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National Press Release
 | BorgWarner Reports Fourth Quarter and Full Year 2008 Results; Record First Half Performance Offset by Industry Volume Cuts in Second HalfPublished 2009-02-12 08:00By BorgWarner Inc. |
Fourth Quarter Highlights:
-- Sales were $931.5 million, down 32% from fourth quarter 2007.
-- U.S. GAAP earnings were a loss of $(0.70) per diluted share. For
comparison with other quarters, fourth quarter 2008 earnings per share
were breakeven excluding non-recurring items. These included the
following per share items:
- Goodwill impairment charge related to the BERU acquisition, $(0.09);
- Restructuring expense, $(0.56);
- Transmission product related warranty charge associated with a
product sold in Europe, limited to production from mid-2007 through
May 2008, $(0.14);
- Effective full year tax rate change from 25% to 23% for the first
nine months of 2008, $0.07; and
- Adjustments to tax accounts, $0.02.
-- Approximately $76 million of the total $112.5 million pre-tax charges
($0.65 per share after-tax) for restructuring and goodwill were non-
cash.
-- Cost structure adjustments included workforce and workweek reductions,
extended holiday shutdowns and plant closings.
-- Net cash provided by operating activities was $135.7 million.
-- Net debt to capital ratio was 25.2%; gross debt to twelve month
trailing EBITDA was 1.2 times.
-- Cash on hand was $103.4 million; no outstanding borrowings under $600
million revolving credit facility.
Full Year Highlights:
-- Sales were $5,263.9 million, down 1% from 2007; worldwide auto
production declined 4% during the same period.
-- U.S. GAAP earnings were a loss of $(35.6) million or $(0.31) per
diluted share. For comparison with other years, full-year 2008 earnings
were $2.07 per share excluding non-recurring items. These included the
following per share items:
- Goodwill impairment charge related to the BERU acquisition, $(1.35);
- BERU purchase accounting adjustment, $(0.04);
- Restructuring expense, $(0.72);
- Transmission product related warranty charge, $(0.14);
- Tax valuation allowance, $(0.12);
- Retiree healthcare litigation outcome, $(0.03) and
- Adjustments to tax accounts, $0.02.
-- Operating income margin was 6.3% excluding non-recurring items.
-- Approximately $230 million of the total $284.3 million pre-tax charges
($2.07 per share after-tax) for restructuring and goodwill were
non-cash.
-- Net cash provided by operating activities was $400.8 million.
-- After-tax return on average invested capital was 10%.
2008 Performance: "Our full-year results were hurt by the worldwide
economic deterioration that led to significantly reduced global auto
production in the second half of the year," said
2008 Restructuring: "Entering 2009, we have already undertaken
significant restructuring actions in
"Additionally, we are proactively modifying our operations to respond to
ever-changing customer and business needs. We are managing inventory closely
and reducing capital spending. At the same time, we continue to leverage our
healthy financial position to invest in future growth as we spend wisely on
research and development." The company had also previously announced plans to
close two Drivetrain facilities that produce four-wheel-drive systems, one in
2009 in
2009 Outlook: The company indicated that its visibility into 2009 is
limited until customer schedules stabilize. However, based on an assumption
of North American vehicle builds of 9.3 million units for 2009 and total
European vehicle builds of 16.6 million units, the company expects to generate
positive earnings and positive cash flow from operations (net cash provided by
operating activities less capital expenditures, including tooling outlays) for
the full year 2009. In both
Financial Results: Sales were
Full-year 2008 sales were
Net cash provided by operating activities was
The company's capital structure remains strong. The ratio of balance
sheet debt net of cash to capital was 25.2% at the end of the year. The
company has ample liquidity with
The following table reconciles the company's non-U.S. GAAP amounts included in the press release to the most directly comparable U.S. GAAP amounts and is provided for comparisons with other results:
Net earnings per diluted share Fourth Quarter Year to Date
2008 2007 2008 2007
Non - U.S. GAAP $- $0.73 $2.07 $2.44
Reconciliations:
Goodwill impairment charge (0.09) - (1.35) -
Restructuring expense (0.56) - (0.72) -
Tax valuation allowance - - (0.12) -
Retiree healthcare litigation
outcome - - (0.03) -
Beru purchase adjustments - (0.02) (0.04) (0.02)
Transmission product related
warranty charge (0.14) - (0.14) -
Adjustments to tax accounts 0.02 (0.11) 0.02 0.03
Impact of change to effective
tax rate from 25% to 23% for
first nine months of 2008 0.07 - - -
U.S. GAAP $(0.70) $0.60 $(0.31) $2.45
Engine Group Results: Fourth quarter 2008 sales were
For the full year, 2008 sales were up slightly to
In the first half of the year, the group continued to benefit from European and Asian automaker demand for turbochargers, but second half production declines reduced demand for all of the company's engine products in most regions.
