BorgWarner Takes Additional Action in 2000 in Response to Industry Conditions; Expects to Earn $5 Per Share for 2000
16 January 2001
BorgWarner Takes Additional Action in 2000 in Response to Industry Conditions; Expects to Earn $5 Per Share for 2000
CHICAGO, Jan. 16 BorgWarner Inc. today
announced that additional efforts were undertaken in the fourth quarter of
2000 to bring costs in line with deteriorating industry conditions. The
company anticipates savings of $19 million annually beginning in 2001 from
these and other initiatives previously announced in the 2000 third quarter.
As a result, the company has recorded a one-time after-tax restructuring
charge of about $19.1 million or $.72 per share in the fourth quarter. The
charge includes costs for a variety of additional actions to adjust the
company's assets and workforce to anticipated future business levels. In
addition to a permanent workforce adjustment of less than 2% of its worldwide
employment base of 14,000 people in 2000, the company has been implementing
temporary layoffs at its manufacturing facilities as its U.S. automaker
customers reduce production and shut down facilities.
For 2000, the company expects to earn approximately $5.00 per share,
before the charges, compared with $5.07 per share for 1999. The combined
charges totaled $1.47 per share in 2000. The company anticipates that first
quarter 2001 earnings per share could be down at least one-third from record
2000 first quarter results of $1.53 per share. The main factors putting
pressure on earnings are continued production cuts at major North American
customers and general industry instability.
"We took early action in the third quarter, and have again acted to get
our costs in line with changing conditions," said John Fiedler, Chairman and
CEO. "Our industry fell faster and further than expected in the last months
of 2000, and continues to struggle with day-to-day uncertainty. As a result,
we expect a very difficult first six months in 2001. We believe, however,
that we should begin to see some improvement in our business in the second
half of the year. We intend to effectively manage our way through this period
of slower industry growth. By doing so, we expect to be well positioned for
the approximately $950 million in new business that we anticipate over the
next three years to keep us on track to achieve our historic growth targets.
Our growth continues to be driven by the very real needs to improve fuel
economy and air quality worldwide, and the emerging concern about vehicle
stability."
Chicago-based BorgWarner is a product leader in highly engineered
components and systems for vehicle powertrain applications worldwide. The
company operates 56 manufacturing and technical facilities in 13 countries.
Customers include Ford, DaimlerChrysler, General Motors, Toyota, Caterpillar,
Navistar, PSA and VW Group. The Internet address for BorgWarner is:
http://www.bwauto.com .
Statements contained in this news release may contain forward-looking
statements as contemplated by the 1995 Private Securities Litigation Reform
Act that are based on management's current expectations, estimates and
projections. Words such as "expects," "anticipates," "intends," "plans,"
"believes," "estimates," variations of such words and similar expressions are
intended to identify such forward-looking statements. 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, fluctuations in demand for
vehicles containing the Company's products, 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 10-K for the fiscal year ended December 31, 1999.