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BorgWarner Takes Action, Modifies Outlook

12 September 2000

BorgWarner Takes Action, Modifies Outlook in Response to Industry Conditions

    CHICAGO, Sept. 12 BorgWarner Inc. today
modified its outlook for the third and fourth quarters of 2000 based on a
variety of industry conditions, and announced cost-reduction efforts to bring
costs in line with these industry conditions.
    As a result, the company will record a one-time after tax restructuring
charge of about $19.6 million or $.75 per share in the third quarter.  The
charge includes restructuring costs related to the rationalization and
integration of certain businesses and actions taken to bring costs in line
with vehicle production slowdowns in major customer product lines.  The
restructuring is expected to save approximately $9 million annually beginning
in 2001.
    The company expects third quarter earnings of approximately $.95, before
the restructuring, compared with $1.02 in the 1999 third quarter.  For the
year, the company expects earnings in a range of $5.30 to $5.50, before the
charge.  The main factors putting pressure on earnings are the continued
softness of the Euro, uncertainties surrounding Ford truck and sport utility
vehicle production and continued weak sales at other customers including
DaimlerChrysler and US heavy duty truck manufacturers.
    "Given current worldwide industry variables, we feel we must act quickly
to get costs in line with changing conditions," said John Fiedler, Chairman
and CEO.  "By managing effectively through a period of slower industry growth
over the next year, we will be well positioned for the new business that we
expect will keep BorgWarner on track to achieve its historic growth targets
longer term."
    "While internal growth in 2001 is expected to be about 5% as a result of
industry conditions, we are securing new and expanded business today that we
believe will lead to stronger future growth.  This business includes contracts
with significant new customers for our four-wheel drive systems and engine
related products, as well as the launch of our innovative new concepts in
automated transmissions.  Our growth continues to be driven by the need to
improve fuel economy and air quality worldwide while providing a great driving
experience.  Our strategy of powertrain technology leadership remains viable.
Short-term issues, such as those we are facing, are inevitable in our
business.  We intend to manage our way through them effectively."