10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

Form 10-K

ANNUAL REPORT

(Mark One)

þAnnual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2012

OR

oTransition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission File Number: 1-12162

BorgWarner Inc.

(Exact name of registrant as specified in its charter)

Delaware	13-3404508
State or other jurisdiction of Incorporation or organization	(I.R.S. Employer Identification No.)

3850 Hamlin Road,

Auburn Hills, Michigan 48326

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (248) 754-9200

Securities registered pursuant to Section 12(b) of the Act

Title of each class	Name of each exchange on which registered
Common Stock, par value $0.01 per share	New York Stock Exchange

Securities registered Pursuant to Section 12(g) of the Act: None

__________________________

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes þ    No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes o No þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the SecuritiesExchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was requiredto file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ    No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes  þ    No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-KR

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smallerreporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	þ	Accelerated filer	o	Non-accelerated filer	o	Smaller reporting company	o
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

  Yes  o    No  þ

The aggregate market value of the voting common stock of the registrant held by stockholders (not including voting common stock held by directors and executive officers of the registrant) on June 30, 2012 (the last business day of the most recentlycompleted second fiscal quarter) was approximately $7.4 billion.

As of February 8, 2013, the registrant had 115,639,856 shares of voting common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the following documents are incorporated herein by reference into the Part of the Form 10-K indicated.

Document	Part of Form 10-K into which incorporated
Portions of the BorgWarner Inc. Proxy Statement for the 2013 Annual Meeting of Stockholders	Part III

BORGWARNER INC.

FORM 10-K

YEAR ENDED DECEMBER 31, 2012

INDEX

		Page No.
PART I.
Item 1.	Business	4
Item 1A.	Risk Factors	14
Item 1B.	Unresolved Staff Comments	20
Item 2.	Properties	21
Item 3.	Legal Proceedings	22
Item 4.	Mine Safety Disclosures	22
PART II.
Item 5.	Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	22
Item 6.	Selected Financial Data	25
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 7A.	Quantitative and Qualitative Disclosure About Market Risk	49
Item 8.	Financial Statements and Supplementary Data	49
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	97
Item 9A.	Controls and Procedures	97
Item 9B.	Other Information	97
PART III.
Item 10.	Directors, Executive Officers and Corporate Governance	98
Item 11.	Executive Compensation	98
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	98
Item 13.	Certain Relationships and Related Transactions and Director Independence	98
Item 14.	Principal Accountant Fees and Services	98
PART IV.
Item 15.	Exhibits and Financial Statement Schedules	98

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CAUTIONARY STATEMENTS FOR FORWARD-LOOKING INFORMATION

Statements contained in this Form 10-K (including Management's Discussion and Analysis of Financial Condition and Results of Operations) may contain forward-looking statements as contemplated by the 1995 Private Securities Litigation Reform Act (the “Act”) that are based on management's current outlook, expectations, estimates and projections. Words such as "anticipates," "believes," "continues," "could," "designed," "effect," "estimates," "evaluates," "expects," "forecasts," "goal," "initiative," "intends," "outlook," "plans," "potential," "project," "pursue," "seek," "should," "target," "when," "would," variations of such words and similar expressions are intended to identify such forward-looking statements. All statements, other than statements of historical fact contained or incorporated by reference in this Form 10-K, that we expect or anticipate will or may occur in the future regarding our financial position, business strategy and measures to implement that strategy, including changes to operations, competitive strengths, goals, expansion and growth of our business and operations, plans, references to future success and other such matters, are forward-looking statements. Accounting estimates, such as those described under the heading "Critical Accounting Policies" in Item 7 of this Annual Report on Form 10-K, are inherently forward-looking. These statements are based on assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances. Forward-looking statements are not guarantees of performance and the Company's actual results may differ materially from those expressed, projected or implied in or by the forward-looking statements.

You should not place undue reliance on these forward-looking statements, which speak only as of the date of this Annual Report. Forward-looking statements are subject to risks and uncertainties, many of which are difficult to predict and generally beyond our control. Such risks and uncertainties include: fluctuations in domestic or foreign vehicle production, the continued use by original equipment manufacturers of outside suppliers, fluctuations in demand for vehicles containing our products, changes in general economic conditions, as well as the other risks noted under Item 1A, “Risk Factors,” and in other reports that we file with the Securities and Exchange Commission. We do not undertake any obligation to update or announce publicly any updates to or revision to any of the forward-looking statements in this Form 10-K to reflect any change in our expectations or any change in events, conditions, circumstances, or assumptions underlying the statements.

This section and the discussions contained in Item 1A, "Risk Factors," and in Item 7, subheading "Critical Accounting Policies" in this report, are intended to provide meaningful cautionary statements for purposes of the safe harbor provisions of the Act. This should not be construed as a complete list of all of the economic, competitive, governmental, technological and other factors that could adversely affect our expected consolidated financial position, results of operations or liquidity. Additional risks and uncertainties not currently known to us or that we currently believe are immaterial also may impair our business, operations, liquidity, financial condition and prospects.

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PART I

ITEM 1. BUSINESS

BorgWarner Inc. and Consolidated Subsidiaries (the “Company”) is a Delaware corporation incorporated in 1987. We are a leading global supplier of highly engineered automotive systems and components primarily for powertrain applications. Our products help improve vehicle performance, fuel efficiency, stability and air quality. These products are manufactured and sold worldwide, primarily to original equipment manufacturers (“OEMs”) of light vehicles (passenger cars, sport-utility vehicles ("SUVs"), vans and light trucks). The Company's products are also sold to other OEMs of commercial vehicles (medium-duty trucks, heavy-duty trucks and buses) and off-highway vehicles (agricultural and construction machinery and marine applications). We also manufacture and sell our products to certain Tier One vehicle systems suppliers and into the aftermarket for light, commercial and off-highway vehicles. The Company operates manufacturing facilities serving customers in the Americas, Europe and Asia and is an original equipment supplier to every major automotive OEM in the world.

Financial Information About Reporting Segments

Refer to Note 17, “Reporting Segments and Related Information,” to the Consolidated Financial Statements in Item 8 of this report for financial information about the Company's reporting segments.

Narrative Description of Reporting Segments

The Company reports its results under two reporting segments: Engine and Drivetrain. Net sales by reporting segment for the years ended December 31, 2012, 2011 and 2010 are as follows:

	Year Ended December 31,
(millions of dollars)	2012			2011			2010
Engine	$	4,913.0		$	5,050.6		$	4,060.8
Drivetrain	2,298.7			2,084.5			1,611.4
Inter-segment eliminations	(28.5		)	(20.4		)	(19.4		)
Net sales	$	7,183.2		$	7,114.7		$	5,652.8

The sales information presented above excludes the sales by the Company's unconsolidated joint ventures (See sub-heading “Joint Ventures”). Such unconsolidated sales totaled approximately $871 million, $817 million and $779 million for the years ended December 31, 2012, 2011 and 2010, respectively.

Engine

The Engine Group develops and manufactures products to manage engines for fuel efficiency, reduced emissions and enhanced performance. Concern about fuel prices and availability, as well as the need to lower CO₂ emissions, are driving demand for the Company's products in gasoline and diesel engines and alternative powertrains. The Engine Group's products include: turbochargers, timing devices and chains, emissions systems, thermal systems, diesel cold start, gasoline ignition technology and cabin heaters.

The Engine Group provides turbochargers for light, commercial and off-highway applications for diesel and gasoline engine manufacturers in the Americas, Europe and Asia.  The Engine Group has greatly benefited from the growth in turbocharger demand in Europe.  This growth is linked to increasing demand for diesel engines in light vehicles, which typically use turbochargers, and for turbocharged gasoline engines.  Benefits of turbochargers in light, commercial and off-highway applications include increased power for a given engine size, improved fuel economy and reduced emissions.

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Sales of turbochargers for light vehicles represented approximately 26% of total net sales for the years ended December 31, 2012, 2011 and 2010, respectively. The Company currently supplies light vehicle turbochargers to many OEMs including BMW, Daimler, Fiat, Ford, General Motors, Hyundai, PSA, Renault and Volkswagen. The Company also supplies commercial vehicle turbochargers to Daimler, Deutz, MAN and Navistar and off-highway turbochargers to Caterpillar and John Deere.

The Company's newest turbocharger technologies are its regulated two-stage turbocharging system, known as R2S®, regulated 3-stage turbocharging systems ("R3S"), variable turbine geometry ("VTG") turbochargers and turbochargers for gasoline direct injected engines, all of which may be found in numerous applications around the world. For example, the Company supplies its award winning R2S® turbocharger technology to Volkswagen's 2.0 liter four-cylinder common-rail diesel engine featured in the Transporter T5 and Amarok pickup and its R3S turbocharger system, an industry first, to BMW for its new high-powered 3.0 liter diesel engine. Also, the Company supplies VTG turbochargers to Renault's 1.6 liter R9M diesel engine featured in the Mégane Scénic and to Great Wall for its 2.0 liter diesel engine. Ford selected BorgWarner's leading gasoline turbocharger technology for its new 1.6 liter and 2.0 liter four-cylinder EcoBoost engines, the latter of which launched in the U.S. in the 2012 Explorer and 2012 Edge models and in China in the Ford Mondeo.

The Engine Group's timing systems products include timing chain, variable cam timing (“VCT”), crankshaft and camshaft sprockets, tensioners, guides and snubbers, HY-VO® front-wheel drive (“FWD”) transmission chain and four-wheel drive (“4WD”) chain for light vehicles.

The Company is a leading manufacturer of timing chain systems to OEMs around the world. BorgWarner timing chain systems are featured on Ford's family of engines, including the Duratec, Modular and in-line four-cylinder engines, Chrysler's 3.6 liter Pentastar engine, Volkswagen's EA888 family, Hyundai's Gamma, Nu and Theta families and numerous other applications around the world.

The Engine Group's newest product technology is its VCT with mid position lock, which allows a greater range of camshaft positioning thereby enabling greater control over airflow and the opportunity to improve fuel economy, reduce emissions and improve engine performance compared with conventional VCT systems. VCT with mid position lock made its debut on Subaru's Boxer® 2.0 liter engine. BorgWarner is currently working with a number of other OEMs interested in implementing this technology. The Company is a leading manufacturer of chain for drivetrain systems. The Company's HY-VO® chain is used to transfer power from the engine to the drivetrain in FWD transmissions and also in 4WD transfer cases, which distributes power between a vehicle's front and rear wheels.

The Engine Group also designs and manufactures products to control emissions and improve fuel economy. These products include electric air pumps, turbo actuators using integrated electronics to precisely control turbocharger speed and pressure ratio and exhaust gas recirculation ("EGR") coolers, tubes and valves for gasoline and diesel applications. In 2010, the Company acquired Dytech Ensa S.L., a leading producer of EGR coolers, EGR tubes and integrated EGR modules including valves for light, commercial and off-highway applications.

The Company is a leading global provider of engine thermal solutions for truck, agricultural and off-highway applications. The Engine Group designs, manufactures and markets viscous fan drives that control fans to sense and respond to multiple cooling requirements. The Engine Group also manufactures and markets polymer fans for engine cooling systems. The Company's thermal products provide improved vehicle fuel economy and reduced engine emissions while minimizing parasitic horsepower loss. The Company has been awarded the "standard position" (the OEM-designated preferred supplier of component systems available to the end-customer) at several major global heavy truck producers.

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The Company is a leading global automotive supplier of diesel cold start technology (glow plugs and instant starting systems), including its Pressure Sensor Glow Plug which monitors and enhances the combustion process of a diesel engine, minimizing CO2 and NOx emissions. The Company also designs and manufactures gasoline ignition technology and electronic control units and sensor technology (diesel cabin heaters and selected sensors).

In 2009, the Company announced the purchase of advanced gasoline ignition technology and related intellectual property from Florida-based Etatech, Inc. The high-frequency ignition technology is expected to enable high-performing, lean burning engines to significantly improve fuel economy and reduce emissions compared with conventional combustion technologies.

In 2010, in anticipation of market growth expected for its electric cabin heaters, the Company completed the acquisition of BERU-Eichenauer GmbH by acquiring the shares of its former joint venture partner, Eichenauer Heizelemente GmbH & Co. KG. The former 50/50 joint venture was formed in 2000 to develop and manufacture electric cabin heaters.

The Company sold its tire pressure monitoring and spark plug businesses during the fourth quarter of 2011 and third quarter of 2012, respectively. The sale of these businesses will allow the Company to continue to focus on expanding BERU Systems' core products of glow plugs, diesel cold start systems and other gasoline ignition technologies.

Drivetrain

The Drivetrain Group designs and manufactures automatic transmission components and modules and is a supplier to virtually every major automatic transmission manufacturer in the world for conventional automatic, dual clutch transmissions (“DCT”), automated manual transmissions and continuously variable transmissions. In conventional automatic transmissions, there has been a global market trend from four and five speeds to six, seven and eight speed transmissions. Transmissions with more speeds improve fuel economy and vehicle performance and offer growth opportunities.

 Friction and mechanical products include dual clutch modules, friction clutch modules, friction and steel plates, transmission bands, torque converter clutches, one-way clutches and torsional vibration dampers. Controls products feature electro-hydraulic solenoids for standard and high pressure hydraulic systems, transmission solenoid modules and dual clutch control modules. The Company's 50%-owned joint venture in Japan, NSK-Warner KK ("NSK-Warner"), is a leading producer of friction plates and one-way clutches in Japan and China.

 The Company has led the globalization of today's DCT technology for over 10 years. Following the development of its DCT technology in the 1990s, the Company established its industry-leading position in 2003 with the production launch of its award-winning DualTronic® innovations with VW/Audi. In 2007, the Company launched its first dual-clutch technology application in a Japanese transmission with Nissan.

 The Company has announced DCT programs with customers that include VW/Audi, SAIC and Nissan, in addition to Getrag DCT programs with BMW, Ford and other global automakers. The Company is working on several other DCT programs with OEMs around the world. BorgWarner DualTronic® technology enables a conventional, manual gearbox to function as a fully automatic transmission by eliminating the interruption in power flow that occurs when shifting a single clutch manual transmission. The result is a smooth shifting automatic transmission with the fuel efficiency and great driving experience of a manual gearbox.

In 2008, the Company entered into a joint venture agreement with China Automobile Development United Investment Company, a company owned by 12 leading Chinese automakers, to produce various DCT modules for the Chinese market. The joint venture's operations are located in Dalian, China and production is scheduled to begin in 2013. The Company owns 66% of the joint venture.

6

The Drivetrain Group's torque management products include rear-wheel drive (“RWD”)/all-wheel drive ("AWD") transfer case systems, FWD/AWD coupling systems and cross-axle coupling systems. The Company's focus is on developing electronically controlled torque management devices and systems that will benefit vehicle dynamics, fuel economy and stability.

 Transfer cases are installed on RWD based light trucks, SUVs, cross-over utility vehicles (“CUVs”), and passenger cars. A transfer case attaches to the transmission and distributes torque to the front and rear axles improving vehicle traction and stability in dynamic driving conditions. There are many variants of the Company's transfer case technology in the market today, including Torque On-Demand (TOD®), chain-driven, gear-driven, 1-speed and 2-speed transfer cases. The Company's transfer cases are featured on the Ford F-150 and on the Dodge Ram light-duty and heavy-duty trucks.

The Company is involved in the AWD market for FWD based vehicles with couplings that use electronically-controlled clutches to distribute power to the rear wheels instantly as traction is required. The Company's latest coupling innovation, the Centrifugal Electro-Hydraulic (“CEH”) Actuator, which is utilized to engage the clutches in the coupling, produces outstanding vehicle stability and traction while promoting better fuel economy with reduced weight. The CEH Actuator is found in the AWD couplings featured in several current FWD/AWD vehicles including the Audi A3, Skoda Octavia,Volvo XC60 and VW Golf.

In 2011, the Company acquired the Traction Systems division of Haldex Group, a leading provider of innovative AWD products for the global vehicle industry headquartered in Stockholm, Sweden. This acquisition has accelerated BorgWarner's growth in the global AWD market as it continues to shift toward FWD based vehicles. The acquisition will continue to add industry leading AWD technologies for FWD based vehicles, with a strong European customer base, to BorgWarner's portfolio of front- and rear-wheel drive based products. This enables BorgWarner to offer global customers a broader range of AWD solutions to meet their vehicle needs.

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Joint Ventures

As of December 31, 2012, the Company had nine joint ventures in which it had a less-than-100% ownership interest. Results from the six joint ventures in which the Company is the majority owner are consolidated as part of the Company's results. Results from the three joint ventures in which the Company's effective ownership interest is 50% or less, were reported by the Company using the equity method of accounting.

Management of the unconsolidated joint ventures is shared with the Company's respective joint venture partners. Certain information concerning the Company's joint ventures is set forth below:

Joint venture	Products	Year organized	Percentage owned by the Company		Location of operation	Joint venture partner	Fiscal 2012 sales (millions of dollars) (a)
Unconsolidated:
NSK-Warner	Transmission components	1964	50	%	Japan/China	NSK Ltd.	$	696.7
Turbo Energy Limited (b)	Turbochargers	1987	32.6	%	India	Sundaram Finance Limited; Brakes India Limited	$	167.5
BERU Diesel Start Systems Pvt. Ltd.	Glow Plugs	1996	49	%	India	Jayant Dave	$	6.7
Consolidated:
BorgWarner Transmission Systems Korea Ltd. (c)	Transmission components	1987	60	%	Korea	NSK-Warner	$	253.4
Divgi-Warner Private Limited	Transfer cases and synchronizer rings	1995	60	%	India	Divgi Metalwares, Ltd.	$	23.8
Borg-Warner Shenglong (Ningbo) Co. Ltd.	Fans and fan drives	1999	70	%	China	Ningbo Shenglong Automotive Powertrain Systems Co., Ltd.	$	33.1
BorgWarner TorqTransfer Systems Beijing Co. Ltd.	Transfer cases	2000	80	%	China	Beijing Automotive Components Stock Co. Ltd.	$	81.7
SeohanWarner Turbo Systems Ltd.	Turbochargers	2003	71	%	Korea	Korea Flange Company	$	123.3
BorgWarner United Transmission Systems Co. Ltd.	Transmission components	2009	66	%	China	China Automobile Development United Investment Co., Ltd.	$	2.0

________________

(a) All sales figures are for the year ended December 31, 2012, except NSK-Warner and Turbo Energy Limited. NSK-Warner’s sales are reported for the 12 months ended November 30, 2012. Turbo Energy Limited’s sales are reported for the 12 months ended September 30, 2012.

(b) The Company made purchases from Turbo Energy Limited totaling $24.2 million, $22.5 million and $22.9 million for the years ended December 31, 2012, 2011 and 2010, respectively.

(c) BorgWarner Inc. owns 50% of NSK-Warner, which has a 40% interest in BorgWarner Transmission Systems Korea Ltd. This gives the Company an additional indirect effective ownership percentage of 20%. This results in a total effective ownership interest of 80%.

Financial Information About Geographic Areas

During the year ended December 31, 2012, approximately 74% of the Company's consolidated net sales were outside the United States ("U.S."), attributing sales to the location of production rather than the location of the customer.

Refer to Note 17, “Reporting Segments and Related Information,” to the Consolidated Financial Statements in Item 8 of this report for financial information about geographic areas. 

Product Lines and Customers

During the year ended December 31, 2012, approximately 80% of the Company's net sales were for light-vehicle applications; approximately 9% were for commercial vehicle applications; approximately 6% were for off-highway vehicle applications; and approximately 5% were to distributors of aftermarket replacement parts.

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The Company’s worldwide net sales to the following customers (including their subsidiaries) were approximately as follows:

	Year Ended December 31,
Customer	2012		2011		2010
Volkswagen	17	%	19	%	19	%
Ford	13	%	12	%	11	%

No other single customer accounted for more than 10% of our consolidated net sales in any of the years presented.

The Company's automotive products are generally sold directly to OEMs, substantially pursuant to negotiated annual contracts, long-term supply agreements or terms and conditions as may be modified by the parties. Deliveries are subject to periodic authorizations based upon OEM production schedules. The Company typically ships its products directly from its plants to the OEMs.

Sales and Marketing

Each of the Company's businesses within its two reporting segments has its own sales function. Account executives for each of our business units are assigned to serve specific OEM customers for one or more of a business unit's products. Our account executives spend the majority of their time in direct contact with OEM purchasing and engineering employees and are responsible for servicing existing business and for identifying and obtaining new business.  Because of their close relationship with OEMs, account executives are able to identify and meet customers' needs based upon their knowledge of our products' design and manufacturing capabilities. Upon securing a new order, account executives participate in product launch team activities and serve as a key interface with customers.

In addition, the sales and marketing employees of our Engine and Drivetrain reporting segments often work together to explore cross-development opportunities for the business units. The development of DualTronic®, the Company's wet-clutch and control-system technology for a new-concept automated transmission, is an example of a successful collaboration.

Seasonality

Our operations are directly related to the automotive industry. Consequently, we may experience seasonal fluctuations to the extent automotive vehicle production slows, such as in the summer months when many customer plants typically close for model year changeovers or vacations. Historically, model changeovers or vacations have generally resulted in lower sales volume in the third quarter.

Research and Development

The Company conducts advanced Engine and Drivetrain research at the reporting segment level. This advanced engineering function looks to leverage know-how and expertise across product lines to create new Engine and Drivetrain systems and modules that can be commercialized. This function manages a venture capital fund that was created by the Company as seed money for new innovation and collaboration across businesses.

In addition, each of the Company's business units within its two reporting segments has its own research and development (“R&D”) organization, including engineers and technicians, engaged in R&D activities at facilities worldwide. The Company also operates testing facilities such as prototype, measurement and calibration, life cycle testing and dynamometer laboratories.

9

By working closely with the OEMs and anticipating their future product needs, the Company's R&D personnel conceive, design, develop and manufacture new proprietary automotive components and systems. R&D personnel also work to improve current products and production processes. The Company believes its commitment to R&D will allow it to obtain new orders from its OEM customers.

The Company's net R&D expenditures are included in selling, general and administrative expenses of the Consolidated Statements of Operations. Customer reimbursements are netted against gross R&D expenditures as they are considered a recovery of cost. Customer reimbursements for prototypes are recorded net of prototype costs based on customer contracts, typically either when the prototype is shipped or when it is accepted by the customer. Customer reimbursements for engineering services are recorded when performance obligations are satisfied in accordance with the contract and accepted by the customer. Financial risks and rewards transfer upon shipment, acceptance of a prototype component by the customer or upon completion of the performance obligation as stated in the respective customer agreement.

	Year Ended December 31,
(millions of dollars)	2012			2011			2010
Gross R&D expenditures	$	309.3		$	294.7		$	233.2
Customer reimbursements	(43.4		)	(51.0		)	(48.2		)
Net R&D expenditures	$	265.9		$	243.7		$	185.0

Net R&D expenditures as a percentage of net sales were 3.7%, 3.4% and 3.3% in the years ended December 31, 2012, 2011 and 2010, respectively. The Company has contracts with several customers at the Company's various R&D locations. No such contract exceeded 5% of net R&D expenditures in any of the years presented.

Intellectual Property

The Company has more than 4,200 active domestic and foreign patents and patent applications pending or under preparation, and receives royalties from licensing patent rights to others. While it considers its patents on the whole to be important, the Company does not consider any single patent, any group of related patents or any single license essential to its operations in the aggregate or to the operations of any of the Company's business groups individually. The expiration of the patents individually and in the aggregate is not expected to have a material effect on the Company's financial position or future operating results. The Company owns numerous trademarks, some of which are valuable, but none of which are essential to its business in the aggregate.

The Company owns the “BorgWarner” and “Borg-Warner Automotive” trade names and housemarks, and variations thereof, which are material to the Company's business.  

Competition

The Company's reporting segments compete worldwide with a number of other manufacturers and distributors that produce and sell similar products. Many of these competitors are larger and have greater resources than the Company. Technological innovation, application engineering development, quality, price, delivery and program launch support are the primary elements of competition.

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The Company’s major competitors by product type follow:

Product Type: Engine	Names of Competitors
Turbochargers:	Cummins Turbo Technology	IHI
	Honeywell	Mitsubishi Heavy Industries (MHI)
Emissions systems:	Behr	Modine
	Denso	Pierburg
Timing devices and chains:	Denso	Schaeffler Group
	Iwis	Tsubaki Group
Thermal systems:	Behr	Usui
	Horton/Sachs	Xuelong
Diesel cold start, gasoline ignition	Bosch	Eberspacher Catem
technology and cabin heaters:	Delphi	NGK

Product Type: Drivetrain	Names of Competitors
Torque transfer:	American Axle	JTEKT
	GKN Driveline	Magna Powertrain
Transmission:	Bosch	FCC
	Dynax	Schaeffler Group

In addition, a number of the Company's major OEM customers manufacture, for their own use and for others, products that compete with the Company's products. Other current OEM customers could elect to manufacture products to meet their own requirements or to compete with the Company. There is no assurance that the Company's business will not be adversely affected by increased competition in the markets in which it operates.

For many of its products, the Company's competitors include suppliers in parts of the world that enjoy economic advantages such as lower labor costs, lower health care costs, lower tax rates and, in some cases, export subsidies and/or raw materials subsidies. Also, see Item 1A, "Risk Factors."

Workforce

As of December 31, 2012, the Company had a salaried and hourly workforce of approximately 19,100 (as compared with approximately 19,250 at December 31, 2011), of which approximately 5,500 were in the U.S.  Approximately 20% of the Company's U.S. workforce is unionized. The workforces at certain international facilities are also unionized. The Company believes the present relations with our workforce to be satisfactory.

Our only domestic collective bargaining agreement is for our Ithaca and Cortland, New York facilities. This agreement expires in September 2016.

11

Raw Materials

The Company uses a variety of raw materials in the production of its automotive products including steel, aluminum, copper, nickel, plastic resins and certain alloy elements. Manufacturing operations for each of the Company's operating segments are dependent upon natural gas, fuel oil and electricity.

Commodity prices remained volatile in 2012. The Company uses a variety of tactics in order to limit the impact of supply shortages and inflationary pressures. The Company's global procurement organization works to accelerate cost reductions, purchases from lower cost regions, supplier rationalization, risk mitigation efforts and collaborative buying activities. In addition, the Company uses long-term contracts, cost sharing arrangements, design changes, customer buy programs and limited financial instruments to help control costs. The Company intends to use similar measures in 2013 and beyond.  Refer to Note 10, “Financial Instruments,” of the Consolidated Financial Statements in Item 8 of this report for information related to the Company's hedging activities. 

For 2013, the Company believes that its supplies of raw materials are adequate and available from multiple sources to support its manufacturing requirements.

Available Information

Through its Internet website (www.borgwarner.com), the Company makes available, free of charge, its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, all amendments to those reports, and other filings with the Securities and Exchange Commission, as soon as reasonably practicable after they are filed or furnished. The Company also makes the following documents available on its Internet website: the Audit Committee Charter; the Compensation Committee Charter; the Corporate Governance Committee Charter; the Company's Corporate Governance Guidelines; the Company's Code of Ethical Conduct; and the Company's Code of Ethics for CEO and Senior Financial Officers. You may also obtain a copy of any of the foregoing documents, free of charge, if you submit a written request to Investor Relations, 3850 Hamlin Road, Auburn Hills, Michigan 48326.

Executive Officers of the Registrant

Set forth below are the names, ages, positions and certain other information concerning the executive officers of the Company as of February 14, 2013.

Name	Age	Position with the Company
Timothy M. Manganello	63	Executive Chairman of the Board
Robin J. Adams	59	Vice Chairman of the Board, Executive Vice President and Chief Administrative Officer
James R. Verrier	50	President and Chief Executive Officer
Ronald T. Hundzinski	54	Vice President and Chief Financial Officer
Steven G. Carlson	62	Vice President and Controller
Stefan Demmerle	48	Vice President
Brady D. Ericson	41	Vice President
Joseph F. Fadool	46	Vice President
John J. Gasparovic	55	Vice President, General Counsel and Secretary
Robin Kendrick	48	Vice President
Pete B. Kohler	57	Vice President
Frederic B. Lissalde	45	Vice President
Janice K. McAdams	54	Vice President, Human Resources
Thomas J. McGill	46	Vice President and Treasurer

12

Mr. Manganello has been Executive Chairman of the Board since June 2003 and was Chief Executive Officer of the Company from February 2003 through December 2012.  Mr. Manganello also served as the Board Chairman of the Federal Reserve Bank of Chicago, Detroit branch from 2006 through 2011 and is a director of Bemis Company, Inc. and Zep Inc.

Mr. Adams has been Vice Chairman of the Board since March 2012 and Executive Vice President and Chief Administrative Officer of the Company since April 2004. From April 2004 through March 2012, he was also the Chief Financial Officer of the Company and has been a member of BorgWarner's Board of Directors since April 2005. Mr. Adams is also a director of Carlisle Companies Inc.

Mr. Verrier has been President, Chief Executive Officer and member of BorgWarner's Board of Directors since January 1, 2013. From March 2012 through December 2012, he was the President and Chief Operating Officer of the Company. From January 2010 to March 2012, he was Vice President of the Company and President and General Manager of BorgWarner Morse TEC Inc. He was Vice President and General Manager, Passenger Car of BorgWarner Turbo Systems Inc. from January 2006 to January 2010.

Mr. Hundzinski has been Vice President and Chief Financial Officer of the Company since March 2012. From August 2011 through March 2012, he was Vice President and Treasurer of the Company. From April 2010 until August 2011, he was Vice President and Controller of the Company. From June 2005 until April 2010, he was Vice President of Finance of BorgWarner Turbo Systems.

Mr. Carlson has been Vice President and Controller of the Company since May 2012. From August 2011 through April 2012, he was Vice President of Finance of BorgWarner Transmissions Systems Inc. From June 2009 until August 2011, he was Vice President of Finance of BorgWarner Morse TEC Inc. From November 2006 until June 2009, he was Group Controller of BorgWarner Thermal Systems Inc.

Dr. Demmerle has been Vice President of the Company and President and General Manager of BorgWarner TorqTransfer Systems Inc. since September 2012. From July 2010 to September 2012, he was Vice President, Engine Control Electronics at Continental Automotive Systems. From December 2007 to June 2010, he was President and CEO of Continental Diesel Systems US LLC (formerly known as Siemens Diesel Systems Technology LLC).

Mr. Ericson has been Vice President of the Company and President and General Manager of BorgWarner BERU Systems and Emissions Systems since September 2011. He was Vice President and General Manager of BorgWarner Emissions Systems from April 2010 through August 2011. From August 2009 through March 2010, he was Vice President, Global Manufacturing Strategies for BorgWarner Turbo and Emissions Systems. From January 2008 through July 2009, he was Vice President, Operations - China and Korea for BorgWarner Turbo and Emissions Systems.

Mr. Fadool has been Vice President of the Company and President and General Manager of BorgWarner Morse TEC Inc. since May 2012. He was Vice President of the Company and President and General Manager of BorgWarner TorqTransfer Systems Inc. from June 2011 until May 2012. He was Vice President and General Manager of TorqTransfer Systems Inc. from July 2010 until June 2011. From May 2009 until July 2010, he was Vice President for North American Operations for the Central Electronics Plants at Continental Automotive Systems. From July 2007 until July 2010, he was Vice President, Huntsville Operations at SiemensVDO.

Mr. Gasparovic has been Vice President, General Counsel and Secretary of the Company since January 2007.

13

Mr. Kendrick has been Vice President of the Company and President and General Manager of BorgWarner Transmissions Systems Inc. since September 2011. From January 2011 until September 2011, he was President and Chief Executive Officer of Ruia Global Fasteners, a spin-off of Acument Global Technologies. From September 2008 to January 2011, he was Vice President and General Manager, Europe for Acument Global Technologies. From March 1999 until September 2008, he held various positions at American Axle & Manufacturing Holdings, Inc. including Vice President & General Manager of Driveshafts & Halfshafts, Managing Director of AAM Europe, and Executive Director of Sales.

Mr. Kohler has been Vice President of the Company and President and General Manager of BorgWarner Turbo Systems Commercial Diesel Products since May 2011, President and General Manager of BorgWarner Thermal Systems since February 2013 and President Global Commercial Market Development and Strategy since March 2011. He was Acting President and General Manager of BorgWarner Turbo Systems Commercial Diesel from March 2011 to May 2011. He was Vice President and General Manager for BorgWarner Turbo Systems Commercial Vehicles from February 2006 to March 2011.

Mr. Lissalde has been Vice President of the Company and President and General Manager of BorgWarner Turbo Systems Passenger Car Products since May 2011. He was Acting President and General Manager of BorgWarner Turbo Systems Passenger Car Products from March 2011 until May 2011. He was Vice President and General Manager for Turbo Systems Passenger Car from January 2010 until March 2011. He was Vice President and General Manager, DualTronic and Clutch Systems, BorgWarner Transmission Systems Inc. from January 2008 to January 2010. He was the Vice President of Global Sales of that entity from May 2007 to January 2008.

Ms. McAdams has been Vice President, Human Resources of the Company since March 2010. She was Director of Compensation and Benefits from May 2005 to March 2010.

Mr. McGill has been Vice President and Treasurer of the Company since May 2012. He was Vice President of Finance of BorgWarner Turbo Systems from April 2010 until May 2012. He was Vice President of Finance of BorgWarner Thermal Systems Inc. from June 2009 to April 2010. He was Vice President of Finance TorqTransfer Systems Inc. from February 2009 to June 2009. He was Director of Audit & Analysis of the Company from December 2006 to February 2009.

Item 1A.    Risk Factors    

The following risk factors and other information included in this Annual Report on Form 10-K should be considered. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impact our business operations. If any of the following risks occur, our business including its financial performance, financial condition, operating results and cash flows could be materially adversely affected.

Risks related to our industry

Conditions in the automotive industry may adversely affect our business.

Our financial performance depends on conditions in the global automotive industry. Automotive and truck production and sales are cyclical and sensitive to general economic conditions and other factors including interest rates, consumer credit, and consumer spending and preferences. Economic declines that result in significant reduction in automotive or truck production would have a material adverse affect on our sales to OEMs.

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We face strong competition.

We compete worldwide with a number of other manufacturers and distributors that produce and sell products similar to ours. Price, quality, delivery, technological innovation, application engineering development and program launch support are the primary elements of competition. Our competitors include vertically integrated units of our major OEM customers, as well as a large number of independent domestic and international suppliers. We are not as large as a number of these companies and do not have as many financial or other resources. Although OEMs have indicated that they will continue to rely on outside suppliers, a number of our major OEM customers manufacture products for their own uses that directly compete with our products. These OEMs could elect to manufacture such products for their own uses in place of the products we currently supply. The competitive environment has changed dramatically over the past few years as our traditional U.S. OEM customers, faced with intense international competition, have expanded their worldwide sourcing of components. As a result, we have experienced competition from suppliers in other parts of the world that enjoy economic advantages, such as lower labor costs, lower health care costs, lower tax rates and, in some cases, export or raw materials subsidies. Increased competition could adversely affect our business.

Risks related to our business

We are under substantial pressure from OEMs to reduce the prices of our products.

There is substantial and continuing pressure on OEMs to reduce costs, including costs of products we supply. Annual price reductions to OEM customers have become a permanent feature of our business environment. To maintain our profit margins, we seek price reductions from our suppliers, improve production processes to increase manufacturing efficiency, update product designs to reduce costs and develop new products, the benefits of which support stable or increased prices. Our ability to pass through increased raw material costs to our OEM customers is limited, with cost recovery often less than 100% and often on a delayed basis. Inability to reduce costs in an amount equal to annual price reductions, increases in raw material costs, and increases in employee wages and benefits could have an adverse effect on our business.

We continue to face highly volatile costs of commodities used in the production of our products.

The Company uses a variety of commodities (including steel, nickel, copper, aluminum, plastic resins, other raw materials and energy) and materials purchased in various forms such as castings, powder metal, forgings, stampings and bar stock. Increasing commodity costs will have an impact on our results.  We have sought to alleviate the impact of increasing costs by including a material pass-through provision in our customer contracts wherever possible and by selectively hedging certain commodity exposures. Customers frequently challenge these contractual provisions and rarely pay the full cost of any material increases. The discontinuation of our ability to pass-through or hedge increasing commodity costs could adversely affect our business.

From time to time, commodity prices may also fall rapidly. When this happens, suppliers may withdraw capacity from the market until prices improve which may cause periodic supply interruptions. The same may be true of our transportation carriers and energy providers. If these supply interruptions occur, it could adversely affect our business.

15

We use important intellectual property in our business. If we are unable to protect our intellectual property or if a third party makes assertions against us or our customers relating to intellectual property rights, our business could be adversely affected.

We own important intellectual property, including patents, trademarks, copyrights and trade secrets, and are involved in numerous licensing arrangements. Our intellectual property plays an important role in maintaining our competitive position in a number of the markets that we serve. Our competitors may develop technologies that are similar or superior to our proprietary technologies or design around the patents we own or license. Further, as we expand our operations in jurisdictions where the protection of intellectual property rights is less robust, the risk of others duplicating our proprietary technologies increases, despite efforts we undertake to protect them. Developments or assertions by or against us relating to intellectual property rights, and any inability to protect these rights, could materially adversely impact our business and our competitive position.

We are subject to business continuity risks associated with increasing centralization of our information technology systems.

To improve efficiency and reduce costs, we have regionally centralized the information systems that support our business processes such as invoicing, payroll and general management operations. If the centralized systems are disrupted or disabled, key business processes could be interrupted, which could adversely affect our business.

Our business success depends on attracting and retaining qualified personnel.

Our ability to sustain and grow our business requires us to hire, retain and develop a highly skilled and diverse management team and workforce worldwide. Any unplanned turnover or inability to attract and retain key employees in numbers sufficient for our needs could adversely affect our business.

Part of our workforce is unionized which could subject us to work stoppages.

As of December 31, 2012, approximately 20% of our U.S. workforce was unionized. Our only domestic collective bargaining agreement is for our Ithaca and Cortland, New York facilities. This agreement expires in September 2016. The workforce at certain of our international facilities is also unionized. A prolonged dispute with our employees could have an adverse effect on our business.

We are impacted by the rising cost of providing retirement benefits and certain retirement benefit plans we sponsor are currently unfunded or underfunded.

We sponsor certain retirement benefit plans worldwide that are unfunded or underfunded and will require cash payments. If the performance of the assets in our funded pension plans do not meet our expectations, if medical costs continue to increase or actuarial assumptions are modified, our required cash payments may be higher than we expect. 

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We are subject to extensive environmental regulations.

Our operations are subject to laws governing, among other things, emissions to air, discharges to waters and the generation, handling, storage, transportation, treatment and disposal of waste and other materials. The operation of automotive parts manufacturing plants entails risks in these areas, and we cannot assure you that we will not incur material costs or liabilities as a result. Through various acquisitions over the years, we have acquired a number of manufacturing facilities, and we cannot assure you that we will not incur material costs and liabilities relating to activities that predate our ownership. In addition, potentially significant expenditures could be required in order to comply with evolving environmental, health and safety laws that may be adopted in the future. Costs associated with failure to comply with environmental regulations could have an adverse effect on our business.

We have contingent liabilities related to environmental, product warranties, regulatory matters, litigation and other claims.

We and certain of our current and former direct and indirect corporate predecessors, subsidiaries and divisions have been identified by the United States Environmental Protection Agency and certain state environmental agencies and private parties as potentially responsible parties at various hazardous waste disposal sites under the Comprehensive Environmental Response, Compensation and Liability Act and equivalent state laws.

We provide product warranties to our customers for some of our products. Under these product warranties, we may be required to bear costs and expenses for the repair or replacement of these products. We cannot assure you that costs and expenses associated with these product warranties will not be material, or that those costs will not exceed any amounts accrued for such product warranties in our financial statements.

We are currently, and may in the future become, subject to legal proceedings and commercial or contractual disputes. These claims typically arise in the normal course of business and may include, but not be limited to, commercial or contractual disputes with our suppliers, intellectual property matters, personal injury, product liability, environmental and employment claims. There is a possibility that such claims may have an adverse impact on our business that is greater than we anticipate.

Negative or unexpected tax consequences could adversely affect our business.

Adverse changes in the underlying profitability and financial outlook of our operations in several jurisdictions could lead to changes in our valuation allowances against deferred tax assets and other tax accruals that could adversely affect our financial performance.

Additionally, we are subject to tax audits by governmental authorities in the U.S. and numerous non-U.S. jurisdictions, which are inherently uncertain. Negative or unexpected results from one or more such tax audits or changes to tax laws governing the jurisdictions in which we operate could adversely affect our business.

17

Our growth strategy may prove unsuccessful.

We have a stated goal of increasing sales and operating income at a rate greater than global vehicle production by increasing content per vehicle with innovative new components and through select acquisitions. We may not meet our goal because of any of the following: (a) the failure to develop new products that will be purchased by our customers; (b) technology changes rendering our products obsolete; (c) a reversal of the trend of supplying systems (which allows us to increase content per vehicle) instead of components; and (d) the failure to find suitable acquisition targets or the failure to integrate operations of acquired businesses quickly and cost affectively. Failure to execute our growth strategy could adversely affect our business.

We are subject to risks related to our international operations.

We have manufacturing and technical facilities in many regions including the Americas, Europe and Asia. For 2012, approximately 74% of our sales were outside the U.S. Consequently, our results could be affected by changes in trade, monetary and fiscal policies, trade restrictions or prohibitions, import or other charges or taxes, fluctuations in foreign currency exchange rates, limitations on the repatriation of funds, changing economic conditions, unreliable intellectual property protection and legal systems, insufficient infrastructures, social unrest, political instability and disputes, and international terrorism. Compliance with multiple and potentially conflicting laws and regulations of various countries is burdensome and expensive.

A downgrade in the ratings of our debt could restrict our ability to access the debt capital markets.

Changes in the ratings that rating agencies assign to our debt may ultimately impact our access to the debt capital markets and the costs we incur to borrow funds. If ratings for our debt fall below investment grade, our access to the debt capital markets could become restricted.

Additionally, our revolving credit agreement includes an increase in interest rates if the ratings for our debt are downgraded. The interest costs on our revolving credit agreement are based on a rating grid agreed to in our credit agreement. Further, an increase in the level of our indebtedness and related interest costs may increase our vulnerability to adverse general economic and industry conditions and may affect our ability to obtain additional financing.

Risks related to our customers

We rely on sales to major customers.

We rely on sales to OEMs around the world of varying credit quality. Supply to several of these customers requires significant investment by the Company. We base our growth projections, in part, on commitments made by our customers. These commitments generally renew yearly during a program life cycle. If actual production orders from our customers do not approximate such commitments due to any of a variety of factors including non-renewal of purchase orders, the customer's financial hardship or other unforeseen reasons, it could adversely affect our business.

Furthermore, some of our sales are concentrated. Our worldwide sales in 2012 to Volkswagen and Ford constituted approximately 17% and 13%, respectively, of our 2012 consolidated net sales.   

18

We are sensitive to the effects of our major customers’ labor relations.

All three of our primary North American customers, Ford, Chrysler and General Motors, have major union contracts with the United Automobile, Aerospace and Agricultural Implement Workers of America. Because of domestic OEMs' dependence on a single union, we are affected by labor difficulties and work stoppages at OEMs' facilities. Similarly, a majority of our global customers' operations outside of North America are also represented by various unions. Any extended work stoppage could have an adverse affect on our business.

Risks related to our suppliers

We could be adversely affected by supply shortages of components from our suppliers.

In an effort to manage and reduce the cost of purchased goods and services, we have been rationalizing our supply base. As a result, we are dependent on fewer sources of supply for certain components used in the manufacture of our products. The Company selects suppliers based on total value (including total landed price, quality, delivery, and technology), taking into consideration their production capacities and financial condition. We expect that they will deliver to our stated written expectations.

However, there can be no assurance that capacity limitations, labor unrest, weather emergencies, commercial disputes, government actions, riots, wars, sabotage, non-conforming parts, acts of terrorism, “Acts of God," or other problems experienced by our suppliers will not result in occasional shortages or delays in their supply of components to us. If we were to experience a significant or prolonged shortage of critical components from any of our suppliers and could not procure the components from other sources, we would be unable to meet the production schedules for some of our key products and could miss customer delivery expectations. This would adversely affect our customer relations and business.

Suppliers’ economic distress could result in the disruption of our operations and could adversely affect our business.

Rapidly changing industry conditions such as volatile production volumes; credit tightness; changes in foreign currencies; raw material, commodity, transportation, and energy price escalation; drastic changes in consumer preferences; and other factors could adversely affect our supply chain, and sometimes with little advanced notice. These conditions could also result in increased commercial disputes and supply interruption risks. In certain instances, it would be difficult and expensive for us to change suppliers that are critical to our business. On occasion, we must provide financial support to distressed suppliers or take other measures to protect our supply lines. While we have taken definite actions to mitigate these factors, we cannot predict with certainty the potential adverse effects these costs might have on our business.

We are subject to possible insolvency of outsourced service providers.

