BorgWarner Reports Fourth Quarter U.S. GAAP Earnings Of $0.62 Per Diluted Share, Or $0.79 Per Diluted Share Excluding Non

  BorgWarner Reports Fourth Quarter U.S. GAAP Earnings Of $0.62 Per Diluted
       Share, Or $0.79 Per Diluted Share Excluding Non-Comparable Items

SETS FULL YEAR RECORDS FOR NET SALES, OPERATING INCOME MARGIN AND EARNINGS PER
SHARE IN 2013

PR Newswire

AUBURN HILLS, Mich., Feb. 13, 2014

AUBURN HILLS, Mich., Feb. 13, 2014 /PRNewswire/ -- BorgWarner Inc. (NYSE: BWA)
today reported fourth quarter 2013 U.S. GAAP earnings of $0.62 per diluted
share. Excluding non-comparable items, net earnings were $0.79 per diluted
share. Net sales were $1,885 million in the quarter.

Fourth Quarter Highlights:

  oNet sales of $1,885 million.

       oExcluding the impact of foreign currencies and 2012 dispositions, net
         sales were up 9% compared with fourth quarter 2012.

  oU.S. GAAP earnings of $0.62 per diluted share.

       oExcluding the $(0.20) per diluted share impact of restructuring
         activities, and $0.02 per diluted share related to net tax
         adjustments, net earnings were $0.79 per diluted share, up 36% from
         fourth quarter 2012.

  oOperating income of $188 million, or 10.0% of net sales.

       oExcluding the $52 million pretax impact of restructuring activities,
         operating income was $240 million, or 12.7% of net sales.

  oSigned an agreement to acquire all shares in Gustav Wahler GmbH u. Co. KG
    and its general partner ("Wahler"), a producer of exhaust gas
    recirculation (EGR) valves, EGR tubes and thermostats.
  oImplemented a two-for-one stock split.
  oContributed $138 million to the company's German pension plans.

Full Year Highlights:

  oRecord net sales of $7,437 million.

       oExcluding the impact of foreign currencies and 2012 dispositions, net
         sales were up 4% from 2012.

  oU.S. GAAP earnings of $2.70 per diluted share.

       oExcluding net non-comparable items, 2013 earnings were $2.89 per
         diluted share, a record for the company, up 17% from 2012 comparable
         results.

  oOperating income of $855 million, or 11.5% of net sales.

       oExcluding non-comparable items, operating income was 12.4% of net
         sales, a full year record.

  oRepurchased approximately 5.2 million shares of common stock in 2013. The
    number of shares repurchased has been adjusted for the two-for-one stock
    split.

Comment and Outlook: "2013 was a remarkable year for our company," said James
R. Verrier, President and Chief Executive Officer, BorgWarner. "Faced with
cost pressures and a challenging environment for growth, we maintained our
focus on operational efficiency and cost management and achieved record
profitability. Additionally, we signed an agreement to purchase Wahler, a
leading producer of EGR valves, EGR tubes and thermostats. This strategic
acquisition will strengthen our competitive position in EGR systems, a
technology automakers and commercial vehicle makers are rapidly adopting to
help improve fuel economy and meet tightening emissions standards around the
world."

"As we look ahead to 2014, we expect organic net sales growth of 7% to 11%
compared with 2013, earnings of $3.10 to $3.25 per diluted share and an
operating income margin of 12.5% or better. This excludes the impact of the
pending Wahler acquisition. A return to historical growth rates, combined with
improved operational proficiency, should result in another great year for
BorgWarner in 2014," said Verrier.

Financial Results: Net sales were $1,885 million in fourth quarter 2013, up
10% from $1,719 million in fourth quarter 2012. Net earnings in the quarter
were $141 million, or $0.62 per diluted share, compared with $121 million, or
$0.51 per diluted share, in fourth quarter 2012. Fourth quarter 2013 net
earnings included net non-comparable items of $(0.18) per diluted share.
Fourth quarter 2012 net earnings included non-comparable items of $(0.07) per
diluted share. These items are listed in a table below as reconciliations of
non-U.S. GAAP measures, which are provided by the company for comparison with
other results, and the most directly comparable U.S. GAAP measures. The impact
of foreign currencies increased net sales by approximately $28 million, and
decreased net earnings by approximately $0.01 per diluted share, in fourth
quarter 2013 compared with fourth quarter 2012.