Drivetrain Group Results: Fourth quarter 2008 sales were
For the full year, 2008 sales were
Recent Highlights: At the end of 2008, the company entered into an
agreement with a consortium of leading Chinese automakers to form a joint
venture to produce dual clutch transmission modules. The 12 manufacturers
include FAW, SAIC, Dongfeng, Chery, Geely, and Great Wall, and together
account for over 90% of the domestic passenger car market in
At
http://www.borgwarner.com/invest/webcasts.shtml.
Financial Tables Follow
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 Statement of Operations (Unaudited)
(millions of dollars, except per share data)
Three Months Ended Twelve Months Ended
December 31, December 31,
2008 2007 2008 2007
Net sales $931.5 $1,372.9 $5,263.9 $5,328.6
Cost of sales 857.6 1,115.2 4,425.4 4,378.7
Gross profit 73.9 257.7 838.5 949.9
Selling, general and
administrative expenses 92.5 135.9 542.9 531.9
Restructuring expense 102.5 - 127.5 -
Goodwill impairment charge 10.0 - 156.8 -
Other (income) expense 0.5 (1.2) (3.1) (6.8)
Operating income (loss) (131.6) 123.0 14.4 424.8
Equity in affiliates'
earnings, net of tax (8.2) (12.4) (38.4) (40.3)
Interest expense and finance
charges 10.3 8.1 38.8 34.7
Earnings (loss) before
income taxes and
minority interest (133.7) 127.3 14.0 430.4
Provision for income taxes (54.4) 48.1 33.3 113.9
Minority interest, net of tax 2.1 8.0 16.3 28.0
Net earnings (loss) $(81.4) $71.2 $(35.6) $288.5
Earnings (loss) per share -
diluted $(0.70) $0.60 $(0.31) $2.45
Weighted average shares
outstanding (millions) -
Diluted 115.6 * 118.3 116.0 * 117.8
* The Company had a loss for the quarter and year ended December 31,
2008. As a result, diluted loss per share is the same as basic loss per
share in each period, as any dilutive securities would reduce the loss
per share.
Supplemental Information (Unaudited)
(millions of dollars)
Three Months Twelve Months
Ended Ended
December 31, December 31,
2008 2007 2008 2007
Capital expenditures, including
tooling outlays $104.1 $99.3 $369.7 $293.9
Depreciation and amortization:
Fixed assets and tooling $57.4 $65.8 $259.7 $243.1
Other 6.0 8.9 27.1 21.5
$63.4 $74.7 $286.8 $264.6
BorgWarner Inc.