The Company relies on third party service providers for administration of workers' compensation claims, health care benefits, pension benefits, stockholder and bondholder registration and similar services. These service providers contribute to the efficient conduct of the Company's business. Insolvency of one or more of these service providers could adversely affect our business.

We are subject to possible insolvency of financial counterparties.

The Company engages in numerous financial transactions and contracts including insurance policies, letters of credit, credit line agreements, financial derivatives, and investment management agreements involving various counterparties. The Company is subject to the risk that one or more of these counterparties may become insolvent and therefore be unable to discharge its obligations under such contracts.

19

Other risks

A variety of other factors could adversely affect our business.

Any of the following could materially and adversely affect our business: the loss of or changes in supply contracts or sourcing strategies of our major customers or suppliers; start-up expenses associated with new vehicle programs or delays or cancellation of such programs, utilization of our manufacturing facilities, which can be dependent on a single product line or customer; inability to recover engineering and tooling costs; market and financial consequences of recalls that may be required on products we supplied; delays or difficulties in new product development; the possible introduction of similar or superior technologies by others; global excess capacity and vehicle platform proliferation; and the impact of natural disasters.

Item 1B. Unresolved Staff Comments

The Company has received no written comments regarding its periodic or current reports from the staff of the Securities and Exchange Commission that were issued 180 days or more preceding the end of its 2012 fiscal year that remain unresolved.  

20

Item 2. Properties

As of December 31, 2012, the Company had 57 manufacturing, assembly, and technical locations worldwide. In addition to its 14 U.S. locations, the Company has seven locations in Germany; six locations in each of China and South Korea; five locations in India; three locations in each of Japan and Mexico; two locations in Hungary and one location in each of Brazil, France, Ireland, Italy, Monaco, Poland, Portugal, Spain, Sweden, Thailand and the United Kingdom. The Company also has several sales offices, warehouses and technical centers. The Company's worldwide headquarters are located in a leased facility in Auburn Hills, Michigan. In general, the Company believes its facilities to be suitable and adequate to meet its current and reasonably anticipated needs.

The following is additional information concerning principal manufacturing, assembly, and technical facilities operated by the Company, its subsidiaries, and affiliates.

ENGINE^(a) 

Americas:	Europe:	Asia:
Asheville, North Carolina	Arcore, Italy	Aoyama, Japan
Auburn Hills, Michigan	Bradford, England	Changwon, South Korea (b)
Cadillac, Michigan	Kirchheimbolanden, Germany	Chennai, India
Campinas, Brazil	Ludwigsburg, Germany	Chonburi, Thailand
Cortland, New York	Markdorf, Germany	Chungju-City, South Korea
Dixon, Illinois	Muggendorf, Germany	Kakkalur, India
El Salto Jalisco, Mexico	Oroszlany, Hungary	Manesar, India (b)
Fletcher, North Carolina	Rzeszow, Poland	Nabari City, Japan
Ithaca, New York	Tralee, Ireland	Ningbo, China (b) (c)
Marshall, Michigan	Valenca, Portugal (b)	Pyongtaek, South Korea (b) (c)
Ramos, Mexico	Vigo, Spain

DRIVETRAIN^(a) 

Americas:	Europe:	Asia:
Addison, Illinois (b)	Arnstadt, Germany	Beijing, China (b)
Auburn Hills, Michigan	Heidelberg, Germany	Dalian, China (b)
Bellwood, Illinois	Ketsch, Germany	Eumsung, South Korea
Frankfort, Illinois	Landskrona, Sweden	Fukuroi City, Japan
Irapuato, Mexico	Monte Carlo, Monaco	Ochang, South Korea (b)
Livonia, Michigan	Szentlorinchata, Hungary	Pune, India
Longview, Texas (b)	Tulle, France	Shanghai, China (b)
Seneca, South Carolina		Sirsi, India
Water Valley, Mississippi

________________

(a) The table excludes joint ventures owned less than 50% and administrative offices.

(b) Indicates leased land rights or a leased facility.

(c) City has 2 locations: a wholly owned subsidiary and a joint venture.

21

Item 3. Legal Proceedings    

The Company is subject to a number of claims and judicial and administrative proceedings (some of which involve substantial amounts) arising out of the Company’s business or relating to matters for which the Company may have a contractual indemnity obligation. See Note 13, "Contingencies," to the Consolidated Financial Statements for a discussion of environmental, product liability and other litigation, which is incorporated herein by reference.

Item 4. Mine Safety Disclosures

Not applicable.

PART II

Item 5. Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

The Company's common stock is listed for trading on the New York Stock Exchange under the symbol BWA. As of February 8, 2013, there were 2,196 holders of record of Common Stock.

On March 5, 2009, the Company announced the suspension of the Company's quarterly dividend of $0.12 per share. The dividend policy is subject to review and change at the discretion of the Board of Directors.    

High and low prices (as reported on the New York Stock Exchange composite tape) for the Company's common stock for each quarter in 2011 and 2012 were:

Quarter Ended	High		Low
March 31, 2011	$	81.07	$	64.22
June 30, 2011	$	82.28	$	65.78
September 30, 2011	$	81.98	$	57.39
December 31, 2011	$	77.70	$	54.59
March 31, 2012	$	87.45	$	64.28
June 30, 2012	$	87.00	$	62.62
September 30, 2012	$	78.18	$	60.17
December 31, 2012	$	74.88	$	60.53

22

The line graph below compares the cumulative total shareholder return on our Common Stock with the cumulative total return of companies on the Standard & Poor's (S&P's) 500 Stock Index, companies within our peer group and companies within Standard Industrial Code (“SIC”) 3714 - Motor Vehicle Parts.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*

Among BorgWarner Inc., the S&P 500 Index,

SIC 3714 Motor Vehicle Parts and a Peer Group

___________

*$100 invested on 12/31/2007 in stock or index, including reinvestment of dividends. Fiscal year ending December 31.

Copyright © S&P, a division of the McGraw-Hill Companies Inc. All rights reserved.

BWA, S&P 500 and Peer Group data gleaned from Capital IQ; SIC Code Index gleaned from Research Data Group

	2007	2008	2009	2010	2011	2012
BorgWarner Inc.(1)	100.00	45.53	69.95	152.36	134.21	150.80
S&P 500(2)	100.00	63.00	79.67	91.67	93.61	108.59
SIC Code Index(3)	100.00	41.02	74.87	126.38	94.34	109.28
Peer Group(4)	100.00	49.25	73.41	114.58	103.92	127.13

________________

(1)BorgWarner Inc.

(2)S&P 500 — Standard & Poor’s 500 Total Return Index

(3)Standard Industrial Code (“SIC”) 3714-Motor Vehicle Parts

(4)Peer Group Companies — Consists of the following companies:

American Axle & Manufacturing Holdings, Inc., Autoliv, Inc., Gentex Corporation, Johnson Controls, Inc., Lear Corporation (pre-2009 bankruptcy), Magna International Inc., Meritor, Inc., Modine Manufacturing Company, Tenneco Inc., TRW Automotive Holdings Corp. and Visteon Corporation (pre-2009 bankruptcy)

Repurchase of Equity Securities

The Company's Board of Directors has authorized the purchase of up to 24.8 million shares of the Company's common stock. As of December 31, 2012, the Company had repurchased 21,669,252 shares under the Common Stock Repurchase Program. All shares purchased under this authorization have been and will continue to be repurchased in the open market at prevailing prices and at times and in amounts to be determined by management as market conditions and the Company's capital position warrant. The Company may use Rule 10b5-1 plans to facilitate share repurchase. Repurchased shares will be deemed common stock held in treasury and may subsequently be reissued for general corporate purposes.

23

Employee transactions include restricted shares withheld to offset statutory minimum tax withholding that occurs upon vesting of restricted shares. The BorgWarner Inc. Amended and Restated 2004 Stock Incentive Plan provides that the withholding obligations be settled by the Company retaining stock that is part of the Award. Withheld shares will be deemed common stock held in treasury and may subsequently be reissued for general corporate purposes.

The following table provides information about the Company's purchases of its equity securities that are registered pursuant to Section 12 of the Exchange Act during the quarter ended December 31, 2012:

Issuer Repurchases of Equity Securities
Period	Total number of shares repurchased	Average price per share		Total number of shares purchased as part of publicly announced plans or programs	Maximum number of shares that may yet be purchased
Month Ended October 31, 2012
Common Stock Repurchase Program	—	$	—	—	4,630,748
Employee transactions	657	$	65.82	—
Month Ended November 30, 2012
Common Stock Repurchase Program	1,188,100	$	63.14	1,188,100	3,442,648
Employee transactions	—	$	—	—
Month Ended December 31, 2012
Common Stock Repurchase Program	311,900	$	66.05	311,900	3,130,748
Employee transactions	—	$	—	—

____________

NOTE: All purchases made on the open market.

Equity Compensation Plan Information

As of December 31, 2012, the number of stock options and restricted common stock outstanding under our equity compensation plans, the weighted average exercise price of outstanding stock options and restricted common stock and the number of securities remaining available for issuance were as follows:

	Number of securities to be issued upon exercise of outstanding options, restricted common stock, warrants and rights	Weighted average exercise price of outstanding options, restricted common stock, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Plan category	(a)	(b)		(c)
Equity compensation plans approved by security holders	2,467,429	$	42.46	1,935,283
Equity compensation plans not approved by security holders	—	$	—	—
Total	2,467,429	$	42.46	1,935,283

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Item 6. Selected Financial Data

	Year Ended December 31,
(millions of dollars, except share and per share data)	2012 (a)		2011 (a)		2010 (a)		2009 (a)		2008 (b)
Operating results
Net sales	$	7,183.2	$	7,114.7	$	5,652.8	$	3,961.8	$	5,263.9
Operating income (c)	$	752.9	$	797.5	$	504.3	$	50.8	$	7.3
Net earnings (loss) attributable to BorgWarner Inc. (c)	$	500.9	$	550.1	$	377.4	$	27.0	$	(35.6	)
Earnings (loss) per share — basic	$	4.45	$	5.04	$	3.31	$	0.23	$	(0.31	)
Earnings (loss) per share — diluted	$	4.17	$	4.45	$	3.07	$	0.23	$	(0.31	)
Net R&D expenditures	$	265.9	$	243.7	$	185.0	$	155.2	$	205.7
Capital expenditures, including tooling outlays	$	407.4	$	393.7	$	276.6	$	172.0	$	369.7
Depreciation and tooling amortization	$	260.2	$	252.2	$	224.5	$	234.6	$	259.7
Number of employees	19,100		19,250		17,500		12,500		13,800
Financial position
Cash	$	715.7	$	359.6	$	449.9	$	357.4	$	103.4
Total assets	$	6,400.8	$	5,958.6	$	5,555.0	$	4,811.4	$	4,644.0
Total debt	$	1,067.2	$	1,329.1	$	1,180.4	$	842.3	$	780.3
Common share information
Cash dividend declared and paid per share	$	—	$	—	$	—	$	0.12	$	0.44
Market prices of the Company's common stock
High	$	87.45	$	82.28	$	73.43	$	36.78	$	55.99
Low	$	60.17	$	54.59	$	33.43	$	14.62	$	15.00
Weighted average shares outstanding (thousands)
Basic	112,652		109,229		114,155		116,522		116,007
Diluted	121,377		128,468		129,575		116,939		116,007

________________

(a) Refer to Note 15, "Earnings per Share," in Item 8 of this report regarding the impact of the Company's 3.50% convertible senior notes and associated call options and warrants on the Company's earnings per share for the years ended December 31, 2012, 2011 and 2010. For the year ending December 31, 2009, the impact of the Company's 3.50% convertible senior notes and associated warrants were not included in the calculation of diluted earnings per share because including them, under the if-converted method, would have increased earnings per share.

(b) The Company had a net loss for the year ended December 31, 2008. As a result, diluted loss per share is the same as basic loss per share in the period, as any dilutive securities would reduce the loss per share.

(c) Refer to Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," for discussion of non-comparable items impacting the years ending December 31, 2012, 2011 and 2010. The Company's operating income and net earnings attributable to BorgWarner Inc. for the year ended December 31, 2009 includes $50.3 million of restructuring expense. The Company's operating income and net loss attributable to BorgWarner Inc. for the year ended December 31, 2008 includes $127.5 million of restructuring expense and a goodwill impairment charge of $156.8 million.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

INTRODUCTION

BorgWarner Inc. and Consolidated Subsidiaries (the “Company”) is a leading global supplier of highly engineered automotive systems and components primarily for powertrain applications. Our products help improve vehicle performance, fuel efficiency, stability and air quality. These products are manufactured and sold worldwide, primarily to original equipment manufacturers (“OEMs”) of light vehicles (passenger cars, sport-utility vehicles ("SUVs"), vans and light trucks). The Company's products are also sold to other OEMs of commercial vehicles (medium-duty trucks, heavy-duty trucks and buses) and off-highway vehicles (agricultural and construction machinery and marine applications). We also manufacture and sell our products to certain Tier One vehicle systems suppliers and into the aftermarket for light, commercial and off-highway vehicles. The Company operates manufacturing facilities serving customers in the Americas, Europe and Asia and is an original equipment supplier to every major automotive OEM in the world.

The Company's products fall into two reporting segments: Engine and Drivetrain. The Engine segment's products include turbochargers, timing devices and chain products, emissions systems, thermal systems, diesel coldstart, gasoline ignition technology and cabin heaters. The Drivetrain segment's products include transmission components and systems and all-wheel drive torque management systems.

RESULTS OF OPERATIONS

A summary of our operating results for the years ended December 31, 2012, 2011 and 2010 is as follows:

	Year Ended December 31,
(millions of dollars, except per share data)	2012			2011			2010
Net sales	$	7,183.2		$	7,114.7		$	5,652.8
Cost of sales	5,716.3			5,704.3			4,559.5
Gross profit	1,466.9			1,410.4			1,093.3
Selling, general and administrative expenses	629.3			621.0			566.6
Other (income) expense	84.7			(8.1		)	22.4
Operating income	752.9			797.5			504.3
Equity in affiliates’ earnings, net of tax	(42.8		)	(38.2		)	(39.6		)
Interest income	(4.7		)	(4.8		)	(2.8		)
Interest expense and finance charges	39.4			74.6			68.8
Earnings before income taxes and noncontrolling interest	761.0			765.9			477.9
Provision for income taxes	238.6			195.3			81.7
Net earnings	522.4			570.6			396.2
Net earnings attributable to the noncontrolling interest, net of tax	21.5			20.5			18.8
Net earnings attributable to BorgWarner Inc.	$	500.9		$	550.1		$	377.4
Earnings per share — diluted	$	4.17		$	4.45		$	3.07

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Non-comparable items impacting the Company's earnings per diluted share and net earnings

The Company's earnings per diluted share were $4.17, $4.45 and $3.07 for the years ended December 31, 2012, 2011 and 2010, respectively. The Company believes the following table is useful in highlighting non-comparable items that impacted its earnings per diluted share:

	Year Ended December 31,
Non-comparable items:	2012			2011			2010
Loss from disposal activities	$	(0.37	)	$	(0.19	)	$	—
Restructuring expense	(0.17		)	—			—
Retirement related obligations	(0.10		)	—			—
Tax adjustments	(0.16		)	0.05
Patent infringement settlement, net of legal costs incurred	—			0.14			—
Environmental litigation settlement	—			—			(0.14		)
Medicare Part D tax law change	—			—			(0.02		)
Reversal of foreign tax credit valuation allowance	—			—			0.17
BERU - Eichenauer equity investment gain	—			—			0.04
Total impact of non-comparable items per share — diluted:	$	(0.80	)	$	—		$	0.05

A summary of non-comparable items impacting the Company’s net earnings for the years ended December 31, 2012, 2011 and 2010 is as follows:

Year ended December 31, 2012:

• The Company incurred $39.7 million of expense and $5.7 million of tax expense associated with the loss on sale of the spark plug business, primarily related to the write-down of prior purchase price accounting adjustments included within the disposal group. The Company also recorded restructuring expense of $27.4 million, primarily associated with the disposal and future requirements of BERU's on-going business, which was partially offset by a tax benefit of $7.7 million.

• Retirement related obligations of $17.3 million are comprised of a $5.7 million loss resulting from the settlement of a portion of the Muncie Plant's pension obligation and an $11.6 million expense associated with the retirement of certain Named Executive Officers.These obligations were partially offset by a $6.1 million tax benefit.

• The Company incurred $19.8 million of tax expense resulting from other tax adjustments. These other tax adjustments primarily include tax expense resulting from the settlement of certain tax audits, the Company's second quarter 2012 decision to change its cash repatriation assertion for some of its foreign subsidiaries and a correction of the income taxes payable balance, partially offset by a tax benefit related to certain countries enacting changes to their respective statutory income tax rates.

Year ended December 31, 2011:

• The Company incurred $21.5 million in expense associated with the loss on sale of the tire pressure monitoring business, including costs related to the divestiture, and a write-down of a portion of the ignitor and electronic business. In addition, the Company recorded $1.4 million of tax benefit associated with the disposals and $4.1 million of tax expense related to an intercompany disposal transaction.

• The Company recorded a $29.1 million patent infringement settlement gain, net of legal costs incurred, which was partially offset by $11.0 million of tax expense.

• The Company recorded a $6.2 million benefit related to tax adjustments resulting from a change in state corporate income tax legislation as well as an adjustment of the Company's tax accounts as a result of the closure of certain tax audits.

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Year ended December 31, 2010:

• The Company recorded a $28.0 million charge for alleged personal injury relating to environmental contamination.

• The Company recorded $2.5 million in expense associated with the Medicare Part D tax adjustment.

• The Company reversed $21.2 million of the valuation allowance on U.S. based foreign tax credit carryforwards.

• The Company recorded an $8.0 million gain on the acquisition of BERU-Eichenauer GmbH related to adjusting the Company's 50% investment to fair value under ASC Topic 805.

The Company's effective tax rate, after giving tax effect to the non-comparable items shown above, was 26.8%, 24.8% and 21.7% for the years ended December 31, 2012, 2011 and 2010, respectively.

Net Sales

The table below summarizes the overall worldwide light vehicle production year over year percentage increases/(decreases) for the years ended December 31, 2012 and 2011:

	Years Ended December 31,
	2012		2011
North America*	17	%	9	%
Europe*	(6	)%	5	%
Asia*	11	%	—	%
Total Worldwide*	6	%	3	%
BorgWarner year over year net sales change	1	%	26	%
BorgWarner year over year net sales change, excluding the impact of acquisitions, divestitures and foreign currencies	6	%	17	%

________________

* Estimated data provided by IHS Automotive.

Net sales for the year ended December 31, 2012 totaled $7,183.2 million, a 1.0% increase from the year ended December 31, 2011. Excluding the impact of the first quarter 2011 acquisition of Haldex Traction Holding AB, fourth quarter of 2011 and third quarter of 2012 dispositions and the impact of weaker foreign currencies, primarily the Euro, net sales increased approximately 6%. This increase occurred while estimated light vehicle production was up 6% worldwide, primarily driven by a 17% increase in North America and a 19% increase in Japan, partially offset by a 6% decrease in Europe from the year ended December 31, 2011.

Net sales for the year ended December 31, 2011 totaled $7,114.7 million, a 25.9% increase from the year ended December 31, 2010 and better than the then estimated worldwide market production increase of 3%. Excluding the impact of strengthening foreign currencies, primarily the Euro, the second quarter 2010 purchase of Dytech Ensa S.L. and the first quarter 2011 purchase of Haldex Traction AB, net sales increased by approximately 17% during the year ended December 31, 2011. The above-market growth for the Company was driven by the industry's focus on fuel economy and lower emissions.

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The following table details our results of operations as a percentage of net sales:

	Year Ended December 31,
(percentage of net sales)	2012		2011		2010
Net sales	100.0	%	100.0	%	100.0	%
Cost of sales	79.6		80.2		80.7
Gross profit	20.4		19.8		19.3
Selling, general and administrative expenses	8.8		8.7		10.0
Other (income) expense	1.2		(0.1	)	0.4
Operating income	10.4		11.2		8.9
Equity in affiliates’ earnings, net of tax	(0.6	)	(0.5	)	(0.7	)
Interest income	(0.1	)	(0.1	)	—
Interest expense and finance charges	0.5		1.0		1.2
Earnings before income taxes and noncontrolling interest	10.6		10.8		8.4
Provision for income taxes	3.3		2.8		1.4
Net earnings	7.3		8.0		7.0
Net earnings attributable to the noncontrolling interest, net of tax	0.3		0.3		0.3
Net earnings attributable to BorgWarner Inc.	7.0	%	7.7	%	6.7	%

Cost of sales as a percentage of net sales was 79.6%, 80.2% and 80.7% in the years ended December 31, 2012, 2011 and 2010, respectively. The Company's material cost of sales was approximately 50% of net sales in the years ended December 31, 2012, 2011 and 2010. The Company's remaining cost to convert raw material to finished product, which includes direct labor and manufacturing overhead, has continued to improve during the years ended December 31, 2012 and December 31, 2011 compared to December 31, 2010 as a result of increased net sales and successful cost reduction actions. Gross profit as a percentage of net sales was 20.4%, 19.8% and 19.3% in the years ended December 31, 2012, 2011 and 2010, respectively.

Selling, general and administrativeexpenses (“SG&A”) was $629.3 million, $621.0 million and $566.6 million or 8.8%, 8.7% and 10.0% of net sales for the years ended December 31, 2012, 2011 and 2010, respectively. SG&A remained relatively flat during the year ended December 31, 2012 compared to the year ended December 31, 2011 as a result of increased research and development ("R&D") costs included in SG&A, offset by continued cost management. The increase in SG&A for the year ended December 31, 2011 compared with the year ended December 31, 2010 of $54.4 million was primarily due to the $58.7 million, or 31.7%, increase in R&D costs. The SG&A decrease as a percentage of net sales was primarily driven by the significant year over year increase in net sales.

R&D costs, net of customer reimbursements, was $265.9 million, or 3.7% of net sales, in the year ended December 31, 2012, compared to $243.7 million, or 3.4% of net sales, and $185.0 million, or 3.3% of net sales, in the years ended December 31, 2011 and 2010, respectively. We will continue to invest in a number of cross-business R&D programs, as well as a number of other key programs, all of which are necessary for short- and long-term growth. Our current long-term expectation for R&D spending is approximately 4% of net sales.

Other (income) expense was $84.7 million, $(8.1) million and $22.4 million for the years ended December 31, 2012, 2011 and 2010, respectively. This line item is primarily comprised of transactions discussed within the subtitle "Non-comparable items impacting the Company's earnings per diluted share and net earnings" above.

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Equity in affiliates' earnings, net of tax was $42.8 million, $38.2 million and $39.6 million in the years ended December 31, 2012, 2011 and 2010, respectively. This line item is primarily driven by the results of our 50%-owned Japanese joint venture, NSK-Warner, and our 32.6%-owned Indian joint venture, Turbo Energy Limited (“TEL”). The increase in equity in affiliates' earnings for the year ended December 31, 2012 compared with the year ended December 31, 2011 is primarily due to year over year growth in the Japanese auto market resulting in improved earnings from the Company's interest in NSK-Warner. The decrease in equity in affiliates' earnings for the year ended December 31, 2011 compared to the year ended December 31, 2010 is primarily due to lower production volumes in Japan as a result of natural disasters. Refer to Note 5 to the Consolidated Financial Statements in Item 8 of this report for further discussion of NSK-Warner.

Interest expense and finance charges were $39.4 million, $74.6 million and $68.8 million in the years ended December 31, 2012, 2011 and 2010, respectively. The decrease in interest expense for the year ended December 31, 2012 compared with the year ended December 31, 2011 was primarily due to the April 2012 settlement of the Company's convertible senior notes, the ineffectiveness of cross-currency swaps and higher capitalized interest associated with increased long-term capital projects. The increase in interest expense for the year ended December 31, 2011 compared with the year ended December 31, 2010 was primarily due to higher debt levels.

Provision for income taxes The provision for income taxes resulted in an effective tax rate of 31.4% for the year ended December 31, 2012, compared with rates of 25.5% and 17.1% for the years ended December 31, 2011 and 2010, respectively.

The Company's provision for income taxes for the year ended December 31, 2012 includes a net tax benefit of $2.0 million associated with the loss from disposal activities and restructuring expense. The $2.0 million net benefit is comprised of a tax benefit of $7.7 million associated with restructuring expense, partially offset by tax expense of $5.7 million resulting from the sale of the spark plug business. Additionally, the provision includes a tax benefit of $6.1 million related to retirement related obligations and additional tax expense of $19.8 million resulting from other tax adjustments. These other tax adjustments include $5.9 million of tax expense primarily resulting from the settlement of certain tax audits, $7.5 million of tax expense associated with the Company's second quarter 2012 decision to change its cash repatriation assertion for some of its foreign subsidiaries, $4.7 million of tax benefit related to certain countries enacting changes to their respective statutory income tax rates and $11.1 million of U.S. tax expense to correct the income taxes payable balance. Excluding the impact of these non-comparable items, the Company's annual effective tax rate associated with ongoing operations for 2012 was 26.8%.

In January 2013, the United States Congress passed an extension of the federal research and development tax credit and other international tax provisions through December 31, 2013. As a result, we expect that our tax provision for the first quarter of fiscal year 2013 will include a discrete tax benefit which will reduce our effective tax rate for the quarter and, to a lesser extent, the full year.

The effective tax rate of 25.5% for the year ended December 31, 2011 includes $11.0 million of tax expense associated with the Company's patent infringement settlement, $2.7 million of tax expense associated with the loss on disposals and a tax benefit of $6.2 million resulting from other tax adjustments. These other tax adjustments related to a change in state corporate income tax legislation as well as an adjustment of the Company's tax accounts as a result of the closure of certain tax audits. This rate differs from the U.S. statutory rate primarily due to foreign rates, which differ from those in the U.S., the realization of certain business tax credits including foreign tax credits and favorable permanent differences between book and tax treatment for items, including equity in affiliates' earnings. Excluding the impact of these non-comparable items, the Company's annual effective tax rate associated with ongoing operations for 2011 was 24.8%.

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The effective tax rate of 17.1% for the year ended December 31, 2010 differs from the U.S. statutory rate primarily due to foreign rates, which differ from those in the U.S., the realization of certain business tax credits including foreign tax credits and favorable permanent differences between book and tax treatment for items, including equity in affiliates' earnings. Excluding the impact of the items mentioned above, the Company's annual effective tax rate associated with ongoing business operations was 21.7%.

Net earnings attributable to the noncontrolling interest, net of tax of $21.5 million for the year ended December 31, 2012 increased by $1.0 million and $2.7 million compared to 2012 for the years ended December 31, 2011 and 2010, respectively. The increases during the years ended December 31, 2012 and December 31, 2011 compared to the year ended December 31, 2010 are primarily related to higher sales and earnings by the Company's joint ventures.

Results By Reporting Segment

The Company's business is comprised of two reporting segments: Engine and Drivetrain. These segments are strategic business groups, which are managed separately as each represents a specific grouping of related automotive components and systems.

The Company allocates resources to each segment based upon the projected after-tax return on invested capital ("ROIC") of its business initiatives. ROIC is comprised of Adjusted EBIT after deducting notional taxes compared to the projected average capital investment required. Adjusted EBIT is comprised of earnings before interest, income taxes and noncontrolling interest (“EBIT") adjusted for restructuring, goodwill impairment charges, affiliates' earnings and other items not reflective of ongoing operating income or loss.

Adjusted EBIT is the measure of segment income or loss used by the Company. The Company believes Adjusted EBIT is most reflective of the operational profitability or loss of our reporting segments.

The following tables show segment information and Adjusted EBIT for the Company's reporting segments.

Net Sales

	Year Ended December 31,
(millions of dollars)	2012			2011			2010
Engine	$	4,913.0		$	5,050.6		$	4,060.8
Drivetrain	2,298.7			2,084.5			1,611.4
Inter-segment eliminations	(28.5		)	(20.4		)	(19.4		)
Net sales	$	7,183.2		$	7,114.7		$	5,652.8

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Adjusted Earnings Before Interest, Income Taxes and Noncontrolling Interest ("Adjusted EBIT")

	Year Ended December 31,
(millions of dollars)	2012			2011			2010
Engine	$	786.4		$	774.3		$	537.9
Drivetrain	209.1			161.2			137.0
Adjusted EBIT	995.5			935.5			674.9
Loss from disposal activities	39.7			21.5			—
Restructuring expense	27.4			—			—
Retirement related obligations	17.3			—			—
Patent infringement settlement, net of legal costs incurred	—			(29.1		)	—
Environmental litigation settlement	—			—			28.0
BERU - Eichenauer equity investment gain	—			—			(8.0		)
Corporate, including equity in affiliates' earnings and stock-based compensation	115.4			107.4			111.0
Interest income	(4.7		)	(4.8		)	(2.8		)
Interest expense and finance charges	39.4			74.6			68.8
Earnings before income taxes and noncontrolling interest	761.0			765.9			477.9
Provision for income taxes	238.6			195.3			81.7
Net earnings	522.4			570.6			396.2
Net earnings attributable to the noncontrolling interest, net of tax	21.5			20.5			18.8
Net earnings attributable to BorgWarner Inc.	$	500.9		$	550.1		$	377.4

The Engine segment's net sales for the year ended December 31, 2012 decreased $137.6 million, or 2.7%, and segment Adjusted EBIT increased $12.1 million, or 1.6%, from the year ended December 31, 2011. Excluding the impact of the fourth quarter 2011 and third quarter 2012 dispositions and weaker foreign currencies, primarily the Euro, net sales increased approximately 4% from the year ended December 31, 2011. This increase was primarily driven by global growth in most major product groups. The segment Adjusted EBIT margin was 16.0% for the year ended December 31, 2012, up from 15.3% in the year ended December 31, 2011. The Adjusted EBIT margin increase was primarily driven by continued cost management.

The Engine segment's net sales for the year ended December 31, 2011 increased $989.8 million, or 24.4%, and segment Adjusted EBIT increased $236.4 million, or 43.9%, from the year ended December 31, 2010. Excluding the impact of strengthening foreign currencies, primarily the Euro, and the second quarter 2010 acquisition of Dytech ENSA S.L., net sales increased approximately 18%. The segment Adjusted EBIT margin was 15.3% for the year ended December 31, 2011, up from 13.2% in the year ended December 31, 2010. The net sales and Adjusted EBIT margin increases were primarily driven by strong global growth in all major product groups and continued cost management.

The Drivetrain segment's net sales for the year ended December 31, 2012 increased $214.2 million, or 10.3%, and segment Adjusted EBIT increased $47.9 million, or 29.7%, from the year ended December 31, 2011. Excluding the acquisition of Haldex Traction AB and the impact of weaker foreign currencies, primarily the Euro, net sales increased approximately 13% from the year ended December 31, 2011. This increase was primarily driven by strong global growth in all major product groups. The segment Adjusted EBIT margin was 9.1% in the year ended December 31, 2012, up from 7.7% in the year ended December 31, 2011. The Adjusted EBIT margin increase was primarily driven by strong global growth in all major product groups, operational improvements and continued cost management.

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The Drivetrain segment's net sales for the year ended December 31, 2011 increased $473.1 million, or 29.4%, and segment Adjusted EBIT increased $24.2 million, or 17.7%, from the year ended December 31, 2010. Excluding the impact of strengthening foreign currencies, primarily the Euro, and the first quarter 2011 acquisition of Haldex Traction AB, net sales increased approximately 14%. The net sales increase was a result of strong four-wheel drive system and traditional transmission component sales in South Korea and higher dual clutch transmission module sales in Europe. The segment Adjusted EBIT margin was 7.7% in the year ended December 31, 2011, down from 8.5% in the year ended December 31, 2010, primarily due to operational inefficiencies in its European operations and Traction Systems acquisition related expenses.

Corporate represents headquarters' expenses not directly attributable to the individual segments, expenses associated with divested operations and equity in affiliates' earnings. This net expense was $115.4 million, $107.4 million and $111.0 million for the years ended December 31, 2012, 2011 and 2010, respectively.

Outlook

Based on weakening global economic conditions, particularly in Europe, our overall outlook for 2013 is cautious. The Company expects global production volumes to be slightly higher in 2013 compared with 2012. In Europe, our largest market, we expect production volumes to decline in 2013 compared with 2012. However, we expect that higher adoption rates of BorgWarner products around the world will result in sales growth for the Company in 2013.

The Company maintains a positive long-term outlook for its global business and is committed to new product development and strategic capital investments to enhance its product leadership strategy. The trends that are driving our long-term growth are expected to continue, including the growth of direct injection diesel and gasoline engines worldwide, the increased adoption of automated transmissions in Europe and Asia-Pacific, and the move to variable cam and chain engine timing systems in Europe and Asia-Pacific.

LIQUIDITY AND CAPITAL RESOURCES

The Company maintains various liquidity sources including cash and cash equivalents and the unused portion of our multi-currency revolving credit agreement. At December 31, 2012, the Company had $715.7 million of cash, including $712.1 million of cash held by our subsidiaries outside of the United States. Cash held by these subsidiaries is used to fund foreign operational activities and future investments, including acquisitions. The vast majority of cash held outside the United States is available for repatriation, however, doing so could result in increased foreign and U.S. federal, state and local income taxes. A deferred tax liability has been recorded for the portion of these funds anticipated to be repatriated to the United States.

The Company's $650 million multi-currency revolving credit facility, which includes a feature that allows the Company's borrowings to be increased to $1 billion, provides for borrowings through June 30, 2016 and is guaranteed by the Company's material domestic subsidiaries. The Company has two key financial covenants as part of the credit agreement. These covenants are a debt compared to EBITDA (“Earnings Before Interest, Taxes, Depreciation and Amortization”) test and an interest coverage test. The Company was in compliance with all covenants at December 31, 2012 and expects to remain compliant in future periods. At December 31, 2012 and 2011, the Company had outstanding borrowings of $140.0 million and $70.0 million, respectively, under this facility.

On April 9, 2009, the Company issued $373.8 million in convertible senior notes, which were settled in April 2012 by delivering approximately 11.4 million shares of common stock held in treasury to the note holders. The settlement resulted in a reduction in the current portion of long-term debt of $373.8 million, a reduction in common stock held in treasury of $617.3 million and a reduction in capital in excess of par value of $243.5 million.

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In conjunction with the convertible senior note offering, the Company entered into a bond hedge overlay, including both call options and warrants, at a net pre-tax cost of $25.2 million, effectively raising the conversion premium to 50%, or approximately $38.61 per share. On April 16, 2012, the Company settled the call option portion of the bond hedge overlay, receiving approximately 6.5 million shares of its common stock. The settlement resulted in an increase to common stock held in treasury of $503.9 million offset by an increase to capital in excess of par value of $503.9 million.

During the third and fourth quarters of 2012, the Company settled the warrants included in the bond hedge overlay, delivering approximately 4.9 million shares of its common stock held in treasury, resulting in a reduction in common stock held in treasury of $338.5 million offset by a reduction to capital in excess of par value of $338.5 million.

In addition to the credit facility, the Company's universal shelf registration with the Securities and Exchange Commission has an unlimited amount of various debt and equity instruments that could be issued.

From a credit quality perspective, the Company has a credit rating of Baa2 from Moody's. In April 2012, the Company's credit rating was raised to BBB+ from BBB by both Standard & Poor’s and Fitch Ratings. The current outlook from Moody's, Standard & Poor’s and Fitch Ratings is stable. None of the Company’s debt agreements require accelerated repayment in the event of a downgrade in credit ratings.

    Capitalization

	December 31,
(millions of dollars)	2012			2011
Notes payable and short-term debt	$	239.1		$	196.3
Current portion of long-term debt	4.3			381.5
Long-term debt	823.8			751.3
Total debt	1,067.2			1,329.1
Less: cash	715.7			359.6
Total debt, net of cash	351.5			969.5
Total equity	3,146.1			2,453.0
Total capitalization	$	3,497.6		$	3,422.5
Total debt, net of cash, to capital ratio	10.0		%	28.3		%

Balance sheet debt decreased by $261.9 million and cash on hand increased by $356.1 million compared to December 31, 2011 primarily due to net cash provided by operating activities, net of capital expenditures, and the Company's settlement of its 3.50% convertible senior notes, which was partially offset by share repurchases.

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Total equity increased by $693.1 million in the year ended December 31, 2012 as follows:

(millions of dollars)
Balance, January 1, 2012	$	2,453.0
Net earnings	522.4
Convertible bond settlement	373.8
Purchase of treasury stock	(295.9		)
Stock-based compensation	94.4
Other comprehensive income	32.3
Dividends declared to noncontrolling stockholders	(18.9		)
BorgWarner BERU Systems Korea Co., Ltd. acquisition	(15.0		)
Balance, December 31, 2012	$	3,146.1

Operating Activities

Net cash provided by operating activities was $878.7 million, $708.2 million and $538.9 million in the years ended December 31, 2012, 2011 and 2010, respectively. The increase for the year ended December 31, 2012 compared with the year ended December 31, 2011 primarily reflects improved working capital management. The increase in the year ended December 31, 2011 compared to the year ended December 31, 2010 primarily reflects higher earnings.

Investing Activities

Net cash used in investing activities was $345.2 million, $564.5 million and $429.5 million in the years ended December 31, 2012, 2011 and 2010, respectively. The decrease in the year ended December 31, 2012 compared with the year ended December 31, 2011 primarily reflects the cash payment of $203.7 million made during the first quarter of 2011 for the acquisition of Haldex Traction AB and the cash proceeds of $55.2 million received during the third quarter of 2012 from the sale of the spark plug business, which was partially offset by increased capital expenditures. The increase in cash used in investing activities in the year ended December 31, 2011 compared to the year ended December 31, 2010 was primarily due to increased capital spending and higher payments for businesses acquired, net of cash acquired. Year over year capital spending increases of $13.7 million and $117.1 million during the years ended December 31, 2012 and December 31, 2011, respectively, were primarily due to higher spending levels required to meet increased program launches worldwide.

Financing Activities

Net cash used in financing activities was $188.6 million, $219.7 million and $13.2 million for the years ended December 31, 2012, 2011 and 2010, respectively. The $31.1 million decrease in the year ended December 31, 2012 compared with the year ended December 31, 2011 was primarily driven by decreased purchases of treasury stock partially offset by an increase in dividends paid to noncontrolling stockholders.

The $206.5 million increase in cash used in financing activities during the year ended December 31, 2011 compared to the year ended December 31, 2010 reflects lower net borrowings of $133.2 million, an increase in the Company's purchases of treasury stock of $31.9 million and the purchase of the noncontrolling interest's 40% share of BorgWarner Vikas Emissions Systems India Private Limited of $29.4 million.

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The Company's significant contractual obligation payments at December 31, 2012 are as follows:

(millions of dollars)	Total		2013		2014-2015		2016-2017		After 2017
Other postretirement benefits, excluding pensions (a)	$	297.3	$	21.1	$	40.3	$	37.6	$	198.3
Defined benefit pension plans (b)	101.0		7.1		19.0		18.3		56.6
Notes payable and long-term debt	1,071.0		243.4		12.8		290.0		524.8
Projected interest payments (c)	339.4		38.4		73.7		66.1		161.2
Non-cancelable operating leases	68.7		18.1		27.2		20.0		3.4
Capital spending obligations	39.8		39.8		—		—		—
Income tax payments (d)	201.1		201.1		—		—		—
Total	$	2,118.3	$	569.0	$	173.0	$	432.0	$	944.3

________________

(a) Other postretirement benefits, excluding pensions, include anticipated future payments to cover retiree medical and life insurance benefits. See Note 11 to the Consolidated Financial Statements for disclosures related to the Company’s other postretirement benefits.

(b) Since the timing and amount of payments for funded defined benefit pension plans are usually not certain for future years such potential payments are not shown in this table. Amount contained in “After 2017” column is for unfunded plans and includes estimated payments through 2022. See Note 11 to the Consolidated Financial Statements for disclosures related to the Company’s pension benefits.

(c) Projection is based upon actual fixed rates where appropriate, and a projected floating rate for the variable rate portion of the total debt portfolio. The floating rate projection is based upon current market conditions and rounded to the nearest 50th basis point (0.50%), which is 4.0% for this purpose. Projection is also based upon debt being redeemed upon maturity.

(d) See Note 4 to the Consolidated Financial Statements for disclosures related to the Company’s income taxes.

We believe that the combination of cash from operations, cash balances, available credit facilities, and the remaining shelf registration capacity will be sufficient to satisfy our cash needs for our current level of operations and our planned operations for the foreseeable future. We will continue to balance our needs for internal growth, external growth, debt reduction and cash conservation.

Off Balance Sheet Arrangements

The Company has certain leases that are recorded as operating leases. Types of operating leases include leases on the headquarters facility, an airplane, vehicles and certain office equipment. The total expected future cash outlays for non-cancelable operating lease obligations at December 31, 2012 is $68.7 million. See Note 14 to the Consolidated Financial Statements for more information on operating leases, including future minimum payments.

Pension and Other Postretirement Benefits

The Company's policy is to fund its defined benefit pension plans in accordance with applicable government regulations and to make additional contributions when appropriate. At December 31, 2012, all legal funding requirements had been met. The Company contributed $18.0 million, $37.0 million and $25.1 million to its defined benefit pension plans in the years ended December 31, 2012, 2011 and 2010, respectively. The Company expects to contribute a total of $15 million to $25 million into its defined benefit pension plans during 2013. Of the $15 million to $25 million in projected 2013 contributions, $7.1 million are contractual obligations, while the remaining payments are discretionary.

The funded status of all pension plans was a net unfunded position of $317.1 million and $236.4 million at December 31, 2012 and 2011, respectively. Of these amounts, $192.4 million and $128.7 million at December 31, 2012 and 2011, respectively, were related to plans in Germany, where there is not a tax deduction allowed under the applicable regulations to fund the plans; hence the common practice is to make contributions as benefit payments become due.

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Other postretirement benefits primarily consist of postretirement health care benefits for certain employees and retirees of the Company's U.S. operations. The Company funds these benefits as retiree claims are incurred. Other postretirement benefits had an unfunded status of $220.5 million and $251.0 million at December 31, 2012 and 2011, respectively.

The Company believes it will be able to fund the requirements of these plans through cash generated from operations or other available sources of financing for the foreseeable future.

See Note 11 to the Consolidated Financial Statements for more information regarding costs and assumptions for employee retirement benefits.

OTHER MATTERS

Contingencies

In the normal course of business, the Company is party to various commercial and legal claims, actions and complaints, including matters involving warranty claims, intellectual property claims, general liability and various other risks. It is not possible to predict with certainty whether or not the Company will ultimately be successful in any of these commercial and legal matters or, if not, what the impact might be. The Company's environmental and product liability contingencies are discussed separately below. The Company's management does not expect that the results in any of these commercial and legal claims, actions and complaints will have a material adverse effect on the Company's results of operations, financial position or cash flows.

Litigation

In January 2006, BorgWarner Diversified Transmission Products Inc. ("DTP"), a subsidiary of the Company, filed a declaratory judgment action in United States District Court, Southern District of Indiana (Indianapolis Division) against the United Automobile, Aerospace, and Agricultural Implements Workers of America (“UAW”) Local No. 287 and Gerald Poor, individually and as the representative of a defendant class. DTP sought the Court's affirmation that DTP did not violate the Labor-Management Relations Act or the Employee Retirement Income Security Act (ERISA) by unilaterally amending certain medical plans effective April 1, 2006 and October 1, 2006, prior to the expiration of the then-current collective bargaining agreements. On September 10, 2008, the Court found that DTP's reservation of the right to make such amendments reducing the level of benefits provided to retirees was limited by its collectively bargained health insurance agreement with the UAW, which did not expire until April 24, 2009. Thus, the amendments were untimely. In 2008, the Company recorded a charge of $4.0 million as a result of the Court's decision.

DTP filed a declaratory judgment action in the United States District Court, Southern District of Indiana (Indianapolis Division) against the UAW Local No. 287 and Jim Barrett and others, individually and as representatives of a defendant class, on February 26, 2009 again seeking the Court's affirmation that DTP did not violate the Labor - Management Relations Act or ERISA by modifying the level of benefits provided retirees to make them comparable to other Company retiree benefit plans after April 24, 2009. Certain retirees, on behalf of themselves and others, filed a mirror-image action in the United States District Court, Eastern District of Michigan (Southern Division) on March 11, 2009, for which a class has been certified. During the last quarter of 2009, the action pending in Indiana was dismissed, while the action in Michigan is continuing. The Company is vigorously defending against the suit.  This contingency is subject to many uncertainties, therefore based on the information available to date, the Company cannot reasonably estimate the amount or the range of potential loss, if any. A decision on the merits of the suit could be rendered sometime in 2013.

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Environmental

The Company and certain of its current and former direct and indirect corporate predecessors, subsidiaries and divisions have been identified by the United States Environmental Protection Agency and certain state environmental agencies and private parties as potentially responsible parties (“PRPs”) at various hazardous waste disposal sites under the Comprehensive Environmental Response, Compensation and Liability Act (“Superfund”) and equivalent state laws and, as such, may presently be liable for the cost of clean-up and other remedial activities at 32 such sites. Responsibility for clean-up and other remedial activities at a Superfund site is typically shared among PRPs based on an allocation formula.

