Record 1997 Sales and Earnings for Borg-Warner Automotive
29 January 1998
Record 1997 Sales and Earnings for Borg-Warner Automotive
CHICAGO, Jan. 29 -- Borg-Warner Automotive today
reported record results for 1997, again outperforming a flat auto and light
truck market. Earnings from operations rose 34%; revenue increased 15%.
Full-year 1997 net income was $103.2 million, or $4.35 per share, compared
with $76.8 million or $3.26 per share in 1996, excluding a one-time charge
related to the sale of the company's North American manual transmission
business. Sales for 1997 totaled $1.8 billion compared with $1.5 billion in
1996.
"Borg-Warner Automotive had another outstanding year in 1997," said John
F. Fiedler, chairman and chief executive officer of Borg-Warner Automotive.
"We continue to meet our growth goals and are ahead of schedule to reach
$2 billion in sales by the year 2000. Building on our powertrain expertise,
we have increased our content per vehicle through innovative new products and
systems.
"With the purchase of a majority position in a German turbocharger
business, we have expanded our global reach as well as our technical expertise
to improve vehicle fuel economy and air quality. Our businesses in Europe and
Asia performed well during the year despite currency difficulties. We are
committed to having a global presence as our customers build and sell cars and
trucks throughout the world.
"During 1997, we completed the final secondary offering necessary to
become a totally independent publicly owned company. It was an appropriate
time for us to launch new strategic initiatives to drive our growth. Through
these initiatives based on our product leadership, we expect to double the
size of Borg-Warner Automotive in the next five to seven years. We are well
positioned to assist our worldwide automotive customers as they seek to give
consumers more fuel efficient and environmentally friendly vehicles, and to
meet consumers' continued preference for the security of all-wheel and four-
wheel drive vehicles with affordable, responsive systems."
For the 1997 fourth quarter, net income was up 14% to $27.2 million, or
$1.14 per share, compared with $23.9 million or $1.02 per share in 1996,
excluding a one-time charge related to the sale of the company's North
American manual transmission business. Sales for the quarter rose 11% to $467
million compared with $422 million in 1996.
For the year, Powertrain Systems' sales increased 8% to $605.2 million,
driven by strong demand for transfer cases for sport-utility vehicles and
light trucks. If 1996 revenue from the divested manual transmission business
is excluded, sales for the group were up 29%. During the year, a new
manufacturing facility in Seneca, South Carolina, ramped up transfer case
production for the Mercedes M-Class All Activity Vehicle and is expected to
benefit in late 1998 and 1999 from increased production of that vehicle.
Automatic Transmission Systems' sales rose 8% to $519.8 million with good
across-the-board performance. Production of forged powder metal components
for transmissions and engines were separated, and the company continues to
operate both. During the year, the group also secured major new business with
General Motors that will benefit them beginning mid-1998.
Sales for Morse TEC were up 17% to $324.1 million on the strength of the
MORSE GEMINI(TM) Chain System, a new European timing chain system and 4WD
transfer case applications. Pilot production at a new powder metal facility
in Ithaca, New York, was begun during the year. Production of the previously
purchased components will allow the group to optimize the design of future
timing systems. Production in Italy was relocated to larger quarters to
accommodate the anticipated increase in timing system sales in Europe spurred
by the growth of direct injection diesel engines.
Air/Fluid System revenue climbed 38% to $357.0 million, bolstered by
acquisitions made in 1996. During 1997 the group focused on integration of
the acquired businesses, centralizing research and development and
rationalizing production. The group also launched production of an innovative
plastic manifold system for Chrysler vehicles, as it positions itself as a
systems supplier in the fast growing field of air management for improved
vehicle emissions and performance. In addition, it invested significant time
and effort in developing European opportunities generated by emission
regulations that phase in beginning in 1998.
Chicago-based Borg-Warner Automotive, Inc. is a product leader in highly
engineered components and systems primarily for automotive drivetrain
applications. The company operates manufacturing facilities in 12 countries
serving the North American, European and Asian automotive markets.
Statements contained in this press release which are not historical facts
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. Such risks
and uncertainties include fluctuations in domestic or foreign automotive
production, the continued use of outside suppliers by original equipment
manufacturers, and 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 1O-K for
the fiscal year ended December 31, 1996.
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.
Statement of Operations (Unaudited)
(millions of dollars, except per share data)
Three Months Ended Twelve Months Ended
December 31, December 31,
1997 1996 1997 1996
Net sales $467.0 $421.7 $1,767.0 $1,540.1
Cost of sales 359.1 322.4 1,375.4 1,205.5
Depreciation 18.9 17.6 70.4 71.3
Selling, general and
administrative expenses 36.5 35.6 132.0 122.7
Minority interest 1.4 0.7 3.2 2.6
Goodwill amortization 4.3 4.1 16.7 13.5
Loss on sale of business(A) -- 61.5 -- 61.5
Equity in affiliate earnings
and other income (1.5) (2.6) (13.2) (13.1)
Earnings before interest expense
and finance charges and taxes 48.3 (17.6) 182.5 76.1
Interest expense and finance
charges 5.6 7.4 24.6 21.4
Provision for income taxes 15.5 (13.9) 54.7 12.9
Net earnings $27.2 ($11.1) $103.2 $41.8
Net earnings per share - Basic $1.14 ($0.47) $4.35 $1.77
Net earnings per share
- Diluted $1.14 ($0.47) $4.31 $1.75
Average shares outstanding
- Basic (in thousands) 23.7 23.6 23.7 23.6
(A) The Company recorded a pre-tax loss on the sale of the North American
manual transmission business of $61.5 million, which net of tax
benefit of $25.5 million, results in an after-tax charge of $35
million.
Borg-Warner Automotive, Inc.
Sales by Operating Group (Unaudited)
(millions of dollars, average shares outstanding)
Fourth Fourth % Twelve Twelve %
Quarter Quarter Change Months Months Change
1997 1996 1997 1996
Powertrain Systems $154.4 $151.7 1.8% $605.2 $562.7 7.6%
Automatic Transmission
Systems 132.8 116.7 13.8% 519.8 481.8 7.9%
Morse TEC 84.8 71.7 18.3% 324.1 276.5 17.2%
Air/Fluid Systems 86.4 93.4 -7.5% 357.0 258.8 37.9%
AG Kuhnle, Kopp &
Kausch 24.8 -- N/A 24.8 -- N/A
Subtotal 483.2 433.5 11.5% 1,830.9 1,579.8 15.9%
Eliminations (16.2) (11.8) 37.3% (63.9) (39.7) 61.0%
Total $467.0 $421.7 10.7% $1,767.0 $1,540.1 14.7%
SOURCE Borg-Warner Automotive