Net Sales by Reporting Segment (Unaudited)
(millions of dollars)
Three Months Ended Twelve Months Ended
December 31, December 31,
2008 2007 2008 2007
Engine $680.3 $977.9 $3,861.5 $3,761.3
Drivetrain 255.0 401.9 1,426.4 1,598.8
Inter-segment eliminations (3.8) (6.9) (24.0) (31.5)
Net Sales $931.5 $1,372.9 $5,263.9 $5,328.6
Segment Earnings (Loss) Before Interest and Income Taxes (Unaudited)
(millions of dollars)
Three Months Twelve Months
Ended Ended
December 31, December 31,
2008 2007 2008 2007
Engine $36.5 $123.5 $394.9 $418.0
Drivetrain (42.1) 30.3 (4.9) 118.1
Segment earnings (loss) before
interest and taxes ("Segment
EBIT") (5.6) 153.8 390.0 536.1
Corporate expenses, including
equity in affiliates' earnings 5.3 18.4 52.9 71.0
Consolidated earnings (loss)
before interest and taxes
("EBIT") (10.9) 135.4 337.1 465.1
Restructuring expense 102.5 - 127.5 -
Goodwill impairment charge 10.0 - 156.8 -
Interest expense and finance
charges 10.3 8.1 38.8 34.7
Earnings (loss) before income
taxes and minority interest (133.7) 127.3 14.0 430.4
Provision for income taxes (54.4) 48.1 33.3 113.9
Minority interest, net of tax 2.1 8.0 16.3 28.0
Net earnings (loss) $(81.4) $71.2 $(35.6) $288.5
BorgWarner Inc.
Condensed Consolidated Balance Sheet (Unaudited)
(millions of dollars)
December 31, 2008 December 31, 2007
Assets
Cash $103.4 $188.5
Marketable securities - 14.6
Receivables, net 607.1 802.4
Inventories, net 451.2 447.6
Other current assets 146.5 127.2
Total current assets 1,308.2 1,580.3
Property, plant and equipment, net 1,586.2 1,609.1
Other non-current assets 1,749.6 1,769.1
Total assets $4,644.0 $4,958.5
Liabilities and Stockholders' Equity
Notes payable $183.8 $63.7
Current portion of long-term debt 136.9 -
Accounts payable and accrued
expenses 923.0 993.0
Income taxes payable 6.3 27.2
Total current liabilities 1,250.0 1,083.9
Long-term debt 459.6 572.6
Other non-current liabilities 896.9 863.0
Minority interest in consolidated
subsidiaries 31.5 117.9
Stockholders' equity 2,006.0 2,321.1
Total liabilities and
stockholders' equity $4,644.0 $4,958.5
BorgWarner Inc.
Condensed Consolidated Statements of Cash Flow (Unaudited)
(millions of dollars)
Twelve Months Ended
December 31,
2008 2007
Operating
Net earnings (loss) $(35.6) $288.5
Non-cash charges (credits) to
operations:
Depreciation and amortization 286.8 264.6
Restructuring expense, net of
cash paid 115.9 -
Goodwill impairment charge 156.8 -
Deferred income tax benefit (78.3) (29.9)
Other non-cash items 49.5 32.3
Net earnings (loss)
adjusted for non-cash
charges to operations 495.1 555.5
Changes in assets and liabilities (94.3) 48.0
Net cash provided by operating
activities 400.8 603.5
Investing
Capital expenditures, including
tooling outlays (369.7) (293.9)
Net proceeds from asset disposals 5.7 17.3
Payments for businesses acquired,
net of cash acquired (141.2) (138.8)
Proceeds from sale of business 5.5 -
Purchases of marketable securities - (13.0)
Proceeds from sales of marketable
securities 14.6 60.4
Net cash used in investing
activities (485.1) (368.0)
Financing
Net increase (decrease) in notes
payable 114.8 (92.6)
Net change in long-term debt (7.3) (9.1)
Payment for purchase of treasury
stock (55.9) (47.0)
Proceeds from stock options
exercised, including the tax
benefit 17.1 46.3
Dividends paid to BorgWarner
stockholders (51.1) (39.4)
Dividends paid to minority
shareholders (12.5) (17.5)
Net cash provided by (used in)
financing activities 5.1 (159.3)
Effect of exchange rate changes on
cash (5.9) (11.0)
Net increase (decrease) in cash (85.1) 65.2
Cash at beginning of year 188.5 123.3
Cash at end of year $103.4 $188.5
Non-cash investing transactions:
Domination and Profit Transfer
Agreement obligation $44.0 $-
SOURCE BorgWarner Inc.