The Company believes that none of these matters, individually or in the aggregate, will have a material adverse effect on its results of operations, financial position or cash flows. Generally, this is because either the estimates of the maximum potential liability at a site are not material or the liability will be shared with other PRPs, although no assurance can be given with respect to the ultimate outcome of any such matter.

Based on information available to the Company (which in most cases includes: an estimate of allocation of liability among PRPs; the probability that other PRPs, many of whom are large, solvent public companies, will fully pay the cost apportioned to them; currently available information from PRPs and/or federal or state environmental agencies concerning the scope of contamination and estimated remediation and consulting costs; and remediation alternatives), the Company has an accrual for indicated environmental liabilities of $3.9 million at December 31, 2012. The Company expects to pay out substantially all of the amounts accrued for environmental liability over the next five years.

In connection with the sale of Kuhlman Electric Corporation, the Company agreed to indemnify the buyer and Kuhlman Electric for certain environmental liabilities, then unknown to the Company, relating to certain operations of Kuhlman Electric that pre-date the Company's 1999 acquisition of Kuhlman Electric. In 2007 and 2008, lawsuits were filed against Kuhlman Electric and others, including the Company, on behalf of approximately 340 plaintiffs alleging personal injury relating to alleged environmental contamination at its Crystal Springs, Mississippi plant. The Company entered into a settlement in July 2010 regarding the personal injury claims of the plaintiffs and those of approximately 2,700 unfiled claimants represented by those plaintiffs' attorneys. In exchange for, among other things, the dismissal with prejudice of these lawsuits and the release of claims by the unfiled claimants, the Company agreed to pay up to $28 million in settlement funds, which was expensed in the second quarter of 2010. The Company paid $13.9 million in November 2010 and made the final payment of $13.9 million in February 2011. Litigation concerning indemnification is pending and the Company may in the future become subject to further legal proceedings.

Product Liability

Like many other industrial companies who have historically operated in the U.S., the Company (or parties the Company is obligated to indemnify) continues to be named as one of many defendants in asbestos-related personal injury actions. We believe that the Company's involvement is limited because, in general, these claims relate to a few types of automotive friction products that were manufactured many years ago and contained encapsulated asbestos. The nature of the fibers, the encapsulation and the manner of use lead the Company to believe that these products are highly unlikely to cause harm. As of both December 31, 2012 and December 31, 2011, the Company had approximately 16,000 pending asbestos-related product liability claims, respectively. Of the approximately 16,000 outstanding claims at December 31, 2012, approximately half were pending in jurisdictions that have undergone significant tort and judicial reform activities subsequent to the filing of these claims.

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The Company's policy is to vigorously defend against these lawsuits and the Company has been successful in obtaining dismissal of many claims without any payment. The Company expects that the vast majority of the pending asbestos-related product liability claims where it is a defendant (or has an obligation to indemnify a defendant) will result in no payment being made by the Company or its insurers. In 2012, of the approximately 2,400 claims resolved, 308 (13%) resulted in payment being made to a claimant by or on behalf of the Company. In the full year of 2011, of the approximately 1,800 claims resolved, 288 (16%) resulted in any payment being made to a claimant by or on behalf of the Company.

Prior to June 2004, the settlement and defense costs associated with all claims were paid by the Company's primary layer insurance carriers under a series of funding arrangements. In addition to the primary insurance available for asbestos-related claims, the Company has substantial excess insurance coverage available for potential future asbestos-related product claims. In June 2004, primary layer insurance carriers notified the Company of the alleged exhaustion of their policy limits.

A declaratory judgment action was filed in January 2004 in the Circuit Court of Cook County, Illinois by Continental Casualty Company and related companies against the Company and certain of its historical general liability insurers. The court has issued a number of interim rulings and discovery is continuing. The Company has entered into settlement agreements with some of its insurance carriers, resolving their coverage disputes by agreeing to pay specified amounts to the Company. The Company is vigorously pursuing the litigation against the remaining insurers.

On April 5, 2010, the Superior Court of New Jersey Appellate Division affirmed a lower court judgment in an asbestos-related action against the Company and others. The Company filed its Notice of Petition to the Supreme Court of New Jersey in late April, seeking to appeal the decisions of the lower courts. On July 8, 2010, the Supreme Court of New Jersey denied the Company's Notice of Petition appealing the decision of the lower courts. The total claim of $40.7 million was paid by the Company in July 2010.

Although it is impossible to predict the outcome of pending or future claims or the impact of tort reform legislation that may be enacted at the state or federal levels, due to the encapsulated nature of the products, the Company's experience in vigorously defending and resolving claims in the past, and the Company's significant insurance coverage with solvent carriers as of the date of this filing, management does not believe that asbestos-related product liability claims are likely to have a material adverse effect on the Company's results of operations, financial position or cash flows.

To date, the Company has paid and accrued $235.8 million in defense and indemnity in advance of insurers' reimbursement and has received $124.8 million in cash and notes from insurers. The net balance of $111.0 million, is expected to be fully recovered, of which approximately $20 million is expected to be recovered within one year. Timing of recovery is dependent on final resolution of the declaratory judgment action referred to above or additional negotiated settlements. At December 31, 2011, insurers owed $109.8 million in association with these claims.

In addition to the $111.0 million net balance relating to past settlements and defense costs, the Company has estimated a liability of $85.6 million for claims asserted, but not yet resolved and their related defense costs at December 31, 2012. The Company also has a related asset of $85.6 million to recognize proceeds from the insurance carriers, which is expected to be fully recovered. Receipt of these proceeds is not expected prior to the resolution of the declaratory judgment action referred to above, which, more-likely-than-not, will occur subsequent to December 31, 2013. At December 31, 2011, the comparable value of the accrued liability and associated insurance asset was $61.7 million.

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The amounts recorded in the Consolidated Balance Sheets related to the estimated future settlement of existing claims are as follows:

	December 31,
(millions of dollars)	2012		2011
Assets:
Prepayments and other current assets	$	—	$	28.8
Other non-current assets	85.6		32.9
Total insurance assets	$	85.6	$	61.7
Liabilities:
Accounts payable and accrued expenses	$	36.5	$	28.8
Other non-current liabilities	49.1		32.9
Total accrued liabilities	$	85.6	$	61.7

The 2012 increase in the accrued liability and associated insurance asset is primarily due to an expected higher rate of claim settlement based on recent litigation claim activity.

The Company cannot reasonably estimate possible losses, if any, in excess of those for which it has accrued, because it cannot predict how many additional claims may be brought against the Company (or parties the Company has an obligation to indemnify) in the future, the allegations in such claims, the possible outcomes, or the impact of tort reform legislation that may be enacted at the State or Federal levels.

CRITICAL ACCOUNTING POLICIES

The consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States (“GAAP”). In preparing these financial statements, management has made its best estimates and judgments of certain amounts included in the financial statements, giving due consideration to materiality. Critical accounting policies are those that are most important to the portrayal of the Company's financial condition and results of operations. Some of these policies require management's most difficult, subjective or complex judgments in the preparation of the financial statements and accompanying notes. Management makes estimates and assumptions about the effect of matters that are inherently uncertain, relating to the reporting of assets, liabilities, revenues, expenses and the disclosure of contingent assets and liabilities. Our most critical accounting policies are discussed below.

Use of estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the accompanying notes, as well as, the amounts of revenues and expenses reported during the periods covered by these financial statements and accompanying notes. Actual results could differ from those estimates.

Revenue recognition The Company recognizes revenue when title and risk of loss pass to the customer, which is usually upon shipment of product. Although the Company may enter into long-term supply agreements with its major customers, each shipment of goods is treated as a separate sale and the prices are not fixed over the life of the agreements.

Cost of sales The Company includes materials, direct labor and manufacturing overhead within cost of sales. Manufacturing overhead is comprised of indirect materials, indirect labor, factory operating costs and other such costs associated with manufacturing products for sale.

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Impairment of long-lived assets, including definite-lived intangible assets The Company reviews the carrying value of its long-lived assets, whether held for use or disposal, including other amortizing intangible assets, when events and circumstances warrant such a review under Accounting Standards Codification ("ASC") Topic 360. A recoverability review is performed using the undiscounted cash flows if there is a triggering event. If the undiscounted cash flow test for recoverability identifies a possible impairment, management will perform a fair value analysis. Management determines fair value under ASC Topic 820 using the appropriate valuation technique of market, income or cost approach. If the carrying value of a long-lived asset is considered impaired, an impairment charge is recorded for the amount by which the carrying value of the long-lived asset exceeds its fair value.

Management believes that the estimates of future cash flows and fair value assumptions are reasonable; however, changes in assumptions underlying these estimates could affect the valuations. Long-lived assets held for sale are recorded at the lower of their carrying amount or fair value less cost to sell. Significant judgments and estimates used by management when evaluating long-lived assets for impairment include: (i) an assessment as to whether an adverse event or circumstance has triggered the need for an impairment review; (ii) undiscounted future cash flows generated by the asset; and (iii) fair valuation of the asset.

Goodwill and other indefinite-lived intangible assets During the fourth quarter of each year, the Company qualitatively assesses its goodwill and indefinite-lived intangible assets assigned to each of its reporting units. This qualitative assessment evaluates various events and circumstances, such as macro economic conditions, industry and market conditions, cost factors, relevant events and financial trends, that may impact a reporting unit's fair value. Using this qualitative assessment, the Company determines whether it is more-likely-than not the reporting unit's fair value exceeds its carrying value. If it is determined that it is not more-likely-than-not the reporting unit's fair value exceeds the carrying value, or upon a triggering event, including recent acquisition or divestiture activity, the Company performs a quantitative, "step one," goodwill impairment analysis.

During the fourth quarter of 2012, the Company performed a qualitative analysis on each reporting unit and determined it was more-likely-than-not the fair value exceeded the carrying value of these reporting units. For the reporting unit with recent divestiture activity, the Company performed a quantitative, "step one," goodwill impairment analysis, which requires the Company to make significant assumptions and estimates about the extent and timing of future cash flows, discount rates and growth rates. The basis of this goodwill impairment analysis is the Company's annual budget and long-range plan (“LRP”). The annual budget and LRP includes a five year projection of future cash flows based on actual new products and customer commitments and assumes the last year of the LRP data is a fair indication of the future performance. Because the LRP is estimated over a significant future period of time, those estimates and assumptions are subject to a high degree of uncertainty. Further, the market valuation models and other financial ratios used by the Company require certain assumptions and estimates regarding the applicability of those models to the Company's facts and circumstances.

The Company believes the assumptions and estimates used to determine its estimated fair value are reasonable. Different assumptions could materially affect the estimated fair value. The primary assumptions affecting the Company's December 31, 2012 goodwill quantitative, "step one," impairment review are as follows:

• Discount rate: The Company used a 10% weighted average cost of capital (“WACC”) as the discount rate for future cash flows. The WACC is intended to represent a rate of return that would be expected by a market participant.

• Operating income margin: The Company used historical and expected operating income margins, which may vary based on the projections the reporting unit being evaluated.

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In addition to the above primary assumptions, the Company notes the following risks to volume and operating income assumptions that could have an impact on the discounted cash flow model:

• The automotive industry is cyclical and the Company's results of operations would be adversely affected by industry downturns.

• The Company is dependent on market segments that use our key products and would be affected by decreasing demand in those segments.

• The Company is subject to risks related to international operations.

Based on the assumptions outlined above, the impairment testing conducted in the fourth quarter of 2012 indicated the Company's goodwill assigned to the reporting unit that was quantitatively assessed was not impaired. Additionally, a sensitivity analysis was completed indicating a 1% increase in the discount rate or a 1% decrease in the operating margin assumptions would not result in the carrying value exceeding the fair value of the reporting unit quantitatively assessed.

See Note 6 to the Consolidated Financial Statements for more information regarding goodwill.

Product warranties The Company provides warranties on some, but not all, of its products. The warranty terms are typically from one to three years. Provisions for estimated expenses related to product warranty are made at the time products are sold. These estimates are established using historical information about the nature, frequency and average cost of warranty claim settlements as well as product manufacturing and industry developments and recoveries from third parties. Management actively studies trends of warranty claims and takes action to improve product quality and minimize warranty claims. Management believes that the warranty accrual is appropriate; however, actual claims incurred could differ from the original estimates, requiring adjustments to the accrual. Our warranty provision over the last three years, and as a percentage of net sales, has continued to decrease in conjunction with Company's improved quality efforts and has trended as follows:

	Year Ended December 31,
(millions of dollars)	2012			2011			2010
Net sales	$	7,183.2		$	7,114.7		$	5,652.8
Warranty provision	$	33.7		$	47.5		$	39.3
Warranty provision as a percentage of net sales	0.5		%	0.7		%	0.7		%

The following table illustrates the sensitivity of a 25 basis point change (as a percentage of net sales) in the assumed warranty trend on the Company's accrued warranty liability:

	December 31,
(millions of dollars)	2012			2011			2010
25 basis point decrease (income)/expense	$	(18.0	)	$	(17.8	)	$	(14.1	)
25 basis point increase (income)/expense	$	18.0		$	17.8		$	14.1

At December 31, 2012, the total accrued warranty liability was $64.9 million. The accrual is represented as $33.1 million in current liabilities and $31.8 million in non-current liabilities on our Consolidated Balance Sheet.

See Note 7 to the Consolidated Financial Statements for more information regarding product warranties.

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Other loss accruals and valuation allowances The Company has numerous other loss exposures, such as customer claims, workers' compensation claims, litigation and recoverability of assets. Establishing loss accruals or valuation allowances for these matters requires the use of estimates and judgment in regard to the risk exposure and ultimate realization. The Company estimates losses under the programs using consistent and appropriate methods; however, changes to its assumptions could materially affect the recorded accrued liabilities for loss or asset valuation allowances.

Environmental contingencies The Company works with outside experts to determine a range of potential liability for environmental sites. The ranges for each individual site are then aggregated into a loss range for the total accrued liability. We record an accrual at the most probable amount within the range unless one cannot be determined; in which case we record the accrual at the low end of the range. Management's estimate of the loss for environmental liability was $3.9 million at December 31, 2012.

See Note 13 to the Consolidated Financial Statements for more information regarding environmental accrual.

Pension and other postretirement defined benefits The Company provides postretirement defined benefits to a number of its current and former employees. Costs associated with postretirement defined benefits include pension and postretirement health care expenses for employees, retirees and surviving spouses and dependents.

The Company's defined benefit pension and other postretirement plans are accounted for in accordance with ASC Topic 715. The determination of the Company's obligation and expense for its pension and other postretirement benefits, such as retiree health care, is dependent on certain assumptions used by actuaries in calculating such amounts. Certain assumptions, including the expected long-term rate of return on plan assets, discount rate, rates of increase in compensation and health care costs trends are described in Note 11, “Retirement Benefit Plans,” to the Consolidated Financial Statements. The effects of any modification to those assumptions are either recognized immediately or amortized over future periods in accordance with GAAP.

In accordance with GAAP, actual results that differ from assumptions used are accumulated and generally amortized over future periods. The primary assumptions affecting the Company's accounting for employee benefits under ASC Topics 712 and 715 as of December 31, 2012 are as follows:

• Expected long-term rate of return on plan assets: The expected long-term rate of return is used in the calculation of net periodic benefit cost. The required use of the expected long-term rate of return on plan assets may result in recognized returns that are greater or less than the actual returns on those plan assets in any given year. Over time, however, the expected long-term rate of return on plan assets is designed to approximate actual earned long-term returns. The expected long-term rate of return for pension assets has been determined based on various inputs, including historical returns for the different asset classes held by the Company's trusts and its asset allocation, as well as inputs from internal and external sources regarding expected capital market return, inflation and other variables. The Company also considers the impact of active management of the plans' invested assets. In determining its pension expense for the year ended December 31, 2012, the Company used long-term rates of return on plan assets ranging from 1.75% to 6.75% outside of the U.S. and 6.75% in the U.S.

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Actual returns on U.S. pension assets were 11.0%, 3.7% and 14.6% for the years ended December 31, 2012, 2011 and 2010, respectively, compared to the expected rate of return assumption of 6.75% for the year ended December 31, 2012 and 7.50% for the years ended December 31, 2011 and 2010, respectively.

Actual returns on U.K. pension assets were 10.0%, 3.3% and 13.3% for the years ended December 31, 2012, 2011 and 2010, respectively, compared to the expected rate of return assumption of 6.75% for the year ended December 31, 2012 and 7.50% for the years ended December 31, 2011 and 2010, respectively.

• Discount rate: The discount rate is used to calculate pension and postretirement employee benefit obligations (“OPEB”). The discount rate assumption is based on a constant effective yield from matching projected plan cash flows to high quality (Aa) bond yields of corresponding maturities as of the measurement date. The Company used discount rates ranging from 1.75% to 6.75% to determine its pension and other benefit obligations as of December 31, 2012, including weighted average discount rates of 3.67% in the U.S., 3.86% outside of the U.S., and 3.25% for U.S. other postretirement health care plans. The U.S. discount rate reflects the fact that our U.S. pension plan has been closed for new participants since 1989 (1999 for our U.S. health care plan), and with the closing of our Muncie facility in 2009, there will be negligible service cost going forward.

• Health care cost trend: For postretirement employee health care plan accounting, the Company reviews external data and Company specific historical trends for health care cost to determine the health care cost trend rate assumptions. In determining the projected benefit obligation for postretirement employee health care plans as of December 31, 2012, the Company used health care cost trend rates of 7.50%, declining to an ultimate trend rate of 5% by the year 2019.

While the Company believes that these assumptions are appropriate, significant differences in actual experience or significant changes in these assumptions may materially affect the Company's pension and other postretirement employee benefit obligations and its future expense.

The following table illustrates the sensitivity to a change in certain assumptions for Company sponsored U.S. and non-U.S. pension plans on its 2013 pre-tax pension expense:

(millions of dollars)	Impact on U.S. 2013 pre-tax pension (expense)/income				Impact on Non-U.S. 2013 pre-tax pension (expense)/income
1 percentage point decrease in discount rate	$	—		*	$	(4.9	)
1 percentage point increase in discount rate	$	—		*	$	4.9
1 percentage point decrease in expected return on assets	$	(2.7	)		$	(1.8	)
1 percentage point increase in expected return on assets	$	2.7			$	1.8

________________

* A 1 percentage point increase or decrease in the discount rate would have a negligible impact on the Company’s U.S. 2013 pre-tax pension expense.

The following table illustrates the sensitivity to a change in the discount rate assumption related to the Company’s U.S. OPEB interest expense:

(millions of dollars)	Impact on 2013 pre-tax OPEB interest (expense)/income
1 percentage point decrease in discount rate	$	(2.4	)
1 percentage point increase in discount rate	$	2.4

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The sensitivity to a change in the discount rate assumption related to the Company's total 2013 U.S. OPEB expense is expected to be negligible, as any increase in interest expense will be offset by net actuarial gains.

The following table illustrates the sensitivity to a one-percentage point change in the assumed health care cost trend related to the Company's OPEB obligation and service and interest cost:

	One Percentage Point
(millions of dollars)	Increase		Decrease
Effect on other postretirement benefit obligation	$	16.2	$	(14.3	)
Effect on total service and interest cost components	$	0.5	$	(0.5	)

See Note 11 to the Consolidated Financial Statements for more information regarding the Company’s retirement benefit plans.

Income taxes  The Company accounts for income taxes in accordance with ASC Topic 740. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

Management judgment is required in determining the Company’s provision for income taxes, deferred tax assets and liabilities and the valuation allowance recorded against the Company’s net deferred tax assets. In calculating the provision for income taxes on an interim basis, the Company uses an estimate of the annual effective tax rate based upon the facts and circumstances known at each interim period. In determining the need for a valuation allowance, the historical and projected financial performance of the operation recording the net deferred tax asset is considered along with any other pertinent information. Since future financial results may differ from previous estimates, periodic adjustments to the Company’s valuation allowance may be necessary.

The Company is subject to income taxes in the U.S. at the federal and state level and numerous non-U.S. jurisdictions. Significant judgment is required in determining our worldwide provision for income taxes and recording the related assets and liabilities. In the ordinary course of our business, there are many transactions and calculations where the ultimate tax determination is less than certain. Accruals for income tax contingencies are provided for in accordance with the requirements of ASC Topic 605. The Company’s U.S. federal and certain state income tax returns and certain non-U.S. income tax returns are currently under various stages of audit by applicable tax authorities. Although the outcome of ongoing tax audits is always uncertain, management believes that it has appropriate support for the positions taken on its tax returns and that its annual tax provisions included amounts sufficient to pay assessments, if any, which may be proposed by the taxing authorities. At December 31, 2012, the Company has recorded a liability for its best estimate of the more likely than not loss on certain of its tax positions, which is included in other non-current liabilities. Nonetheless, the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ materially from the amounts accrued for each year.

See Note 4 to the Consolidated Financial Statements for more information regarding income taxes.

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New Accounting Pronouncements

In November 2012, the Financial Accounting Standards Board ("FASB") amended ASC Topic 220, "Comprehensive Income," requiring companies to disclose the income statement line items impacted by the reclassification of comprehensive income (loss) into net earnings. This guidance is effective retrospectively for interim and annual periods beginning on or after December 15, 2012. The Company anticipates the adoption of this guidance will not have a material impact on its Consolidated Financial Statements.

In December 2011, the FASB amended ASC Topic 210, "Balance Sheet," requiring companies to disclose both gross and net information about instruments and transactions eligible for offset in the statement of financial position as well as instruments and transactions subject to an agreement similar to a master netting arrangement. This guidance is effective retrospectively for interim and annual periods beginning on or after January 1, 2013. The Company anticipates the adoption of this guidance will not have a material impact on its Consolidated Financial Statements.

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The Company's primary market risks include fluctuations in interest rates and foreign currency exchange rates. We are also affected by changes in the prices of commodities used or consumed in our manufacturing operations. Some of our commodity purchase price risk is covered by supply agreements with customers and suppliers. Other commodity purchase price risk is addressed by hedging strategies, which include forward contracts. The Company enters into derivative instruments only with high credit quality counterparties and diversifies its positions across such counterparties in order to reduce its exposure to credit losses. We do not engage in any derivative instruments for purposes other than hedging specific operating risks.

We have established policies and procedures to manage sensitivity to interest rate, foreign currency exchange rate and commodity purchase price risk, which include monitoring the level of exposure to each market risk. For quantitative disclosures about market risk, please refer to Note 10, "Financial Instruments," to the Consolidated Financial Statements in Item 8 of this report for information with respect to interest rate risk and foreign currency exchange rate risk.

Interest Rate Risk

Interest rate risk is the risk that we will incur economic losses due to adverse changes in interest rates. The Company manages its interest rate risk by balancing its exposure to fixed and variable rates while attempting to minimize its interest costs. The Company selectively uses interest rate swaps to reduce market value risk associated with changes in interest rates (fair value hedges). At December 31, 2012, the amount of debt with fixed interest rates was 43.5% of total debt, including the impact of the interest rate swaps. Our earnings exposure related to adverse movements in interest rates is primarily derived from outstanding floating rate debt instruments that are indexed to floating money market rates. A 10% increase or decrease in the average cost of our variable rate debt would result in a change in pre-tax interest expense of approximately $1.6 million, $1.8 million and $1.6 million in the years ended December 31, 2012, 2011 and 2010, respectively.

46

Foreign Currency Exchange Rate Risk

Foreign currency exchange rate risk is the risk that we will incur economic losses due to adverse changes in foreign currency exchange rates. Currently, our most significant currency exposures relate to the British Pound, the Chinese Yuan, the Euro, the Hungarian Forint, the Japanese Yen, the Swedish Krona and the South Korean Won. We mitigate our foreign currency exchange rate risk by establishing local production facilities and related supply chain participants in the markets we serve, by invoicing customers in the same currency as the source of the products and by funding some of our investments in foreign markets through local currency loans and cross currency swaps. Such non-U.S. Dollar debt was $258.3 million and $280.4 million as of December 31, 2012 and 2011, respectively. We also monitor our foreign currency exposure in each country and implement strategies to respond to changing economic and political environments. In addition, the Company periodically enters into forward currency contracts in order to reduce exposure to exchange rate risk related to transactions denominated in currencies other than the functional currency. As of December 31, 2012, the Company was holding foreign exchange derivatives with positive and negative fair market values of $5.9 million and $9.8 million, respectively, of which $5.2 million in gains and $9.8 million in losses mature in less than one year.

Commodity Price Risk

Commodity price risk is the possibility that we will incur economic losses due to adverse changes in the cost of raw materials used in the production of our products. Commodity forward and option contracts are executed to offset our exposure to the potential change in prices mainly for various non-ferrous metals and natural gas consumption used in the manufacturing of vehicle components. As of December 31, 2012, the Company had no forward and option commodity contracts outstanding.

Disclosure Regarding Forward-Looking Statements

The matters discussed in this Item 7 include forward looking statements. See "Forward Looking Statements" at the beginning of this Annual Report on Form 10-K.

47

REPORT OF MANAGEMENT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The information in this report is the responsibility of management. BorgWarner Inc. and Consolidated Subsidiaries (the “Company”) has in place reporting guidelines and policies designed to ensure that the statements and other information contained in this report present a fair and accurate financial picture of the Company. In fulfilling this management responsibility, we make informed judgments and estimates conforming with accounting principles generally accepted in the United States of America.

The accompanying Consolidated Financial Statements have been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm.

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting.

The Company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States of America. The internal control process includes those policies and procedures that:

• Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

• Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

• Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements.

Any system of internal control, no matter how well designed, has inherent limitations. Therefore, even those systems determined to be effective may not prevent or detect misstatements and can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

The Company's management assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2012. In making this assessment, the Company's management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control - Integrated Framework.

Based on management's assessment and those criteria, we believe that, as of December 31, 2012, the Company's internal control over financial reporting is effective.

PricewaterhouseCoopers LLP, an independent registered public accounting firm, has audited the Company's consolidated financial statements and the effectiveness of internal controls over financial reporting as of December 31, 2012 as stated in their report.

The Company's Audit Committee, composed entirely of directors of the Company who are not employees, meets periodically with the Company's management and independent registered public accounting firm to review financial results and procedures, internal financial controls and internal and external audit plans and recommendations. In carrying out these responsibilities, the Audit Committee and the independent registered public accounting firm have unrestricted access to each other with or without the presence of management representatives.

/s/ James R. Verrier

President and Chief Executive Officer

/s/ Ronald T. Hundzinski

Vice President and Chief Financial Officer

February 14, 2013

48

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

For quantitative and qualitative information regarding market risk, please refer to the discussion in Item 7 of this report under the caption "Quantitative and Qualitative Disclosure about Market Risk."

For information regarding interest rate risk and foreign currency exchange risk, refer to Note 10, “Financial Instruments,” to the Consolidated Financial Statements in Item 8 of this report. For information regarding the levels of indebtedness subject to interest rate fluctuation, refer to Note 8, “Notes Payable and Long-Term Debt,” to the Consolidated Financial Statements in Item 8 of this report. For information regarding the level of business outside the United States, which is subject to foreign currency exchange rate market risk, refer to Note 17, “Reporting Segments and Related Information,” to the Consolidated Financial Statements in Item 8 of this report.

Item 8. Financial Statements and Supplementary Data

Index to Financial Statements and Supplementary Data	Page No.
Report of Independent Registered Public Accounting Firm	50
Consolidated Balance Sheets	51
Consolidated Statements of Operations	52
Consolidated Statements of Comprehensive Income	53
Consolidated Statements of Cash Flows	54
Consolidated Statements of Equity	55
Notes to Consolidated Financial Statements	56

49

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of BorgWarner Inc.

In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of BorgWarner Inc.and its subsidiariesat December 31, 2012 and December 31, 2011, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2012in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included inManagement's Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on these financial statements and on the Company's internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP

Detroit, Michigan

February 14, 2013

50

BORGWARNER INC. AND CONSOLIDATED SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	December 31,
(millions of dollars)	2012			2011
ASSETS
Cash	$	715.7		$	359.6
Receivables, net	1,147.3			1,183.0
Inventories, net	447.6			454.3
Deferred income taxes	94.7			58.5
Prepayments and other current assets	67.5			82.4
Total current assets	2,472.8			2,137.8
Property, plant and equipment, net	1,788.0			1,664.3
Investments and advances	382.7			345.3
Goodwill	1,181.4			1,186.2
Other non-current assets	575.9			625.0
Total assets	$	6,400.8		$	5,958.6
LIABILITIES AND EQUITY
Notes payable and other short-term debt	$	239.1		$	196.3
Current portion of long-term debt	4.3			381.5
Accounts payable and accrued expenses	1,287.2			1,297.8
Income taxes payable	72.5			29.8
Total current liabilities	1,603.1			1,905.4
Long-term debt	823.8			751.3
Other non-current liabilities:
Retirement-related liabilities	509.7			457.0
Other	318.1			391.9
Total other non-current liabilities	827.8			848.9
Capital stock:
Preferred stock, $0.01 par value; authorized shares: 5,000,000; none issued and outstanding	—			—
Common stock, $0.01 par value; authorized shares: 390,000,000; issued shares: (2012- 123,023,159; 2011- 121,315,705); outstanding shares: (2012 - 115,572,699; 2011 - 108,514,462)	1.2			1.2
Non-voting common stock, $0.01 par value; authorized shares: 25,000,000; none issued and outstanding	—			—
Capital in excess of par value	1,160.7			1,134.3
Retained earnings	2,611.2			2,110.3
Accumulated other comprehensive loss	(121.3		)	(150.8		)
Common stock held in treasury, at cost: (2012 - 7,450,460 shares; 2011 - 12,801,243 shares)	(569.2		)	(707.1		)
Total BorgWarner Inc. stockholders’ equity	3,082.6			2,387.9
Noncontrolling interest	63.5			65.1
Total equity	3,146.1			2,453.0
Total liabilities and equity	$	6,400.8		$	5,958.6

See Accompanying Notes to Consolidated Financial Statements.

51

BORGWARNER INC. AND CONSOLIDATED SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

	Year Ended December 31,
(in millions, except per share amounts)	2012			2011			2010
Net sales	$	7,183.2		$	7,114.7		$	5,652.8
Cost of sales	5,716.3			5,704.3			4,559.5
Gross profit	1,466.9			1,410.4			1,093.3
Selling, general and administrative expenses	629.3			621.0			566.6
Other (income) expense	84.7			(8.1		)	22.4
Operating income	752.9			797.5			504.3
Equity in affiliates’ earnings, net of tax	(42.8		)	(38.2		)	(39.6		)
Interest income	(4.7		)	(4.8		)	(2.8		)
Interest expense and finance charges	39.4			74.6			68.8
Earnings before income taxes and noncontrolling interest	761.0			765.9			477.9
Provision for income taxes	238.6			195.3			81.7
Net earnings	522.4			570.6			396.2
Net earnings attributable to the noncontrolling interest, net of tax	21.5			20.5			18.8
Net earnings attributable to BorgWarner Inc.	$	500.9		$	550.1		$	377.4
Earnings per share — basic	$	4.45		$	5.04		$	3.31
Earnings per share — diluted*	$	4.17		$	4.45		$	3.07
Weighted average shares outstanding:
Basic	112.652			109.229			114.155
Diluted	121.377			128.468			129.575

* The Company's diluted earnings per share for the years ended December 31, 2012, 2011 and 2010 includes the impact of the Company's 3.50% convertible senior notes and associated warrants. Refer to Note 15, "Earnings Per Share," for further information on the diluted earnings per share calculation.

See Accompanying Notes to Consolidated Financial Statements.

52

BORGWARNER INC. AND CONSOLIDATED SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Year Ended December 31,
(millions of dollars)	2012			2011			2010
Net earnings attributable to BorgWarner Inc.	$	500.9		$	550.1		$	377.4
Other comprehensive income
Foreign currency translation adjustments
Foreign currency translation adjustments	38.2			(62.2		)	(63.6		)
Foreign currency loss reclassified into net earnings related to disposal activities	16.8			—			—
Net change in foreign currency translation adjustments	55.0			(62.2		)	(63.6		)
Hedge instrument adjustments
Market value change of hedge instruments	30.3			(9.2		)	(14.3		)
Income taxes associated with the market value change of hedge instruments	(10.4		)	3.0			6.7
(Gain) loss reclassified into net earnings	(8.8		)	1.5			(6.2		)
Income taxes reclassified into net earnings	2.2			(1.0		)	0.2
Net change in hedge instruments	13.3			(5.7		)	(13.6		)
Defined benefit postretirement plans
Net unrecognized gain (loss) arising during the period	(60.8		)	(45.3		)	15.0
Income taxes associated with net unrecognized gain (loss) arising during the period	16.2			12.8			(12.9		)
Amortization of prior service benefit and unrecognized loss into net earnings	9.1			7.6			8.9
Income taxes reclassified into net earnings	(3.1		)	(2.7		)	(3.2		)
Acquisition	—			(2.0		)	—
Income taxes associated with acquisition	—			0.5			—
Net change in defined benefit postretirement plans	(38.6		)	(29.1		)	7.8
Other changes in comprehensive income, net of tax	(0.2		)	(0.1		)	1.2
Total other comprehensive income attributable to BorgWarner Inc.	29.5			(97.1		)	(68.2		)
Comprehensive income attributable to BorgWarner Inc.	530.4			453.0			309.2
Comprehensive income (loss) attributable to the noncontrolling interest	2.8			(1.3		)	2.5
Comprehensive income	$	533.2		$	451.7		$	311.7

See Accompanying Notes to Consolidated Financial Statements.

53

BORGWARNER INC. AND CONSOLIDATED SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended December 31,
(millions of dollars)	2012			2011			2010
OPERATING
Net earnings	$	522.4		$	570.6		$	396.2
Adjustments to reconcile net earnings to net cash flows from operations:
Non-cash charges (credits) to operations:
Depreciation and tooling amortization	260.2			252.2			224.5
Amortization of intangible assets and other	28.4			30.8			28.4
Loss from disposal activities, net of cash paid	31.7			21.5			—
Restructuring expense, net of cash paid	23.3			—			—
Environmental litigation settlement, net of cash paid	—			—			14.0
Stock-based compensation expense	56.7			21.8			22.8
Deferred income tax benefit	(10.7		)	(1.1		)	(52.2		)
Bond amortization	5.3			20.3			18.3
BERU - Eichenauer equity investment gain	—			—			(8.0		)
Equity in affiliates’ earnings, net of dividends received, and other	(13.0		)	(7.8		)	1.7
Net earnings adjusted for non-cash charges to operations	904.3			908.3			645.7
Changes in assets and liabilities:
Receivables	43.8			(150.6		)	(239.0		)
Inventories	(5.3		)	(38.6		)	(79.0		)
Prepayments and other current assets	(15.4		)	(2.4		)	0.6
Accounts payable and accrued expenses	(27.1		)	53.0			169.4
Income taxes payable	44.9			(15.4		)	37.3
Other non-current assets and liabilities	(66.5		)	(46.1		)	3.9
Net cash provided by operating activities	878.7			708.2			538.9
INVESTING
Capital expenditures, including tooling outlays	(407.4		)	(393.7		)	(276.6		)
Net proceeds from asset disposals	5.4			7.9			6.8
Payments for businesses acquired, net of cash acquired	—			(203.7		)	(164.7		)
Net proceeds from sale of businesses	56.8			25.0			5.0
Net cash used in investing activities	(345.2		)	(564.5		)	(429.5		)
FINANCING
Net increase (decrease) in notes payable	12.8			67.6			(29.8		)
Additions to long-term debt, net of debt issuance costs	313.9			364.6			372.2
Repayments of long-term debt, including current portion	(246.4		)	(309.1		)	(116.1		)
Proceeds from accounts receivable securitization facility	30.0			—			30.0
Payments for purchase of treasury stock	(295.9		)	(357.6		)	(325.7		)
Proceeds from stock options exercised, including the tax benefit	52.0			53.0			67.1
Taxes paid on employees' restricted stock award vestings	(18.1		)	(14.4		)	—
Purchase of noncontrolling interest	(15.0		)	(29.4		)	—
Capital contribution from noncontrolling interest	—			19.5			—
Dividends paid to noncontrolling stockholders	(21.9		)	(13.9		)	(10.9		)
Net cash used in financing activities	(188.6		)	(219.7		)	(13.2		)
Effect of exchange rate changes on cash	11.2			(14.3		)	(3.7		)
Net increase (decrease) in cash	356.1			(90.3		)	92.5
Cash at beginning of year	359.6			449.9			357.4
Cash at end of year	$	715.7		$	359.6		$	449.9
SUPPLEMENTAL CASH FLOW INFORMATION
Net cash paid during the year for:
Interest	$	57.0		$	68.5		$	53.4
Income taxes	$	158.9		$	175.5		$	83.1

See Accompanying Notes to Consolidated Financial Statements.

54

BORGWARNER INC. AND CONSOLIDATED SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

	Number of shares			BorgWarner Inc. stockholder's equity
(millions of dollars, except share data)	Issued common stock	Common stock held in treasury		Issued common stock		Capital in excess of par value			Treasury stock			Retained earnings			Accumulated other comprehensive income (loss)			Noncontrolling interests
Balance, January 1, 2010	118,336,410	(1,498,855	)	$	1.2	$	1,034.1		$	(57.9	)	$	1,193.4		$	14.5		$	37.4
Dividends declared	—	—		—		—			—			—			—			(9.5		)
Stock option expense	—	—		—		0.1			—			—			—			—
Stock incentive plans	—	525,297		—		43.5			22.6			(10.6		)	—			—
Executive stock plan	—	269,896		—		3.8			11.5			—			—			—
Net issuance of restricted stock	1,749,796	—		—		18.9			—			—			—			—
Purchase of treasury stock	—	(7,066,100	)	—		—			(325.7		)	—			—			—
Net earnings	—	—		—		—			—			377.4			—			18.8
Other comprehensive income	—	—		—		—			—			—			(68.2		)	2.5
Dytech Ensa, S.L. acquisition	—	—		—		—			—			—			—			2.0
Balance, December 31, 2010	120,086,206	(7,769,762	)	$	1.2	$	1,100.4		$	(349.5	)	$	1,560.2		$	(53.7	)	$	51.2
Dividends declared	—	—		—		—			—			—			—			(22.0		)
Stock incentive plans	1,020,375	—		—		38.7			—			—			—			—
Executive stock plan	104,205	—		—		6.8			—			—			—			—
Net issuance of restricted stock	104,919	—		—		15.0			—			—			—			—
Purchase of treasury stock	—	(5,031,481	)	—		—			(357.6		)	—			—			—
Net earnings	—	—		—		—			—			550.1			—			20.5
Other comprehensive income	—	—		—		—			—			—			(97.1		)	(1.3		)
Capital contribution from noncontrolling interest	—	—		—		—			—			—			—			19.5
BorgWarner Vikas Emissions India Private Limited acquisition	—	—		—		(26.6		)	—			—			—			(2.8		)
Balance, December 31, 2011	121,315,705	(12,801,243	)	$	1.2	$	1,134.3		$	(707.1	)	$	2,110.3		$	(150.8	)	$	65.1
Dividends declared	—	—		—		—			—			—			—			(18.9		)
Stock incentive plans	777,925	—		—		52.0			—			—			—			—
Executive stock plan	538,180	—		—		39.3			—			—			—			—
Net issuance of restricted stock	391,349	(241,250	)	—		21.2			(18.1		)	—			—			—
Purchase of treasury stock	—	(4,155,694	)	—		—			(295.9		)	—			—			—
Convertible bond settlement	—	11,382,771		—		(243.5		)	617.3			—			—			—
Convertible bond - hedge settlement	—	(6,489,698	)	—		503.9			(503.9		)	—			—			—
Convertible bond - warrant settlement	—	4,854,654		—		(338.5		)	338.5			—			—			—
Net earnings	—	—		—		—			—			500.9			—			21.5
Other comprehensive income	—	—		—		—			—			—			29.5			2.8
BorgWarner BERU Systems Korea Co., Ltd. acquisition	—	—		—		(8.0		)	—			—			—			(7.0		)
Balance, December 31, 2012	123,023,159	(7,450,460	)	$	1.2	$	1,160.7		$	(569.2	)	$	2,611.2		$	(121.3	)	$	63.5

See Accompanying Notes to Consolidated Financial Statements.

55

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

INTRODUCTION

BorgWarner Inc. and Consolidated Subsidiaries (the “Company”) is a leading global supplier of highly engineered automotive systems and components primarily for powertrain applications. Our products help improve vehicle performance, fuel efficiency, stability and air quality. These products are manufactured and sold worldwide, primarily to original equipment manufacturers (“OEMs”) of light vehicles (passenger cars, sport-utility vehicles ("SUVs"), vans and light trucks). The Company's products are also sold to other OEMs of commercial vehicles (medium-duty trucks, heavy-duty trucks and buses) and off-highway vehicles (agricultural and construction machinery and marine applications). We also manufacture and sell our products to certain Tier One vehicle systems suppliers and into the aftermarket for light, commercial and off-highway vehicles. The Company operates manufacturing facilities serving customers in the Americas, Europe and Asia and is an original equipment supplier to every major automotive OEM in the world. The Company's products fall into two reporting segments: Engine and Drivetrain.

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The following paragraphs briefly describe the Company's significant accounting policies.

Basis of presentation The Company retrospectively adopted the amendment to Accounting Standards Codification ("ASC") Topic 220, "Comprehensive Income," which requires companies to separately disclose reclassifications from other comprehensive income into net income on the face of the financial statements. Prior year balances within the Consolidated Statements of Comprehensive Income conform to this requirement.

Use of estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the accompanying notes, as well as, the amounts of revenues and expenses reported during the periods covered by these financial statements and accompanying notes. Actual results could differ from those estimates.

Concentrations of risk Cash is maintained with several financial institutions. Deposits held with banks may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand and are maintained with financial institutions of reputable credit and therefore bear minimal risk.

The Company performs ongoing credit evaluations of its suppliers and customers and, with the exception of certain financing transactions, does not require collateral from its OEM customers. Some automotive parts suppliers continue to experience commodity cost pressures and the effects of industry overcapacity. These factors have increased pressure on the industry's supply base, as suppliers cope with higher commodity costs, lower production volumes and other challenges. The Company receives certain of its raw materials from sole suppliers or a limited number of suppliers. The inability of a supplier to fulfill supply requirements of the Company could materially affect future operating results.

Principles of consolidation The Consolidated Financial Statements include all majority-owned subsidiaries with a controlling financial interest. All inter-company accounts and transactions have been eliminated in consolidation. Investments in 20% to 50% owned affiliates are accounted for under the equity method when the Company does not have a controlling financial interest.

56

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Revenue recognition The Company recognizes revenue when title and risk of loss pass to the customer, which is usually upon shipment of product. Although the Company may enter into long-term supply agreements with its major customers, each shipment of goods is treated as a separate sale and the prices are not fixed over the life of the agreements.

Cost of sales The Company includes materials, direct labor and manufacturing overhead within cost of sales. Manufacturing overhead is comprised of indirect materials, indirect labor, factory operating costs and other such costs associated with manufacturing products for sale.

Cash Cash is valued at fair market value. It is the Company's policy to classify all highly liquid investments with original maturities of three months or less as cash.

Receivables, net The Company securitizes certain receivables through third party financial institutions without recourse and continues to administer the collection of these receivables on behalf of the third party. The amount can vary each month based on the amount of underlying receivables. On December 21, 2009, the Company entered into a $50 million accounts receivable securitization facility, which was amended on September 8, 2010 to increase the facility to $80 million and then again on November 1, 2012 to increase the facility to $110 million. The amended facility matures on October 31, 2014.

Inventories, net Inventories are valued at the lower of cost or market. Cost of U.S. inventories is determined using the last-in, first-out (“LIFO”) method, while the foreign operations use the first-in, first-out (“FIFO”) or average-cost methods. Inventory held by U.S. operations was $102.1 million and $100.6 million at December 31, 2012 and 2011, respectively. Such inventories, if valued at current cost instead of LIFO, would have been greater by $16.0 million and $15.3 million at December 31, 2012 and 2011, respectively.

See Note 5 to the Consolidated Financial Statements for more information on inventories, net.

Pre-production costs related to long-term supply arrangements Engineering, research and development and other design and development costs for products sold on long-term supply arrangements are expensed as incurred unless the Company has a contractual guarantee for reimbursement from the customer. Costs for molds, dies and other tools used to make products sold on long-term supply arrangements for which the Company either has title to the assets or has the non-cancelable right to use the assets during the term of the supply arrangement are capitalized in property, plant and equipment and amortized to cost of sales over the shorter of the term of the arrangement or over the estimated useful lives of the assets, typically 3 to 5 years. Costs for molds, dies and other tools used to make products sold on long-term supply arrangements for which the Company has a contractual guarantee for lump sum reimbursement from the customer are capitalized in prepayments and other current assets.

Property, plant and equipment, netProperty, plant and equipment is valued at cost less accumulated depreciation. Expenditures for maintenance, repairs and renewals of relatively minor items are generally charged to expense as incurred. Renewals of significant items are capitalized. Depreciation is generally computed on a straight-line basis over the estimated useful lives of the assets. Useful lives for buildings range from 15 to 40 years and useful lives for machinery and equipment range from three to 12 years. For income tax purposes, accelerated methods of depreciation are generally used.

