Borg-Warner Automotive Reports Record Quarter: Receives Go-Ahead on Turbo Charger Acquisition
22 October 1997
Borg-Warner Automotive Reports Record Quarter: Receives Go-Ahead on Turbo Charger Acquisition
CHICAGO, Oct. 22 -- Borg-Warner Automotive, Inc.
today reported record third quarter income and revenue. In addition, the
company announced that it was proceeding with its purchase of the majority
ownership share of Kuhnle, Kopp & Kausch, a German manufacturer of automotive
and industrial turbochargers and turbomachinery.
For the third quarter ended September 30, 1997, net income rose 15% to
$21.6 million, or $.91 per share, compared with $18.8 million, or $.80 per
share, reported in the same quarter of 1996. Revenue was up 5% to $406.8
million compared with $387.7 million in the 1996 third quarter.
Net income for the first nine months of 1997 was up 44% to $76.0 million,
or $3.21 per share, compared with $52.9 million, or $2.25 per share, in the
first nine months of 1996. Revenue was up 16% to $1,300.0 million compared
with $1,118.4 million in 1996.
"Continued strength in the light truck and sport-utility vehicle markets
more than offset the results from anticipated delays in customer product
changeovers during the quarter," said John F. Fiedler, chairman and chief
executive officer of Borg-Warner Automotive. "Earnings were in line with our
expectations and our growth continues to outperform that of the industry."
Commenting on the remainder of the year, Fiedler said: "We are encouraged
by the optimism expressed by the auto makers for fourth quarter production.
Given their plans, we still believe that full year results will be in line
with street expectations."
For the quarter, Powertrain Systems' sales increased 10% to $140.2
million, driven by demand for transfer cases for sport-utility vehicles and
light trucks. If third quarter 1996 revenue from the divested manual
transmission business is excluded, sales were up 32%.
Automatic Transmission Systems' sales rose 7% to $124.6 million.
Continued strong performances in Europe and Asia were offset by a stronger
U.S. dollar. Sales for Morse TEC were up 15% to $78.0 million on the strength
of the MORSE GEMINI(TM) Chain System, a new European timing chain system and
4WD transfer case applications. Revenue from Air/Fluid Systems was down 5% to
$80.7 million, primarily due to anticipated customer product changeover delays
and slower new product launches.
In addition to record quarterly results, the company announced that it was
proceeding with closing the acquisition of the majority ownership share of
Kuhnle, Kopp & Kausch, following notification from the Bundeskartellamt that
it will not prohibit the transaction. The German firm supplies most European
engine manufacturers with turbochargers for the light and commercial vehicle
markets, and turbomachinery for industrial applications. Sales for 1996
totaled DM314 million of which DM210 million was from the turbocharger
business and DM104 million was from the turbomachinery business.
The turbocharger business gives the company another strategic technology
with which to develop advanced powertrain solutions to reduce emissions and
improve fuel economy. The acquisition is expected to double Borg-Warner
Automotive's sales presence in Europe and continues to increase the global
aspects of its operations.
Chicago-based Borg-Warner Automotive, Inc. is a product leader in highly
engineered components and systems primarily for automotive powertrain
applications. The company operates manufacturing facilities in 12 countries
serving the North American, European and Asian automotive markets.
Certain statements contained in this press release are "forward looking
statements" as contemplated by the Private Securities Litigation Reform Act of
1995. Such 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. Factors which could effect whether
or not these forward looking statements are realized are described in the
company's Securities and Exchange Commission filings.
Note: Borg-Warner Automotive press releases are available on the Internet
via Company News On-Call: http://www.prnewswire.com or via fax, 800-758-5804,
ext. 120941.
Borg-Warner Automotive, Inc.
Consolidated Statement of Income (Unaudited)
(millions of dollars, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
Net sales $406.8 $387.7 $1,300.0 $1,118.4
Cost of sales 323.7 308.1 1,016.3 883.1
Depreciation 17.0 17.8 51.5 53.7
Selling, general and
administrative expenses 25.5 27.1 95.5 87.1
Minority interest 0.6 0.7 1.8 1.9
Goodwill amortization 4.2 4.0 12.4 9.4
Equity in affiliate earnings
and other income (3.1) (3.6) (11.7) (10.5)
Earnings before interest expense
and finance charges and
income taxes 38.9 33.6 134.2 93.7
Interest expense and finance
charges 6.2 7.0 19.0 14.0
Provision for income taxes 11.1 7.8 39.2 26.8
Net earnings $21.6 $18.8 $76.0 $52.9
Net earnings per share $0.91 $0.80 $3.21 $2.25
Average shares outstanding
(in thousands) 23,692 23,543 23,692 23,543
Borg-Warner Automotive, Inc.
Sales by Operating Group (Unaudited)
(millions of dollars, average shares outstanding)
Third Third % First Nine First Nine %
Quarter Quarter Change Months Months Change
1997 1996 1997 1996
Powertrain Systems $140.2 $127.3 10.1% $450.8 $413.4 9.0%
Automatic Transmission
Systems 124.6 116.9 6.6% 387.0 365.1 6.0%
Morse TEC 78.0 68.1 14.5% 239.3 204.8 16.8%
Air/Fluid Systems 80.7 84.8 -4.8% 270.6 163.0 66.0%
Subtotal 423.5 397.1 6.6% 1,347.7 1,146.3 17.6%
Eliminations (16.7) (9.4) 77.7% (47.7) (27.9) 71.0%
Total $406.8 $387.7 4.9% $1,300.0 $1,118.4 16.2%
Average shares
outstanding 23,672 23,543 -- 23,672 23,543 --
SOURCE Borg-Warner Automotive, Inc.