BorgWarner Enters Into Crystal Springs Settlement

AUBURN HILLS, Mich., July 8 -- BorgWarner Inc. has entered into a settlement regarding approximately 90% of claims related to previously disclosed alleged environmental contamination from a Kuhlman Electric Corporation ("KEC") plant site in Crystal Springs, Mississippi. The contamination predates BorgWarner's purchase of Kuhlman Corporation, the former parent company of KEC. BorgWarner and other defendants will pay up to $39 million in three equal installments ending on January 2, 2006.

"We are pleased to have the vast majority of this issue behind us and expect that the remainder can be resolved quickly and in a satisfactory manner," said Timothy Manganello, Chairman and CEO of BorgWarner.

The company will incur an after-tax charge of approximately $29 million in the second quarter, or $0.50 per share, as a result of anticipated costs associated with settling all Crystal Springs-related claims. BorgWarner is also vigorously pursuing recovery of the settlement amount from various insurance carriers and other third parties and will reflect those recoveries as income in future periods as they become resolved.

As a result of the $0.50 per share after-tax charge, the company says it now expects 2005 earnings per share in a range of $4.15 to $4.31 which includes the ($0.50) per share second quarter charge related to the Crystal Springs settlement and $0.38 per share associated with divestitures, the release of tax accruals and net of the immediate write-off of the excess purchase price associated with Beru's in-process R&D reported in the first quarter. Previous earnings guidance for 2005 was $4.65 to $4.81 per share. The company reconfirms its expectations for earnings per share in a range of $4.27 to $4.43 on its base business plus the anticipated contribution from Beru, excluding the aforementioned items.

Auburn Hills, Michigan-based BorgWarner Inc. is a product leader in highly engineered components and systems for vehicle powertrain applications worldwide. The company operates manufacturing and technical facilities in 62 locations in 17 countries. Customers include Ford, DaimlerChrysler, General Motors, VW/Audi, Toyota, Hyundai/Kia, Renault/Nissan, Honda, Caterpillar, Navistar International, Peugeot and BMW. The Internet address for BorgWarner is: http://www.borgwarner.com/ .