See Note 5 to the Consolidated Financial Statements for more information on property, plant and equipment, net.

57

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Impairment of long-lived assets, including definite-lived intangible assets The Company reviews the carrying value of its long-lived assets, whether held for use or disposal, including other amortizing intangible assets, when events and circumstances warrant such a review under Accounting Standards Codification ("ASC") Topic 360. A recoverability review is performed using the undiscounted cash flows if there is a triggering event. If the undiscounted cash flow test for recoverability identifies a possible impairment, management will perform a fair value analysis. Management determines fair value under ASC Topic 820 using the appropriate valuation technique of market, income or cost approach. If the carrying value of a long-lived asset is considered impaired, an impairment charge is recorded for the amount by which the carrying value of the long-lived asset exceeds its fair value.

Management believes that the estimates of future cash flows and fair value assumptions are reasonable; however, changes in assumptions underlying these estimates could affect the valuations. Long-lived assets held for sale are recorded at the lower of their carrying amount or fair value less cost to sell. Significant judgments and estimates used by management when evaluating long-lived assets for impairment include: (i) an assessment as to whether an adverse event or circumstance has triggered the need for an impairment review; (ii) undiscounted future cash flows generated by the asset; and (iii) fair valuation of the asset.

Goodwill and other indefinite-lived intangible assets During the fourth quarter of each year, the Company qualitatively assesses its goodwill and indefinite-lived intangible assets assigned to each of its reporting units. This qualitative assessment evaluates various events and circumstances, such as macro economic conditions, industry and market conditions, cost factors, relevant events and financial trends, that may impact a reporting unit's fair value. Using this qualitative assessment, the Company determines whether it is more-likely-than not the reporting unit's fair value exceeds its carrying value. If it is determined that it is not more-likely-than-not the reporting unit's fair value exceeds the carrying value, or upon a triggering event, including recent acquisition or divestiture activity, the Company performs a quantitative, "step one," goodwill impairment analysis.

See Note 6 to the Consolidated Financial Statements for more information on goodwill and other indefinite-lived intangible assets.

Product warranties The Company provides warranties on some, but not all, of its products. The warranty terms are typically from one to three years. Provisions for estimated expenses related to product warranty are made at the time products are sold. These estimates are established using historical information about the nature, frequency and average cost of warranty claim settlements as well as product manufacturing and industry developments and recoveries from third parties. Management actively studies trends of warranty claims and takes action to improve product quality and minimize warranty claims. Management believes that the warranty accrual is appropriate; however, actual claims incurred could differ from the original estimates, requiring adjustments to the accrual. The product warranty accrual is allocated to current and non-current liabilities in the Consolidated Balance Sheets.

See Note 7 to the Consolidated Financial Statements for more information on product warranties.

Other loss accruals and valuation allowances The Company has numerous other loss exposures, such as customer claims, workers' compensation claims, litigation and recoverability of assets. Establishing loss accruals or valuation allowances for these matters requires the use of estimates and judgment in regard to the risk exposure and ultimate realization. The Company estimates losses under the programs using consistent and appropriate methods, however, changes to its assumptions could materially affect the recorded accrued liabilities for loss or asset valuation allowances.

58

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Derivative financial instruments The Company recognizes that certain normal business transactions generate risk. Examples of risks include exposure to exchange rate risk related to transactions denominated in currencies other than the functional currency, changes in commodity costs and interest rates. It is the objective and responsibility of the Company to assess the impact of these transaction risks and offer protection from selected risks through various methods, including financial derivatives. Virtually all derivative instruments held by the Company are designated as hedges, have high correlation with the underlying exposure and are highly effective in offsetting underlying price movements. Accordingly, gains and losses from changes in qualifying hedge fair values are matched with the underlying transactions. All hedge instruments are carried at their fair value based on quoted market prices for contracts with similar maturities. The Company does not engage in any derivative transactions for purposes other than hedging specific risks.

See Note 10 to the Consolidated Financial Statements for more information on derivative financial instruments.

Foreign currency The financial statements of foreign subsidiaries are translated to U.S. dollars using the period-end exchange rate for assets and liabilities and an average exchange rate for each period for revenues, expenses and capital expenditures. The local currency is the functional currency for substantially all of the Company's foreign subsidiaries. Translation adjustments for foreign subsidiaries are recorded as a component of accumulated other comprehensive income (loss) in equity. The Company recognizes transaction gains and losses arising from fluctuations in currency exchange rates on transactions denominated in currencies other than the functional currency in earnings as incurred.

See Note 5 to the Consolidated Financial Statements for more information on accumulated other comprehensive income (loss).

Environmental contingencies  The Company accounts for environmental costs in accordance with ASC Topic 450. Costs related to environmental assessments and remediation efforts at operating facilities are accrued when it is probable that a liability has been incurred and the amount of that liability can be reasonably estimated. Estimated costs are recorded at undiscounted amounts, based on experience and assessments and are regularly evaluated. The liabilities are recorded in accounts payable and accrued expenses and other non-current liabilities in the Company's Consolidated Balance Sheets.

See Note 13 to the Consolidated Financial Statements for more information regarding environmental contingencies.

Pensions and other postretirement employee defined benefits  The Company's defined benefit pension and other postretirement employee benefit plans are accounted for in accordance with ASC Topic 715. Disability, early retirement and other postretirement employee benefits are accounted for in accordance with ASC Topic 712.

Pensions and other postretirement employee benefit costs and related liabilities and assets are dependent upon assumptions used in calculating such amounts. These assumptions include discount rates, expected returns on plan assets, health care cost trends, compensation and other factors. In accordance with GAAP, actual results that differ from the assumptions used are accumulated and amortized over future periods, and accordingly, generally affect recognized expense in future periods.

See Note 11 to the Consolidated Financial Statements for more information regarding the Company's pension and other postretirement employee defined benefit plans.

59

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Income taxes  In accordance with ASC Topic 740, the Company's income tax expense is calculated based on expected income and statutory tax rates in the various jurisdictions in which the Company operates and requires the use of management's estimates and judgments.

See Note 4 to the Consolidated Financial Statements for more information regarding income taxes.

New Accounting Pronouncements

In November 2012, the Financial Accounting Standards Board ("FASB") amended ASC Topic 220, "Comprehensive Income," requiring companies to disclose the income statement line items impacted by the reclassification of comprehensive income (loss) into net earnings. This guidance is effective retrospectively for interim and annual periods beginning on or after December 15, 2012. The Company anticipates the adoption of this guidance will not have a material impact on its Consolidated Financial Statements.

In December 2011, the FASB amended ASC Topic 210, "Balance Sheet," requiring companies to disclose both gross and net information about instruments and transactions eligible for offset in the statement of financial position as well as instruments and transactions subject to an agreement similar to a master netting arrangement. This guidance is effective retrospectively for interim and annual periods beginning on or after January 1, 2013. The Company anticipates the adoption of this guidance will not have a material impact on its Consolidated Financial Statements.

NOTE 2    RESEARCH AND DEVELOPMENT COSTS

The Company's net Research & Development ("R&D") expenditures are included in selling, general and administrative expenses of the Consolidated Statements of Operations. Customer reimbursements are netted against gross R&D expenditures as they are considered a recovery of cost. Customer reimbursements for prototypes are recorded net of prototype costs based on customer contracts, typically either when the prototype is shipped or when it is accepted by the customer. Customer reimbursements for engineering services are recorded when performance obligations are satisfied in accordance with the contract and accepted by the customer. Financial risks and rewards transfer upon shipment, acceptance of a prototype component by the customer or upon completion of the performance obligation as stated in the respective customer agreement.

The following table presents the Company’s gross and net expenditures on R&D activities:

	Year Ended December 31,
(millions of dollars)	2012			2011			2010
Gross R&D expenditures	$	309.3		$	294.7		$	233.2
Customer reimbursements	(43.4		)	(51.0		)	(48.2		)
Net R&D expenditures	$	265.9		$	243.7		$	185.0

Net R&D expenditures as a percentage of net sales were 3.7%, 3.4% and 3.3% in the years ended December 31, 2012, 2011 and 2010, respectively. The Company has contracts with several customers at the Company's various R&D locations. No such contract exceeded 5% of net R&D expenditures in any of the years presented.

60

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 3 OTHER (INCOME) EXPENSE

The following table presents items included in other (income) expense:

	Year Ended December 31,
(millions of dollars)	2012		2011			2010
Loss from disposal activities	$	39.7	$	21.5		$	—
Restructuring expense	27.4		—			—
Retirement related obligations	17.3		—			—
Patent infringement settlement, net of legal costs incurred	—		(29.1		)	—
Environmental litigation settlement	—		—			28.0
BERU - Eichenauer equity investment gain	—		—			(8.0		)
Other	0.3		(0.5		)	2.4
Other (income) expense	$	84.7	$	(8.1	)	$	22.4

During the second and third quarters of 2012, the Company incurred $39.7 million in expense associated with the loss on sale of the spark plug business, primarily related to the to write-down of prior purchase price accounting adjustments included within the disposal group. These purchase price accounting adjustments were originally reported in the Engine segment and related to the BERU acquisition. The Company also recorded restructuring expense of $27.4 million in the third quarter of 2012 primarily associated with the disposal and future requirements of BERU's on-going business, which included $9.0 million of employee termination benefits, $6.3 million of contract cancellation costs and $12.1 million of other charges, primarily related to the write-down of certain assets. The Company expects to pay all employee termination benefits in the next 12 months.

During the fourth quarter of 2012, the Company recorded retirement related obligations of $17.3 million comprised of a $5.7 million loss resulting from the settlement of a portion of the Muncie Plant's pension obligation and an $11.6 million expense associated with the retirement of certain Named Executive Officers. Refer to Notes 11 and 12 to the Consolidated Financial Statements for further information regarding the Muncie Plant's settlement loss and the Company's decision to waive the forfeiture provisions of existing restricted stock and performance share grants made to certain retiring Named Executive Officers.

On May 16, 2011, BorgWarner and Honeywell settled a lawsuit resolving BorgWarner's patent infringement claims. As a result of the settlement, Honeywell paid $32.5 million for a paid up license to use the asserted BorgWarner patents. During 2011, the Company incurred $3.4 million in legal costs related to this lawsuit and after deducting these costs, the Company recorded a net gain of $29.1 million.

Refer to Note 16 to the Consolidated Financial Statements for information regarding the Company's loss from disposal activities and BERU - Eichenauer equity investment gain and Note 13 to the Consolidated Financial Statements for information regarding the Company's environmental litigation settlement.

61

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 4 INCOME TAXES

Earnings (loss) before income taxes and the provision for income taxes are presented in the following table.

	Year Ended December 31, 2012									Year Ended December 31, 2011									Year Ended December 31, 2010
(millions of dollars)	U.S.			Non-U.S.			Total			U.S.			Non-U.S.			Total			U.S.			Non-U.S.			Total
Earnings (loss) before income taxes	$	132.3		$	628.7		$	761.0		$	119.2		$	646.7		$	765.9		$	(26.7	)	$	504.6		$	477.9
Provision for income taxes:
Current:
Federal/foreign	$	59.8		$	186.1		$	245.9		$	31.8		$	162.9		$	194.7		$	14.0		$	117.7		$	131.7
State	3.4			—			3.4			1.7			—			1.7			2.2			—			2.2
Total current	63.2			186.1			249.3			33.5			162.9			196.4			16.2			117.7			133.9
Deferred	19.5			(30.2		)	(10.7		)	17.4			(18.5		)	(1.1		)	(48.9		)	(3.3		)	(52.2		)
Total provision for income taxes	$	82.7		$	155.9		$	238.6		$	50.9		$	144.4		$	195.3		$	(32.7	)	$	114.4		$	81.7
Effective tax rate	62.5		%	24.8		%	31.4		%	42.7		%	22.3		%	25.5		%	(122.5		)%	22.7		%	17.1		%

The provision for income taxes resulted in an effective tax rate of 31.4%, 25.5% and 17.1% for the years ended December 31, 2012, 2011 and 2010, respectively. An analysis of the differences between the effective tax rate and the U.S. statutory rate for the years ended December 31, 2012, 2011 and 2010 is presented below.

	Year Ended December 31,
(millions of dollars)	2012			2011			2010
Income taxes at U.S. statutory rate of 35%	$	266.4		$	268.1		$	167.3
Increases (decreases) resulting from:
Income from non-U.S. sources, including withholding taxes	(58.3		)	(74.8		)	(55.8		)
Affiliates' earnings	(15.0		)	(13.4		)	(13.8		)
State taxes, net of federal benefit	2.2			1.1			1.4
Business and foreign tax credits	8.8			11.5			0.2
Accrual adjustment and settlement of prior year tax matters	9.3			(1.0		)	0.4
Medicare Part D	—			0.1			2.9
Capital loss carryforward valuation allowance	9.7			—			—
Reversal of foreign tax credit valuation allowance	—			—			(21.2		)
Unremitted foreign earnings	13.4			—			—
Non-temporary differences and other	2.1			3.7			0.3
Provision for income taxes, as reported	$	238.6		$	195.3		$	81.7

The Company's provision for income taxes for the year ended December 31, 2012 includes a net tax benefit of $2.0 million associated with the loss from disposal activities and restructuring expense. The $2.0 million net benefit is comprised of a tax benefit of $7.7 million associated with restructuring expense, partially offset by tax expense of $5.7 million resulting from the sale of the spark plug business. The provision also includes additional tax expense of $19.8 million resulting from other tax adjustments. These other tax adjustments include $5.9 million of tax expense primarily resulting from the settlement of certain tax audits, $7.5 million of tax expense associated with the Company's second quarter 2012 decision to change its cash repatriation assertion for some of its foreign subsidiaries, $4.7 million of tax benefit related to certain countries enacting changes to their respective statutory income tax rates and $11.1 million of U.S. tax expense to correct the income taxes payable balance. The Company concluded this item was not material to the current or prior period financial statements.

62

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company's provision for income taxes for the year ended December 31, 2011 includes $11.0 million of tax expense associated with the Company's patent infringement settlement, $2.7 million of tax expense associated with the loss from disposal activities and a tax benefit of $6.2 million resulting from other tax adjustments. These other tax adjustments related to a change in state corporate income tax legislation as well as an adjustment of the Company's tax accounts as a result of the closure of certain tax audits. During 2011, several countries enacted changes to their respective statutory income tax rates. None of these changes had a material impact on the Company's effective tax rate.

The Company's provision for income taxes for the year ended December 31, 2010 includes a favorable impact of $21.2 million related to the reversal of the Company's valuation allowance on U.S. based foreign tax credit carryforwards, the impact of the change in tax legislation related to Medicare Part D subsidies of $2.9 million, additional tax expense of $2.3 million associated with the BERU - Eichenauer equity investment gain and the tax benefit of $9.8 million associated with the Company's environmental litigation settlement.

A roll forward of the Company's total gross unrecognized tax benefits for the years ended December 31, 2012 and 2011, respectively, is presented below. Of the total $25.8 million of unrecognized tax benefits as of December 31, 2012, approximately $23.4 million of the total represents the amount, if recognized, wouldaffect the Company's effective income tax rate in future periods. This amount differs from the gross unrecognized tax benefits presented in the table due to the decrease in the U.S. federal income taxes which would occur upon recognition of the state tax benefits included therein.

(millions of dollars)	2012			2011
Balance, January 1	$	26.2		$	27.6
Additions based on tax positions related to current year	2.0			0.5
Additions for tax positions of prior years	13.4			3.9
Reductions for closure of tax audits and settlements	(14.6		)	(4.3		)
Reductions for lapse in statute of limitations	(1.7		)	(0.8		)
Translation adjustment	0.5			(0.7		)
Balance, December 31	$	25.8		$	26.2

The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense. The amount recognized in income tax expense for 2012 and 2011 is $0.5 million and $1.7 million, respectively. The Company has an accrual of approximately $8.3 million and $7.8 million for the payment of interest and penalties at December 31, 2012 and 2011, respectively. Included in the $25.8 million of unrecognized tax benefits is $18.5 million for the settlement of audits and resulting amended returns in certain foreign jurisdictions, most of which the Company expects to pay in the first quarter of 2013. Possible changes within the next 12 months related to other examinations cannot be reasonably estimated at this time.

The Company and/or one of its subsidiaries files income tax returns in the U.S. federal, various state jurisdictions and various foreign jurisdictions. In certain tax jurisdictions, the Company may have more than one taxpayer. The Company is no longer subject to income tax examinations by tax authorities in its major tax jurisdictions as follows:

Tax jurisdiction	Years no longer subject to audit	Tax jurisdiction	Years no longer subject to audit
U.S. Federal	2010 and prior	Hungary	2008 and prior
China	2007 and prior	Japan	2011 and prior
France	2007 and prior	South Korea	2006 and prior
Germany	2007 and prior	Sweden	2006 and prior

63

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The gross components of deferred tax assets and liabilities as of December 31, 2012 and 2011 consist of the following:

	December 31,
(millions of dollars)	2012			2011
Current deferred tax assets:
Foreign tax credits	$	29.0		$	—
Employee related	25.7			28.0
Research and development capitalization	13.4			—
Inventory	8.4			14.5
Warranties	5.3			4.5
Customer claims	3.6			2.2
Other	13.1			11.5
Total current deferred tax assets	$	98.5		$	60.7
Current deferred tax liabilities:
Unremitted foreign earnings	$	(1.1	)	$	—
Other	(2.6		)	(3.7		)
Total current deferred tax liabilities	$	(3.7	)	$	(3.7	)
Non-current deferred tax assets:
Foreign tax credits	$	117.0		$	158.2
Other comprehensive income	113.7			116.7
Research and development capitalization	89.1			76.7
Net operating loss and capital loss carryforwards*	44.3			35.1
Pension and other postretirement benefits	37.7			33.9
Employee related	27.4			22.9
Research and development credits	4.9			3.0
Warranties	4.5			4.7
Litigation and environmental	1.2			2.0
Other	3.1			5.1
Total non-current deferred tax assets	$	442.9		$	458.3
Non-current deferred tax liabilities:
Goodwill & intangibles	$	(130.9	)	$	(155.5	)
Fixed assets	(101.9		)	(79.7		)
Unremitted foreign earnings	(12.3		)	(1.3		)
Other comprehensive income	(3.0		)	(2.9		)
Other	(6.6		)	(6.6		)
Total non-current deferred tax liabilities	$	(254.7	)	$	(246.0	)
Total deferred tax items	$	283.0		$	269.3
Valuation allowances*	(35.0		)	(23.6		)
Net deferred tax asset	$	248.0		$	245.7

_______________

*Net operating loss and capital loss carryforwards are shown gross with the corresponding valuation allowances located at the end of the table.

64

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The deferred tax assets and liabilities recognized in the Company’s Consolidated Balance Sheets are as follows:

	December 31,
(millions of dollars)	2012			2011
Deferred income taxes — current assets*	$	94.7		$	58.5
Deferred income taxes — current liabilities*	(1.4		)	(6.5		)
Other non-current assets*	244.1			313.9
Other non-current liabilities*	(89.4		)	(120.2		)
Net deferred tax asset (current and non-current)	$	248.0		$	245.7

________________

*Current and non-current assets and liabilities have been netted within their respective taxing jurisdictions.

Deferred income taxes - current assets are primarily comprised of amounts from the U.S., China, France, Italy, Japan, Mexico and South Korea. Deferred income taxes - current liabilities are primarily comprised of amounts from the U.K. Other non-current assets are primarily comprised of amounts from the U.S., China and Japan. Other non-current liabilities are primarily comprised of amounts from Germany, Sweden and the U.K.

At December 31, 2012, certain non-U.S. subsidiaries have net operating loss carryforwards totaling $42.4 million available to offset future taxable income. Of the total $42.4 million, $35.4 million expire at various dates from 2013 through 2032 and the remaining $7.0 million have no expiration date. The Company has a valuation allowance of $0.7 million recorded on $2.5 million of non-U.S net operating loss carryforwards. Certain U.S. subsidiaries have state net operating loss carryforwards totaling $490.7 million which are completely offset by a valuation allowance due to risk of realization. Certain non-U.S. subsidiaries located in China, Korea and Poland have tax exemptions or tax holidays, which reduced tax expense approximately $26.7 million and $21.8 million in 2012 and 2011, respectively. Most existing tax holidays remain in effect during 2013. The U.S. has foreign tax credit carryforwards of $146.1 million, which expire at various dates from 2015 through 2020.

The Company is not required to provide U.S. federal or state income taxes on cumulative undistributed earnings of foreign subsidiaries when such earnings are considered permanently reinvested. At December 31, 2011, the Company considered most of its foreign unremitted earnings to be permanently reinvested. The Company's policy is to evaluate this assertion on a quarterly basis. During the second quarter of 2012, the Company changed the assertion for some of its foreign subsidiaries to provide management additional financial flexibility.

At December 31, 2012, the Company's deferred tax liability associated with unremitted foreign earnings was $13.4 million, which includes the $7.5 million of tax expense associated with the second quarter 2012 decision to change its cash repatriation assertion for some of its foreign subsidiaries and $5.9 million of tax expense associated with unremitted foreign earnings during the current year.

The Company has not recorded deferred income taxes on the difference between the book and tax basis of investments in foreign subsidiaries or foreign equity affiliates totaling approximately $2.1 billion in 2012, as these amounts are essentially permanent in nature. The difference will become taxable upon repatriation of assets, sale or liquidation of the investment. Due to fluctuation in tax laws around the world and fluctuations in foreign exchange rates, it is not practicable to determine the unrecognized deferred tax liability on this difference because the actual tax liability, if any, is dependent on circumstances existing when the repatriation occurs.

65

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 5 BALANCE SHEET INFORMATION

Detailed balance sheet data is as follows:

	December 31,
(millions of dollars)	2012			2011
Receivables, net:
Customers	$	1,014.6		$	1,037.4
Other	134.8			149.9
Gross receivables	1,149.4			1,187.3
Bad debt allowance(a)	(2.1		)	(4.3		)
Total receivables, net	$	1,147.3		$	1,183.0
Inventories, net:
Raw material and supplies	$	264.0		$	254.4
Work in progress	82.0			90.9
Finished goods	117.6			124.3
FIFO inventories	463.6			469.6
LIFO reserve	(16.0		)	(15.3		)
Total inventories, net	$	447.6		$	454.3
Prepayments and other current assets:
Prepaid tooling	$	39.1		$	23.5
Product liability insurance asset	—			28.8
Derivatives	5.7			2.7
Prepaid taxes	0.7			0.8
Other	22.0			26.6
Total prepayments and other current assets	$	67.5		$	82.4
Property, plant and equipment, net:
Land and land use rights	$	76.4		$	71.2
Buildings	640.8			616.7
Machinery and equipment	2,282.4			2,006.9
Capital leases	2.3			2.3
Construction in progress	243.7			206.8
Property, plant and equipment, gross	3,245.6			2,903.9
Accumulated depreciation	(1,567.0		)	(1,343.9		)
Property, plant & equipment, net, excluding tooling	1,678.6			1,560.0
Tooling, net of amortization	109.4			104.3
Property, plant & equipment, net	$	1,788.0		$	1,664.3
Investments and advances:
Investment in equity affiliates	$	217.7		$	217.4
Other investments and advances	165.0			127.9
Total investments and advances	$	382.7		$	345.3
Other non-current assets:
Deferred income taxes	$	244.1		$	313.9
Other intangible assets	206.3			243.3
Product liability insurance asset	85.6			32.9
Other	39.9			34.9
Total other non-current assets	$	575.9		$	625.0

66

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	December 31,
(millions of dollars)	2012			2011
Accounts payable and accrued expenses:
Trade payables	$	815.4		$	820.7
Trade payables for capital expenditures	39.8			48.9
Payroll and employee related	180.7			201.9
Product liability	36.5			28.8
Customer related	36.3			29.9
Product warranties	33.1			38.6
Retirement related	27.9			30.9
Interest	11.7			14.2
Derivatives	9.8			2.4
Dividends payable to noncontrolling shareholders	9.5			11.7
Insurance	9.2			10.5
Severance	8.9			5.6
Legal and professional fees	4.2			6.8
Environmental	1.6			3.4
Current deferred income taxes	1.4			6.5
Other	61.2			37.0
Total accounts payable and accrued expenses	$	1,287.2		$	1,297.8
Other non-current liabilities:
Deferred income taxes	$	89.4		$	120.2
Cross currency swaps and derivatives	58.1			85.5
Product liability	49.1			32.9
Product warranties	31.8			34.1
Deferred revenue	30.5			26.0
Environmental	2.3			8.1
Other	56.9			85.1
Total other non-current liabilities	$	318.1		$	391.9
Accumulated other comprehensive loss
Foreign currency translation adjustments	$	140.8		$	85.8
Market value of hedge instruments	(37.2		)	(50.5		)
Defined benefit postretirement plans	(225.8		)	(187.2		)
Other	0.9			1.1
Total accumulated other comprehensive loss	$	(121.3	)	$	(150.8	)

(a) Bad debt allowance:	2012			2011			2010
Beginning balance, January 1	$	(4.3	)	$	(4.0	)	$	(4.3	)
Provision	(0.8		)	(1.4		)	(1.1		)
Write-offs	3.0			1.0			2.5
Translation adjustment and other	—			0.1			(1.1		)
Ending balance, December 31	$	(2.1	)	$	(4.3	)	$	(4.0	)

As of December 31, 2012 and December 31, 2011, accounts payable of $39.8 million and $48.9 million, respectively, were related to property, plant and equipment purchases.

Interest costs capitalized for the years ended December 31, 2012 and 2011 were $17.8 million and $15.0 million, respectively.

67

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NSK-Warner KK ("NSK-Warner")

The Company has a 50% interest in NSK-Warner, a joint venture based in Japan that manufactures automatic transmission components. The Company's share of the earnings reported by NSK-Warner is accounted for using the equity method of accounting. NSK-Warner is the joint venture partner with a 40% interest in the Drivetrain Group's South Korean subsidiary, BorgWarner Transmission Systems Korea Inc. Dividends received from NSK-Warner were $28.1 million, $33.4 million and $35.5 million in calendar years ended December 31, 2012, 2011 and 2010, respectively.

NSK-Warner has a fiscal year-end of March 31. The Company's equity in the earnings of NSK-Warner consists of the 12 months ended November 30. Following is summarized financial data for NSK-Warner, translated using the ending or periodic rates, as of and for the years ended November 30, 2012, 2011 and 2010 (unaudited):

	November 30,
(millions of dollars)	2012		2011
Balance sheets:
Cash and securities	$	123.3	$	119.4
Current assets, including cash and securities	320.0		344.1
Non-current assets	175.3		182.0
Current liabilities	147.4		172.1
Non-current liabilities	50.2		45.3
Total equity	297.7		308.7
	Year Ended November 30,
(millions of dollars)	2012		2011		2010
Statements of operations:
Net sales	$	696.7	$	655.2	$	634.7
Gross profit	138.2		128.5		131.9
Net earnings	68.5		61.6		68.3

NSK-Warner had no debt outstanding as of November 30, 2012 and 2011. Purchases by the Company from NSK-Warner were $22.8 million, $16.6 million and $14.6 million for the years ended December 31, 2012, 2011 and 2010, respectively.

NOTE 6 GOODWILL AND OTHER INTANGIBLES

During the fourth quarter of each year, the Company qualitatively assesses its goodwill and indefinite-lived intangible assets assigned to each of its reporting units. This qualitative assessment evaluates various events and circumstances, such as macro economic conditions, industry and market conditions, cost factors, relevant events and financial trends, that may impact a reporting unit's fair value. Using this qualitative assessment, the Company determines whether it is more-likely-than not the reporting unit's fair value exceeds its carrying value. If it is determined that it is not more-likely-than-not the reporting unit's fair value exceeds the carrying value, or upon a triggering event, including recent acquisition or divestiture activity, the Company performs a quantitative, "step one," goodwill impairment analysis.

During the fourth quarter of 2012, the Company performed a qualitative analysis on each reporting unit and determined it was more-likely-than-not the fair value exceeded the carrying value of these reporting units. For the reporting unit with recent divestiture activity, the Company performed a quantitative, "step one," goodwill impairment analysis, which requires the Company to make significant assumptions and estimates about the extent and timing of future cash flows, discount rates and growth rates. The basis of

68

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

this goodwill impairment analysis is the Company's annual budget and long-range plan (“LRP”). The annual budget and LRP includes a five year projection of future cash flows based on actual new products and customer commitments and assumes the last year of the LRP data is a fair indication of the future performance. Because the LRP is estimated over a significant future period of time, those estimates and assumptions are subject to a high degree of uncertainty. Further, the market valuation models and other financial ratios used by the Company require certain assumptions and estimates regarding the applicability of those models to the Company's facts and circumstances.

The Company believes the assumptions and estimates used to determine its estimated fair value are reasonable. Different assumptions could materially affect the estimated fair value. The primary assumptions affecting the Company's December 31, 2012 goodwill quantitative, "step one," impairment review are as follows:

• Discount rate: The Company used a 10% weighted average cost of capital (“WACC”) as the discount rate for future cash flows. The WACC is intended to represent a rate of return that would be expected by a market participant.

• Operating income margin: The Company used historical and expected operating income margins, which may vary based on the projections of the reporting unit being evaluated.

In addition to the above primary assumptions, the Company notes the following risks to volume and operating income assumptions that could have an impact on the discounted cash flow model:

• The automotive industry is cyclical and the Company's results of operations would be adversely affected by industry downturns.

• The Company is dependent on market segments that use our key products and would be affected by decreasing demand in those segments.

• The Company is subject to risks related to international operations.

Based on the assumptions outlined above, the impairment testing conducted in the fourth quarter of 2012 indicated the Company's goodwill assigned to the reporting unit quantitatively assessed was not impaired. Additionally, a sensitivity analysis was completed indicating a 1% increase in the discount rate or a 1% decrease in the operating margin assumptions would not result in the carrying value exceeding the fair value of the reporting unit quantitatively assessed.

The changes in the carrying amount of goodwill for the years ended December 31, 2012 and 2011 are as follows:

	2012						2011
(millions of dollars)	Engine			Drivetrain			Engine			Drivetrain
Gross goodwill balance, January 1	$	1,334.7		$	353.5		$	1,351.9		$	263.6
Accumulated impairment losses, January 1	(501.8		)	(0.2		)	(501.8		)	(0.2		)
Net goodwill balance, January 1	$	832.9		$	353.3		$	850.1		$	263.4
Goodwill during the year:
Acquisition*	$	—		$	—		$	—		$	96.2
Divestitures*	(16.9		)	—			(7.9		)	—
Translation adjustment	6.3			5.8			(9.3		)	(6.3		)
Ending balance, December 31	$	822.3		$	359.1		$	832.9		$	353.3

________________

* Goodwill acquired relates to the 2011 purchase of Haldex Traction AB. Goodwill divested relates to the Company's 2011 sale of the tire pressure monitoring business and 2012 sale of the spark plug business.

69

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company’s other intangible assets, primarily from acquisitions, consist of the following:

	December 31, 2012						December 31, 2011
(millions of dollars)	Gross carrying amount		Accumulated amortization		Net carrying amount		Gross carrying amount		Accumulated amortization		Net carrying amount
Amortized intangible assets:
Patented and unpatented technology	$	80.0	$	26.2	$	53.8	$	81.2	$	20.4	$	60.8
Customer relationships	216.3		100.0		116.3		213.4		76.7		136.7
Miscellaneous	2.9		2.9		—		2.8		1.3		1.5
Total amortized intangible assets	299.2		129.1		170.1		297.4		98.4		199.0
In-process R&D	10.8		—		10.8		10.8		—		10.8
Unamortized trade names	25.4		—		25.4		33.5		—		33.5
Total other intangible assets	$	335.4	$	129.1	$	206.3	$	341.7	$	98.4	$	243.3

Amortization of other intangible assets was $28.4 million, $30.8 million and $28.4 million for the years ended December 31, 2012, 2011 and 2010, respectively. The estimated useful lives of the Company's amortized intangible assets range from three to 15 years. The Company utilizes the straight line method of amortization recognized over the estimated useful lives of the assets. The estimated future annual amortization expense, primarily for acquired intangible assets, is as follows: $26.8 million in 2013, $26.8 million in 2014, $18.1 million in 2015, $17.6 million in 2016 and $15.9 million in 2017.

A roll forward of the gross carrying amounts of the Company's other intangible assets is presented below:

(millions of dollars)	2012			2011
Beginning balance, January 1	$	341.7		$	244.3
Acquisition	—			117.2
Divestitures*	(15.7		)	(5.6		)
Translation adjustment	9.4			(14.2		)
Ending balance, December 31	$	335.4		$	341.7

________________

* Divestitures relate to the Company's 2011 sale of the tire pressure monitoring business and 2012 sale of the spark plug business.

A roll forward of the accumulated amortization associated with the Company's other intangible assets is presented below:

(millions of dollars)	2012			2011
Beginning balance, January 1	$	98.4		$	75.5
Amortization	28.4			30.8
Divestitures*	(0.6		)	(3.8		)
Translation adjustment	2.9			(4.1		)
Ending balance, December 31	$	129.1		$	98.4

________________

* Divestitures relate to the Company's 2011 sale of the tire pressure monitoring business and 2012 sale of the spark plug business.

70

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

On January 31, 2011, the Company acquired 100% of the stock of Haldex Traction AB. In connection with the acquisition, the Company utilized the multi-period excess earnings method under the income approach, to determine the value of the customer relationships capitalized, $96.7 million. Additionally, the Company capitalized $17.5 million for patented and unpatented technology and $3.0 million for trade names. Customer relationships, patented and unpatented technology and trade names will be amortized over 12, 11 and 2 year useful lives, respectively.

On June 2, 2009, the Company announced the purchase of advanced gasoline ignition technology and related intellectual property from Florida-based Etatech, Inc. In connection with ASC Topic 805, "Business Combinations," the Company capitalized $10.8 million of in-process R&D. The Company intends to commercialize a high-frequency ignition system based on Etatech technology in the next five years. Amortization of the $10.8 million of in-process R&D will coincide with the commercial application of the technology.

NOTE 7 PRODUCT WARRANTY

The changes in the carrying amount of the Company’s total product warranty liability for the years ended December 31, 2012 and 2011 were as follows:

(millions of dollars)	2012			2011
Beginning balance, January 1	$	72.7		$	66.8
Acquisition	—			4.5
Provisions	33.7			47.5
Payments	(42.8		)	(43.5		)
Translation adjustment	1.3			(2.6		)
Ending balance, December 31	$	64.9		$	72.7

The product warranty liability is classified in the Consolidated Balance Sheets as follows:

	December 31,
(millions of dollars)	2012		2011
Accounts payable and accrued expenses	$	33.1	$	38.6
Other non-current liabilities	31.8		34.1
Total product warranty liability	$	64.9	$	72.7

71

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 8 NOTES PAYABLE AND LONG-TERM DEBT

As of December 31, 2012 and 2011, the Company had short-term and long-term debt outstanding as follows:

	December 31,
(millions of dollars)	2012		2011
Short-term debt
Short-term borrowings	$	129.1	$	116.3
Receivables securitization	110.0		80.0
Total short-term debt	$	239.1	$	196.3
Long-term debt
3.50% Convertible senior notes due 04/15/12	$	—	$	368.5
5.75% Senior notes due 11/01/16 ($150 million par value)	149.6		149.5
8.00% Senior notes due 10/01/19 ($134 million par value)	133.9		133.9
4.625% Senior notes due 09/15/20 ($250 million par value)	247.9		247.7
7.125% Senior notes due 02/15/29 ($121 million par value)	119.4		119.3
Multi-currency revolving credit facility	140.0		70.0
Term loan facilities and other	17.1		19.8
Unamortized portion of debt derivatives	20.2		24.1
Total long-term debt	$	828.1	$	1,132.8
Less: current portion	4.3		381.5
Long-term debt, net of current portion	$	823.8	$	751.3

The weighted average interest rate on all borrowings outstanding as of December 31, 2012 and 2011 was 4.0% and 5.9%, respectively.

Annual principal payments required as of December 31, 2012 are as follows :

(millions of dollars)
2013	$	243.4
2014	0.4
2015	12.4
2016	290.0
2017	—
After 2017	524.8
Total payments	$	1,071.0
Less: unamortized discounts	3.8
Total	$	1,067.2

The Company's long-term debt includes various financial covenants, none of which are expected to restrict future operations.

72

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company's $650 million multi-currency revolving credit facility, which includes a feature that allows the Company's borrowings to be increased to $1 billion, provides for borrowings through June 30, 2016 and is guaranteed by the Company's material domestic subsidiaries. The Company has two key financial covenants as part of the credit agreement. These covenants are a debt compared to EBITDA (“Earnings Before Interest, Taxes, Depreciation and Amortization”) test and an interest coverage test. The Company was in compliance with all covenants at December 31, 2012 and expects to remain compliant in future periods. At December 31, 2012 and 2011, the Company had outstanding borrowings of $140.0 million and $70.0 million, respectively, under this facility.

On April 9, 2009, the Company issued $373.8 million in convertible senior notes, which were settled in April 2012 by delivering approximately 11.4 million shares of common stock held in treasury to the note holders. The settlement resulted in a reduction in the current portion of long-term debt of $373.8 million, a reduction in common stock held in treasury of $617.3 million and a reduction in capital in excess of par value of $243.5 million. Prior to the settlement, the Company accreted the discounted carrying value of the convertible notes to their face value over the term of the notes.

The total interest expense related to the convertible senior notes in the Company’s Consolidated Statements of Operations for the years ended December 31, 2012, 2011 and 2010 was as follows:

	Year Ended December 31,
(millions of dollars)	2012		2011		2010
Interest expense	$	9.0	$	33.1	31.3
Non-cash portion	5.3		20.0		18.3

In conjunction with the convertible senior note offering, the Company entered into a bond hedge overlay, including both call options and warrants, at a net pre-tax cost of $25.2 million, effectively raising the conversion premium to 50%, or approximately $38.61 per share. On April 16, 2012, the Company settled the call option portion of the bond hedge overlay, receiving approximately 6.5 million shares of its common stock. The settlement resulted in an increase to common stock held in treasury of $503.9 million offset by an increase to capital in excess of par value of $503.9 million.

During the third and fourth quarters of 2012, the Company settled the warrants included in the bond hedge overlay, delivering approximately 4.9 million shares of its common stock held in treasury, resulting in a decrease to common stock held in treasury of $338.5 million offset by a decrease to capital in excess of par value of $338.5 million.

As of December 31, 2012 and 2011, the estimated fair values of the Company's senior unsecured notes totaled $770.3 million and $1,454.4 million, respectively. The estimated fair values were $119.5 million and $435.5 million higher than their carrying value at December 31, 2012 and 2011, respectively. Fair market values of the senior unsecured notes are developed using observable values for similar debt instruments, which are considered Level 2 inputs as defined by ASC Topic 820. The carrying value of the Company's multi-currency revolving credit facility is equal to its fair value. The fair value estimates do not necessarily reflect the values the Company could realize in the current markets.

The Company had outstanding letters of credit of $59.1 million and $58.5 million at December 31, 2012 and 2011, respectively. The letters of credit typically act as guarantees of payment to certain third parties in accordance with specified terms and conditions.

73

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 9 FAIR VALUE MEASUREMENTS

ASC Topic 820 emphasizes that fair value is a market-based measurement, not an entity specific measurement. Therefore, a fair value measurement should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering market participant assumptions in fair value measurements, ASC Topic 820 establishes a fair value hierarchy, which prioritizes the inputs used in measuring fair values as follows:

Level 1: Observable inputs such as quoted prices for identical assets or liabilities in active markets;

Level 2: Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and

Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

Assets and liabilities measured at fair value are based on one or more of the following three valuation techniques noted in ASC Topic 820:

A. Market approach: Prices and other relevant information generated by market transactions involving identical or comparable assets, liabilities or a group of assets or liabilities, such as a business.

B. Cost approach: Amount that would be required to replace the service capacity of an asset (replacement cost).

C. Income approach: Techniques to convert future amounts to a single present amount based upon market expectations (including present value techniques, option-pricing and excess earnings models).

The following tables classify assets and liabilities measured at fair value on a recurring basis as of December 31, 2012 and 2011:

			Basis of fair value measurements
	Balance at December 31, 2012		Quoted prices in active markets for identical items (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Valuation technique
(millions of dollars)
Assets:
Foreign currency contracts	$	5.9	$	—	$	5.9	$	—	A
Other non-current assets (insurance settlement agreement note receivable)	$	41.0	$	—	$	41.0	$	—	C
Liabilities:
Foreign currency contracts	$	9.8	$	—	$	9.8	$	—	A
Net investment hedge contracts	$	58.1	$	—	$	58.1	$	—	A

74

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

			Basis of fair value measurements
(millions of dollars)	Balance at December 31, 2011		Quoted prices in active markets for identical items (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Valuation technique
Assets:
Foreign currency contracts	$	2.7	$	—	$	2.7	$	—	A
Other non-current assets (insurance settlement agreement note receivable)	$	21.3	$	—	$	21.3	$	—	C
Liabilities:
Foreign currency contracts	$	2.9	$	—	$	2.9	$	—	A
Net investment hedge contracts	$	85.0	$	—	$	85.0	$	—	A

The following tables classify the Company's defined benefit plan assets measured at fair value on a recurring basis as of December 31, 2012 and 2011:

			Basis of fair value measurements
(millions of dollars)	Balance at December 31, 2012		Quoted prices in active markets for identical items (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Valuation technique
U.S. Plans:
Fixed income securities	$	157.4	$	—	$	157.4	$	—	A
Equity securities	100.0		48.9		51.1		—		A
Real estate and other	25.3		—		25.3		—		A
	$	282.7	$	48.9	$	233.8	$	—
Non-U.S. Plans:
Fixed income securities	$	67.3	$	—	$	67.3	$	—	A
Equity securities	99.0		—		99.0		—		A
Real estate and other	11.6		—		11.6		—		A
	$	177.9	$	—	$	177.9	$	—

			Basis of fair value measurements
(millions of dollars)	Balance at December 31, 2011		Quoted prices in active markets for identical items (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Valuation technique
U.S. Plans:
Fixed income securities	$	158.2	$	—	$	158.2	$	—	A
Equity securities	101.5		49.6		51.9		—		A
Real estate and other	30.7		—		30.7		—		A
	$	290.4	$	49.6	$	240.8	$	—
Non-U.S. Plans:
Fixed income securities	$	63.5	$	—	$	63.5	$	—	A
Equity securities	78.3		—		78.3		—		A
Real estate and other	13.1		—		13.1		—		A
	$	154.9	$	—	$	154.9	$	—

Refer to Note 11, “Retirement Benefit Plans," for more detail surrounding the defined plan’s asset investment policies and strategies, target allocation percentages and expected return on plan asset assumptions.

75

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 10 FINANCIAL INSTRUMENTS

The Company’s financial instruments include cash and marketable securities. Due to the short-term nature of these instruments, their book value approximates their fair value. The Company’s financial instruments also include long-term debt, interest rate and cross-currency swaps, commodity derivative contracts and foreign currency derivatives. All derivative contracts are placed with counterparties that have an S&P, or equivalent, investment grade credit rating at the time of the contracts’ placement. At December 31, 2012 and 2011, the Company had no derivative contracts that contained credit risk related contingent features.

The Company selectively uses cross-currency swaps to hedge the foreign currency exposure associated with our net investment in certain foreign operations (net investment hedges). At December 31, 2012 and 2011, the following cross-currency swaps were outstanding:

	Cross-currency swaps
(millions of dollars)	Notional in USD		Notional in local currency		Duration
Floating $ to Floating €	$	75.0	€	58.5	Oct - 19
Floating $ to Floating ¥	$	150.0	¥	17,581.5	Nov - 16

The Company uses certain commodity derivative contracts to protect against commodity price changes related to forecasted raw material and supplies purchases. The Company primarily utilizes forward and option contracts, which are designated as cash flow hedges. The Company did not have any commodity derivative contracts outstanding at December 31, 2012 and 2011.