Full year 2013 net sales were $7,437 million, up 4% compared with $7,183
million in 2012. Full year 2013 net earnings were $624 million, or $2.70 per
diluted share, compared with $501 million, or $2.09 per diluted share, in
2012. Full year 2013 net earnings included net non-comparable items of $(0.20)
per diluted share. Full year 2012 net earnings included non-comparable items
of $(0.40) per diluted share. These items are listed in a table below as
reconciliations of non-U.S. GAAP measures, which are provided by the company
for comparison with other results, and the most directly comparable U.S. GAAP
measures. The impact of foreign currencies increased net sales by
approximately $71 million, and decreased net earnings by approximately $0.05
per diluted share, in 2013 compared with 2012.

The following table reconciles the company's non-U.S. GAAP measures included
in the press release, which are provided for comparison with other results,
and the most directly comparable U.S. GAAP measures:



Net earnings per diluted share*   Fourth Quarter       Full Year
                                  2013        2012     2013        2012
Non – U.S. GAAP                   $ 0.79      $ 0.58   $ 2.89      $ 2.48
Reconciliations:
Restructuring expense             (0.20)               (0.20)      (0.08)
Program termination agreement                          (0.03)
Retirement related obligations                (0.05)   (0.02)      (0.05)
Tax adjustments                   0.02        (0.02)   0.05        (0.08)
Loss from disposal activities                                      (0.19)
U.S. GAAP                         $ 0.62  ^** $ 0.51   $ 2.70  ^** $ 2.09  ^**
* Reflects a two-for-one stock
split effective December 16, 2013
** Column does not add due to
rounding



Net cash provided by operating activities was $719 million in 2013 compared
with $879 million in 2012. Investments in capital expenditures, including
tooling outlays, totaled $418 million in 2013, compared with $407 million in
2012. Balance sheet debt increased by $155 million and cash increased by $224
million compared with the end of 2012. The $68 million decrease in balance
sheet debt (net of cash) was primarily due to net cash provided by operating
activities partially offset by capital expenditures, share repurchases and
dividends paid to stockholders. The ratio of balance sheet debt (net of cash)
to capital was 7.2% at the end of 2013 compared with 10.0% at the end of 2012.

Engine Segment Results: Engine segment net sales were $1,266 million in fourth
quarter 2013 compared with $1,167 million in fourth quarter 2012. Excluding
the impact of foreign currencies and 2012 dispositions, net sales were up 8%
from the prior year's quarter, primarily due to higher sales of
turbochargers, engine timing devices and EGR coolers around the world.
Adjusted earnings before interest, income taxes and non-controlling interest
("Adjusted EBIT") were $208 million in fourth quarter 2013, up 14% from $182
million in fourth quarter 2012.

Drivetrain Segment Results: Drivetrain segment net sales were $628 million in
fourth quarter 2013 compared with $559 million in fourth quarter 2012.
Excluding the impact of foreign currencies, net sales were up 10% from the
prior year's quarter, primarily due to higher sales of all-wheel drive
systems, traditional transmission components and dual clutch transmission
modules around the world. Adjusted EBIT was $71 million in fourth quarter
2013, up 43% from $49 million in fourth quarter 2012.

Recent Highlights:

  oThe board of directors approved a two-for-one stock split effected in the
    form of a stock dividend on the company's common stock. To implement the
    stock split, shares of common stock were distributed on December 16, 2013
    to all stockholders of record as of the close of business on December 2,
    2013.
  oIn November, the company reported an expected backlog of $2.9 billion of
    net new business for the period 2014 through 2016. Demand for the
    company's advanced powertrain technologies, such as gasoline and diesel
    turbochargers, all-wheel drive systems, engine timing systems including
    variable cam timing, and emissions products, is expected to continue to
    drive strong growth.
  oBorgWarner introduced the world's first electronic limited slip
    differential designed for the front transaxle of a front-wheel drive
    vehicle on the 2013 Volkswagen Golf GTI with Performance Pack. Known as
    front cross differential (FXD) technology, the system greatly enhances
    vehicle traction, handling and stability without sacrificing engine power.
    Under certain driving conditions, the FXD technology's enhanced vehicle
    performance approaches that of an all-wheel drive system but costs less
    and offers better fuel economy.
  oBorgWarner has signed an agreement to acquire all shares in Gustav Wahler
    GmbH u. Co. KG and its general partner, a producer of EGR valves, EGR
    tubes and thermostats, subject to regulatory approvals. With locations in
    Germany, Brazil, the U.S., China and Slovakia, Wahler employs
    approximately 1,250 people and supplies customers such as Daimler,
    Volkswagen, BMW, GM and John Deere. Wahler's sales for 2013 are expected
    to be approximately $350 million.

