morse TEC, the company's chain and turbocharger business, was $212.0 million. North American production softness continued to impact sales of the group's chain products while demand continues in Europe for both chain engine timing systems and turbochargers.

Sales for Transmission Systems of $106.8 million reflected a customer mix weighted toward General Motors, improved productivity in the group's U.S. operations, and demand in Europe for transmission products. Sales of $53.2 million from Cooling Systems continue to be 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.

Sales for Air/Fluid Systems of $83.5 million continued to be affected by weakness at Chrysler, its major customer. TorqTransfer Systems' sales were $114.4 million, negatively impacted by unanticipated production shutdowns at Ford late in the quarter.

Overall, sales reported in dollars were affected by the weakness of European and Asian currencies relative to the dollar. This reduced sales by $12 million for the third quarter and $40 million year-to-date.

Recent Highlights: During the quarter, the company announced new business wins with both North American and European automakers, and expansions in the Asian market. Among the new business are programs to supply an expected 1.8 million turbochargers over the next few years for Peugeot's DV4 engine, the first engine emerging from the Peugeot/Ford diesel engine alliance, and chain timing systems for DaimlerChrysler's 3.7 liter engine and for a major European automaker's new generation of middle-size 4-cylinder gasoline engines.

The company also announced that it has been named the production supplier to a major European OEM for its new concept DualTronic(TM) transmission module that marries the fuel efficiency of a manual transmission with the smooth shifting of an automatic. In addition, the company announced the expansion of its chain and cooling systems businesses into India, and the development of new transmission clutch and cooling systems products.

BorgWarner Inc 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.