The Company uses foreign currency forward and option contracts to protect against exchange rate movements for forecasted cash flows, including capital expenditures, purchases, operating expenses or sales transactions designated in currencies other than the functional currency of the operating unit. Foreign currency derivative contracts require the Company, at a future date, to either buy or sell foreign currency in exchange for the operating units’ local currency. At December 31, 2012 and 2011, the following foreign currency derivative contracts were outstanding:

Foreign currency derivatives (in millions)
Functional currency	Traded currency	Notional in traded currency December 31, 2012	Notional in traded currency December 31, 2011	Duration
British pound	Euro	28.8	64.8	Dec - 13
Euro	British pound	4.7	7.0	Dec - 13
Euro	Hungarian forint	9,300.0	5,400.0	Nov - 13
Euro	Japanese yen	6,760.0	—	Dec - 13
Euro	Polish zloty	87.4	24.5	Dec - 13
Euro	US dollar	15.2	16.1	Dec - 13
Japanese yen	US dollar	9.5	7.4	Dec - 13
Korean won	Euro	32.4	34.5	Dec - 14
Korean won	US dollar	17.5	2.4	Dec - 13
Mexican peso	Euro	—	9.2	Dec - 12
Mexican peso	US dollar	20.9	40.7	Dec - 13
Swedish krona	Euro	—	6.1	Dec - 12
US dollar	Euro	—	3.0	Dec - 12
US dollar	Indian rupee	111.1	—	Oct - 13
US dollar	Japanese yen	3,000.0	3,000.0	Mar - 13

76

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

At December 31, 2012 and 2011, the following amounts were recorded in the Consolidated Balance Sheets as being payable to or receivable from counterparties under ASC Topic 815:

	Assets					Liabilities
(millions of dollars)	Location	December 31, 2012		December 31, 2011		Location	December 31, 2012		December 31, 2011
Foreign currency	Prepayments and other current assets	$	5.7	$	2.6	Accounts payable and accrued expenses	$	9.8	$	2.4
	Other non-current assets	$	0.2	$	0.1	Other non-current liabilities	$	—	$	0.5
Net investment hedges	Other non-current assets	$	—	$	—	Other non-current liabilities	$	58.1	$	85.0

Effectiveness for cash flow and net investment hedges is assessed at the inception of the hedging relationship and quarterly, thereafter. To the extent that derivative instruments are deemed to be effective, gains and losses arising from these contracts are deferred into accumulated other comprehensive income (loss) ("AOCI") and reclassified into income as the underlying operating transactions are recognized. These realized gains or losses offset the hedged transaction and are recorded on the same line in the statement of operations. To the extent that derivative instruments are deemed to be ineffective, gains or losses are recognized into income.

The table below shows deferred gains (losses) reported in AOCI as well as the amount expected to be reclassified to income in one year or less. The amount expected to be reclassified to income in one year or less assumes no change in the current relationship of the hedged item at December 31, 2012 market rates.

	Deferred gain (loss) in AOCI at						Gain (loss) expected to be reclassified to income in one year or less
(millions of dollars)	December 31, 2012			December 31, 2011
Foreign currency	$	(3.5	)	$	(0.6	)	$	(3.8	)
Net investment hedges	(54.5		)	(78.9		)	—
Total	$	(58.0	)	$	(79.5	)	$	(3.8	)

Derivative instruments designated as hedging instruments as defined by ASC Topic 815 held during the period resulted in the following gains and losses recorded in income:

		Gain (loss) reclassified from AOCI to Income (effective portion)						Gain (loss) recognized in income (ineffective portion)
		Year Ended December 31,						Year Ended December 31,
(millions of dollars)	Location	2012		2011			Location	2012		2011
Foreign currency	Sales	$	5.3	$	(1.4	)	SG&A expense	$	—	$	—
Foreign currency	Cost of goods sold	$	3.5	$	(0.6	)	SG&A expense	$	0.1	$	—
Foreign currency	SG&A expense	$	—	$	0.5		SG&A expense	$	—	$	—
Net investment hedges	N/A						Interest expense	$	2.3	$	0.5

At December 31, 2012, derivative instruments that were not designated as hedging instruments as defined by ASC Topic 815 were immaterial.

77

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 11 RETIREMENT BENEFIT PLANS

The Company sponsors various defined contribution savings plans, primarily in the U.S., that allow employees to contribute a portion of their pre-tax and/or after-tax income in accordance with plan specified guidelines. Under specified conditions, the Company will make contributions to the plans and/or match a percentage of the employee contributions up to certain limits. Total expense related to the defined contribution plans was $24.8 million, $18.9 million and $19.2 million in the years ended December 31, 2012, 2011 and 2010, respectively.

The Company has a number of defined benefit pension plans and other postretirement benefit plans covering eligible salaried and hourly employees and their dependents. The defined pension benefits provided are primarily based on (i) years of service and (ii) average compensation or a monthly retirement benefit amount. The Company provides defined benefit pension plans in France, Germany, Ireland, Italy, Japan, Mexico, Monaco, South Korea, Sweden, U.K. and U.S. The other postretirement benefit plans, which provide medical and life insurance benefits, are unfunded plans. All pension and other postretirement benefit plans in the U.S. have been closed to new employees since 1999. The measurement date for all plans is December 31.

On February 26, 2009, the Company's subsidiary BorgWarner Diversified Transmission Products Inc. ("DTP"), entered into a Plant Shutdown Agreement with the United Auto Workers ("UAW") for its Muncie, Indiana automotive component plant (the "Muncie Plant"). Management subsequently wound-down production activity at the plant, with operations effectively ceased as of March 31, 2009. The Plant Shutdown Agreement included terms allowing for lump sum payment of the pension obligation for certain participants if funding of the plan exceeded a defined level. In accordance with these terms, in December 2012, the Company settled a portion of the pension obligation resulting in a non-cash loss of $5.7 million, which was recorded in other (income) expense within the Consolidated Statement of Operations.

On March 24, 2010, the Company finalized its settlement agreement regarding the closure of the Muncie Plant with the Pension Benefit Guaranty Corporation ("PBGC") in which the Company agreed to make certain payments directly to the Muncie Plant's defined benefit pension plan (the “Plan”). In accordance with the settlement agreement, the Company made an initial cash contribution of $23 million for the 2009 Plan year and a cash contribution of $15 million in the year ended December 31, 2011. During the fourth quarter of 2012, the Company received notification from the PBGC that the terms of the settlement have been suspended pending review of the Company's financial strength under the PBGC's revised enforcement policy pilot program announced on November 2, 2012. The evaluation was confirmed in January 2013 and as a result the Company currently does not have any obligations as described in the original agreement.

The following table summarizes the expenses for the Company's defined contribution and defined benefit pension plans and the other postretirement defined benefit plans.

	Year Ended December 31,
(millions of dollars)	2012		2011		2010
Defined contribution expense	$	24.8	$	18.9	$	19.2
Defined benefit pension expense	27.3		17.5		19.8
Other postretirement benefit expense	11.1		13.5		17.5
Total	$	63.2	$	49.9	$	56.5

78

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following provides a roll forward of the plans’ benefit obligations, plan assets, funded status and recognition in the Consolidated Balance Sheets.

	Pension benefits												Other post-
	Year Ended December 31,												retirement benefits
	2012						2011						Year Ended December 31,
(millions of dollars)	US			Non-US			US			Non-US			2012			2011
Change in projected benefit obligation:
Projected benefit obligation, January 1	$	337.4		$	344.3		$	326.2		$	326.0		$	251.0		$	261.9
Service cost	—			9.1			—			9.1			0.5			0.7
Interest cost	14.3			17.2			16.1			17.8			10.1			11.8
Plan participants’ contributions	—			0.5			—			0.3			—			—
Plan amendments	—			—			—			(0.5		)	(0.3		)	3.9
Actuarial (gain) loss	15.5			84.1			21.8			11.9			(20.7		)	(6.8		)
Currency translation	—			11.3			—			(5.8		)	—			—
Other	—			(4.5		)	—			0.9			—			—
Benefits paid	(37.1		)	(14.4		)	(26.7		)	(15.4		)	(20.1		)	(20.5		)
Projected benefit obligation, December 31	$	330.1		$	447.6		$	337.4		$	344.3		$	220.5		$	251.0
Change in plan assets:
Fair value of plan assets, January 1	$	290.4		$	154.9		$	287.2		$	154.6
Actual return on plan assets	29.4			15.0			8.9			5.0
Employer contribution	—			18.0			21.0			16.0
Plan participants’ contribution	—			0.5			—			0.3
Currency translation	—			6.0			—			(0.7		)
Other	—			(2.1		)	—			(4.9		)
Benefits paid	(37.1		)	(14.4		)	(26.7		)	(15.4		)
Fair value of plan assets, December 31	$	282.7		$	177.9		$	290.4		$	154.9
Funded status	$	(47.4	)	$	(269.7	)	$	(47.0	)	$	(189.4	)	$	(220.5	)	$	(251.0	)
Amounts in the Consolidated Balance Sheets consist of:
Non-current assets	$	—		$	—		$	—		$	0.5		$	—		$	—
Current liabilities	(0.1		)	(7.0		)	(0.1		)	(6.5		)	(20.8		)	(24.3		)
Non-current liabilities	(47.3		)	(262.7		)	(46.9		)	(183.4		)	(199.7		)	(226.7		)
Net amount	$	(47.4	)	$	(269.7	)	$	(47.0	)	$	(189.4	)	$	(220.5	)	$	(251.0	)
Amounts in accumulated other comprehensive loss consist of:
Net actuarial loss	$	163.8		$	135.1		$	172.8		$	54.4		$	78.7		$	106.3
Net prior service cost (credit)	(10.5		)	0.5			(11.3		)	0.8			(42.6		)	(48.7		)
Net amount*	$	153.3		$	135.6		$	161.5		$	55.2		$	36.1		$	57.6
Total accumulated benefit obligation for all plans	$	330.1		$	430.2		$	337.4		$	327.9

________________

* AOCI shown above does not include our equity investee, NSK-Warner. NSK-Warner had an AOCI loss of $7.9 million and $6.9 million at December 31, 2012 and 2011, respectively.

79

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The funded status of pension plans with accumulated benefit obligations in excess of plan assets at December 31 is as follows:

	December 31,
(millions of dollars)	2012			2011
Accumulated benefit obligation	$	(757.7	)	$	(656.9	)
Plan assets	458.0			435.5
Deficiency	$	(299.7	)	$	(221.4	)
Pension deficiency by country:
United States	$	(47.4	)	$	(47.0	)
United Kingdom	(22.4		)	(13.4		)
Germany	(192.4		)	(128.7		)
Other	(37.5		)	(32.3		)
Total pension deficiency	$	(299.7	)	$	(221.4	)

The weighted average asset allocations of the Company’s funded pension plans and target allocations by asset category are as follows:

	December 31,				Target Allocation
	2012		2011
U.S. Plans:
Real estate and other	9	%	11	%	5%-15%
Fixed income securities	56	%	54	%	45%-65%
Equity securities	35	%	35	%	25%-45%
	100	%	100	%
Non-U.S. Plans:
Real estate and other	6	%	8	%	2% - 8%
Fixed income securities	38	%	41	%	37% - 43%
Equity securities	56	%	51	%	52% - 58%
	100	%	100	%

The Company's investment strategy is to maintain actual asset weightings within a preset range of target allocations. The Company believes these ranges represent an appropriate risk profile for the planned benefit payments of the plans based on the timing of the estimated benefit payments. Within each asset category, separate portfolios are maintained for additional diversification. Investment managers are retained within each asset category to manage each portfolio against its benchmark. Each investment manager has appropriate investment guidelines. In addition, the entire portfolio is evaluated against a relevant peer group. The defined benefit pension plans did not hold any Company securities as investments as of December 31, 2012 and 2011. A portion of pension assets are invested in common and comingled trusts.

The Company expects to contribute a total of $15 million to $25 million into its defined benefit pension plans during 2013. Of the $15 million to $25 million in projected 2013 contributions, $7.1 million are contractually obligated, while the remaining payments are discretionary.

Refer to Note 9, “Fair Value Measurements," for more detail surrounding the fair value of each major category of plan assets as well as the inputs and valuation techniques used to develop the fair value measurements of the plans' assets at December 31, 2012 and 2011.

80

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

See the table below for a breakout of net periodic benefit cost between U.S. and non-U.S. pension plans:

	Pension benefits																		Other postretirement benefits
	Year Ended December 31,
	2012						2011						2010						Year Ended December 31,
(millions of dollars)	US			Non-US			US			Non-US			US			Non-US			2012			2011			2010
Service cost	$	—		$	9.1		$	—		$	9.1		$	—		$	7.4		$	0.5		$	0.7		$	0.8
Interest cost	14.3			17.2			16.1			17.8			17.5			17.6			10.1			11.8			14.5
Expected return on plan assets	(18.8		)	(9.3		)	(20.8		)	(11.2		)	(19.7		)	(9.7		)	—			—			—
Settlements, curtailments and other	5.7			0.5			—			(0.1		)	—			—			—			—			—
Amortization of unrecognized prior service benefit	(0.7		)	—			(0.7		)	—			(0.7		)	—			(6.4		)	(6.9		)	(6.9		)
Amortization of unrecognized loss	8.1			1.2			6.5			0.8			6.6			0.8			6.9			7.9			9.1
Net periodic benefit cost	$	8.6		$	18.7		$	1.1		$	16.4		$	3.7		$	16.1		$	11.1		$	13.5		$	17.5

The estimated net loss for the defined benefit pension plans that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost over the next fiscal year is $13.5 million. The estimated net loss and prior service credit for the other postretirement plans that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost over the next fiscal year are $4.9 million and $(6.4) million, respectively.

The Company's weighted-average assumptions used to determine the benefit obligations for its defined benefit pension and other postretirement plans as of December 31, 2012 and 2011 were as follows:

	December 31,
(percent)	2012	2011
U.S. pension plans:
Discount rate	3.67	4.42
Rate of compensation increase	N/A	N/A
U.S. other postretirement plans:
Discount rate	3.25	4.25
Rate of compensation increase	N/A	N/A
Non-U.S. pension plans:
Discount rate	3.86	5.13
Rate of compensation increase	2.72	2.78

81

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company’s weighted-average assumptions used to determine the net periodic benefit cost for its defined benefit pension and other postretirement benefit plans for the years ended December 31, 2012, 2011 and 2010 were as follows:

	Year Ended December 31,
(percent)	2012	2011	2010
U.S. pension plans:
Discount rate	4.42	5.17	5.75
Rate of compensation increase	N/A	N/A	3.50
Expected return on plan assets	6.75	7.50	7.50
U.S. other postretirement plans:
Discount rate	4.25	4.75	5.50
Rate of compensation increase	N/A	N/A	N/A
Expected return on plan assets	N/A	N/A	N/A
Non-U.S. pension plans:
Discount rate	5.13	5.37	5.47
Rate of compensation increase	2.78	2.80	2.75
Expected return on plan assets	6.49	7.07	7.12

The Company's approach to establishing the discount rate is based upon the market yields of high-quality corporate bonds, with appropriate consideration of each plan's defined benefit payment terms and duration of the liabilities.

The Company determines its expected return on plan asset assumptions by evaluating estimates of future market returns and the plans' asset allocation. The Company also considers the impact of active management of the plans' invested assets.

The estimated future benefit payments for the pension and other postretirement benefits are as follows:

	Pension benefits				Other postretirement benefits
(millions of dollars)					w/o Medicare Part D reimbursements		with Medicare Part D reimbursements
Year	U.S.		Non-U.S.
2013	$	24.9	$	15.7	$	21.9	$	21.1
2014	24.2		18.0		21.3		20.5
2015	23.4		19.8		20.6		19.8
2016	22.9		18.8		19.9		19.1
2017	22.3		20.1		19.3		18.5
2018-2022	105.4		110.1		82.1		78.8

The weighted-average rate of increase in the per capita cost of covered health care benefits is projected to be 7.50% in 2013 for pre-65 and post-65 participants, decreasing to 5.0% by the year 2019. A one-percentage point change in the assumed health care cost trend would have the following effects:

	One Percentage Point
(millions of dollars)	Increase		Decrease
Effect on other postretirement benefit obligation	$	16.2	$	(14.3	)
Effect on total service and interest cost components	$	0.5	$	(0.5	)

82

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 12 STOCK INCENTIVE PLANS

Under the Company's 1993 Stock Incentive Plan (“1993 Plan”), the Company granted options to purchase shares of the Company's common stock at the fair market value on the date of grant. The options vested over periods up to three years and have a term of 10 years from date of grant. As of December 31, 2003, there were no options available for future grants under the 1993 Plan. The 1993 Plan expired at the end of 2003 and was replaced by the Company's 2004 Stock Incentive Plan, which was amended at the Company's 2009 Annual Stockholders Meeting, among other things, to increase the number of shares available for issuance under the Plan. Under the BorgWarner Inc. Amended and Restated 2004 Stock Incentive Plan (“2004 Stock Incentive Plan”), 12.5 million shares are authorized for grant, of which approximately 1.9 million shares are available for future issuance.

Stock Options A summary of the plans’ shares under option at December 31, 2012, 2011 and 2010 is as follows:

	Shares (thousands)		Weighted average exercise price		Weighted average remaining contractual life (in years)	Aggregate intrinsic value (in millions)
Outstanding at January 1, 2010	5,177		$	27.98	5.8	$	29.7
Exercised	(1,888	)	$	26.73		$	50.3
Forfeited	(36	)	$	33.95
Outstanding at December 31, 2010	3,253		$	28.64	4.9	$	142.2
Exercised	(1,033	)	$	27.15		$	48.4
Outstanding at December 31, 2011	2,220		$	29.36	4.1	$	76.3
Exercised	(784	)	$	26.86		$	40.1
Outstanding at December 31, 2012	1,436		$	30.65	3.4	$	58.8
Options exercisable at December 31, 2012	1,436		$	30.65	3.4	$	58.8

Proceeds from stock option exercises for the years ended December 31, 2012, 2011 and 2010 were as follows:

	Year Ended December 31,
(millions of dollars)	2012		2011		2010
Proceeds from stock options exercised — gross	$	20.9	$	28.6	$	55.4
Tax benefit	31.1		24.4		11.7
Proceeds from stock options exercised, net of tax	$	52.0	$	53.0	$	67.1

Restricted Stock At its November 2007 meeting, the Company's Compensation Committee decided that restricted common stock awards and stock units ("restricted stock") would be awarded in place of stock options for long-term incentive award grants to employees. Restricted stock granted to employees vests 50% after two years and the remainder after three years from the date of grant. Restricted stock granted to non-employee directors generally vests on the anniversary date of the grant.

The value of restricted stock is determined by the market value of the Company’s common stock at the date of grant. In 2012, restricted stock in the amount of 328,138 and 9,677 shares was granted to employees and non-employee directors, respectively, under the 2004 Stock Incentive Plan.The value of the awards is recorded as unearned compensation within capital in excess of par value in equity and is amortized as compensation expense over the restriction periods.

83

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Restricted stock compensation expense recorded in the Consolidated Statements of Operations is as follows:

	Year Ended December 31,
(millions of dollars, except per share data)	2012		2011		2010
Restricted stock compensation expense	$	21.2	$	15.1	$	18.9
Restricted stock compensation expense, net of tax	$	15.5	$	11.4	$	14.7

A summary of the status of the Company’s nonvested restricted stock for employees and non-employee directors at December 31, 2012, 2011 and 2010 is as follows:

	Shares subject to restriction (thousands)		Weighted average price
Nonvested at January 1, 2010	1,547		$	29.90
Granted	603		$	36.16
Vested	(188	)	$	44.80
Forfeited	(91	)	$	27.10
Nonvested at December 31, 2010	1,871		$	30.55
Granted	274		$	70.57
Vested	(609	)	$	27.39
Forfeited	(106	)	$	38.05
Nonvested at December 31, 2011	1,430		$	39.02
Granted	338		$	78.41
Vested	(675	)	$	27.43
Forfeited	(61	)	$	54.35
Nonvested at December 31, 2012	1,032		$	58.77

Performance Share Plans The 2004 Stock Incentive Plan provides for awarding of performance shares to members of senior management at the end of successive three-year periods based on the Company's performance in terms of total shareholder return relative to a peer group of automotive companies. In the first quarter of 2012, the Company modified all outstanding Performance Share Award Agreements to allow for the payment of these awards entirely in the Company's common stock, rather than 40% in cash and 60% in the Company's common stock. Using the lattice model (Monte Carlo simulation) at the date of modification, the Company determined the first quarter 2012 compensation expense associated with the modification to be negligible. Within the Consolidated Statement of Cash Flows for the years ended December 31, 2011 and 2010, the Company's $19.6 million and $16.6 million of expense associated with the 40% cash portion of the award was included in the changes in accounts payable and accrued expenses and other non-current assets and liabilities line items.

The Company recognizes compensation expense relating to its performance share plans ratably over the performance period. Prior to the modification, compensation expense for the 60% stock component was based on the performance share's fair value at the date of grant using a lattice model (Monte Carlo simulation) and the 40% cash component was based on quarterly mark to market of the cash liability on a quarterly basis. After the first quarter 2012 modification, 100% of compensation expense associated with the performance share plans is calculated using a lattice model (Monte Carlo simulation). The amounts expensed under the plan and the share issuances for the three-year measurement periods ended December 31, 2012, 2011 and 2010 were as follows:

84

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	Year Ended December 31,
(millions of dollars, except share data)	2012		2011		2010
Expense	$	35.5	$	26.3	$	23.9
Number of shares*	558,000		538,180		104,205

________________

*Shares are issued in February of the following year.

The restricted stock and performance share plan compensation expense disclosed above includes $7.0 million of expense related to the Company's fourth quarter 2012 decision to waive the forfeiture provisions of existing restricted stock and performance share grants made to certain retiring Named Executive Officers. The Company recorded this expense within other (income) expense in the Consolidated Statement of Operations.

NOTE 13 CONTINGENCIES

In the normal course of business, the Company is party to various commercial and legal claims, actions and complaints, including matters involving warranty claims, intellectual property claims, general liability and various other risks. It is not possible to predict with certainty whether or not the Company will ultimately be successful in any of these commercial and legal matters or, if not, what the impact might be. The Company's environmental and product liability contingencies are discussed separately below. The Company's management does not expect that the results in any of these commercial and legal claims, actions and complaints will have a material adverse effect on the Company's results of operations, financial position or cash flows.

Litigation

In January 2006, BorgWarner Diversified Transmission Products Inc. ("DTP"), a subsidiary of the Company, filed a declaratory judgment action in United States District Court, Southern District of Indiana (Indianapolis Division) against the United Automobile, Aerospace, and Agricultural Implements Workers of America (“UAW”) Local No. 287 and Gerald Poor, individually and as the representative of a defendant class. DTP sought the Court's affirmation that DTP did not violate the Labor-Management Relations Act or the Employee Retirement Income Security Act (ERISA) by unilaterally amending certain medical plans effective April 1, 2006 and October 1, 2006, prior to the expiration of the then-current collective bargaining agreements. On September 10, 2008, the Court found that DTP's reservation of the right to make such amendments reducing the level of benefits provided to retirees was limited by its collectively bargained health insurance agreement with the UAW, which did not expire until April 24, 2009. Thus, the amendments were untimely. In 2008, the Company recorded a charge of $4.0 million as a result of the Court's decision.

DTP filed a declaratory judgment action in the United States District Court, Southern District of Indiana (Indianapolis Division) against the UAW Local No. 287 and Jim Barrett and others, individually and as representatives of a defendant class, on February 26, 2009 again seeking the Court's affirmation that DTP did not violate the Labor - Management Relations Act or ERISA by modifying the level of benefits provided retirees to make them comparable to other Company retiree benefit plans after April 24, 2009. Certain retirees, on behalf of themselves and others, filed a mirror-image action in the United States District Court, Eastern District of Michigan (Southern Division) on March 11, 2009, for which a class has been certified. During the last quarter of 2009, the action pending in Indiana was dismissed, while the action in Michigan is continuing. The Company is vigorously defending against the suit.  This contingency is subject to many uncertainties, therefore based on the information available to date, the Company cannot reasonably estimate the amount or the range of potential loss, if any. A decision on the merits of the suit could be rendered sometime in 2013.

85

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Environmental

The Company and certain of its current and former direct and indirect corporate predecessors, subsidiaries and divisions have been identified by the United States Environmental Protection Agency and certain state environmental agencies and private parties as potentially responsible parties (“PRPs”) at various hazardous waste disposal sites under the Comprehensive Environmental Response, Compensation and Liability Act (“Superfund”) and equivalent state laws and, as such, may presently be liable for the cost of clean-up and other remedial activities at 32 such sites. Responsibility for clean-up and other remedial activities at a Superfund site is typically shared among PRPs based on an allocation formula.

The Company believes that none of these matters, individually or in the aggregate, will have a material adverse effect on its results of operations, financial position or cash flows. Generally, this is because either the estimates of the maximum potential liability at a site are not material or the liability will be shared with other PRPs, although no assurance can be given with respect to the ultimate outcome of any such matter.

Based on information available to the Company (which in most cases includes: an estimate of allocation of liability among PRPs; the probability that other PRPs, many of whom are large, solvent public companies, will fully pay the cost apportioned to them; currently available information from PRPs and/or federal or state environmental agencies concerning the scope of contamination and estimated remediation and consulting costs; and remediation alternatives), the Company has an accrual for indicated environmental liabilities of $3.9 million at December 31, 2012. The Company expects to pay out substantially all of the amounts accrued for environmental liability over the next five years.

In connection with the sale of Kuhlman Electric Corporation, the Company agreed to indemnify the buyer and Kuhlman Electric for certain environmental liabilities, then unknown to the Company, relating to certain operations of Kuhlman Electric that pre-date the Company's 1999 acquisition of Kuhlman Electric. In 2007 and 2008, lawsuits were filed against Kuhlman Electric and others, including the Company, on behalf of approximately 340 plaintiffs alleging personal injury relating to alleged environmental contamination at its Crystal Springs, Mississippi plant. The Company entered into a settlement in July 2010 regarding the personal injury claims of the plaintiffs and those of approximately 2,700 unfiled claimants represented by those plaintiffs' attorneys. In exchange for, among other things, the dismissal with prejudice of these lawsuits and the release of claims by the unfiled claimants, the Company agreed to pay up to $28 million in settlement funds, which was expensed in the second quarter of 2010. The Company paid $13.9 million in November 2010 and made the final payment of $13.9 million in February 2011. Litigation concerning indemnification is pending and the Company may in the future become subject to further legal proceedings.

Product Liability

Like many other industrial companies who have historically operated in the U.S., the Company (or parties the Company is obligated to indemnify) continues to be named as one of many defendants in asbestos-related personal injury actions. We believe that the Company's involvement is limited because, in general, these claims relate to a few types of automotive friction products that were manufactured many years ago and contained encapsulated asbestos. The nature of the fibers, the encapsulation and the manner of use lead the Company to believe that these products are highly unlikely to cause harm. As of both December 31, 2012 and December 31, 2011, the Company had approximately 16,000 pending asbestos-related product liability claims, respectively. Of the approximately 16,000 outstanding claims at December 31, 2012, approximately half were pending in jurisdictions that have undergone significant tort and judicial reform activities subsequent to the filing of these claims.

The Company's policy is to vigorously defend against these lawsuits and the Company has been successful in obtaining dismissal of many claims without any payment. The Company expects that the vast majority of the pending asbestos-related product liability claims where it is a defendant (or has an obligation to indemnify a defendant) will result in no payment being made by the Company or its insurers. In 2012, of

86

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

the approximately 2,400 claims resolved, 308 (13%) resulted in payment being made to a claimant by or on behalf of the Company. In the full year of 2011, of the approximately 1,800 claims resolved, 288 (16%) resulted in any payment being made to a claimant by or on behalf of the Company.

Prior to June 2004, the settlement and defense costs associated with all claims were paid by the Company's primary layer insurance carriers under a series of funding arrangements. In addition to the primary insurance available for asbestos-related claims, the Company has substantial excess insurance coverage available for potential future asbestos-related product claims. In June 2004, primary layer insurance carriers notified the Company of the alleged exhaustion of their policy limits.

A declaratory judgment action was filed in January 2004 in the Circuit Court of Cook County, Illinois by Continental Casualty Company and related companies against the Company and certain of its historical general liability insurers. The court has issued a number of interim rulings and discovery is continuing. The Company has entered into settlement agreements with some of its insurance carriers, resolving their coverage disputes by agreeing to pay specified amounts to the Company. The Company is vigorously pursuing the litigation against the remaining insurers.

On April 5, 2010, the Superior Court of New Jersey Appellate Division affirmed a lower court judgment in an asbestos-related action against the Company and others. The Company filed its Notice of Petition to the Supreme Court of New Jersey in late April, seeking to appeal the decisions of the lower courts. On July 8, 2010, the Supreme Court of New Jersey denied the Company's Notice of Petition appealing the decision of the lower courts. The total claim of $40.7 million was paid by the Company in July 2010.

Although it is impossible to predict the outcome of pending or future claims or the impact of tort reform legislation that may be enacted at the state or federal levels, due to the encapsulated nature of the products, the Company's experience in vigorously defending and resolving claims in the past, and the Company's significant insurance coverage with solvent carriers as of the date of this filing, management does not believe that asbestos-related product liability claims are likely to have a material adverse effect on the Company's results of operations, financial position or cash flows.

To date, the Company has paid and accrued $235.8 million in defense and indemnity in advance of insurers' reimbursement and has received $124.8 million in cash and notes from insurers. The net balance of $111.0 million, is expected to be fully recovered, of which approximately $20 million is expected to be recovered within one year. Timing of recovery is dependent on final resolution of the declaratory judgment action referred to above or additional negotiated settlements. At December 31, 2011, insurers owed $109.8 million in association with these claims.

In addition to the $111.0 million net balance relating to past settlements and defense costs, the Company has estimated a liability of $85.6 million for claims asserted, but not yet resolved and their related defense costs at December 31, 2012. The Company also has a related asset of $85.6 million to recognize proceeds from the insurance carriers, which is expected to be fully recovered. Receipt of these proceeds is not expected prior to the resolution of the declaratory judgment action referred to above, which, more-likely-than-not, will occur subsequent to December 31, 2013. At December 31, 2011, the comparable value of the accrued liability and associated insurance asset was $61.7 million.

87

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The amounts recorded in the Consolidated Balance Sheets related to the estimated future settlement of existing claims are as follows:

	December 31,
(millions of dollars)	2012		2011
Assets:
Prepayments and other current assets	$	—	$	28.8
Other non-current assets	85.6		32.9
Total insurance assets	$	85.6	$	61.7
Liabilities:
Accounts payable and accrued expenses	$	36.5	$	28.8
Other non-current liabilities	49.1		32.9
Total accrued liabilities	$	85.6	$	61.7

The 2012 increase in the accrued liability and associated insurance asset is primarily due to an expected higher rate of claim settlement based on recent litigation claim activity.

The Company cannot reasonably estimate possible losses, if any, in excess of those for which it has accrued, because it cannot predict how many additional claims may be brought against the Company (or parties the Company has an obligation to indemnify) in the future, the allegations in such claims, the possible outcomes, or the impact of tort reform legislation that may be enacted at the State or Federal levels.

NOTE 14 LEASES AND COMMITMENTS

Certain assets are leased under long-term operating leases, including rent for the corporate headquarters and one airplane. Most leases contain renewal options for various periods. Leases generally require the Company to pay for insurance, taxes and maintenance of the leased property. The Company leases other equipment such as vehicles and certain office equipment under short-term leases. Total rent expense was $31.3 million, $30.7 million and $25.6 million in the years ended December 31, 2012, 2011 and 2010, respectively. The Company does not have any material capital leases.

On September 30, 2010, the Company paid $6.0 million for certain machinery and equipment it had previously leased, which was recorded as a capital expenditure within the investing activities section of the Company's Consolidated Statement of Cash Flows for the year ended December 31, 2010.

Future minimum operating lease payments at December 31, 2012 were as follows:

(millions of dollars)
2013	$	18.1
2014	13.9
2015	13.3
2016	10.2
2017	9.8
After 2017	3.4
Total minimum lease payments	$	68.7

88

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 15 EARNINGS PER SHARE

The Company presents both basic and diluted earnings per share of common stock (“EPS”) amounts. Basic EPS is calculated by dividing net earnings attributable to BorgWarner Inc. by the weighted average shares of common stock outstanding during the reporting period. Diluted EPS is calculated by dividing net earnings attributable to BorgWarner Inc. by the weighted average shares of common stock and common equivalent stock outstanding during the reporting period.

The dilutive impact of stock-based compensation is calculated using the treasury stock method. The treasury stock method assumes that the Company uses the assumed proceeds from the exercise of awards to repurchase common stock at the average market price during the period. The assumed proceeds under the treasury stock method include the purchase price that the grantee will pay in the future, compensation cost for future service that the Company has not yet recognized and any windfall/(shortfall) tax benefits that would be credited/(debited) to capital in excess of par value when the award generates a tax deduction. Options are only dilutive when the average market price of the underlying common stock exceeds the exercise price of the options.

In April 2012, the Company settled its 3.50% convertible senior notes. Prior to the settlement, the potential common shares associated with these notes were reflected in diluted EPS using the “if-converted” method. Under this method, if dilutive, the common shares were assumed issued as of the beginning of the reporting period and included in calculating diluted EPS. In addition, if dilutive, interest expense, net of tax, related to the convertible senior notes was added back to the numerator in calculating diluted EPS.

In conjunction with the convertible senior note offering, the Company entered into a bond hedge overlay, including both call options and warrants. On April 16, 2012, the Company settled the call option portion of the bond hedge overlay, receiving approximately 6.5 million shares, which reduced the weighted average basic and dilutive shares outstanding. Prior to the settlement, if the Company's weighted average share price exceeded $32.82 per share, the call options were anti-dilutive. During the third and fourth quarters of 2012, the Company settled the warrant portion of the bond hedge overlay, delivering approximately 4.9 million shares. Prior to settlement, if the Company's weighted-average share price exceeded $38.61 per share, the warrants were dilutive to the Company's earnings.

89

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table reconciles the numerators and denominators used to calculate basic and diluted earnings per share of common stock:

	Year Ended December 31,
(in millions except per share amounts)	2012		2011		2010
Basic earnings per share:
Net earnings attributable to BorgWarner Inc.	$	500.9	$	550.1	$	377.4
Weighted average shares of common stock outstanding	112.652		109.229		114.155
Basic earnings per share of common stock	$	4.45	$	5.04	$	3.31
Diluted earnings per share:
Net earnings attributable to BorgWarner Inc.	$	500.9	$	550.1	$	377.4
Adjusted for net interest expense on convertible notes	5.8		21.5		20.4
Diluted net earnings attributable to BorgWarner Inc.	$	506.7	$	571.6	$	397.8
Weighted average shares of common stock outstanding	112.652		109.229		114.155
Effect of 3.50% convertible senior notes	3.322		11.389		11.389
Effect of warrant	3.400		5.215		1.464
Effect of stock-based compensation	2.003		2.635		2.567
Total dilutive effect on weighted average shares of common stock outstanding	8.725		19.239		15.420
Weighted average shares of common stock outstanding including dilutive shares	121.377		128.468		129.575
Diluted earnings per share of common stock	$	4.17	$	4.45	$	3.07
Total anti-dilutive shares:
Call options	1.939		6.141		2.836

NOTE 16 RECENT TRANSACTIONS

BorgWarner BERU Systems Korea Co., Ltd.

During the third and fourth quarters of 2012, the Company completed the purchase of the remaining 49% of BorgWarner BERU Systems Korea Co., Ltd. for $15.0 million in cash, which has been classified as a financing activity within the Consolidated Statement of Cash Flows. In accordance with ASC Topic 810,"Consolidation," the Company reduced its noncontrolling interest balance by $7.0 million and reduced capital in excess of par value by $8.0 million. As a result of these transactions, the Company now owns 100% of BorgWarner BERU Systems Korea Co., Ltd.

Spark plug business

During the second and third quarters of 2012, the Company incurred $39.7 million in expense associated with the loss on sale of the spark plug business to Federal-Mogul Corporation primarily related to the write-down of prior purchase price accounting adjustments. These purchase price accounting adjustments were originally reported in the Engine segment and related to the BERU acquisition. As a result of the sale, the Company received $55.2 million in cash, which is classified as an investing activity within the Consolidated Statement of Cash Flows. The sale will allow BorgWarner to continue to focus on expanding BERU Systems' core products of glow plugs, diesel cold start systems and other gasoline ignition technologies.

90

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Tire pressure monitoring business

During the fourth quarter of 2011, the Company incurred $21.5 million in expense associated with the loss on sale of the tire pressure monitoring business, including the write-down of prior purchase price accounting adjustments related to the BERU acquisition, costs related to the divestiture, and a write-down of a portion of the ignitor and electronic business. The Company received $22.9 million in cash, classified as an investing activity within the Consolidated Statement of Cash Flows, from the sale of its tire pressure monitoring business to Huf Electronics GmbH. The sale will allow BorgWarner to continue to focus on expanding BERU Systems' core products of glow plugs, diesel cold start systems and other gasoline ignition technologies.

BorgWarner Vikas Emissions Systems India Private Limited

On August 2, 2011, the Company purchased the noncontrolling interest's 40% share of BorgWarner Vikas Emissions Systems India Private Limited for $29.4 million in cash, which has been classified as a financing activity within the Consolidated Statement of Cash Flows. In accordance with ASC Topic 810, the Company reduced its noncontrolling interest balance by $2.8 million and reduced capital in excess of par value by $26.6 million. As a result of this transaction, the Company owns 100% of BorgWarner Vikas Emissions Systems India Private Limited.

Traction Systems division of Haldex Group

On January 31, 2011, the Company acquired 100% of the stock of Haldex Traction Holding AB ("Haldex Traction Systems"). Haldex Traction Systems has operations in Sweden, Hungary and Mexico. The consideration for the acquisition, net of cash acquired, was $214.9 million (1.38 billion Swedish Krona).

The acquisition is expected to accelerate the Company's growth in the global all-wheel drive (AWD) market as it continues to shift toward front-wheel drive (FWD) based vehicles.  The acquisition will add industry leading FWD/AWD technologies, with a strong European customer base, to the Company's existing portfolio of front and rear-wheel drive based products.  This enables the Company to provide global customers a broader range of AWD solutions to meet their vehicle needs.

The operating results are reported within the Company's Drivetrain reporting segment as of the date of acquisition. The Company paid $203.7 million, which is recorded as an investing activity in the Consolidated Statement of Cash Flows. Additionally, the Company assumed retirement-related liabilities of $5.3 million and assumed debt of $5.9 million, which are considered non-cash transactions in the Consolidated Statement of Cash Flows.

BERU-Eichenauer GmbH

In anticipation of market growth expected for its electric cabin heaters, the Company completed the acquisition of BERU-Eichenauer GmbH by acquiring the shares of its former joint venture partner, Eichenauer Heizelemente GmbH & Co. KG. The former 50/50 joint venture was formed in 2000 to develop and manufacture electric cabin heaters. The acquisition formally took effect on May 1, 2010.

The pre-tax impact of this acquisition was an increase in intangible and other assets of $17.6 million related to adjusting the Company's 50% investment to fair value under ASC Topic 805, a gain of $8.0 million and a decrease in cash of $9.6 million. The Company's $9.6 million payment has been recorded as an investing activity in the Consolidated Statement of Cash Flows.

91

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Dytech ENSA S.L.

On April 10, 2010, the Company acquired 100% of Dytech ENSA S.L. (“Dytech”), headquartered in Vigo, Spain. The gross cost of this acquisition is $147.7 million, or $147.6 million, net of cash and cash equivalents. Dytech is a leading producer of exhaust gas recirculation (EGR) coolers, EGR tubes, and integrated EGR modules including valves for automotive and commercial vehicle applications, both on- and off-road. This acquisition enhances the Company's emissions products offering and system/module expertise, further differentiating BorgWarner as a leader in highly engineered automotive systems. In addition, Dytech's geographic footprint and customer base complements and strengthens the Company's market presence with global automakers. The operating results of Dytech are reported within the Company's Engine reporting segment from the date of acquisition. The Company's $147.6 million payment has been recorded as an investing activity in the Consolidated Statement of Cash Flows.

Etatech, Inc. Technology

On June 2, 2009, the Company announced the purchase of advanced gasoline ignition technology and related intellectual property from Florida-based Etatech, Inc. The high-frequency ignition technology enables high-performing, lean burning engines to significantly improve fuel economy and reduce emissions compared with conventional combustion technologies. The Company made a cash payment of $7.5 million in both June 2009 and May 2010 for the purchase of Etatech, Inc., which has been reflected as an investing activity in the Consolidated Statements of Cash Flows.

BERU

In 2009, the Company completed the acquisition of 100% of BERU Aktiengesellschaft's ("BERU") outstanding shares through a German legal process referred to as a "squeeze out," which required the Company to pay €73.39 per share to the non-controlling shareholders. Certain non-controlling shareholders  had challenged the "squeeze out" share price of €73.39 . In November 2012, the court ruled confirming the adequacy of the share price of €73.39, therefore the Company would not be required to pay any additional amount to the “squeezed-out” shareholders. However, the non-controlling  shareholders have appealed the ruling and no date has been set by the court to rule on the appeal.

In addition, certain non-controlling shareholders had challenged the 2008 Domination and Profit Sharing Agreement ("DPTA"). In the same ruling on the "squeeze out," the court ruled on the adequacy of the guaranteed dividend calculated in the DPTA. The ruling increased the guaranteed divided by a negligible amount. The non-controlling shareholders and the Company have appealed this ruling and no date has yet been set by the court to rule on the appeals.

NOTE 17 REPORTING SEGMENTS AND RELATED INFORMATION

The Company's business is comprised of two reporting segments: Engine and Drivetrain. These segments are strategic business groups, which are managed separately as each represents a specific grouping of related automotive components and systems.

The Company allocates resources to each segment based upon the projected after-tax return on invested capital ("ROIC") of its business initiatives. ROIC is comprised of Adjusted EBIT after deducting notional taxes compared to the projected average capital investment required. Adjusted EBIT is comprised of earnings before interest, income taxes and noncontrolling interest (“EBIT") adjusted for restructuring, goodwill impairment charges, affiliates' earnings and other items not reflective of on-going operating income or loss.

Adjusted EBIT is the measure of segment income or loss used by the Company. The Company believes Adjusted EBIT is most reflective of the operational profitability or loss of our reporting segments. The following tables show segment information and Adjusted EBIT for the Company's reporting segments.

92

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2012 Segment information
	Net sales								Year-end assets		Depreciation/ amortization		Long-lived asset expenditures (b)
(millions of dollars)	Customers		Inter-segment			Net
Engine	$	4,884.5	$	28.5		$	4,913.0		$	3,299.2	$	177.8	$	269.9
Drivetrain	2,298.7		—			2,298.7			1,652.2		91.3		125.6
Inter-segment eliminations	—		(28.5		)	(28.5		)	—		—		—
Total	7,183.2		—			7,183.2			4,951.4		269.1		395.5
Corporate (a)	—		—			—			1,449.4		19.5		11.9
Consolidated	$	7,183.2	$	—		$	7,183.2		$	6,400.8	$	288.6	$	407.4

2011 Segment information
	Net sales								Year-end assets		Depreciation/ amortization		Long-lived asset expenditures (b)
(millions of dollars)	Customers		Inter-segment			Net
Engine	$	5,030.2	$	20.4		$	5,050.6		$	3,329.0	$	188.6	$	264.3
Drivetrain	2,084.5		—			2,084.5			1,562.8		80.0		115.9
Inter-segment eliminations	—		(20.4		)	(20.4		)	—		—		—
Total	7,114.7		—			7,114.7			4,891.8		268.6		380.2
Corporate (a)	—		—			—			1,066.8		14.4		13.5
Consolidated	$	7,114.7	$	—		$	7,114.7		$	5,958.6	$	283.0	$	393.7

2010 Segment information
	Net sales								Year-end assets		Depreciation/ amortization		Long-lived asset expenditures (b)
(millions of dollars)	Customers		Inter-segment			Net
Engine	$	4,041.4	$	19.4		$	4,060.8		$	3,277.7	$	184.4	$	181.3
Drivetrain	1,611.4		—			1,611.4			1,230.5		63.6		83.5
Inter-segment eliminations	—		(19.4		)	(19.4		)	—		—		—
Total	5,652.8		—			5,652.8			4,508.2		248.0		264.8
Corporate (a)	—		—			—			1,046.8		4.9		11.8
Consolidated	$	5,652.8	$	—		$	5,652.8		$	5,555.0	$	252.9	$	276.6

_______________

(a) Corporate assets include investments and advances and deferred income taxes.

(b) Long-lived asset expenditures include capital expenditures and tooling outlays.

93

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Adjusted earnings before interest, income taxes and noncontrolling interest ("Adjusted EBIT")

	Year Ended December 31,
(millions of dollars)	2012			2011			2010
Engine	$	786.4		$	774.3		$	537.9
Drivetrain	209.1			161.2			137.0
Adjusted EBIT	995.5			935.5			674.9
Loss from disposal activities	39.7			21.5			—
Restructuring expense	27.4			—			—
Retirement related obligations	17.3			—			—
Patent infringement settlement, net of legal costs incurred	—			(29.1		)	—
Environmental litigation settlement	—			—			28.0
BERU - Eichenauer equity investment gain	—			—			(8.0		)
Corporate, including equity in affiliates' earnings and stock-based compensation	115.4			107.4			111.0
Interest income	(4.7		)	(4.8		)	(2.8		)
Interest expense and finance charges	39.4			74.6			68.8
Earnings before income taxes and noncontrolling interest	761.0			765.9			477.9
Provision for income taxes	238.6			195.3			81.7
Net earnings	522.4			570.6			396.2
Net earnings attributable to the noncontrolling interest, net of tax	21.5			20.5			18.8
Net earnings attributable to BorgWarner Inc.	$	500.9		$	550.1		$	377.4

Geographic Information

Outside the U.S., only China, Germany, Hungary and South Korea exceeded 5% of consolidated net sales during the year ended December 31, 2012, attributing sales to the location of production rather than the location of the customer. Also, the Company's 50% equity investment in NSK-Warner (see Note 5) of $184.4 million, $189.2 million and $180.3 million at December 31, 2012, 2011 and 2010, respectively, is excluded from the definition of long-lived assets, as are goodwill and certain other non-current assets.