At 9:30 a.m. ET today, a brief conference call concerning fourth quarter and
full year results will be webcast at:
http://www.borgwarner.com/en/Investors/default.aspx.

BorgWarner Inc. (NYSE: BWA) is a product leader in highly engineered
components and systems for powertrains around the world. Operating
manufacturing and technical facilities in 56 locations in 19 countries, the
company delivers innovative powertrain solutions to improve fuel economy,
reduce emissions and enhance performance. For more information, please visit
borgwarner.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 "outlook," "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, many of
which are difficult to predict and generally beyond our control, that could
cause actual results to differ materially from those expressed, projected or
implied in or by the forward-looking statements. Such risks and uncertainties
include: fluctuations in domestic or foreign vehicle production, the continued
use of outside suppliers, fluctuations in demand for vehicles containing our
products, changes in general economic conditions, and other risks detailed in
our filings with the Securities and Exchange Commission, including the Risk
Factors, identified in our most recently filed Annual Report on Form 10-K. We
do not undertake any obligation to update any forward-looking statements.



BorgWarner Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(millions, except per share amounts)
                                Three Months Ended      Twelve Months Ended
                                December 31,            December 31,
                                2013        2012        2013        2012
Net sales                       $ 1,885.4   $ 1,719.1   $ 7,436.6   $ 7,183.2
Cost of sales                   1,478.8     1,374.9     5,879.1     5,716.3
Gross profit                    406.6       344.2       1,557.5     1,466.9
Selling, general and            167.1       156.2       639.7       629.3
administrative expenses
Other expense                   51.8        17.3        62.6        84.7
Operating income                187.7       170.7       855.2       752.9
Equity in affiliates' earnings, (12.3)      (10.0)      (43.5)      (42.8)
net of tax
Interest income                 (1.5)       (1.0)       (4.8)       (4.7)
Interest expense and finance    7.6         6.7         34.2        39.4
charges
Earnings before income taxes    193.9       175.0       869.3       761.0
and noncontrolling interest
Provision for income taxes      44.5        48.4        218.3       238.6
Net earnings                    149.4       126.6       651.0       522.4
Net earnings attributable to
the noncontrolling interest,    8.0         5.4         26.7        21.5
net of tax
Net earnings attributable to    $ 141.4     $ 121.2     $ 624.3     $ 500.9
BorgWarner Inc.
Reconciliation to diluted
earnings per share:
Net earnings attributable to    $ 141.4     $ 121.2     $ 624.3     $ 500.9
BorgWarner Inc.
Adjustment for net interest     —           —           —           5.8
expense on convertible notes
Diluted net earnings            $ 141.4     $ 121.2     $ 624.3     $ 506.7
attributable to BorgWarner Inc.
Earnings per share — diluted    $ 0.62      $ 0.51      $ 2.70      $ 2.09
Weighted average shares         229.5       235.6       231.3       242.8
outstanding — diluted
Supplemental Information
(Unaudited)
(millions of dollars)
                                Three Months Ended      Twelve Months Ended
                                December 31,            December 31,
                                2013        2012        2013        2012
Capital expenditures, including $ 119.9     $ 124.4     $ 417.8     $ 407.4
tooling outlays
Depreciation and amortization:
Fixed assets and tooling        $ 70.3      $ 70.4      $ 272.7     $ 260.2
Intangible assets and other     6.6         6.9         26.7        28.4
                                $ 76.9      $ 77.3      $ 299.4     $ 288.6