	Net sales						Long-lived assets
(millions of dollars)	2012		2011		2010		2012		2011		2010
United States	$	1,857.2	$	1,674.0	$	1,451.1	$	508.1	$	492.6	$	466.6
Europe:
Germany	1,871.3		2,200.0		1,839.9		432.2		420.4		447.5
Hungary	448.9		503.2		418.3		64.3		56.9		53.0
France	335.2		363.0		318.7		45.9		63.2		63.0
Other Europe	1,015.1		917.8		546.1		225.8		194.6		173.7
Total Europe	3,670.5		3,984.0		3,123.0		768.2		735.1		737.2
South Korea	505.6		471.7		358.0		140.4		124.5		94.8
China	499.1		416.6		330.6		184.3		148.0		104.9
Other foreign	650.8		568.4		390.1		187.0		164.1		139.1
Total	$	7,183.2	$	7,114.7	$	5,652.8	$	1,788.0	$	1,664.3	$	1,542.6

94

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Sales to Major Customers

Consolidated net sales to a single customer (including their subsidiaries), which exceeded 10% of our total net sales, were to Volkswagen of approximately 17% for the year ended December 31, 2012 and 19% for the years ended December 31, 2011 and 2010, respectively; and to Ford of approximately 13%, 12%, and 11% for the years ended December 31, 2012, 2011 and 2010, respectively. Both of the Company's reporting segments had significant sales to Volkswagen and Ford in 2012, 2011 and 2010. Accounts receivable from these customers at December 31, 2012 comprised approximately 18% ($218.8 million) of total accounts receivable. Such sales consisted of a variety of products to a variety of customer locations and regions. No other single customer accounted for more than 10% of consolidated net sales in any of the years presented.

Sales by Product Line

Sales of turbochargers for light vehicles represented approximately 26% of total net sales for the years ended December 31, 2012, 2011 and 2010, respectively. The Company currently supplies light vehicle turbochargers to many OEMs including BMW, Daimler, Fiat, Ford, General Motors, Hyundai, PSA, Renault and Volkswagen. No other single product line accounted for more than 10% of consolidated net sales in any of the years presented.

95

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Interim Financial Information (Unaudited)

(millions of dollars, except per share amounts)	2012															2011
Quarter ended	Mar-31			Jun-30			Sep-30			Dec-31			Year			Mar-31			Jun-30			Sep-30			Dec-31			Year
Net sales	$	1,912.5		$	1,856.4		$	1,695.2		$	1,719.1		$	7,183.2		$	1,730.4		$	1,818.8		$	1,791.8		$	1,773.7		$	7,114.7
Cost of sales	1,516.7			1,473.2			1,351.5			1,374.9			5,716.3			1,387.6			1,461.7			1,441.0			1,414.0			5,704.3
Gross profit	395.8			383.2			343.7			344.2			1,466.9			342.8			357.1			350.8			359.7			1,410.4
Selling, general and administrative expenses	169.0			153.1			151.0			156.2			629.3			165.1			157.7			151.4			146.8			621.0
Other (income) expense	1.1			36.6			29.7			17.3			84.7			(1.6		)	(28.9		)	0.6			21.8			(8.1		)
Operating income	225.7			193.5			163.0			170.7			752.9			179.3			228.3			198.8			191.1			797.5
Equity in affiliates’ earnings, net of tax	(9.2		)	(12.5		)	(11.1		)	(10.0		)	(42.8		)	(8.4		)	(8.1		)	(11.5		)	(10.2		)	(38.2		)
Interest income	(1.4		)	(1.3		)	(1.0		)	(1.0		)	(4.7		)	(1.0		)	(1.2		)	(1.3		)	(1.3		)	(4.8		)
Interest expense and finance charges	15.1			12.6			5.0			6.7			39.4			18.4			20.5			18.5			17.2			74.6
Earnings before income taxes and noncontrolling interest	221.2			194.7			170.1			175.0			761.0			170.3			217.1			193.1			185.4			765.9
Provision for income taxes	57.5			68.5			64.2			48.4			238.6			40.9			49.8			46.4			58.2			195.3
Net earnings	163.7			126.2			105.9			126.6			522.4			129.4			167.3			146.7			127.2			570.6
Net earnings attributable to the noncontrolling interest, net of tax	5.7			5.6			4.8			5.4			21.5			4.9			5.3			5.1			5.2			20.5
Net earnings attributable to BorgWarner Inc. (a)	$	158.0		$	120.6		$	101.1		$	121.2		$	500.9		$	124.5		$	162.0		$	141.6		$	122.0		$	550.1
Earnings per share — basic	$	1.46		$	1.08		$	0.88		$	1.05		$	4.45		$	1.13		$	1.49		$	1.30		$	1.12		$	5.04
Earnings per share — diluted	$	1.28		$	1.00		$	0.85		$	1.03		$	4.17		$	1.00		$	1.31		$	1.15		$	1.00		$	4.45

_______________

(a) The Company's results were impacted by the following:

• Quarter ended December 31, 2012: Retirement related obligations of $17.3 million are comprised of a $5.7 million loss resulting from the settlement of a portion of the Muncie Plant's pension obligation and an $11.6 million expense associated with the retirement of certain Named Executive Officers. These obligations were partially offset by a $6.1 million tax benefit. The Company incurred tax expense of $3.9 million which included $11.1 million of U.S. tax expense to correct the income taxes payable balance, partially offset by tax benefits resulting from changes to the statutory income tax rate in certain countries and the settlement of certain tax audits.

• Quarter ended September 30, 2012: The Company incurred $1.8 million of expense and $11.2 million of tax expense associated with the completion of the sale of its spark plug business. The Company also recorded restructuring expense of $27.4 million primarily associated with the disposal and future requirements of BERU's on-going business, which was partially offset by a tax benefit of $7.7 million. Additionally, the Company incurred tax expense of $6.9 million primarily resulting from the settlement of certain tax audits.

• Quarter ended June 30, 2012: The Company recorded expense of $37.9 million primarily due to the write-down of prior purchase price accounting adjustments included within the disposal group as a result of signing a Master Purchase Agreement to sell the spark plug business to Federal-Mogul Corporation, which was partially offset by a tax benefit of $5.5 million resulting from the write-down. Additionally, the Company recorded tax expense of $9.0 million related to its decision to change its cash repatriation assertion for some of its foreign subsidiaries.

• Quarter ended December 31, 2011: The Company incurred $21.5 million in expense associated with the loss on sale of the tire pressure monitoring business, including costs related to the divestiture, and a write-down of a portion of the ignitor and electronic business. The Company recorded $1.4 million of tax benefit associated with the disposals and $4.1 million of tax expense related to an intercompany disposal transaction.

• Quarter ended June 30, 2011: The Company recorded a $29.1 million patent infringement settlement gain, net of legal costs incurred, which was partially offset by $11.0 million of additional tax expense. Additionally, the Company recorded $6.2 million related to tax adjustments resulting from a change in state corporate income tax legislation as well as an adjustment of the Company's tax accounts as a result of the closure of certain tax audits.

96

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

Not applicable.

Item 9A. Controls and Procedures

Disclosure Controls and Procedures 

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. However, our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives.

The Company has adopted and maintains disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in the reports filed or submitted under the Exchange Act, such as this Form 10-K, is collected, recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. The Company's disclosure controls and procedures are also designed to ensure that such information is accumulated and communicated to management to allow timely decisions regarding required disclosure. As required under Exchange Act Rule 13a-15, the Company's management, including the Chief Executive Officer and Chief Financial Officer, has conducted an evaluation of the effectiveness of disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures are effective.

Management's Report on Internal Control Over Financial Reporting 

The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f). Management conducted an assessment of the Company's internal control over financial reporting based on the framework and criteria established by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control - Integrated Framework. Based on the assessment, management concluded that, as of December 31, 2012, the Company's internal control over financial reporting is effective based on those criteria. Refer to Item 7 of this report for "Report of Management on Internal Control Over Financial Reporting."

PricewaterhouseCoopers LLP, an independent registered public accounting firm, has audited the Company's consolidated financial statements and the effectiveness of internal controls over financial reporting as of December 31, 2012 as stated in their report included herein.

Changes in Internal Control

There have been no changes in internal controls over the financial reporting that occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect our internal controls over financial reporting.

Item 9B. Other Information

Not applicable.

97

PART III

Item 10. Directors, Executive Officers and Corporate Governance

Information with respect to directors, executive officers and corporate governance that appears in the Company's proxy statement for its 2013 Annual Meeting of Stockholders under the captions “Election of Directors,” “Information on Nominees for Directors and Continuing Directors,” “Board of Directors and Its Committees,” “Section 16(a) Beneficial Ownership Reporting Compliance,” “Code of Ethics,” and “Compensation Committee Report” is incorporated herein by this reference and made a part of this report.

Item 11. Executive Compensation

Information with respect to director and executive compensation that appears in the Company's proxy statement for its 2013 Annual Meeting of Stockholders under the captions “Director Compensation,” “Compensation Committee Interlocks and Insider Participation,” “Executive Compensation,” “Compensation Discussion and Analysis,” “Restricted Stock and Stock Units,” “Long Term Incentives,” and “Change of Control Employment Agreements” is incorporated herein by this reference and made a part of this report.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Information with respect to security ownership and certain beneficial owners and management and related stockholders matters that appears in the Company's proxy statement for its 2013 Annual Meeting of Stockholders under the caption “Security Ownership of Certain Beneficial Owners and Management” is incorporated herein by this reference and made a part of this report.

For information regarding the Company's equity compensation plans, see Item 5 “Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities” in this Annual Report on Form 10-K.

Item 13. Certain Relationships and Related Transactions and Director Independence

Information with respect to certain relationships and related transactions and director independence that appears in the Company's proxy statement for its 2013 Annual Meeting of Stockholders under the caption “Board of Directors and Its Committees” is incorporated herein by this reference and made a part of this report.

Item 14. Principal Accountant Fees and Services

Information with respect to principal accountant fees and services that appears in the Company's proxy statement for its 2013 Annual Meeting of Stockholders under the caption “Independent Registered Public Accounting Firm Fees and Services” is incorporated herein by this reference and made a part of this report.

PART IV

Item 15. Exhibits and Financial Statement Schedules

The information required by this Section (a)(3) of Item 15 is set forth on the Exhibit Index that follows the Signatures page of this Form 10-K. The information required by this Section (a)(1) of Item 15 is set forth above in Item 8, Financial Statements and Supplementary Data. All financial statement schedules have been omitted, since the required information is not applicable or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements and notes thereto included in this Form 10-K.

98

SIGNATURES 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

BORGWARNER INC.

 By:   /s/ James R. Verrier

James R. Verrier

    President and Chief Executive Officer

Date: February 14, 2013

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on the 14th day of February, 2013.

Signature	Title
/s/ James R. Verrier James R. Verrier	President and Chief Executive Officer (Principal Executive Officer) and Director
/s/ Ronald T. Hundzinski Ronald T. Hundzinski	Vice President and Chief Financial Officer (Principal Financial Officer)
/s/ Steven G. Carlson Steven G. Carlson	Vice President and Controller (Principal Accounting Officer)
/s/ Timothy M. Manganello Timothy M. Manganello	Executive Chairman of the Board
/s/ Robin J. Adams Robin J. Adams	Vice Chairman of the Board, Executive Vice President and Chief Administrative Officer
/s/ Phyllis O. Bonanno Phyllis O. Bonanno	Director
/s/ David T. Brown David T. Brown	Director
/s/ Jan Carlson Jan Carlson	Director
/s/ Dennis C. Cuneo Dennis C. Cuneo	Director
/s/ Jere A. Drummond Jere A. Drummond	Director
/s/ John R. McKernan, Jr. John R. McKernan, Jr.	Director
/s/ Alexis P. Michas Alexis P. Michas	Director
/s/ Ernest J. Novak, Jr. Ernest J. Novak, Jr.	Director
/s/ Richard O. Schaum Richard O. Schaum	Director
/s/ Thomas T. Stallkamp Thomas T. Stallkamp	Director

EXHIBIT INDEX 

Exhibit Number		Description
	3.1/4.1	Restated Certificate of Incorporation of the Company, as amended, (incorporated by reference to Exhibit 3.1 of the Company's Quarterly Report on Form 10-Q for the quarter ended June 30,2012).
	3.2/4.2	Amended and Restated By-Laws of the Company, as amended, (incorporated by reference to Exhibit 3.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012).
	3.3	Certificate of Designation, Preferences and Rights of Series A Junior Participating Preferred Stock (incorporated by reference to Exhibit 4.3 to the Company's Registration Statement 333-172198 filed on February 11, 2011).
	3.4	Certificate of Ownership and Merger Merging BorgWarner Inc. into Borg-Warner Automotive, Inc.*
	4.3	Indenture, dated as of February 15, 1999 between Borg-Warner Automotive, Inc. and The Bank of New York Mellon Trust Company, N.A. (successor in interest to The First National Bank of Chicago), as trustee (incorporated by reference to Exhibit No. 4.5 to the Company's Registration Statement No. 333-172198 filed on February 11, 2011).
	4.4	Indenture, dated as of September 23, 1999 between Borg-Warner Automotive, Inc. and The Bank of New York Mellon Trust Company, N.A. (successor in interest to Chase Manhattan Trust Company, National Association), as trustee (incorporated by reference to Exhibit No. 4.6 to the Company's Registration Statement 333-172198 filed on February 11, 2011).
	4.5	First Supplemental Indenture between the Company and The Bank of New York Mellon Trust Company, N.A., as the indenture trustee (incorporated by reference to Exhibit 4.7 to the Company's Registration Statement 333-172198 filed on February 11, 2011).
	4.6	Third Supplemental Indenture dated as of September 16, 2010 between the Company and The Bank of New York Mellon Trust Company, N.A., as the indenture trustee (incorporated by reference to Exhibit 4.9 to the Company's Registration Statement 333-172198 filed on February 11, 2011).
	10.1	Credit Agreement dated as of June 30, 2011, among the Company, as borrower, the Administrative Agent named therein, and the Lenders that are parties thereto (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed June 30, 2011).
	10.2	Guaranty dated as of June 30, 2011 among Bank of America, N.A., as Administrative Agent and the Company's subsidiaries that are parties thereto (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed June 30, 2011).
	10.3	Receivables Sale Agreement dated as of December 21, 2009 among BorgWarner Emissions Systems Inc., BorgWarner Morse TEC Inc., BorgWarner Powdered Metals Inc., BorgWarner Thermal Systems Inc., BorgWarner TorqTransfer Systems Inc., BorgWarner Transmission Systems Inc., BorgWarner Turbo Systems Inc., and BWA Receivables Corporation (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed December 28, 2009).

A - 1

Exhibit Number		Description
	10.4	Receivables Purchase Agreement dated as of December 21, 2009 among BWA Receivables Corporation, as seller, the Company, as the collection agent, the purchasers from time to time party thereto, and Wachovia Bank, National Association, as administrative agent (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed December 28, 2009).
	10.5	Amendment No. 1 Receivables Purchase Agreement dated as of September 8, 2010, among BWA Receivables Corporation, as seller, the Company., as the collection agent and Wells Fargo Bank, N.A. (successor by merger to Wachovia Bank, National Association), as administrative agent (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q filed October 27, 2010).
	10.6	Amendment No. 2 Receivables Purchase Agreement dated as of November 1, 2012, among BWA Receivables Corporation, as seller, the Company, as the collection agent and Wells Fargo Bank, N.A. (successor by merger to Wachovia Bank, National Association), as administrative agent (incorporated by reference to Exhibit 10.1 to the Company's Current Report Form 8-K filed November 7, 2012).
	†10.7	BorgWarner Inc. 1993 Stock Incentive Plan, as amended (incorporated by reference to Exhibit No. 10.22 to the Company's Annual Report on Form 10-K for the year ended December 31, 2008).
	†10.8	BorgWarner Inc. Amended and Restated 2004 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2009).
	†10.9	First Amendment to the BorgWarner Inc. Amended and Restated 2004 Stock Incentive Plan (as amended and restated effective April 29, 2009) (incorporated by reference to Exhibit 99.2 to the Company's Current Report on Form 8-K filed November 13, 2009).
	†10.10	Second Amendment dated as of July 26, 2011, to the BorgWarner Inc. Amended and Restated 2004 Stock Incentive Plan (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2011).
	†10.11	Form of BorgWarner Inc. Amended and Restated 2004 Stock Incentive Plan Amended Performance Share Award Agreement (incorporated by reference to Exhibit 10.1 of the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2012).
	†10.12	Form of BorgWarner Inc. Amended and Restated 2004 Stock Incentive Plan Performance Units Award Agreement (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed March 31, 2009).
	†10.13	Form of BorgWarner Inc. Amended and Restated 2004 Stock Incentive Plan Restricted Stock Agreement for Employees.*
	†10.14	Form of BorgWarner Inc. Amended and Restated 2004 Stock Incentive Plan Stock Units Award Agreement Non-U.S. Employees.*
	†10.15	Form of BorgWarner Inc. 2004 Stock Incentive Plan Non-Qualified Stock Option Award Agreement.*
	†10.16	Borg-Warner Automotive, Inc. Executive Stock Performance Plan, Revised and Re-approved February 2, 2000.*

A - 2

Exhibit Number		Description
	†10.17	BorgWarner Inc. 2005 Executive Incentive Plan (as amended and restated) (incorporated by reference to Exhibit No. 10.19 to the Company's Annual Report on Form 10-K for the year ended December 31, 2008).
	†10.18	First Amendment dated as of July 27, 2011, to BorgWarner Inc. 2005 Executive Incentive Plan as amended and restated effective January 1, 2009 (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2011).
	†10.19	Borg-Warner Automotive, Inc. Management Incentive Bonus Plan dated January 1, 1994 (as amended and restated) (incorporated by reference to Exhibit No. 10.11 to the Company's Annual Report on Form 10-K for the year ended December 31, 2008).
	†10.20	Borg-Warner Automotive Inc. Retirement Savings Excess Benefit Plan dated January 27, 1993 (as amended and restated) (incorporated by reference to Exhibit No. 10.12 to the Company's Annual Report on Form 10-K for the year ended December 31, 2008).
	†10.21	Form of Amendment dated December 10, 2012 to the Borg-Warner Automotive Inc. Retirement Savings Excess Benefit Plan.*
	†10.22	BorgWarner Inc. Board of Directors Deferred Compensation Plan dated April 18, 1995 (as amended and restated) (incorporated by reference to Exhibit No. 10.14 to the Company's Annual Report on Form 10-K for the year ended December 31, 2008).
	†10.23	First Amendment dated as of November 22, 2010 to BorgWarner Inc. Board of Directors Deferred Compensation Plan (incorporated by reference to Exhibit 10.24 to the Company's Annual Report on Form 10-K for the year ended December 31, 2010).
	†10.24	Form of Amended and Restated Change of Control Employment Agreement for Executive Officers (incorporated by reference to Exhibit No. 10.15 to the Company's Annual Report on Form 10-K for the year ended December 31, 2008).
	†10.25	Form of Amended and Restated Change of Control Employment Agreement for Executive Officers (incorporated by reference to Exhibit No. 99.1 to the Company's Current Report on Form 8-K filed November 13, 2009).
	†10.26	BorgWarner Inc. 2004 Deferred Compensation Plan (as amended and restated) (incorporated by reference to Exhibit No. 10.2 to the Company's Annual Report on Form 10-K for the year ended December 31, 2008).
	10.27	Distribution and Indemnity Agreement dated January 27, 1993 between Borg-Warner Automotive, Inc. and Borg-Warner Security Corporation.*
	10.28	Assignment of Trademarks and License Agreement.*
	10.29	Amendment to Assignment of Trademarks and License Agreement.*
	21.1	Subsidiaries of the Company.*
	23.1	Independent Registered Public Accounting Firm's Consent.*

A - 3

Exhibit Number		Description
	31.1	Rule 13a-14(a)/15d-14(a) Certification by Principal Executive Officer.*
	31.2	Rule 13a-14(a)/15d-14(a) Certification by Principal Financial Officer.*
	32.1	Section 1350 Certifications.*
*Filed herewith.
† Indicates a management contract or compensatory plan or arrangement.

A - 4

EX-3.4

Exhibit 3.4

CERTIFICATE OF OWNERSHIP AND MERGER

MERGING

BORGWARNER INC.

(a Delaware corporation)

INTO

BORG-WARNER AUTOMOTIVE, INC.

Borg-Warner Automotive, Inc., a corporation duly organized and existing under and by virtue of the General Corporation Law of the State of Delaware,

DOES HEREBY CERTIFY:

FIRST: That Borg-Warner Automotive, Inc. (the "Corporation") and BorgWarner Inc. ("BW") are corporations duly organized and existing under and by virtue of the General Corporation Law of the State of Delaware.

SECOND: That the Corporation owns all of the issued and outstanding shares of the capital stock of BW.

THIRD: That the board of directors of the Corporation adopted the following resolutions at a meeting of the Board of Directors on February 2, 2000, and that such resolutions have not been rescinded and are in full force and effect on the date hereof:

"WHEREAS, BorgWarner Inc., a Delaware corporation ("BW"), is a wholly owned subsidiary of the Corporation;

WHEREAS, the board of directors of the Corporation deems it advisable and in the best interest of the Corporation to merge BW with and into the Corporation, with the Corporation begin the surviving corporation;

NOW, THEREFORE, BE IT RESOLVED, that BW be merged with and into the Corporation pursuant to Section 253 of the General Corporation Law of the State of Delaware, and that the Corporation succeed to and possess all the rights and assets of BW and be subject to all of the liabilities and obligations of BW;

RESOLVED, that the Corporation change its corporate name by changing Article 1 of the Restated Certificate of Incorporation of the Corporation to read in its entirety as follows:

"The name of the corporation (hereinafter called the "Corporation") is BorgWarner Inc."

RESOLVED, that each share of common stock, $1.00 par value per share, of BW issued and outstanding immediately prior to the effective date of the merger shall, upon the effective date and by virtue of the merger, be canceled without payment therefor;

RESOLVED, that the merger shall become effective on the date the Corporation files a Certificate of Ownership and Merger with respect to such merger with the Secretary of State of the State of Delaware;

RESOLVED, that the appropriate officers of the Corporation are hereby authorized and empowered to file the necessary documents with the Secretary of State of the State of Delaware, to incur the necessary expenses therefor and to take, or cause to be taken, all such further action and to execute and deliver or cause to be executed and delivered, in the name of and on behalf of the Corporation, all such further instruments and documents as any such officer may deem to be necessary or advisable in order to effect the purpose and intent of the foregoing resolutions and to be in the best interests of the Corporation (as conclusively evidenced by the taking of such action or the execution and delivery of such instruments and documents, as the case may be, by or under the direction of any such officer); and

RESOLVED, that the prior actions of the officers and directors of the Corporation in undertaking to carry out the transactions contemplated by the foregoing resolutions be, and the same hereby are, in all respects, approved, adopted, ratified and confirmed."

IN WITNESS WHEREOF, the Corporation has caused this Certificate to be signed by its duly authorized officer this 3rd day of February, 2000.

/s/Laurene H. Horiszny

Laurene H. Horiszny

Vice President & Secretary

EX-10.13

Exhibit 10.13

BORGWARNER INC.

AMENDED AND RESTATED

2004 STOCK INCENTIVE PLAN

Restricted Stock Agreement

For Employees

THIS Restricted Stock Agreement (the “Agreement”) dated as of ___________, 20__, by and between BORGWARNER INC., a Delaware corporation (the “Company”) and

__________________ (the “Employee”), is entered into as follows:

WITNESSETH:

WHEREAS, the Company has established the BorgWarner Inc. Amended and Restated 2004 Stock Incentive Plan, a copy of which is attached hereto or which has been previously provided to the Employee;

WHEREAS, the Compensation Committee of the Board of Directors of the Company has determined that the Employee be granted shares of Restricted Stock pursuant to the terms of the Plan and the terms of this Agreement;

NOW THEREFORE, in consideration of the foregoing and the mutual covenants hereinafter set forth:

1. Award of Restricted Stock. The Company hereby awards to Employee on this date,

XXXXX shares of its common stock, par value $.01 (“Stock”), subject to the terms and conditions set forth in the Plan and this Agreement (the “Award”).

2. Issuance of Share Certificates or Book Entry Record. The Company shall, as soon as administratively feasible after execution of this Agreement by the Employee, either (1) issue one or more certificates in the name of the Employee representing the shares of Restricted Stock covered by this Award, or (2) direct the Company's transfer agent for the Stock to make a book entry record showing ownership for the Restricted Stock in the name of the Employee, subject to the terms and conditions of the Plan and this Agreement.

3. Custody of Share Certificates During the Restriction Period. In the event that the Company issues one or more certificates for the Restricted Stock covered by this Award in lieu of book entry, during the Restriction Period described below:

a. The certificate or certificates shall bear the following legend:

“The transferability of this certificate and the shares of stock represented hereby are subject to the terms and conditions (including forfeiture) of the Amended and Restated 2004 Stock Incentive Plan and a Restricted Stock Agreement. Copies of such Plan and Restricted Stock Agreement are on file at the headquarters offices of BorgWarner Inc.”

b. The certificates shall be held in custody by the Company until the restrictions set forth herein shall have lapsed; and

c. As a condition to receipt of this Award, the Employee hereby authorizes the Company to issue such instructions to the transfer agent as the Company may deem necessary or proper to comply with the intent and purposes of this Agreement and the Plan, including their provisions regarding forfeiture, and that this paragraph shall be deemed to constitute the stock power, endorsed in blank, contemplated by Section 8(b) of the Plan.

4. Terms of the Plan Shall Govern. The Award is made pursuant to, and is subject to the Plan, including, without limitation, its provisions governing a Change in Control and Cancellation and Rescission of Awards. In the case of any conflict between the Plan and this Agreement, the terms of the Plan shall control. Unless otherwise indicated, all capitalized terms contained in this Agreement shall have the meaning assigned to them in the Plan.

5. Restriction Period. The Restriction Period for the Restricted Stock awarded to the Employee under this Agreement shall commence with the date of this Agreement set forth above and shall end, for the percentage of the shares indicated below, on the date when the Restricted Stock shall have vested in accordance with the following schedule:

DateVested Percentage

____________, 20__50% of the Awarded Shares

____________, 20__100% of the Awarded Shares

During the Restriction Period, the Employee shall not be permitted to sell, assign, transfer, pledge or otherwise encumber the Restricted Stock awarded herein.

6. Shareholder Rights. Subject to the restrictions imposed by this Agreement and the Plan, the Employee shall have, with respect to the Restricted Stock covered by this Award, all of the rights of a stockholder of the Company holding Stock, including the right to vote the shares. However, any cash dividends payable with respect to the Restricted Stock covered by this Award shall be automatically reinvested in additional Restricted Stock, based on the Restricted Stock's Fair Market Value as of the dividend payment date; the additional Restricted Stock so awarded shall vest at the same time as the Restricted Stock to which it relates. Dividends payable with respect to the Restricted Stock covered by this Award that are payable in Stock shall also be paid in the form of Restricted Stock and shall vest at the same time as the Restricted Stock to which it relates.

7. Death or Disability; Forfeiture of Shares. Upon the earlier of Employee's Termination of Employment during the Restriction Period or the Employee's giving of notice of the Employee's voluntary Termination of Employment during the Restriction Period, all shares of Stock covered by this Award that remain subject to restriction shall be forfeited by the Employee. However, if the Employee's employment is involuntarily terminated by the Company (other than for Cause) during the Restriction Period, in the event of the Employee's Termination of Employment by reason of death or Disability during the Restriction Period, or in the event of the Employee's Retirement during the Restriction Period, the Compensation Committee shall have the discretion to waive, in whole or in part, any or all remaining restrictions with respect to any or all of the Restricted Stock covered by this Award.

8. Change in Control. In the event of a Change in Control, the restrictions applicable to any shares of Stock covered by this Award shall lapse, and such shares of Stock shall become free of all restrictions and become fully vested and transferable.

9. Delivery of Shares. At the Employee's request, if and when the Restriction Period expires for a share or shares of Restricted Stock without a prior forfeiture, the Company will deliver certificate(s) for such share(s) to the Employee.

10. Acquisition of Shares For Investment Purposes Only. By his or her signature hereto, the Employee hereby agrees with the Company as follows:

a. The Employee is acquiring the shares of Stock covered by this Award for investment purposes only and not with a view to resale or other distribution thereof to the public in violation of the Securities Act of 1933, as amended (the “1933 Act”), and shall not dispose of any of the shares of the Stock in transactions which, in the opinion of counsel to the Company, violate the 1933 Act, or the rules and regulations thereunder, or any applicable state securities or “blue sky” laws;

b. If any of the shares of Stock covered by this Award shall be registered under the 1933 Act, no public offering (otherwise than on a national securities exchange, as defined in the Exchange Act) of any such shares shall be made by the Employee (or any other person) under such circumstances that he or she (or any other such person) may be deemed an underwriter, as defined in the 1933 Act; and

c. The Company shall have the authority to endorse upon the certificate or certificates representing the Stock covered by this Agreement such legends referring to the foregoing restrictions.

11. No Right to Continued Employment. Nothing contained in the Plan or this Agreement shall confer upon the Employee any right to continued employment nor shall it interfere in any way with the right of the Company or any subsidiary or Affiliate to terminate the employment of the Employee at any time.

12. Withholding of Taxes. No later than the date as of which an amount first becomes includible in the Employee's gross income for Federal income tax purposes, the Employee shall pay to the Company or make arrangements satisfactory to the Company regarding the payment of, any Federal, state, local or foreign taxes of any kind required by law to be withheld.

13. Governing Law. The Award made and actions taken under the Plan and this Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without taking into account its conflict of laws provisions.

14. Acceptance of Award. By the Employee's signature below, the Employee accepts the terms of the Award, as set forth in this Agreement and in the Plan. Unless the Company otherwise agrees in writing, this Agreement shall not be effective as a Restricted Stock Award if a copy of this Agreement is not signed and returned to the Company.

15. Binding Effect. Subject to the limitations stated above, this Agreement shall be binding upon and inure to the benefit of the parties' respective heirs, legal representatives successors and assigns.

*****

IN WITNESS WHEREOF, BORGWARNER INC. and the Executive have executed this Agreement to be effective as of the date first written above.

BORGWARNER INC.

By: _____________________________________________

Title: ____________________________________________

I acknowledge receipt of a copy of the Plan (either as an attachment hereto or that has been previously received by me) and that I have carefully read this Agreement and the Plan. I agree to be bound by all of the provisions set forth in this Agreement and the Plan.

_______________________________________        ____________________________________________    

DateEmployee

EX-10.14

Exhibit 10.14

BORGWARNER INC.

AMENDED AND RESTATED 2004 STOCK INCENTIVE PLAN

Stock Units Award Agreement - Non-U.S. Employees

THIS Award Agreement (the “Agreement”) dated as of ________, 20__, by and between BORGWARNER INC., a Delaware corporation (the “Company”) and ______________________ (the “Employee”), is entered into as follows:

WITNESSETH:

WHEREAS, the Company has established the BorgWarner Inc. Amended and Restated 2004 Stock Incentive Plan (the “Plan”), a copy of which is attached hereto or which has been previously provided to the Employee;

WHEREAS, the Compensation Committee of the Board of Directors (the “Compensation Committee”) of the Company has determined that the Employee be granted Stock Units pursuant to the terms of the Plan and the terms of this Agreement;

NOW THEREFORE, in consideration of the foregoing and the mutual covenants hereinafter set forth:

1. Award of Stock Units. The Company hereby awards to Employee on this date, XXXXXX Stock Units. Each Stock Unit awarded hereunder represents a contingent right to receive one share of the Company's common stock, par value $.01 (“Stock”) upon satisfaction of the conditions for vesting as provided in Paragraph 4 of this Agreement and subject further to the terms of the Plan and the additional terms and conditions of this Agreement (the “Award”). For purposes of this Agreement, “Company” shall include the subsidiary or Affiliate that employs the Employee.

2. Stock Units. The Company shall credit the Employee's Stock Units to a Stock Units account established and maintained for the Employee on the books of the Company payable in shares of Stock or cash. The account shall constitute the record of the Stock Units awarded to Employee under this Agreement, is solely for accounting purposes, and shall not require a segregation of any Company assets.

3. Dividend Equivalents. Whenever the Company pays any cash or other dividend or makes any other distribution in respect of the Stock, the Employee's account shall be credited with an additional number of Stock Units (including fractions thereof) determined by multiplying (i) the number of Stock Units credited to the Employee on the dividend record date by (ii) the dividend paid on each share of Stock, and dividing the result of such multiplication by (iii) the Fair Market Value of a share of Stock on the dividend payment date. Credits shall be made effective as of the date of the dividend or other distribution in respect of the Stock. Dividend equivalents credited to the Employee's account shall be subject to the same restrictions as the Stock Units in respect of which the dividends or other distribution were credited, including, without limitation, the Award's vesting conditions and distribution provisions.

4. Vesting of Stock Units. Subject to the terms and conditions of this Agreement and to the provisions of the Plan, the Stock Units shall vest in accordance with the following schedule:

DateVested Percentage

____________, 20__50% of the Awarded Units

____________, 20__100% of the Awarded Units

Provided however, that:

a. In the event of the Employee's Termination of Employment for Cause, the Employee shall forfeit all of the Stock Units awarded hereby and all rights to receive Stock in payment of such Stock Units;

b. In the event of the Employee's voluntary Termination of Employment, the Employee shall forfeit all rights to Stock Units not yet vested as of the date of Employee's Termination of Employment and all rights to receive Stock in payment of such forfeited Stock Units;

c. In the event of a Change in Control, any remaining restrictions applicable to any then unvested Stock Units shall lapse, and such Stock Units shall become free of all restrictions and become fully vested; and

d. In the event of the Employee's death or disability, or in the event of the Employee's involuntary Termination of Employment without Cause or Retirement prior to the vesting of the Stock Units, the Compensation Committee shall have the discretion to waive, in whole or in part, any or all remaining payment limitations with respect to the Stock Units awarded under this Agreement.

For purposes of this Agreement, if the Employee is a local national of and employed in a country that is a member of the European Union, the grant of the Stock Units and the terms and conditions governing the Award are intended to comply with the age discrimination provisions of the EU Equal Treatment Framework Directive, as implemented into local law (the “Age Discrimination Rules”). To the extent a court or tribunal of competent jurisdiction determines that any provision of the Award is invalid or unenforceable, in whole or in part, under the Age Discrimination Rules, the Company, in its sole discretion, shall have the power and authority to revise or strike such provision to the minimum extent necessary to make it valid and enforceable to the full extent permitted under local law.

5. Distribution of Stock. The Company shall deliver Stock to the Employee in settlement of the Stock Units awarded by this Agreement equal to the number of the Employee's vested Stock Units (including any additional Stock Units acquired as a result of dividend equivalents that have vested). Payment shall be made to the Employee as soon as practicable on or after the specified vesting date, but in no event no later than December 31 of the year in which the vesting period ends. Notwithstanding the foregoing, the Company may, in its sole discretion, settle the Stock Units in the form of: (i) a cash payment to the extent settlement in shares of Stock (1) is prohibited under local law, (2) would require you or the Company to obtain the approval of any governmental and/or regulatory body in the Employee's country of residence (and country of employment, if different) or (3) is administratively burdensome;

or (ii) shares of Stock, but require the Employee to immediately sell such shares (in which case, this Agreement shall give the Company the authority to issues sales instructions on behalf of the Employee).

6. Repatriation; Compliance with Laws. The Employee agrees, as a condition of the grant of the Stock Units, to repatriate all payments attributable to the Stock Units and/or cash acquired under the Plan (including, but not limited to, dividends, dividend equivalents, and any proceeds derived from the sale of the Stock acquired pursuant to the Stock Units) in accordance with all foreign exchange rules and regulations applicable to the Employee. In addition, the Employee also agrees to take any and all actions, and consent to any and all actions taken by the Company and its subsidiaries and Affiliates, as may be required to allow the Company and its subsidiaries and Affiliates to comply with all laws, rules and regulations applicable to the Employee. Finally, the Employee agrees to take any and all actions as may be required to comply with the Employee's personal legal and tax obligations under all laws, rules and regulations applicable to the Employee.

7. Non-transferability. The Stock Units awarded under this Agreement, and any rights and privileges pertaining thereto, are not subject to anticipation, alienation, sale, transfer, assignment, pledge, or encumbrance by the Employee or by the Employee's beneficiary, in any manner, by operation of law or otherwise, and shall not be subject to execution, attachment or similar process.

8. No Rights as a Stockholder. Prior to the actual delivery of Stock to the Employee in settlement of the Stock Units awarded and vested hereunder (if any), the Employee shall have no rights as a stockholder with respect to the Stock Units or any underlying Stock.

9. No Right to Continued Employment. Nothing contained in the Plan or this Agreement shall confer upon the Employee any right to continued employment nor shall it interfere in any way with the right of the Company to terminate the employment of the Employee at any time.

10. Discretionary Nature of Plan; No Vested Rights. The Employee acknowledges and agrees that the Plan is discretionary in nature and limited in duration, and may be amended, canceled, or terminated by the Company, in its sole discretion, at any time. The grant of the Stock Units under the Plan is a one-time benefit and does not create any contractual or other right to receive an award or benefits in lieu of Stock Units in the future. Future awards, if any, will be at the sole discretion of the Company, including, but not limited to, the form and timing of an award, the number of shares of Stock subject to the award, and the vesting provisions.

11. Termination Indemnities. The value of the Stock Units is an extraordinary item of compensation outside the scope of the Employee's employment contract, if any. As such, the Stock Units are not part of normal or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension, or retirement benefits or similar payments.

12. Private Placement. The grant of the Stock Units is not intended to be a public offering of securities in the Employee's country of residence but instead is intended to be a private placement. As a private placement, the Company has not submitted any registration statement, prospectus or other filings with the local securities authorities (unless otherwise

required under local law), and the grant of the Stock Units is not subject to the supervision of the local securities authorities.

13. Consent to Collection, Processing and Transfer of Personal Data. Pursuant to applicable personal data protection laws, the Company hereby notifies the Employee of the following in relation to the Employee's personal data and the collection, processing and transfer of such data in relation to the Company's grant of this Award and the Employee's participation in the Plan. The collection, processing and transfer of the Employee's personal data are necessary for the Company's administration of the Plan and the Employee's participation in the Plan. The Employee's denial and/or objection to the collection, processing and transfer of personal data may affect the Employee's participation in the Plan. As such, the Employee voluntarily acknowledges and consents (where required under applicable law) to the collection, use, processing and transfer of personal data as described herein.

The Company holds certain personal information about the Employee, including name, home address and telephone number, date of birth, social security number or other employee identification number, salary, nationality, job title, any shares of Stock or directorships held in the Company, details of all Stock Units, or any other entitlement to shares of Stock awarded, canceled, purchased, vested, unvested or outstanding in the Employee's favor, for the purpose of managing and administering the Plan (“Data”). The Data maybe provided by the Employee or collected, where lawful, from third parties, and the Company will process the Data for the exclusive purpose of implementing, administering and managing the Employee's participation in the Plan. The Data processing will take place through electronic and non-electronic means according to logic and procedures strictly correlated to the purposes for which Data are collected and with confidentiality and security provisions as set forth by applicable laws and regulations in the Employee's country of residence (and country of employment, if different). Data processing operations will be performed minimizing the use of personal and identification data when such operations are unnecessary for the processing purposes sought. Data will be accessible within the Company's organization only by those persons requiring access for purposes of the implementation, administration and operation of the Plan and for the Employee's participation in the Plan.

The Company will transfer Data as necessary for the purpose of implementation, administration and management of the Employee's participation in the Plan, and the Company may further transfer Data to any third parties assisting the Company in the implementation, administration and management of the Plan. These recipients may be located in the European Economic Area, or elsewhere throughout the world, such as the United States. The Employee hereby authorizes (where required under applicable law) them to receive, possess, use, retain and transfer the Data, in electronic or other form, for purposes of implementing, administering and managing the Employee's participation in the Plan, including any requisite transfer of such Data as may be required for the administration of the Plan and/or the subsequent holding of shares of Stock on the Employee's behalf to a broker or other third party with whom the Employee may elect to deposit any shares of Stock acquired pursuant to the Plan.

The Employee may, at any time, exercise his or her rights provided under applicable personal data protection laws, which may include the right to (a) obtain confirmation as to the existence of the Data, (b) verify the content, origin and accuracy of the Data, (c) request the integration, update, amendment, deletion, or blockage (for breach of applicable laws) of the Data, and

(d) to oppose, for legal reasons, the collection, processing or transfer of the Data which is not necessary or required for the implementation, administration and/or operation of the Plan and the Employee's participation in the Plan. The Employee may seek to exercise these rights by contacting the Employee's local HR manager or the Company's Human Resources Department.

14. Terms of the Plan Shall Govern. The Award is made pursuant to, and is subject to the Plan, including, without limitation, its provisions governing a Change in Control and Cancellation and Rescission of Awards. In the case of any conflict between the Plan and this Agreement, the terms of the Plan shall control. Unless otherwise indicated, all capitalized terms contained in this Agreement shall have the meaning assigned to them in the Plan.

15. Tax and Social Insurance Contributions Withholding.Regardless of any action the Company take with respect to any or all income tax (including U.S. federal, state and local taxes and/or non-U.S. taxes), social insurance, payroll tax, payment on account or other tax-related withholding (“Tax-Related Items”), the Employee acknowledges that the ultimate liability for all Tax-Related Items legally due by the Employee is and remains the Employee's responsibility, and that the Company (i) makes no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Stock Units, including the grant of the Stock Units, the vesting of the Stock Units, the subsequent sale of any Stock acquired pursuant to the Stock Units and the receipt of any dividends or dividend equivalents; and (ii) does not commit to structure the terms of the grant or any aspect of the Stock Units to reduce or eliminate the Employee's liability for Tax-Related Items.

Prior to the delivery of the Stock upon the vesting of the Stock Units, if any taxing jurisdiction requires withholding of Tax-Related Items, the Company may withhold a sufficient number of whole shares of Stock otherwise issuable upon the vesting of the Stock Units that have an aggregate Fair Market Value (as defined under the Plan) sufficient to pay the minimum Tax-Related Items required to be withheld with respect to the Shares. The cash equivalent of the Shares withheld will be used to settle the obligation to withhold the Tax-Related Items (determined by reference to the closing price of the Stock on the New York Stock Exchange on the applicable vesting date). No fractional shares of Stock will be withheld or issued pursuant to the grant of the Stock Units and the issuance of Stock hereunder. Alternatively, the Company may, in its discretion, withhold any amount necessary to pay the Tax-Related Items from the Employee's salary or other amounts payable to the Employee, with no withholding in shares of Stock. In the event the withholding requirements are not satisfied through the withholding of shares of Stock or through the Employee's salary or other amounts payable to the Employee, no shares of Stock will be issued upon vesting of the Stock Units unless and until satisfactory arrangements (as determined by the Committee) have been made by the Employee with respect to the payment of any Tax-Related Items which the Companydetermines, in its sole discretion, must be withheld or collected with respect to such Stock Units. By accepting this grant of Stock Units, the Employee expressly consents to the withholding of shares of Stock and/or cash as provided for hereunder. All other Tax-Related Items related to the Stock Units and any Stock delivered in payment thereof is the Employee's sole responsibility.

16. Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to the Stock Units or other awards granted to the Employee under the Plan by electronic means. The Employee hereby consents to receive such documents by electronic

delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.

17. English Language. The Employee acknowledges and agrees that it is the Employee's express intent that this Agreement, the Plan and all other documents, notices and legal proceedings entered into, given or instituted pursuant to the Stock Units, be drawn up in English. If the Employee has received this Agreement, the Plan or any other documents related to the Stock Units translated into a language other than English, and if the meaning of the translated version is different than the English version, the English version shall control.

18. Addendum. Notwithstanding any provisions herein to the contrary, the Stock Units shall be subject to any special terms and conditions for the Employee's country of residence (and country of employment, if different), as may be set forth in an addendum to this Agreement (the “Addendum”). Further, if the Employee transfers the Employee's residence and/or employment to another country reflected in an Addendum, the special terms and conditions for such country will apply to the Employee to the extent the Company determines, in its sole discretion, that the application of such terms and conditions is necessary or advisable in order to comply with local law or to facilitate the operation and administration of theStock Units and the Plan (or the Company may establish additional special terms and conditions as may be necessary or advisable to accommodate the Employee's transfer). In all circumstances, any applicable Addendum shall constitute part of this Agreement.

19. Additional Requirements. The Company reserves the right to impose other requirements on the Stock Units, any shares of Stock acquired pursuant to the Stock Units, and the Employee's participation in the Plan, to the extent the Company determines, in its sole discretion, that such other requirements are necessary or advisable in order to comply with local law or to facilitate the operation and administration of the Plan. Such requirements may include (but are not limited to) requiring the Employee to sign any agreements or undertakings that may be necessary to accomplish the foregoing.

20. Governing Law. The Award made and actions taken under the Plan and this Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without taking into account its conflict of law's provisions.

21. Binding Effect. Subject to the limitations stated above, this Agreement shall be binding upon and inure to the benefit of the parties' respective heirs, legal representatives successors and assigns.

22. Changes in Capital or Corporate Structure. In the event of any merger, reorganization, consolidation, recapitalization, stock dividend, stock split, extraordinary distribution with respect to the Stock or other change in corporate structure affecting the Stock, the number of Stock Units awarded under this Agreement shall be adjusted pursuant to Section 4(e) of the Plan.

23. Entire Agreement. This Agreement is the entire agreement between the parties hereto, and all prior oral and written representations are merged into this Agreement. The headings in this Agreement are inserted for convenience and identification only and are not intended to describe, interpret, define or limit the scope, extent, or intent of this Agreement or any provision hereof.

24. Notices. Any notice or other communication required or permitted under this Agreement must be in writing and must be delivered personally, sent by certified, registered or express mail, or sent by overnight courier, at the sender's expense. Notice shall be deemed given when delivered personally or, if mailed, three days after the date of deposit in the United States mail or, if sent by overnight courier, on the regular business day following the date sent. Notice to the Company should be sent to Attention: Vice President, Human Resources, BorgWarner World Headquarters, 3850 Hamlin Road, Auburn Hills, MI, USA 48326. The Company may change the person and/or address to whom the Employee must give notice under this paragraph by giving the Employee written notice of such change, in accordance with the procedures described above. Notices to or with respect to the Employee shall be directed to the Employee, or to the Employee's executors, personal representatives or distributees, if the Employee is deceased, or the assignees of the Employee, at the Employee's last home address on the records of the Company.

25. Amendment of the Agreement. The Company and the Employee may amend this Agreement only by a written instrument signed by both parties.

26. Counterparts. This Agreement may be executed in one or more counterparts, all of which together shall constitute but one agreement.

IN WITNESS WHEREOF, BORGWARNER INC. and the Employee have executed this Agreement to be effective as of the date first written above.

BORGWARNER INC.

By: ________________________________________________

Title: _______________________________________________

I acknowledge receipt of a copy of the Plan (either as an attachment hereto or that has been previously received by me) and that I have carefully read this Agreement and the Plan. I agree to be bound by all of the provisions set forth in this Agreement and the Plan.

_____________________________________________        ____________________________________________            

DateEMPLOYEE

EX-10.15

Exhibit 10.15

BORGWARNER INC.

2004 STOCK INCENTIVE PLAN

NON-QUALIFIED STOCK OPTION AWARD AGREEMENT

Stock Option Grant Awarded to _____________________

Column (1) Date of Grant:	Column (2) Number of Shares Subject to Stock Option:	Column (3) Exercise Price Per Share:	Column (4) Type of Stock Option:	Column (5) Expiration Date of Stock Option:	Column (6) Cumulative Percentage Exercise Schedule of Stock Option:
M/D/Yr	# Shares	<$>	Non-Qualified Stock Option	M/D/Yr	___% on M/D/Yr ___% on M/D/Yr

1. Grant of Stock Option. Pursuant to Section 6 of the Borg Warner, Inc. 2004 Stock Incentive Plan, (the "Plan"), BorgWarner Inc., a Delaware corporation, hereby grants to the individual named above, an employee of the Company or an Affiliate (the "Optionee"), an option to purchase from the Company the number of its shares of common stock, $.01 par value shown above in Column 2 of this Award Agreement, upon and subject to the terms and conditions set forth in the Plan and this Award Agreement (the "Shares"). Capitalized terms not defined herein shall have the meanings specified in the Plan.

2. Date of Grant. The date of grant of this Stock Option is the date set forth above in Column 1.

3. Type of Stock Option. This Stock Option is not intended to qualify as an incentive stock option within the meaning of section 422 of the Internal Revenue Code, and this Award Agreement shall be interpreted and treated consistently with the characterization of the Stock Option as a Non-Qualified Stock Option.

4.Stock Option Price. The option price per share of Stock covered by the Stock Option shall be the price set forth above in Column 3 of this Award Agreement.

5. Expiration Date. Unless the Stock Option is previously terminated pursuant to the terms of this Award Agreement and the Plan, the Stock Option granted by this Award Agreement shall terminate on the date shown above in Column 5 of this Award Agreement.

6. Exercise of Stock Option.

A. The Stock Option shall become exercisable as of the date set forth above in Column 6 according to the percentage shown for such date ("Exercisable Date"); provided that at all times during the period between Date of Grant and the Exercisable Date the Optionee has been employed by the Company or an Affiliate. The Committee (as such term is defined in the Plan) has, in its sole discretion, the authority to, in whole or in part, accelerate the exercisability of the Stock Option. The Stock Option may be exercised only to purchase whole Shares and in no case may a fraction of a Share be purchased. The right of the Optionee to purchase Shares may be exercised in whole at any time or in part from time to time after (and to the extent) the Stock Option has become exercisable and prior to the tenth anniversary of the Date of Grant; provided, however, that no portion of the Stock Option shall be exercisable unless (except as hereinafter provided in this Section 6) the Optionee at the time of exercise is, and at all times from the Date of Grant has been employed by the Company or an Affiliate. A Termination of Employment (as such term is defined in the Plan) shall not be deemed to have occurred if the transfer, promotion, reassignment or similar personnel move of the Optionee, at the request of the Company or an Affiliate, from any one entity within the Company or Affiliate to another entity within the Company or Affiliate results in the Optionee being immediately employed with such other entity.

B. If the Optionee dies while employed by the Company or an Affiliate, the Optionee's estate shall be permitted to exercise the Stock Option to the extent exercisable on the date of the Optionee's death or to the extent that the exercisability of the Stock Option may be accelerated by the Committee. The Stock Option may be exercised for a period of one year from the date of such death or until the expiration of the Stock Option, whichever period is shorter.

C. If the Optionee incurs a Termination of Employment by reason of Disability (as such term is defined in the Plan), the Optionee shall be permitted to exercise the Stock Option to the extent exercisable at the time of the termination or to the extent that the exercisability of the Stock Option may be accelerated by the Committee. If an Optionee incurs a Termination of Employment by reason of Retirement (as such term is defined in the Plan), the portion of the Stock Option Award not exercisable under this Agreement at such time shall become accelerated on the date of the Optionee's Retirement and become immediately exercisable. In the event of a Termination of Employment by reason of Disability or Retirement, the Stock Option may be exercised for a period of three years from the date of such termination or until the expiration of the Stock Option, whichever period is the shorter; provided, however, that if the three year period is the applicable period and the Optionee dies within such three year period, any unexercised Stock Option held by such Optionee shall, notwithstanding the expiration of such three year period, continue to be exercisable to the extent to which it was exercisable at the time of death for a period of twelve (12) months from the date of such death or until the expiration of the Stock Option, whichever period is the shorter.

D. If the Optionee incurs a Termination of Employment and such Termination of Employment is involuntary and without Cause (as such term is defined in the Plan), the Optionee shall be permitted to exercise the Stock Option to the extent exercisable at the time of the termination or to the extent that the exercisability of the Stock Option may be accelerated by the Committee. The Stock Option may be exercised for a period of one year from the date of such termination or until the expiration of the Stock Option, whichever period is shorter; provided, however, that if the one year period is the applicable period and the Optionee dies within such one year period, any unexercised Stock Option held by such Optionee

shall, notwithstanding the expiration of such one year period, continue to be exercisable to the extent to which it was exercisable at the time of death for a period of twelve (12) months from the date of such death or until the expiration of the Stock Option, whichever period is the shorter.

E. If the Optionee incurs a Termination of Employment for any reason other than as set forth in Sections 6(B), (C) and (D) above and such Termination of Employment is without Cause, the Optionee shall be permitted to exercise the Stock Option to the extent exercisable at the time of the Termination of Employment. The Stock Option may be exercised for a period of five (5) business days from the date of such termination or until the expiration of the Stock Option, whichever period is the shorter.

F. If the Optionee incurs a Termination of Employment which is for Cause, the Stock Option held by the Optionee shall terminate at the time of the Optionee's Termination of Employment.

7. Transferability of Stock Option. The Stock Option and this Stock Option Award Agreement shall be transferable by the Optionee: (i) by will or by the laws of descent and distribution, (ii) pursuant to a qualified domestic relations order (as such term is described in the Plan), or (iii) pursuant to a gift to the Optionee's "immediate family" members (as such term is described in the Plan) directly or indirectly by means of a trust, partnership, or limited liability company, subject in the case of all transfers pursuant to clause (iii), above, to the review of the Committee or its designee. A Stock Option shall be exercised, only by the Optionee, by the guardian or legal representative of the Optionee, or permitted transferee, it being understood that the terms "holder" and "Optionee" include any such guardian, legal representative or beneficiary or permitted transferee. A permitted transferee may transfer a Stock Option only by will or by the laws of descent and distribution.

8. Exercise of Stock Option; Payment.

A. If the Optionee is then employed by the Company or an Affiliate and elects to exercise all or part of the Stock Option which is exercisable, he or she shall deliver to the Company a written notice, in a form acceptable to the Committee, specifying the number of Shares to be purchased under the Stock Option and an exercise date, not more than thirty days after the date of such notice, upon which such Shares shall be purchased and payment therefor shall be made.

B. If the Optionee's employment with the Company or an Affiliate is terminated for any of the reasons set forth in Section 6(B) through (E) above, then any election to exercise all or part of the Stock Option which is exercisable shall be done in the following manner: the Optionee or his or her estate shall deliver to the Company a written notice, in a form acceptable to the Committee, specifying the number of Shares to be purchased under the Stock Option and an exercise date, within the exercise period set forth for such reason in Section 6(B) through (E) above and with respect to Section 6(B) through (D), not more than thirty days after the date of such notice, upon which such Stock Option Shares shall be purchased and payment therefor shall be made.

C. On the exercise date the Optionee has specified in the notice described in Section 8(A) or 8(B) above, the Optionee or his or her estate shall deliver to the Company (i) cash, certified or bank check or such other instrument as the Company may accept, made payable to the order of the Company in an amount equal to the product of the number of Shares specified to be purchased in such notice and the Option Price (the "Option Exercise Amount") and within five days thereafter payment, by cash, certified or bank check or such other instrument as the Company may accept, made payable to the order of the Company, in such amount as the Company in its sole discretion deems necessary to satisfy its liability to withhold federal, state or local income or other taxes incurred by reason of the exercise of the Stock

Option or the transfer of Shares thereupon (collectively the "Applicable Tax"), or (ii) unrestricted Shares owned by the Optionee for more than six months prior to the exercise date, the value of which in whole Shares shall not exceed the Option Exercise Amount, and within 5 days thereafter unrestricted Shares owned by the Optionee, the value of which in whole Shares shall not exceed the Applicable Tax, the value of such Shares for the purpose of paying the Option Exercise Amount and the Applicable Tax (collectively the "Option Payment Amount") being the Fair Market Value (as such term is defined in the Plan) of the Shares on the exercise date, or (iii) a written request to the Company to withhold, from the number of Shares otherwise issuable upon the exercise of the Stock Option, that whole number of Shares having an aggregate Fair Market Value which does not exceed the Applicable Tax, or (iv) a combination of the above described forms of payment that equals the Option Payment Amount; provided that if the Optionee is subject to Section 16 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), then (y) such Optionee shall have the right to make payment of the Option Payment Amount only at the time and in the manner specified in Section 16 of the Exchange Act and the rules and regulations thereunder and (z) the Company shall have the right to retain or sell without notice, or to demand surrender of, Shares or Shares issuable upon the exercise of the Stock Option which have a Fair Market Value on the exercise date equal to the amount determined by the Company as necessary to satisfy any Applicable Tax. Upon receipt in full of the Option Payment Amount (including in the case of payment by check, the receipt by the Company of collected funds), the Optionee or his or her estate shall be deemed to be the owner of Shares so purchased and certificates representing such Shares shall thereupon be delivered to the Optionee or his or her estate. If the Company has entered into agreement(s) with one or more brokerage firms to enable the Optionee to facilitate payment for the Shares through such brokerage firm(s), the Optionee or his or her estate may make use of such coordinated procedure if he or she elects and if allowed by law.

9.     Specific Restrictions Upon Shares. The Optionee hereby agrees with the Company as follows:

A. The Optionee shall acquire the Shares issuable upon the exercise of the Stock Option (the "Stock Option Shares") for investment purposes only and not with a view to resale or other distribution thereof to the public in violation of the Securities Act of 1933, as amended (the "1933 Act"), and shall not dispose of any Stock Option Shares in transactions which, in the opinion of counsel to the Company, violate the 1933 Act, or the rules and regulations thereunder, or any applicable state securities or "blue sky" laws;

B. If any Stock Option Shares shall be registered under the 1933 Act, no public offering (otherwise than on a national securities exchange, as defined in the Exchange Act) of any such Stock Option Shares shall be made by the Optionee (or any other person) under such circumstances that he or she (or such other person) may be deemed an underwriter, as defined in the 1933 Act; and

C. The Company shall have the authority to endorse upon the certificate or certificates representing the Stock Option Shares such legends referring to the foregoing restrictions.

10. Change in Control Cash Out. During the sixty (60) day period from and after a Change in Control (as such term is defined in the Plan), the Optionee shall have the right, whether or not the Stock Option is fully exercisable and in lieu of the payment of the exercise price for the Shares being purchased under this Stock Option, to elect to surrender, by giving notice to the Company, all or part of this Stock Option to the Company and to receive cash, payable by the Company, within thirty (30) days of such notice, in an amount equal to the amount by which the Change in Control Price (as such term is defined in the Plan) per Share on the date of such election shall exceed the Option Price multiplied by the number of Shares surrendered under this Stock Option; less such amount as the Company deems necessary to satisfy its liability to withhold federal, state or local income or other taxes incurred by reason of the number of Shares surrendered; provided, however, that if the Change in Control is within six (6) months of the Date

of Grant to an Optionee who is an officer or director of the Company and subject to Section 16(b) of the Exchange Act, then no such election shall be made by such Optionee with respect to this Stock Option prior to six (6) months from the Date of Grant.

11. Adjustments to Shares. In the event of any merger, reorganization, consolidation, recapitalization, stock dividend, stock split, extraordinary distribution with respect to the Stock or other change in corporate structure affecting the Stock, the Committee or Board of Directors of the Company may make such substitution or adjustments in the aggregate number, kind and option price of shares subject to this Stock Option Award Agreement and/or such other substitutions or adjustments in the consideration receivable upon exercise as it may determine to be appropriate in its sole discretion.

12.Notices. Any written notice required or permitted under this Stock Option Award Agreement shall be deemed given when delivered personally, as appropriate, either to the Optionee or to the Executive Compensation Department of the Company, or when deposited in a United States Post Office as registered mail, postage prepaid, addressed, as appropriate, either to the Optionee at his or her address set forth above or such other address as he or she may designate in writing to the Company, or to the Attention: Executive Compensation, BorgWarner Inc., at its headquarters office or such other address as the Company may designate in writing to the Optionee.

13. Failure to Enforce Not a Waiver. The failure of the Company to enforce at any time any provision of this Stock Option Award Agreement shall in no way be construed to be a waiver of such provision or of any other provision hereof.

14. Governing Law. All questions concerning the construction, validity and interpretation of this Stock Option Award Agreement shall be governed by and construed according to the internal law, and not the law of conflicts, of the State of Delaware, except that questions concerning the relative rights of the Company and the Optionee with respect to the Shares, shall be governed by the corporate law of the State of Delaware.

15. Provisions of Plan. The Stock Option provided for herein is granted pursuant to the Plan, and said Stock Option and this Stock Option Award Agreement are in all respects governed by the Plan and subject to all of the terms and provisions thereof, whether such terms and provisions are incorporated in this Stock Option Award Agreement solely by reference or are expressly cited herein. In the case of any conflict between the Plan and this Stock Option Award Agreement, the terms of the Plan shall control.

IN WITNESS WHEREOF, the Company has executed this Stock Option Award Agreement in duplicate on the day and year first above written.

BORGWARNER INC.

By: ________________________________

Chairman & Chief Executive Officer

I acknowledge receipt of a copy of the Plan (either as an attachment hereto or that has been previously received by me) and that I have carefully read this Stock Option Award Agreement and the Plan. I agree to be bound by all of the provisions set forth in this Stock Option Award Agreement and the Plan.

_________________________________________________________________

Date Employee's Signature

__________________________________________________________________

SS# (U.S. Employees Only) Print Name

___________________________________________________________________

Home Street Address City, State, Zip, Country

EX-10.16

Exhibit 10.16

BORG-WARNER AUTOMOTIVE, INC.

EXECUTIVE STOCK PERFORMANCE PLAN

Revised and Re-approved, February 2, 2000

TABLE OF CONTENTS

I. GENERAL	1
1.1. Purpose	1
1.2. Effective Date	1
1.3. Termination Date	1
II. DEFINITIONS	1
2.1. "Beneficiary"	1
2.2. "Board of Directors"	1
2.3. "Change of Control"	1
2.4. "Change of Control Price"	2
2.5. "Committee"	2
2.6. "Common Stock"	2
2.7. "Company"	3
2.8. "Disability"	3
2.9. "Normal Retirement"	3
2.10. "Participant"	3
2.11. "Peer Group Companies"	3
2.12. "Performance Award"	3
2.13. "Performance Period"	3
2.14. "Plan"	3
2.15. "Shareholders"	3
2.16. "Termination for Cause"	3
2.17. "Total Shareholder Return of the Company"	3
2.18. "Total Shareholder Return of a Peer Group Company"	4
III. ELIGIBILITY	4
IV. PLAN DESIGN	4
4.1. Performance Period	4
4.2. Target and Performance Awards	4
4.3. Available Shares	5
4.4. Adjustment to Shares	5
4.5. Committee Discretion to Adjust Awards	5
V. PAYMENT	6
5.1. Timing and Form of Payment	6
5.2. Tax Withholding	6
5.3. Beneficiary Designation	6
5.4. Foreign Jurisdictions	6
5.5. Distribution upon Termination of Employment	6
VI. ADMINISTRATION	7
6.1. Committee	7

6.2. General Rights, Powers, and Duties of Committee	7
6.3. Information to be Furnished to Committee	8
6.4. Responsibility	8
VII. AMENDMENT AND TERMINATION	8
7.1. Amendment	8
7.2. Company's Right to Terminate	8
VIII. MISCELLANEOUS	8
8.1. No Implied Rights; Rights on Termination of Service	8
8.2. No Right to Company Assets	9
8.3. No Employment Rights	9
8.4. Other Benefits	9
8.5. Offset	9
8.6. Non-assignability	9
8.7. Notice	9
8.8. Governing Laws	10
IX. CHANGE OF CONTROL	10
9.1. Performance Awards Upon a Change of Control	10
9.2. Payment of Performance Awards After a Change of Control	10

I. GENERAL

1.1 Purpose. The purpose of the Executive Stock Performance Plan is to motivate senior management to improve the long-term performance of the Company as a whole, relative to its peer companies, so that the Company will continue to grow in value and serve the long-term interests of its Shareholders.

1.2 Effective Date. The Plan shall become effective as of April 18, 1995, subject to its approval by the Shareholders of Borg-Warner Automotive, Inc. at the 1996 Annual Meeting of Shareholders. No Performance Awards shall be exercisable or payable before approval of the Plan has been obtained from the Shareholders.

1.3 Termination Date. No contingent Performance Awards shall be assigned under the Plan after December 31, 2004; provided, however, that the Committee may cease the assignment of contingent Performance Awards at any time prior to that date. The termination of the assignment of contingent Performance Awards shall not cancel, reduce or otherwise impair the rights of Participants to receive any contingent Performance Awards assigned prior to such termination, and the Termination Date of the Plan shall be the first date as of which all Performance Awards assigned hereunder have been distributed to Participants.

II. DEFINITIONS

Where appropriate, references in this Plan to the masculine shall include the feminine, and references to the singular shall include the plural.

2.1 “Beneficiary” means the person or persons so designated by a Participant pursuant to Section 5.3.

2.2 “Board of Directors” means the Board of Directors of Borg-Warner Automotive, Inc

2.3 “Change of Control” means:

(a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (i) the then outstanding shares of Common Stock (the “Outstanding Company Common Stock”) or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change of Control: (W) any acquisition directly from the Company other than an acquisition by virtue of the exercise of a conversion privilege unless the security being so converted was itself acquired directly from the Company by the holder exercising such conversion privilege, (V) any acquisition by the Company, (Y) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (Z) any acquisition by any corporation

1

pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (c) of this Section 2.3; or

(b) Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

(c) Approval by the shareholders of the Company of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company or the acquisition of assets of another corporation (each of the foregoing, a “Business Combination”), in each case, unless, following such Business Combination, (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

(d) Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

2.4 “Change of Control Price” means the higher of (i) the highest reported sales price, regular way, of a share of Common Stock in any transaction reported on the New York Stock Exchange Composite Tape or other national exchange on which such shares are listed or on NASDAQ during the 60-day period prior to and including the date of a Change of Control or (ii) if the Change of Control is the result of a tender or exchange offer or a Business Combination, the highest price per share of Common Stock paid in such tender or exchange offer or Business Combination.

2.5 “Committee” means the committee of the Company appointed by the Board of Directors to manage and administer the Plan.

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2.6 “Common Stock” means Borg-Warner Automotive, Inc.’s $0.01 par value common stock.

2.7 “Company” means Borg-Warner Automotive, Inc. Where applicable, Company shall also include such subsidiaries and affiliated companies of Borg-Warner Automotive, Inc. that participate in the Plan with the consent of the Board of Directors.

2.8 “Disability” shall have the same meaning as under the Company sponsored long-term disability plan under which the Participant is then eligible to participate.

2.9 “Normal Retirement” means termination of employment after attainment of age 65. However, the Committee, within its complete discretion, may determine that a Participant who terminates prior to age 65 has terminated by virtue of Normal Retirement

2.10 “Participant” means an executive of the Company who is designated, pursuant to Article III, to be eligible to receive benefits under the Plan

2.11 “Peer Group Companies” means the automotive companies designated from time to time by the Committee that will be used as a benchmark to compare the relative Total Shareholder Return of the Company.

2.12 “Performance Award” is an amount whose final value will be earned and paid to a Participant if certain predetermined requirements are met.

2.13 “Performance Period” is a period, as determined pursuant to Section 4.1, with respect to which an assignment of Performance Awards is made pursuant to this Plan.

2.14 “Plan” means this Borg-Warner Automotive, Inc. Executive Stock Performance Plan as amended from time to time.

2.15 “Shareholders” means the Company’s Common Stock Shareholders.

2.16 “Termination for Cause” means termination of a Participant’s employment due to (i) the conviction of the Participant for committing a felony under Federal law or the law of the state in which such action occurred, (ii) dishonesty in the course of fulfilling the Participant’s employment duties, or (iii) willful and deliberate failure on the part of the Participant to perform his employment duties in any material respect. Whether Termination for Cause occurs shall be determined by the Committee in its discretion. The determination of the Committee shall be conclusive.

2.17 “Total Shareholder Return of the Company” means the cumulative return on the Company’s Common Stock expressed as a percentage, determined by dividing (i) the sum of (a) the cumulative

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amount of dividends per share paid for the applicable Performance Period, assuming dividend reinvestment, and (b) the difference between the average of the closing sales prices of Common Stock on the last five trading days of such Performance Period and the last five trading days preceding the first day of such Performance Period, by (ii) the average of the closing sales prices of Common Stock on the last five days preceding the first day of such Performance Period.

2.18 "Total Shareholder Return of a Peer Group Company” means the cumulative return on such company’s common stock expressed as a percentage, determined by dividing (i) the sum of (a) the cumulative amount of dividends paid per share for the applicable Performance Period, assuming dividend reinvestment, and (b) the difference between the average of the closing sales prices of such common stock on the last five trading days of such Performance Period and the last five trading days preceding the first day of such Performance Period, by (ii) the average of the closing sales prices of such common stock on the last five days preceding the first day of such Performance Period.

III. ELIGIBILITY

Participation in the Plan shall be limited to executives of the Company who are designated to be eligible by the Committee. Such executives shall (i) be part of a “select group of management or highly compensated employees” (as that phrase is used under Department of Labor Regulation Section 2520.104-23) and (ii) generally be those executives who are in a position to make significant contributions to the earnings of the Company.

Participation in one Performance Award, however, will not automatically guarantee participation in subsequent years. Participation for each Performance Award under the Plan will be approved by the Committee after consultation with the chief executive officer of Borg-Warner Automotive, Inc.

If a Participant is deemed to be no longer eligible for participation in Performance Awards because of a change in job responsibilities, he will have a prorated participation in existing Performance Awards for as long as his eligibility was in effect. A Participant shall, for purposes of receiving Performance Awards, continue his participation in the Plan until all Performance Awards in which he is eligible to participate have been distributed.

IV. PLAN DESIGN

4.1 Performance Period. The initial Performance Period under the Plan shall begin on April 18, 1995 and shall terminate on December 31, 1997. For 1996 and subsequent calendar years, each Performance Period under the Plan shall begin on a January 1 and shall terminate on the December 31 of the third calendar year ending thereafter. Therefore, at a given time, three Performance Periods may be in effect, each at a different point in its cycle.

4.2 Target and Performance Awards. Subject to Section 4.5 below, the Committee shall establish, prior to the Performance Period, a target Performance Award for each Participant eligible for such Performance Period.

(a) The Performance Award for each Performance Period shall be based on the percentile rank of the Total Shareholder Return of the Company among the Total Shareholder Returns of the Peer Group Companies during such Performance Period. The Committee shall determine a target percentile rank applicable to each Performance Period and shall for each Performance Period establish percentages of target Performance Awards earned at various percentile rankings of the Company in relation to the Peer

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Group Companies for such Performance Period, including a percentile rank below which no portion of a target Performance Award shall be earned.

(b) Notwithstanding any other provisions of the Plan to the contrary, the following provisions shall be applicable to participation in the Plan by any individual who the Committee determines is likely to be, at the time any Performance Award becomes payable, a “covered employee” within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended, (the “Code”) and the regulations thereunder:

(i) Such Performance Award shall be based solely on achievement of the performance goals applicable pursuant to Section 4.2.

(ii) Such Performance Award shall not be payable hereunder except upon written certification by the Committee that the applicable performance goals have been satisfied to a particular extent.

(iii) The maximum amount payable to such Participant with respect to such Performance Award shall be $2,000,000.

4.3 Available Shares. The maximum number of shares of Common Stock which shall be available for payment of Performance Awards under the Plan during its term, shall not exceed 400,000. (Such amount shall be subject to adjustment as provided in Section 4.4). The shares of Common Stock available for issuance under the Plan may be authorized and unissued shares or treasury shares.

4.4 Adjustment to Shares.

(a) If there is any change in the corporate capitalization of the Company, such as a stock split, a corporate transaction (any merger, consolidation, separation, including a spin-off or other distribution of stock or property of the Company, or reorganization (whether or not such reorganization comes within the definition of such term in Section 368 of the Code)) or any partial or complete liquidation of the Company, the Committee shall, in its sole discretion, make such adjustments (if any) that it determines to be necessary and/or appropriate (i) to the number and kind of shares available for Performance Awards, and (ii) for purposes of properly comparing the price of Common Stock at the beginning of the relevant Performance Period to the price of Common Stock at the end of such Performance Period in order to determine the Total Shareholder Return of the Company for such Performance Period.

(b) If there is any change in the corporate capitalization of any Peer Group Company, such as a stock split, a corporate transaction (any merger, consolidation, separation, including a spin-off or other distribution of stock or property of the Peer Group Company, or reorganization (whether or not such reorganization comes within the definition of such term in Section 368 of the Code)) or any partial or complete liquidation of any Peer Group Company, the Committee shall, to the extent it determines, in its sole discretion, to be necessary and/or appropriate, take such change into account in determining the Total Shareholder Return of the Peer Group Company for purposes of Section 4.2(a) (including, without limitation, by making such determination as if the change had not occurred or by eliminating such Peer Group Company from the list of Peer Group Companies for the applicable Performance Period).

4.5 Committee Discretion to Adjust Awards. At its own discretion, the Committee may decrease, but not increase the size of a Participant’s target Performance Award in a given Performance Period once the Performance Period has begun. The Committee may also, at its own discretion, decrease, but not increase,

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the amount of a Performance Award payout once the comparative results from the Peer Group Companies for the just completed Performance Period have been considered.

V. PAYMENT

5.1 Timing and Form of Payment. Performance Awards for each Performance Period shall be payable as follows:

(a) An amount equal to 40% of the Performance Award shall be paid in cash as soon as practicable after the end of the Performance Period; and

(b) An amount equal to 60% of the Performance Award shall be paid in shares of Common Stock as soon as practicable after the end of the Performance Period. The number of shares of Common Stock to be awarded will be determined by dividing 60% of the Performance Award by the average of the closing sales prices of the Company’s Common Stock on the last five trading days of the Performance Period upon which the Performance Awards are based.

5.2 Tax Withholding. The Company shall have the right to deduct from all cash payments any federal, state, or local taxes required by law to be withheld with respect to the entire Performance Award.

5.3 Beneficiary Designation. A Participant may designate a Beneficiary who is to receive, upon his death, the distributions that otherwise would have been paid to him. All designations shall be in writing and shall be effective only if and when delivered to the corporate secretary of the Company during the lifetime of the Participant. If a Participant designates a Beneficiary without providing in the designation that the Beneficiary must be living at the time of each distribution, the designation shall vest in all of the distribution whether payable before or after the Beneficiary’s death, and any distributions remaining upon the Beneficiary’s death shall be made to the Beneficiary’s estate.

A Participant may from time to time during his lifetime change his Beneficiary by a written instrument delivered to the corporate secretary of the Company. In the event a Participant shall not designate a Beneficiary as aforesaid, or if for any reasons such designation shall be ineffective, in whole or in part, the distribution that otherwise would have been paid to such Participant shall be paid to his estate and in such event the term “Beneficiary” shall include his estate.

5.4 Foreign Jurisdictions. Performance Awards may be granted, without amending the Plan, to Participants who are foreign nationals or employed outside the United States or both, on such terms and conditions different from those specified in the Plan as may, in the judgment of the Committee, be necessary or desirable to further the purposes of the Plan or to accommodate differences in local law, tax policy or custom. Moreover, the Committee may approve such supplements to or alternative versions of the Plan as it may consider necessary or appropriate for such purposes without thereby affecting the terms of the Plan as in effect for any other purpose; provided, however, that no such supplement or alternative version shall: (a) increase the limitation contained in Section 4.2(c)(iii); (b) increase the number of available shares under Section 4.3; or (c) cause the Plan to cease to satisfy any conditions of Rule 16b-3 under the Securities Exchange Act of 1934 or Section 162(m) of the Code (with respect to Participants whose deductible compensation is limited thereby).

5.5 Distribution upon Termination of Employment.

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(a) Death. If a Participant in the Plan dies before the end of the Performance Period for which target Performance Awards have been established on his behalf, such Participant’s Beneficiary will be eligible for a prorated portion of the Performance Award that would have otherwise been earned after the end of the applicable Performance Period. This distribution, if any is earned, will be paid to the Beneficiary at the same time that all other Participants under the Plan receive their Performance Awards with respect to that Performance Period.

If the Participant’s Beneficiary is not alive at the time of the Participant’s death, and the Participant has no surviving spouse, the estate of the Participant may petition the Committee for payment of a prorated Performance Award to the estate in the form of a cash lump sum to be paid as soon as administratively feasible after the payout or Performance Awards for the Performance Period have been approved by the Committee.

(b) Disability. If a Participant in the Plan becomes Disabled before the end of the Performance Period for which target Performance Awards have been established on his behalf, the Participant will be eligible for a prorated portion of the Performance Award that would have otherwise been earned after the end of the Performance Period. This distribution, if any is earned, will be paid to the Participant at the same time that all other Participants under the Plan receive their awards with respect to that Performance Period.

(c) Normal Retirement. If a Participant in the Plan enters Normal Retirement before the end of the Performance Period for which target Performance Awards have been established on his behalf, the Participant will be eligible for a prorated portion of the Performance Award that would have otherwise been earned after the end of the Performance Period. This distribution, if any is earned, will be paid to the Participant at the same time that all other Participants under the Plan receive their Performance Awards with respect to that Performance Period.

(d) Other Reasons. The Committee, in its sole discretion, may authorize prorated eligibility for a Performance Award to a Participant who terminates from the Company before the end of a Performance Period for reasons other than death, Disability, or Normal Retirement, except that in the case of voluntary resignation or Termination for Cause, no Performance Award may be paid.

VI. ADMINISTRATION

6.1 Committee. The Plan shall be administered by the Committee. If a Performance Award payable hereunder is intended to be exempt from the $1 million deductibility limitation of Code Section 162(m), then the Committee, from the time the target Performance Award is established through the time the Performance Award is paid, shall consist solely of two or more “outside directors” as defined in Code Section 162(m) and the regulations thereunder. Further, the Committee shall at all times consist solely of “disinterested persons” as defined in paragraph (c)(2)(i) of Rule 16b-3 under the Securities Exchange Act of 1934. The Committee may designate person(s) who are Company employees to oversee the day to day administration of the Plan.

6.2 General Rights, Powers, and Duties of Committee. The Committee shall be the Plan Administrator and it shall be responsible for the management, operation, and administration of the Plan. In addition to any powers, rights and duties set forth elsewhere in the Plan, it shall have the following powers and duties:

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(a) To adopt such rules and regulations consistent with the provisions of the Plan as it deems necessary for the proper and efficient administration of the Plan;

(b) To administer the Plan in accordance with its terms and any rules and regulations it establishes;

(c) To maintain records concerning the Plan sufficient to prepare reports, returns and other information required by the Plan or by law;

(d) To construe and interpret the Plan and resolve all questions arising under the Plan;

(e) To direct the payment of benefits under the Plan, and to give such other directions and instructions as may be necessary for the proper administration of the Plan; and

(f) To be responsible for the preparation, filing and disclosure on behalf of the Plan of such documents and reports as are required by any applicable federal or state law, such as the filing of a notice with the United States Department of Labor, pursuant to DOL Reg. ‘2520.104-23, within 120 days of the Effective Date.

6.3 Information to be Furnished to Committee. The Company shall furnish to the Committee such data and information as it may require. The records of the Company shall be determinative of each Participant’s period of employment, termination of employment and the reasons therefore, leave of absence, reemployment, years of service, and personal data. Participants and their Beneficiaries shall furnish to the Committee such evidence, data, or information, and execute such documents as the Committee requests.

6.4 Responsibility. No member of the Committee or of the Board of Directors or any person who is designated to oversee the day to day administration of the Plan (as provided in Section 6.1) shall be liable to any person for any action taken or omitted in connection with the administration of this Plan unless attributable to his own fraud or willful misconduct; nor shall the Company be liable to any person for any such action unless attributable to fraud or willful misconduct on the part of a director, officer or employee of the Company within the scope of his Company duties. Each member of the Committee shall be indemnified and held harmless by the Company for any liability arising out of the administration of the Plan, to the maximum extent permitted by law.

VII. AMENDMENT AND TERMINATION

7.1 Amendment. The Plan may be amended in whole or in part by the Company, by action of the Board of Directors, at any time. The Committee reserves the unilateral right to change any rule under the Plan if it deems such a change necessary to avoid the application of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) to the Plan.

7.2 Company’s Right to Terminate. The Company reserves the sole right to terminate the Plan, by action of the Board of Directors, at any time after the Effective Date.

VIII. MISCELLANEOUS

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8.1 No Implied Rights; Rights on Termination of Service. Neither the establishment of the Plan nor any amendment thereof shall be construed as giving any Participant, Beneficiary, or any other person any legal or equitable right unless such right shall be specifically provided for in the Plan or conferred by specific action of the Committee in accordance with the terms and provisions of the Plan. Except as expressly provided in this Plan, the Company shall not be required or be liable to make any payment under the Plan.

8.2 No Right to Company Assets. Neither the Participant nor any other person shall acquire, by reason of the Plan, any right in or title to any assets, funds or property of the Company whatsoever including, without limiting the generality of the foregoing, any specific funds, assets, or other property which the Company, in its sole discretion, may set aside in anticipation of a liability hereunder. Any benefits which become payable hereunder shall be paid from the general assets of the Company. The Participant shall have only a contractual right to the amounts, if any, payable hereunder unsecured by any asset of the Company. Nothing contained in the Plan constitutes a guarantee by the Company that the assets of the Company shall be sufficient to pay any benefit to any person.

8.3 No Employment Rights. Nothing herein shall constitute a contract of employment or of continuing service or in any manner obligate the Company to continue the services of the Participant, or obligate the Participant to continue in the service of the Company, or as a limitation of the right of the Company to discharge any of its employees, with or without cause. Nothing herein shall be construed as fixing or regulating the compensation payable to the Participant.

8.4 Other Benefits. No Performance Award paid under the Plan shall be considered compensation for purposes of computing benefits under any “employee benefit plan” (as defined in Section 3(3) of ERISA) of the Company nor affect any benefits or compensation under any other benefit or compensation plan of the Company now or subsequently in effect (except as provided to the contrary in such Company plan).

8.5 Offset. If, at the time payments or installments of payments are to be made hereunder, the Participant or the Beneficiary or both are indebted or obligated to the Company, then the payments under the Plan remaining to be made to the Participant or the Beneficiary or both may, at the discretion of the Company, be reduced by the amount of such indebtedness or obligation, provided, however, that an election by the Company not to reduce any such payment or payments shall not constitute a waiver of its claim for such indebtedness or obligation.

8.6 Non-assignability. Neither the Participant nor any other person shall have any voluntary or involuntary right to commute, sell, assign, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate or convey in advance of actual receipt the amounts, if any payable hereunder (whether payable in cash or Common Stock), or any part thereof, which are expressly declared to be unassignable and non-transferable. No part of the amounts payable prior to actual payment shall be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by the Participant or any other person, or be transferable by operation of law in the event of the Participant’s or any other person’s bankruptcy or insolvency.

8.7 Notice. Any notice required or permitted to be given under the Plan shall be sufficient if in writing and hand delivered, or sent by registered or certified mail, and if given to the Company, delivered to the principal office of the Company, directed to the attention of the Committee, with a copy to the corporate

9

secretary. Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark or the receipt for registration or certification.

8.8 Governing Laws. The Plan shall be construed and administered according to the laws of the State of Illinois.

IX. CHANGE OF CONTROL

9.1 Performance Awards Upon a Change of Control. If a Change of Control occurs during one or more Performance Periods, then Performance Awards with respect to these Performance Periods shall be payable in accordance with the following provisions:

(a) Each such Performance Period shall end on the effective date of the Change of Control. Each corresponding Peer Group Company’s Performance Period shall end on the same day.

(b) For purposes of determining Total Shareholder Return of the Company for any Performance Period during which a Change of Control occurs, the Change of Control Price (rather than the average of the closing sales price of Common Stock on the last five trading days of the Performance Period) shall be used as the price of the Company’s Common Stock as of the end of that Performance Period.

(c) If, due to a Change of Control, a Performance Period is shortened as provided in Section 9.1(a), then the target Performance Award that was initially established by the Committee with respect to that Performance Period shall be lowered (on a prorated basis) to reflect the shorter Performance Period. For example, if the initially established target Performance Award is $90,000, and the Performance Period is shortened from 3 years to 6 months because of the occurrence of a Change of Control, then the target Performance Award for that Performance Period shall be lowered to $15,000. This subsection (c) shall also apply where the Participant has, prior to the Change of Control, qualified for a prorated Performance Award pursuant to Section 5(a), (b), (c), or (d). In that case, the initial proration shall be adjusted by virtue of the shortened Performance Period.

9.2 Payment of Performance Awards After a Change of Control. Performance Awards payable with respect to any Performance Period during which a Change of Control occurs shall be paid in accordance with Article V, subject to the following:

(a) Any Participant who is employed by the Company on the day prior to the effective date of the Change of Control shall be deemed to have continued in employment with the Company through the end of the Performance Period.

(b) The Performance Period shall be deemed to have ended as provided in Section 9.1(a).

(c) All Performance Awards shall be paid within 60 days after the effective date of the Change of Control.

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EX-10.21

Exhibit 10.21

BorgWarner Inc. Retirement Savings Excess Benefit Plan

Written Action by Vice President of Human Resources

Plan Amendment

The undersigned Vice President of Human Resources of BorgWarner Inc. (the “Company”) hereby executes the following amendment to the BorgWarner Inc. Retirement Savings Excess Benefit Plan (the “Plan”) as adopted by the Committee of the Plan at its meeting on December 10, 2012:

Section 2.08 of the Plan is amended to read as follows:

2.08Participant. Effective January 1, 2013, the term “Participant” means any Employee participating in the RSP (i) whose base compensation is classified as Salary Grade 17 or higher (or any comparable replacement classification implemented by the Company) and (ii) whose participation in and benefits under the RSP are limited by provisions in the Code, including, without limitation, Sections 401(a)(17), 401(k)(3), 401(m), 402(g)(1) and 415 of the Code.

A Participant who ceases to be a Participant but who remains an Employee remains a Participant solely with respect to that Participant's Account attributable to amounts credited, and earnings thereon, as of the last date the Employee was a Participant, unless and until the Employee again becomes a Participant by again satisfying this Section 2.08. An Employee described in the preceding sentence is not a Participant for any other purpose under the Plan, and specifically is not eligible for credits under Sections 5 or 6.

Executed this 21 day of December, 2012.

BorgWarner Inc.

Employee Benefits Committee

By: /s/ Janice K. McAdams

Janice K. McAdams

Vice President of Human Resources

Chairman, Employee Benefits Committee

EX-10.27

Exhibit 10.27

DISTRIBUTION AND INDEMNITY AGREEMENT

BETWEEN

BORG-WARNER SECURITY CORPORATION

and

BORG-WARNER AUTOMOTIVE, INC.

DISTRIBUTION AND INDEMNITY AGREEMENT

TABLE OF CONTENTS

ARTICLE I.DEFINITIONS…..……………………………………………………1

Section 1.01General…………………………………………………….…1

ARTICLE II. THE DISTRIBUTION…………………………………………………3

Section 2.01The Distribution ....……………………………………………3

Section 2.02 Cooperation Prior to the Distribution .……………………… 4

Section 2.03 Conditions to the Distribution ……………………………….. 4

ARTICLE III.TRANSACTIONS RELATING TO

THE DISTRIBUTION………………………………………………5

Section 3.01Intercorporate Reorganization…………………………..…….5

Section3.02 Intercompany Indebtedness……………………………………5

Section3.03 Other Agreements……………………………………………...5

Section 3.04 Automotive Charter and Bylaws……………………………....5

Section 3.05 Insurance………………………………………………………..5

ARTICLE IV.INDEMNIFICATION…………………………………………………..6

Section 4.01 Indemnification by BWC……………………………………… 6

Section 4.02 Indemnification by Automotive……………………………….7

Section 4.03 Limitations on Indemnification

Obligations……………………………………………………7

Section 4.04 Procedures for Indemnification…………………………………8

Section 4.05 Remedies Cumulative…………………………………………..11

Section 4.06Survival of Indemnities…………………………………………11

ARTICLE V.ACCESS TO INFORMATION………………………………………….11

Section 5.01 Access to Information……………………………………………11

Section 5.02 Production of Witnesses…………………………………………12

Section 5.03 Retention of Records…………………………………………….12

Section 5.04 Confidentiality……………………………………………………12

ARTICLE VI.MISCELLANEOUS………………………………………………………13

Section 6.01 Complete Agreement; Construction…….……………………… 13

Section 6.02Survival of Agreements…………………………………………13

Section6.03Expenses……..………………………………………………….13

Section6.04 Governing Law…………………………………………………..13

Section6.05Notices……………………………………………………………14

Section6.06Amendments……………………………………………………..14

Section6.07Successors and Assigns…………………………………………14

Section6.08Termination………………………………………………………14

Section6.09No Third-Party Beneficiaries……………………………………14

Section6.10Titles and Headings………………………………………………15

Section 6.11 Legal Enforceability……………………………………………15

DISTRIBUTION AND INDEMNITY AGREEMENT

DISTRIBUTION AND INDEMNITY AGREEMENT (this "Agreement"), dated as of January 27, 1993, between BORG-WARNER SECURITY CORPORATION, a Delaware corporation ("BWC"), and BORG-WARNER AUTOMOTIVE, INC., a Delaware corporation and, as of the date hereof, a wholly owned subsidiary of BWC ("Automotive").