BorgWarner Inc.
Net Sales by Reporting Segment (Unaudited)
(millions of dollars)
                                Three Months Ended      Twelve Months Ended
                                December 31,            December 31,
                                2013        2012        2013        2012
Engine                          $ 1,266.0   $ 1,167.2   $ 5,022.1   $ 4,913.0
Drivetrain                      627.6       559.0       2,446.5     2,298.7
Inter-segment eliminations      (8.2)       (7.1)       (32.0)      (28.5)
Net sales                       $ 1,885.4   $ 1,719.1   $ 7,436.6   $ 7,183.2
Adjusted Earnings Before Interest, Income Taxes and Noncontrolling Interest
("Adjusted EBIT") (Unaudited)
(millions of dollars)
                                Three Months Ended      Twelve Months Ended
                                December 31,            December 31,
                                2013        2012        2013        2012
Engine                          $ 207.9     $ 182.0     $ 826.0     $ 786.4
Drivetrain                      70.5        49.2        252.2       209.1
Adjusted EBIT                   278.4       231.2       1,078.2     995.5
Restructuring expense           52.3        —           52.3        27.4
Program termination agreement   —           —           11.3        —
Retirement related obligations  —           17.3        5.9         17.3
Loss from disposal activities   —           —           —           39.7
Corporate, including equity in
affiliates' earnings and        26.1        33.2        110.0       115.4
stock-based
compensation
Interest income                 (1.5)       (1.0)       (4.8)       (4.7)
Interest expense and finance    7.6         6.7         34.2        39.4
charges
Earnings before income taxes    193.9       175.0       869.3       761.0
and noncontrolling interest
Provision for income taxes      44.5        48.4        218.3       238.6
Net earnings                    149.4       126.6       651.0       522.4
Net earnings attributable to
the noncontrolling interest,    8.0         5.4         26.7        21.5
net of tax
Net earnings attributable to    $ 141.4     $ 121.2     $ 624.3     $ 500.9
BorgWarner Inc.



BorgWarner Inc.
Condensed Consolidated Balance Sheets (Unaudited)
(millions of dollars)
                                           December 31,  December 31,

                                           2013          2012
Assets
Cash                                       $  939.5      $  715.7
Receivables, net                           1,248.5       1,147.3
Inventories, net                           458.1         447.6
Other current assets                       152.4         162.2
Total current assets                       2,798.5       2,472.8
Property, plant and equipment, net         1,939.4       1,788.0
Other non-current assets                   2,179.1       2,140.0
Total assets                               $  6,917.0    $  6,400.8
Liabilities and Equity
Notes payable and other short-term debt    $  201.6      $  243.4
Accounts payable and accrued expenses      1,383.8       1,287.2
Income taxes payable                       38.5          72.5
Total current liabilities                  1,623.9       1,603.1
Long-term debt                             1,021.0       823.8
Other non-current liabilities              639.7         827.8
Total BorgWarner Inc. stockholders' equity 3,560.6       3,082.6
Noncontrolling interest                    71.8          63.5
Total equity                               3,632.4       3,146.1
Total liabilities and equity               $  6,917.0    $  6,400.8



BorgWarner Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(millions of dollars)
                                                           Twelve Months Ended

                                                           December 31,
                                                           2013       2012
Operating
Net earnings                                               $  651.0   $ 522.4
Non-cash charges (credits) to operations:
Depreciation and amortization                              299.4      288.6
Loss from disposal activities, net of cash paid            —          31.7
Restructuring expense, net of cash paid                    48.5       23.3
Bond amortization                                          —          5.3
Deferred income tax benefit                                (22.9)     (10.7)
Other non-cash items                                       15.3       43.7
Net earnings adjusted for non-cash charges to operations   991.3      904.3
Changes in assets and liabilities                          (272.5)    (25.6)
Net cash provided by operating activities                  718.8      878.7
Investing
Capital expenditures, including tooling outlays            (417.8)    (407.4)
Net proceeds from asset disposals                          23.9       5.4
Net proceeds from sale of businesses                       9.1        56.8
Net cash used in investing activities                      (384.8)    (345.2)
Financing
Net (decrease) increase in notes payable                   (44.4)     12.8
Additions to long-term debt, net of debt issuance costs    289.5      313.9
Repayments of long-term debt, including current portion    (77.0)     (246.4)
Proceeds from accounts receivable securitization facility  —          30.0
Payments for purchase of treasury stock                    (225.5)    (295.9)
Proceeds from stock options exercised, including the tax   33.0       52.0
benefit
Taxes paid on employees' restricted stock award vestings   (40.9)     (18.1)
Purchase of noncontrolling interest                        —          (15.0)
Dividends paid to BorgWarner stockholders                  (56.8)     —
Dividends paid to noncontrolling stockholders              (13.3)     (21.9)
Net cash used in financing activities                      (135.4)    (188.6)
Effect of exchange rate changes on cash                    25.2       11.2
Net increase in cash                                       223.8      356.1
Cash at beginning of year                                  715.7      359.6
Cash at end of year                                        $  939.5   $ 715.7



SOURCE BorgWarner Inc.

Website: http://www.borgwarner.com
Contact: Ken Lamb, 248.754.0884
 
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