WHEREAS, the Board of Directors of BWC has determined that it is appropriate and desirable to spin off its holdings of Automotive by distributing all outstanding shares of Automotive Common Stock on a pro rata basis to the holders of the common stock of BWC; and

WHEREAS, BWC and Automotive have determined that it is appropriate and desirable to set forth the principal corporate transactions required to effect such distribution and certain other agreements that will govern certain matters relating to such distribution;

NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained in this Agreement, the parties hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01 General. As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

Action: any action, suit, arbitration, inquiry, proceeding or investigation by or before any court, any governmental or other regulatory or administrative agency or commission or any arbitration tribunal.

Affiliate: as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, including with respect to BWC any BWC Subsidiary and with respect to Automotive any Automotive Subsidiary.

Automotive Common Stock: the Class A Common Stock, $.01 par value, of Automotive.

Automotive Financing: as defined in Section 2.02(a) hereof.

Automotive Subsidiary: Any subsidiary of Automotive that will remain a subsidiary of Automotive immediately following the Distribution Date, and any other subsidiary of Automotive which thereafter may be organized or acquired.

BWC Board: the Board of Directors of BWC.

BWC Non-Voting Stock: the Series I Non-Voting Common Stock, $.01 par value, of BWC.

BWC Subsidiary: any subsidiary of BWC other than Automotive or any Automotive Subsidiary.

BWC Voting Stock: the Common Stock, $.01 par value, of BWC.

Benefits Agreement: the Benefits Agreement between BWC and Automotive, the form of which is attached as Annex A.

Code: the Internal Revenue Code of 1986, as amended.

Distribution: the distribution to holders of BWC Voting Stock and BWC Non-Voting Stock of the shares of Automotive Common Stock owned by BWC on the Distribution Date.

Distribution Date: the date determined by the BWC Board on which the Distribution shall be effected.

Insurance Proceeds: those monies (i) received by an insured from an insurance carrier or (ii) paid by an insurance carrier on behalf of the insured, in either case net of any applicable premium adjustments (including reserves), retrospectively rated premium adjustments, deductibles, retentions, or costs paid by such insured.

Liabilities: any and all debts, liabilities and obligations, absolute or contingent, matured or unmatured, liquidated or unliquidated, accrued or unaccrued, known or unknown, whenever arising (unless otherwise specified in this Agreement), including all costs and expenses relating there¬to, and including, without limitation, those debts, liabilities and obligations arising under any law, rule, regulation, Action, threatened Action, order or consent decree of any governmental entity or any award of any arbitrator of any kind, and those arising under any contract, commitment or undertaking.

Losses: any and all losses, Liabilities, claims, damages, obligations, payments, costs and expenses, matured or unmatured, absolute or contingent, accrued or unaccrued, liquidated or unliquidated, known or unknown (including, without limitation, the costs and expenses of any and all Actions, threatened Actions, demands, assessments, judgments, settlements and compromises relating thereto and attorneys' fees and any and all expenses whatsoever reasonably incurred in investigating, preparing or defending against any such Actions or threatened Actions).

Record Date: the close of business on the date to be determined by the BWC Board as the record date for the Distribution.

Service Agreement: the Service Agreement between BWC and Automotive, the form of which is attached hereto as Annex B.

Subsidiaries: the term "subsidiaries" as used herein with respect to any entity shall, unless otherwise indicated, be deemed to refer to both direct and indirect subsidiaries of such entity.

Tax Sharing Agreement: the Tax Sharing Agreement between BWC and Automotive, the form of which is attached hereto as Annex C.

Trademark Agreement: the Trademark and Trade Name License Agreement between BWC and Automotive, the form of which is attached hereto as Annex D.

ARTICLE II

THE DISTRIBUTION

Section 2.01 The Distribution. Subject to Section 2.03 hereof, on the Distribution Date, BWC will cause Automotive to issue to the holders of record of BWC Voting Stock and BWC Non-Voting Stock on the Record Date, stock certificates representing in the aggregate all of the then outstanding shares of Automotive Common Stock, and shall distribute such certificates as soon as practicable thereafter to such holders or their designated transferees. The Distribution shall be effective as of 5:00 P.M., New York City time, on the Distribution Date. Automotive will provide to BWC all share certificates and any information required in order to complete the Distribution on the basis of one share of Automotive Common Stock for each share of BWC Voting Stock and BWC Non-Voting Stock outstanding on the Record Date.

Section 2.02 Cooperation Prior to the Distribution.

(a)BWC and Automotive shall cooperate in arranging for a bank credit facility or other financing for Automotive in the amount of $350 million, a portion of the proceeds of which will be used for the repayment of

intercorporate indebtedness as provided in Section 3.02 hereof (the "Automotive Financing") and which will serve as a source of funding for Automotive's working capital needs.

(b)BWC and Automotive shall cooperate in preparing any agreements or other documents which are required to reflect the establishment of, or amendments to, any employee benefit and other plans contemplated by this Agreement or the Benefits Agreement.

Section 2.03 Conditions to the Distribution. This Agreement and the consummation of each of the transactions provided for herein shall be subject to approval of the BWC Board. The BWC Board shall in its discretion establish the Record Date and the Distribution Date and all appropriate procedures in connection with the Distribution, but in no event shall the Distribution Date occur prior to such time as each of the following has occurred or has been waived by the BWC Board in its sole discretion: (i) the consent to the Distribution of the lenders under BWC's existing bank credit agreement shall have been obtained or BWC shall have obtained an appropriate substitute line of credit; (ii) any required regulatory approvals and all other material consents required to effect the Distribution shall have been received; (iii) the BWC Board shall have formally approved the Distribution; (iv) the Automotive Financing shall have been completed; (v) BWC shall have received an opinion of counsel in form satisfactory to BWC that the Distribution will be a distribution described in Section 355(a) of the Code; and (vi) the transactions contemplated by Sections 3.01, 3.02 and 3.03 shall have been consummated in all material respects; provided that the satisfaction of such conditions shall not create any obligation on the part of BWC or any other party hereto to effect the Distribution or in any way limit BWC's power of termination set forth in Section 6.08 or alter the consequences of any such termination from those specified in such Section.

ARTICLE III

TRANSACTIONS RELATING TO THE DISTRIBUTION

Section 3.01 Intercorporate Reorganization. Prior to the Distribution Date, BWC and Automotive shall take all steps necessary to increase the outstanding shares of Automotive Common Stock so that immediately prior to the Distribution, BWC will hold a number of shares of Automotive Common Stock equal to the sum of the number of shares of BWC Voting Stock and the number of shares of BWC Non-Voting Stock outstanding on the Record Date. Such shares of Automotive Common Stock shall be the only capital stock of Automotive outstanding immediately prior to the Distribution.

Section 3.02 Intercompany Indebtedness. Immediately prior to the Distribution, Automotive shall pay $156,119,770.12 to BWC to reduce the intercompany indebtedness owed to BWC by Automotive and the Automotive Subsidiaries. Any intercompany indebtedness owed to BWC after such reduction shall be cancelled as a contribution to the capital of Automotive.

Section 3.03 Other Agreements. On or prior to the Distribution Date, BWC and Automotive shall execute and deliver the Tax Sharing Agreement, the Trademark Agreement, the Service Agreement and the Benefits Agreement.

Section 3.04 Automotive Charter and Bylaws. Prior to the Distribution Date, BWC shall cause the Amended and Restated Certificate of Incorporation of Automotive, substantially in the form attached hereto as Annex E, to be filed with the Secretary of State of Delaware and to be in effect on the Distribution Date, and the Board of Directors of Automotive shall adopt the Bylaws of Automotive substantially in the form attached hereto as Annex F.

Section 3.05 Insurance.

(a) BWC has provided insurance coverage to Automotive through various policies maintained by BWC for the benefit of itself and its subsidiaries for workers' compensation, general liability, fire and other types of losses. Automotive has paid premiums to BWC to provide such insurance, with deductibles, and for varying limits of liability. BWC will continue to provide such coverage to Automotive and Automotive Subsidiaries for all insured

incidents occurring from the date such coverage first commenced until 12:00 midnight on the Distribution Date or such later date as may be agreed to in writing by BWC and Automotive, and Automotive shall pay BWC the premiums for such coverage in accordance with the past practice established by BWC and Automotive.

(b)BWC shall use reasonable efforts to assist Automotive and Automotive Subsidiaries in obtaining initial insurance coverage for Automotive and Automotive Subsidiaries from and after the Distribution Date in such amounts as are agreed upon by the parties; provided, however, that the foregoing shall not require BWC to provide financial assistance of any kind. Following the Distribution Date, each of the parties shall cooperate with and assist the other party in the prevention of conflicts or gaps in insurance coverage and/or collection of proceeds.

(c)BWC and Automotive agree that Automotive shall have the right to present claims to BWC or BWC's insurers under all policies of insurance placed by BWC on Automotive's and Automotive Subsidiaries' behalf, or which include Automotive or Automotive Subsidiaries within them, for insured incidents occurring from the date said coverage first commenced until the Distribution Date. The parties agree that any such policies written on a "claims made" rather than "occurrence" basis may not provide coverage to Automotive and Automotive Subsidiaries for incidents occurring prior to the Distribution Date but which are first reported after the Distribution Date.

(d)With respect to any insured Losses or retroactive premium adjustments relating to assets and/or operations of Automotive and/or Automotive Subsidiaries prior to the Distribution Date or such later date as may be agreed to pursuant to Section 3.05(a) hereof: (i) BWC shall pay over to Automotive any Insurance Proceeds it receives on account of such Losses and any such retroactive premium reductions; and (ii) Automotive and Automotive Subsidiaries shall reimburse BWC for all costs, expenses or payments made by BWC after the Distribution Date to insurers on account of such Losses (including, without limitation, any self-insured retention payments) and any such retroactive premium increases.

ARTICLE IV

INDEMNIFICATION

Section 4.01 Indemnification by BWC. Except with respect to employee benefits or other Liabilities to employees, which shall be governed by the Benefits Agreement, and except with respect to insurance claims, which shall be governed by Sections 3.05(d) and 4.03 hereof, BWC shall indemnify, defend and hold harmless Automotive, each Affiliate of Automotive and each of their respective directors, officers and employees and each of the heirs, executors, successors and assigns of any of the foregoing (the "Automotive Indemnitees") from and against any and all Losses of the Automotive Indemnitees arising out of or due to the failure of BWC or any of its Affiliates to pay, perform or otherwise discharge in due course any item set forth on Schedule A. Anything in this Section 4.01 to the contrary notwithstanding, neither BWC nor any BWC Subsidiary shall have any liability whatsoever to either Automotive or any Automotive Subsidiary in respect of any Tax (as such term is defined in the Tax Sharing Agreement), except as otherwise provided in Schedule A hereto, in the Benefits Agreement or in the Tax Sharing Agreement.

Section 4.02Indemnification by Automotive. Except with respect to employee benefits or other Liabilities to employees, which shall be governed by the Benefits Agreement, and except with respect to insured claims, which shall be governed by Sections 3.05(d) and 4.03 hereof, Automotive shall indemnify, defend and hold harmless BWC, each Affiliate of BWC and each of their respective directors, officers and employees and each of the heirs, executors, successors and assigns of any of the foregoing (the "BWC Indemnitees") from and against any and all Losses of the BWC Indemnitees arising out of or due to the failure or alleged failure of Automotive or any of its Affiliates to pay, perform or otherwise discharge in due course any item set forth on Schedule B. Anything in this Section 4.02 to the contrary notwithstanding, neither Automotive nor any Automotive Subsidiary shall have any liability whatsoever to either BWC or any BWC Subsidiary in respect of any Tax, except as otherwise provided in Schedule B hereto, in the Benefits Agreement or in the Tax Sharing Agreement.

Section 4.03 Limitations on Indemnification Obligations. The amount which any party (an "Indemnifying Party") is or may be required to pay to any other party (an "Indemnitee") pursuant to Section 4.01 or Section 4.02 shall be reduced (including, without limitation, retroactively) by any Insurance Proceeds or other amounts actually recovered by or on behalf of such Indemnitee, in reduction of the related Loss. If an Indemnitee shall have received the payment required by this Agreement from an Indemnifying Party in respect of any Loss and shall subsequently actually receive Insurance Proceeds or other amounts in respect of such Loss, then such Indemnitee shall pay to such Indemnifying Party a sum equal to the amount of such Insurance Proceeds or other amounts actually received (up to but not in excess of the amount of any indemnity payment made hereunder). An insurer who would otherwise be obligated to pay any claim shall not be relieved of the responsibility with respect thereto, or, solely by virtue of the indemnification provisions hereof, have any subrogation rights with respect thereto, it being expressly understood and agreed that no insurer or any other third party shall be entitled to a "windfall" (i.e., a benefit they would not be entitled to receive in the absence of the indemnification provisions) by virtue of the indemnification provisions hereof.

Section 4.04 Procedures for Indemnification.

Procedures for Indemnification of Third Party Claims. Procedures for Indemnification of Third Party Claims shall be as follows:

(a)If an Indemnitee shall receive notice or otherwise learn of the assertion by a person (including, without limitation, any governmental entity) who is not a party to this Agreement or to the Tax Sharing Agreement of any claim or of the commencement by any such person of any Action (a "Third Party Claim") with respect to which an Indemnifying Party may be obligated to provide indemnification pursuant to Section 4.01, 4.02 or any other Section of this Agreement, such Indemnitee shall give such Indemnifying Party written notice thereof promptly after becoming aware of such Third Party Claim; provided that the failure of any Indemnitee to give notice as provided in this Section 4.04(a) shall not relieve the related Indemnifying Party of its obligations under this Article IV, except to the extent that such Indemnifying Party is prejudiced by such failure to give notice. Such notice shall describe the Third Party Claim in reasonable detail and, if ascertainable, shall indicate the amount (estimated if necessary) of the Loss that has been or may be sustained by such Indemnitee.

(b)An Indemnifying Party may elect to defend or to seek to settle or compromise, at such Indemnifying Party's own expense and by such Indemnifying Party's own counsel, any Third Party Claim. Within 30 days of the receipt of notice from an Indemnitee in accordance with Section 4.04(a) (or sooner, if the nature of such Third Party Claim so requires), the Indemnifying Party shall notify the Indemnitee of its election whether the Indemnifying Party will assume responsibility for defending such Third Party Claim, which election shall specify any reservations or exceptions. After notice from an Indemnifying Party to an Indemnitee of its election to assume the defense of a Third Party Claim, such Indemnifying Party shall not be liable to such Indemnitee under this Article IV for any legal or other expenses (except expenses approved in advance by the Indemnifying Party) subsequently incurred by such Indemnitee in connection with the defense thereof; provided that if the defendants in any such claim include both the Indemnifying Party and one or more Indemnitees and in any Indemnitee's reasonable judgment a conflict of interest between one or more of such Indemnitees and such Indemnifying Party exists in respect of such claim or if the Indemnifying Party shall have assumed responsibility for such claim with any reservations or exceptions, such Indemnitees shall have the right to employ separate counsel to represent such Indemnitees and in that event the reasonable fees and expenses of such separate counsel (but not more than one separate counsel reasonably satisfactory to the Indemnifying Party) shall be paid by such Indemnifying Party. If an Indemnifying Party elects not to assume responsibility for defending a Third Party Claim, or fails to notify an Indemnitee of its election as provided in this Section 4.04(b), such Indemnitee may defend or (subject to the remainder of this Section 4.04(b)) seek to compromise or settle such Third Party Claim. Notwithstanding the foregoing, neither an Indemnifying Party nor an Indemnitee may settle or compromise any claim over the objection of the other; provided, however, that consent to settlement or compromise shall not be unreasonably withheld. Neither an Indemnifying Party nor an Indemnitee shall consent to entry of any judgment or enter into any settlement of any Third Party Claim which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnitee, in the case of a consent or settlement by an Indemnifying Party, or the Indemnifying

Party, in the case of a consent or settlement by the Indemnitee, of a written release from all liability in respect to such Third Party Claim.

(c)If an Indemnifying Party chooses to defend or to seek to compromise or settle any Third Party Claim, the related Indemnitee shall make available to such Indemnifying Party any personnel or any books, records or other documents within its control or which it otherwise has the ability to make available that are necessary or appropriate for such defense, settlement or compromise, and shall otherwise cooperate in the defense, settlement or compromise of such Third Party Claims.

(d)Notwithstanding anything else in this Section 4.04 to the contrary, if an Indemnifying Party notifies the related Indemnitee in writing of such Indemnifying Party's desire to settle or compromise a Third Party Claim on the basis set forth in such notice (provided that such settlement or compromise includes as an unconditional term thereof the giving by the claimant or plaintiff of a written release of the Indemnitee from all liability in respect thereof) and the Indemnitee shall notify the Indemnifying Party in writing that such Indemnitee declines to accept any such settlement or compromise, such Indemnitee may continue to contest such Third Party Claim, free of any participation by such Indemnifying Party, at such Indemnitee's sole expense. In such event, the obligation of such Indemnifying Party to such Indemnitee with respect to such Third Party Claim shall be equal to (i) the costs and expenses of such Indemnitee prior to the date such Indemnifying Party notifies such Indemnitee of the offer to settle or compromise (to the extent such costs and expenses are otherwise indemnifiable hereunder) plus (ii) the lesser of (A) the amount of any offer of settlement or compromise which such Indemnitee declined to accept and (B) the actual out-of-pocket amount such Indemnitee is obligated to pay subsequent to such date as a result of such Indemnitee's continuing to pursue such Third Party Claim.

(e)Any claim on account of a Loss which does not result from a Third Party Claim shall be asserted by written notice given by the Indemnitee to the related Indemnifying Party. Such Indemnifying Party shall have a period of 30 days after the receipt of such notice within which to respond thereto. If such Indemnifying Party does not respond within such 30 day period, such Indemnifying Party shall be deemed to have refused to accept responsibility to make payment. If such Indemnifying Party does not respond within such 30 day period or rejects such claim in whole or in part, such Indemnitee shall be free to pursue such remedies as may be available to such party under this Agreement or under applicable law.

(f)In addition to any adjustments required pursuant to Section 4.03, if the amount of any Loss shall, at any time subsequent to the payment required by this Agreement, be reduced by recovery, settlement or otherwise, the amount of such reduction, less any expenses incurred in connection therewith, shall promptly be repaid by the Indemnitee to the Indemnifying Party.

(g)In the event of payment by an Indemnifying Party to any Indemnitee in connection with any Third Party Claim, such Indemnifying Party shall be subrogated to and shall stand in the place of such Indemnitee as to any events or circumstances in respect of which such Indemnitee may have any right or claim relating to such Third Party Claim against any claimant or plaintiff asserting such Third Party Claim or against any other person. Such Indemnitee shall cooperate with such Indemnifying Party in a reasonable manner, and at the cost and expense of such Indemnifying Party, in prosecuting any subrogated right or claim.

Section 4.05 Remedies Cumulative. The remedies provided in this Article IV shall be cumulative and shall not preclude assertion by any Indemnitee of any other rights or the seeking of any and all other remedies against any Indemnifying Party.

Section 4.06 Survival of Indemnities. The obligations of BWC and Automotive under this Article IV shall survive the sale or other transfer by it of any assets or businesses or the assignment by it of any Liabilities, with respect to any Loss of the other related to such assets, businesses or Liabilities.

ARTICLE V

ACCESS TO INFORMATION

Section 5.01 Access to Information. From and after the Distribution Date, BWC shall afford to Automotive and its authorized accountants, counsel and other designated representatives (collectively, "Representatives") reasonable access (including using reasonable efforts to give access to persons or firms possessing information) and duplicating rights during normal business hours to all records, books, contracts, instruments, computer data and other data and information (collectively, "Information") within BWC's possession relating to Automotive or any Automotive Subsidiary, insofar as such access is reasonably required by Automotive or any Automotive Subsidiary. Similarly, Automotive shall afford to BWC and its Representatives reasonable access (including using reasonable efforts to give access to persons or firms possessing information) and duplicating rights during normal business hours to Information within Automotive's possession relating to BWC or any BWC Subsidiary and insofar as such access is reasonably required by BWC or any BWC Subsidiary. Information may be requested under this Article V for, without limitation, audit, accounting, claims, litigation and tax purposes, as well as for purposes of fulfilling disclosure and reporting obligations and for performing this Agreement and the transactions contemplated hereby.

Section 5.02 Production of Witnesses. After the Distribution Date, each of BWC and Automotive and its respective subsidiaries shall use reasonable efforts to make available to the other party and its subsidiaries, upon written request, its directors, officers, employees and agents as witnesses to the extent that any such person may reasonably be required (giving consideration to business demands of such Representatives) in connection with any legal, administrative or other proceedings in which the requesting party may from time to time be involved.

Section 5.03 Retention of Records. Except as otherwise required by law or agreed to in writing, each of BWC and Automotive shall retain, and shall cause its subsidiaries to retain following the Distribution Date, for a period consistent with the document retention policies in effect at BWC and Automotive, respectively, all significant Information relating to the business of the other and the other's subsidiaries. In addition, after the expiration of the applicable periods, such Information shall not be destroyed or otherwise disposed of at any time, unless, prior to such destruction or disposal, (a) the party proposing to destroy or otherwise dispose of such Information shall provide no less than 30 days' prior written notice to the other, specifying in reasonable detail the Information proposed to be destroyed or disposed of and (b) if a recipient of such notice shall request in writing prior to the scheduled date for such destruction or disposal that any of the Information proposed to be destroyed or disposed of be delivered to such requesting party, the party proposing the destruction or disposal shall promptly arrange for the delivery of such of the Information as was requested at the expense of the party requesting such Information.

Section 5.04 Confidentiality. Each of BWC and the BWC Subsidiaries on the one hand, and Automotive and the Automotive Subsidiaries on the other hand, shall hold, and shall cause its Representatives to hold, in strict confidence, all Information concerning the other in its possession or furnished by the other or the other's Representatives pursuant to either this Agreement or the Tax Sharing Agreement (except to the extent that such Information has been (a) in the public domain through no fault of such party or (b) later lawfully acquired from other sources by such party), and each party shall not release or disclose such Information to any other person, except its auditors, attorneys, financial advisors, bankers and other consultants and advisors, unless compelled to disclose by judicial or administrative process or, as advised by its counsel, by other requirements of law.

ARTICLE VI

MISCELLANEOUS

Section 6.01 Complete Agreement: Construction. This Agreement, the Benefits Agreement, the Service Agreement and the Tax Sharing Agreement, including any schedules and exhibits hereto or thereto, and other agreements and documents referred to herein, shall constitute the entire agreement between the parties with respect to the subject matter hereof and shall supersede all previous negotiations, commitments and writings with respect to

such subject matter. Notwithstanding any other provisions in this Agreement to the contrary, in the event and to the extent that there shall be a conflict between the provisions of this Agreement and the provisions of the Tax Sharing Agreement or the Benefits Agreement, the provisions of the Tax Sharing Agreement or the Benefits Agreement, as the case maybe, shall control.

Section 6.02 Survival of Agreements. Except as otherwise contemplated by this Agreement, all covenants and agreements of the parties contained in this Agreement shall survive the Distribution Date.

Section 6.03 Expenses. Except as otherwise set forth in this Agreement, the Benefits Agreement or the Tax Sharing Agreement, all costs and expenses arising on or prior to the Distribution Date (whether or not then payable) in connection with the Distribution (other than (i) costs incurred in connection with any financing arrangements entered into by Automotive or any of its subsidiaries, (ii) any fees charged by the rating agencies for rating Automotive securities, (iii) the fees and expenses of any outside consultant or counsel retained by Automotive, (iv) costs incurred in engraving and printing the stock certificates of Automotive, (v) costs (including attorneys' fees) of establishing any new employee benefit or compensation plans of Automotive, and (vi) expenses, including any lenders' or agents' fees, incurred in connection with the Automotive Financing, which shall be paid by Automotive) shall be paid by BWC to the extent that appropriate documentation concerning such costs and expenses shall be provided to BWC.

Section 6.04 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to the principles of conflicts of laws thereof.

Section 6.05 Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be delivered by hand, mailed by registered or certified mail (return receipt requested), or sent by cable, telegram, telex or telecopy (confirmed by regular, first-class mail), to the parties at the following addresses (or at such other addresses for a party as shall be specified by like notice) and shall be deemed given on the date on which such notice is received:

if to BWC:

Borg-Warner Security Corporation

200 South Michigan Avenue

Chicago, Illinois 60604

Attention: General Counsel

if to Automotive:

Borg-Warner Automotive, Inc.

200 South Michigan Avenue

Chicago, Illinois 60604

Attention: General Counsel

Section 6.06 Amendments. This Agreement may not be modified or amended except by an agreement in writing signed by the parties.

Section 6.07 Successors and Assigns. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns.

Section 6.08 Termination. This Agreement may be terminated and the Distribution abandoned at any time prior to the Distribution Date by and in the sole discretion of the BWC Board without the approval of Automotive or BWC's shareholders. In the event of such termination, no party shall have any liability of any kind to

any other party on account of such termination except that expenses incurred in connection with the transactions contemplated hereby shall be paid as provided in Section 6.03.

Section 6.09 No Third-Party Beneficiaries. Except for the provisions of Article IV relating to Indemnitees, this Agreement is solely for the benefit of the parties hereto and their respective Affiliates and should not be deemed to confer upon third parties (including any employee of BWC or Automotive or any BWC or Automotive Subsidiary) any remedy, claim, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement.

Section 6.10 Titles and Headings. Titles and headings to sections herein are inserted for the convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement.

Section 6.11 Legal Enforceability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof. Any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Without prejudice to any rights or remedies otherwise available to any party hereto, each party hereto acknowledges that damages would be an inadequate remedy for any breach of the provisions of this Agreement and agrees that the obligations of the parties hereunder shall be specifically enforceable.

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the day and year first above written.

BORG-WARNER SECURITY CORPORATION

By: /s/

BORG-WARNER AUTOMOTIVE, INC.

By: /s/ Robin J. Adams

SCHEDULE A

Items with respect to which BWC will indemnify the Automotive Indemnitees in accordance with Section 4.01 of the Agreement:

All Losses arising out of the businesses conducted or to be conducted by BWC or any BWC Subsidiary, whether such Losses relate to events occurring, or whether such Losses are asserted, before or after the Distribution Date, excluding (i) the businesses conducted (formerly or currently) or to be conducted by Automotive (whether directly or through a subsidiary or Affiliate of Automotive), the Automotive Subsidiaries and any previously owned division, subsidiary or Affiliate of Automotive and (ii) any businesses related to the design, manufacture or marketing of parts, assemblies or components used in, or designed for use in, cars, trucks, boats, tractors or other vehicles.

SCHEDULE B

Items with respect to which Automotive will indemnify the BWC Indemnitees in accordance with Section 4.02 of the Agreement:

(1)All Losses arising out of any guarantees or obligations to third parties of BWC or any BWC Subsidiary with respect to any obligations of Automotive or any Automotive Subsidiary to third parties.

(2)All Losses arising out of the businesses conducted (formerly or currently) or to be conducted by Automotive (whether directly or through a subsidiary or Affiliate of Automotive), the Automotive Subsidiaries and any previously owned division, subsidiary or Affiliate of Automotive, whether such Losses relate to events occurring, or whether such Losses are asserted, before or after the Distribution Date, including without limitation any Losses that any BWC Indemnitee may incur under environmental laws or regulations relating to the operations of BWC's Automotive Group and any Losses arising out of the Automotive Financing.

(3)All Losses arising out of any businesses related to the design, manufacture or marketing of parts, assemblies or components used in, or designed for use in, cars, trucks, boats, tractors or other vehicles.

EX-10.28

Exhibit 10.28

ASSIGNMENT OF TRADEMARKS AND LICENSE AGREEMENT

This Agreement is entered into as of the 2nd day of November, 1994, by and between BORG-WARNER SECURITY CORPORATION (formerly known as Borg-Warner Corporation), a Delaware corporation having a place of business at 200 South Michigan Avenue, Chicago, Illinois 60604 (“Security”), and BORG-WARNER AUTOMOTIVE, INC. (formerly a subsidiary of Borg-Warner Corporation), a Delaware corporation having a place of business at 200 South Michigan Avenue, Chicago, Illinois 60604 (“Automotive”).

WITNESSETH:

WHEREAS, Security has been for many years and is in the business of providing a broad range of protective and security services and products, including, but not limited to guard, alarm, armored transport, ATM maintenance and servicing, cash management, courier, investigative, pre-employment screening and mailroom services, and developing, manufacturing, distributing, selling and servicing fire detection and burglary alarm products.

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WHEREAS, Security has been for many years and will continue to be in the business of, among other things, acquiring and operating other businesses in a variety of industries.

WHEREAS, for many years, Security has used and is using, by license or otherwise, in its many businesses various trademarks, service marks, trade names and trade dress comprised, in whole or in part, of the term “Borg Warner”, “B” and “W” and variations thereof, including but not limited to, the trademarks, trade names and trade dress identified in Schedules A, B, C and D (the “Borg Warner Trademarks”).

WHEREAS, Automotive, for many years, was, as a subsidiary of Security, and currently is, as a separate corporation, primarily in the business of developing, manufacturing and selling automotive products to original equipment manufacturers of passenger cars, light trucks and other vehicles, and in the associated aftermarket, under and in connection with trademarks, service marks, trade names and trade dress comprised, in whole or in part, of the term “Borg Warner”, “B” and “W” and variations thereof, including but not limited to the trademarks, service marks and trade names identified in Schedule A (the “Automotive Trademarks”) and Schedule D (the “Base Trademarks”).

WHEREAS, Security and Automotive entered into an Amended and Restated Trademark and Trade Name License Agreement dated as of August 24, 1993 (the “Automotive License Agreement”), pursuant to which Automotive was licensed the right to use the Automotive Trademarks and Base Trademarks in connection with certain products.

WHEREAS, Security has also licensed to Echlin, Inc. the use of some of the trademarks and trade dress identified in Schedule C (the “Bow Tie Trademarks”) in an agreement dated as of September 1, 1993 (the “Echlin License Agreement”).

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WHEREAS, Security operates its present business in the Security Field as defined in Article I and does not plan to expand its business into the Automotive Field as defined in Article I, but intends to expand its business into other industries.

WHEREAS, Automotive operates its present business in the Automotive Field as defined in Article I and does not presently plan to expand its business into the Security Field as defined in Article I or any other field other than the Automotive Field.

WHEREAS, substantial differences exist between Security's products and services and Automotive's products and services; substantial differences exist in the channels of trade in which Security's and Automotive's respective products and services are marketed, promoted, advertised and sold; and substantial differences exist in the consumers and purchasers of Security's products and services and Automotive's products and services.

WHEREAS, there has been no known actual confusion between Security's products and services and Automotive's products and services on account of the similarity of the Borg Warner Trademarks, and no likelihood of confusion is foreseen.

WHEREAS, subject to the terms and conditions of this Agreement, Automotive desires to 1) acquire all of Security's right, title and interest in and to all of the Automotive Trademarks, Bow Tie Trademarks and Base Trademarks in the Automotive Field, the goodwill associated therewith, and the United States and foreign Trademark Registrations and Registration Applications therefor; 2) acquire all of Security's rights and obligations under the Echlin License Agreement; and 3) terminate the Automotive License Agreement.

WHEREAS, subject to the terms and conditions of this Agreement, Security desires to 1) assign to Automotive all of its right, title and interest in and to all of the Automotive Trademarks, Bow Tie Trademarks and Base Trademarks in the Automotive Field, the goodwill associated therewith, and the

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United States and foreign Trademark Registrations and Registration Applications therefor; 2) assign to Automotive all of its rights and obligations under the Echlin License Agreement; and 3) terminate the Automotive License Agreement.

NOW, THEREFORE, based on the aforesaid premises, and subject to the terms and conditions set forth below, the parties agree as follows:

ARTICLE I - DEFINITIONS

1.1) “Automotive Field” means the business of supplying products, components, accessories and services for the manufacture, service and repair of (a) vehicles, including without limitation passenger cars, vans, trucks, fork-lift trucks and other industrial vehicles, off- highway motive equipment, motorcycles and other recreational vehicles, aircraft, marine vessels, tractors and other agricultural vehicles, railroad rolling stock and trailers and (b) internal combustion engines and associated fuel supply or emission control systems or devices for any application. The “Automotive Field” does not include monitoring, tracking or servicing of any alarm, signal or security device installed on any vehicle. The “Automotive Field” includes all such products, components, accessories and services used on vehicles that also have an application or use on industrial equipment. The “Automotive Field” also includes use of promotional items and events associated with the promotion, marketing and sale of any of the foregoing products, components, accessories and services.

1.2) “Security Field” means the business of supplying products or services that provide or enhance security, including but not limited to guard services, alarm services, armored transport services, ATM maintenance and servicing, cash management services, courier services, investigative services, pre-employment screening, mailroom services; developing, manufacturing, distributing, selling and servicing fire detection and burglary alarms and products; and monitoring, tracking or servicing of any alarm, signal or security device installed on any vehicle but does not include the manufacture or sale of any alarm, signal or security device installed on vehicles and replacement parts therefor.

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ARTICLE II - ASSIGNMENT OF MARKS

2.1) Security hereby assigns to Automotive all of its right, title and interest world-wide in and to the Base Trademarks, Automotive Trademarks and Bow Tie Trademarks in the Automotive Field, together with the goodwill of the business associated with such marks, and all United States and foreign Registrations and Registration Applications therefor. Security agrees that it will not challenge or contest the validity of the Automotive Trademarks, the Bow Tie Trademarks or Base Trademarks used or licensed by Automotive in the Automotive Field.

2.2) Security retains all right, title and interest world-wide in and to trademarks and trade names identified in Schedule B (the “Security Trademarks”) and the Base Trademarks other than in the Automotive Field, together with all goodwill of the business associated with such marks, and all United States and foreign Registrations and Registration Applications therefor. Automotive agrees that it will not challenge or contest the validity of the Security Trademarks or Base Trademarks used or licensed by Security other than in the Automotive Field.

ARTICLE III - RESTRICTIONS ON USE OF MARKS

3.1) Security shall not use or license for use any of the Automotive Trademarks or Bow Tie Trademarks. Security shall not use or license for use any of the Security Trademarks, Base Trademarks or any trademarks, service marks, trade dress and trade names comprised or, in whole or in part, the term “Borg Warner”, “B” and “W” or variations thereof, in the Automotive Field. Security may adopt, use or license any new trademark, service mark, trade dress, trade name or the like utilizing, in whole or in part, the term “Borg Warner”, “B” and “W” or variations thereof in any business, industry or field other than in the Automotive Field except as restricted by law.

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3.2) Automotive shall not use or license for use any of the Security Trademarks. Automotive shall not use or license for use any of the Automotive Trademarks, the Bow Tie Trademarks, Base Trademarks or any trademarks, service marks, trade dress and trade names comprised of, in whole or in part, the term “Borg Warner”, “B” and “W” or variations thereof, other than in the Automotive Field. Automotive may adopt, use or license any new trademark, service mark, trade dress, trade name or the like, utilizing, in whole or in part, the term “Borg Warner”, “B” and “W” or variations thereof in the Automotive Field except as restricted by law.

3.3) Automotive may license the Automotive Trademarks, Bow Tie Trademarks, the Base Trademarks or any other trademark, service mark, trade dress or trade name comprised of, in whole or in part, the term “Borg Warner”, “B” or “W” or variations thereof for use in the Automotive Field to any entity provided that for any such license granted after August 24, 1993, Automotive retains the contractual right to control the products and services to be produced or provided by such entity under or in connection with the Automotive Trademarks, the Bow Tie Trademarks or Base Trademarks, the quality of such products and services, the manner in which such products and services are marketed and sold, and the manner in which such trademarks, service marks, trade dress or trade names are displayed and used.

ARTICLE IV - ASSIGNMENT AND TERMINATION OF LICENSE AGREEMENTS

4.1) Security hereby assigns to Automotive all of its rights, interests and obligations in, under, and to the Echlin License Agreement and Automotive hereby assumes all rights, obligations and restrictions of Security thereunder.

4.2) The Automotive License Agreement is hereby terminated and superseded by this Agreement.

ARTICLE V - PAYMENTS

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5.1) Upon approval of this Agreement by the Board of Directors of both Automotive and Security, Automotive shall pay Security $10,000,000.00. Automotive shall also pay Security any royalties collected by Automotive from Echlin pursuant to the Echlin License Agreement relating to the sale of products sold by Echlin under or in connection with the Bow Tie Trademarks which are attributable to any sales during the period of time prior to November 1, 1994.

5.2) As additional consideration for the transactions contemplated by this Agreement, Automotive shall pay Security the sum of $7,500,000.00 within 30 days following the first to occur of:

(i) a “Change in Control” of Automotive;

(ii) the assignment by Automotive or any of its successors or assigns of, or the entering of an agreement to assign, any of the Automotive Trademarks, Bow Tie Trademarks, Base Trademarks or any other trademark, service mark, trade dress or trade name comprised of, in whole or in part, the term “Borg Warner”, “B” or “W” or variations thereof other than to a “Subsidiary;” or

(iii) the license by Automotive or any of its successors or assigns of, or the entering of an agreement to license, any of the Automotive Trademarks, Bow Tie Trademarks, Base Trademarks or any other trademark, service mark, trade dress or trade name comprised of, in whole or in part, the term “Borg Warner”, “B” or “W” or variations thereof, other than as provided in paragraph 3.3 of this Agreement.

As used herein, a “Change in Control” shall be deemed to have occurred when (i) more than 50% of Automotive's Board of Directors (the “Board”) consists of individuals who were not members of the Board on August 24, 1993, and whose election, or nomination for election, was not approved by a vote of at least 75 % of the directors then in the office, who either were directors on August 24, 1993 or whose election or nomination for election was previously so approved or (ii) any person or group (within the meaning of Rule 13d-3 promulgated under the Security Exchange Act of 1934),

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other than Merrill Lynch & Co. and its affiliates and members of Automotive's management on August 24, 1993, shall become or be the owner, directly or indirectly, beneficially or of record, of shares representing more than 50% of the aggregate ordinary voting power represented by the issued and outstanding capital stock of Automotive on a fully diluted basis. As used herein, “Subsidiary” means any corporation with respect to which Automotive or one of its Subsidiaries has the power to vote or direct the voting of sufficient securities to elect a majority of the directors.

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ARTICLE VI - ENFORCEMENT OF TRADEMARK RIGHTS

6.1) The parties agree and acknowledge that the enforcement of the Automotive Trademarks, the Bow Tie Trademarks, Security Trademarks, Base Trademarks and other trademarks, service marks, trade dress and trade names comprised, in whole or in part, of the term “Borg Warner”, “B” and “W” and variations thereof by their respective owners, is integral to the maintenance of the strength, goodwill and value thereof. Security and Automotive shall (i) maintain a consistent and high level of quality, at least equal to that which has previously been employed, for the products and services offered under such marks and (ii) correctly use and properly identify such marks.

6.2) Automotive will, at its reasonable discretion and sole expense, register, maintain and police the Automotive Trademarks, the Bow Tie Trademarks, Base Trademarks in the Automotive Field, and any trademarks, service marks, trade dress and trade names comprised, in whole or in part, of the term “Borg Warner”, “B” and “W” and variations thereof, which Automotive hereafter adopts or uses consistent with Paragraph 3.2 hereof.

6.3) Security will, at its reasonable discretion and sole expense, register, maintain and police the Security Trademarks, Base Trademarks outside the Automotive Field, and any trademarks, service marks, trade dress and trade names comprised, in whole or in part, of the term “Borg Warner”, “B” and “W” and variations thereof, which Security hereafter adopts or uses consistent with Paragraph 3.1 hereof.

6.4) Each party will promptly provide the other with written notification upon learning of the use by a third party of a trademark, service mark, trade dress or trade name that is the same as or substantially similar to any trademark, service mark, trade dress or trade name comprised, in whole or in part, of the term “Borg Warner”, “B” and “W” or any variation thereof, used at any time by Security or

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Automotive (the “Infringing Mark”). Either party may join any enforcement action initiated by the other party against any use by any third party of any Infringing Mark, at its sole expense, as long as joining does not adversely affect the rights of the initiating party. In any event, each party shall cooperate with the other in any enforcement action reasonably brought and prosecuted by either party against any use by any third party of any Infringing Mark, and each party shall bear its own expenses and costs, including attorneys' fees incurred in providing such cooperation. In the event damages (or sanctions) are awarded in any such action, each party shall be responsible for and/or entitled to such damages (or sanctions) as are proved by or against it.

ARTICLE VII - RELEASE AND INDEMNIFICATION

7.1) Security and Automotive hereby release and forever discharge each other, and covenant not to sue each other, for and from any and all claims, causes of action, damages, and liabilities arising from the use of the trademarks, service marks, trade dress and trade names comprised, in whole or in part, of the term “Borg Warner”, “B” and “W” and variations thereof, as are permitted under this Agreement.

7.2) Automotive agrees to indemnify and hold Security harmless from and against, and to defend against, any loss, liability, damage, claim or expense (including reasonable attorneys' fees and court costs) (“Loss”) resulting from, arising out of, relating to, or caused by (i) Automotive's breach of any term of this Agreement, (ii) Automotive's use of any trademarks, service marks, trade dress and trade names comprised, in whole or in part, of the term “Borg Warner”, “B” or “W” or variations thereof, and (iii) the assignment of rights, interests or obligations herein, provided that Automotive shall not have any obligation to indemnify Security under this clause (iii) from and against any

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Loss that results from, arises out of, relates to, or is caused by a challenge by any governmental entity or administrative body.

7.3) Security agrees to indemnify and hold Automotive harmless from and against, and to defend against, any Loss resulting from, arising out of, relating to, or caused by (i) Security's breach of any term of this Agreement, and (ii) Security's use of any trademarks, service marks, trade dress and trade names comprised, in whole or in part, of the term “Borg Warner”, “B” or “W” or variations thereof.

ARTICLE VIII - ARBITRATION

8.1) Any controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall be settled by arbitration in Chicago, Illinois, in accordance with the Rules of the American Arbitration Association, and judgment upon the award rendered by the arbitrator may be entered into any court having jurisdiction thereof.

8.2) The arbitrator shall resolve any controversies, disputes or claims in accordance with the terms of this Agreement interpreted in accordance with the law of Illinois, and applicable federal law acting always as an impartial judge without a jury and not as mediator or conciliator. Depositions may be taken and other discovery obtained during such arbitration proceedings to the same extent as authorized in civil judicial proceedings in the State of Illinois. The arbitration award, which may include equitable relief, shall state in writing the reasons for the award and, in connection therewith, set for the arbitrator's findings of fact and conclusions of law.

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ARTICLE IX - MISCELLANEOUS PROVISIONS

9.1) This Agreement shall be binding upon the parties, their successors and assigns. This Agreement shall not confer any rights or remedies upon any person other than the parties and their respective successors and permitted assigns.

9.2) This Agreement constitutes the entire agreement between Security and Automotive with respect to the subject matter hereof and no other representations, oral or otherwise, have been relied upon.

9.3) The parties will execute such other documents as are necessary and reasonable to effect the purpose of this Agreement.

9.4) This Agreement shall be deemed drafted by both parties, and entered into after review and with advise of counsel.

9.5) The rights and obligations under this Agreement shall not become effective unless and until approved by the parties' respective Boards of Directors.

9.6) This Agreement shall be governed by and construed in accordance with the internal laws (and not the law of conflicts) of the State of Illinois and the applicable federal law of the United States.

9.7) All notices required under this Agreement shall be sent to the attention of the General Counsel at the respective parties, at the above addresses, or as otherwise directed by the parties.

9.8) Each party hereto will have all rights and remedies set forth in this Agreement and all rights and remedies which such parties have been granted at any time under any other existing agreement or contract and under applicable law. Any person having rights under this Agreement will be entitled to enforce such rights specifically, to recover damages by reason of any breach of this Agreement and to exercise all other rights granted by law. In the event that either party shall institute any action specifically to enforce the other party's performance under this Agreement, such other party

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agrees to waive the defense that the enforcing party has an adequate remedy at law and to interpose no opposition, legal or otherwise, as to the propriety of specific performance as a remedy.

9.9) The obligations and restrictions imposed upon Automotive under this Agreement, including but not limited to Paragraph 5.2, shall not apply to the mark or name “BORG & BECK” and equivalents thereof.

In witness whereof, the parties have caused this Agreement to be executed as of the date first above written.

BORG-WARNER SECURITY            BORG-WARNER AUTOMOTIVE, INC.

CORPORATION

BY:            /s/                BY:            /s/            

TYPED NAME:DONALD C. TRAUSCHT    TYPED NAME:J. GORDAN AMEDEE

TITLE:    President                TITLE:    Chairman            

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SCHEDULE A

“Automotive Trademarks”

I.    United States Trademark Registrations and Registration Applications

United States Registration No. 1,412,239

United States Registration No. 1,414,891

United States Registration Application No. 74/351,180

BORG-WARNER AUTOMOTIVE

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SCHEDULE A CONTINUED

BorgWarner

Automotive

BorgWarner Automotive

BorgWarner Automotive

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SCHEDULE A CONTINUED

II.    Trade Names

Borg-Warner Automotive, Inc.

Borg-Warner Automotive Transmission & Engine Components Corporation

Borg-Warner Automotive Diversified Transmission Products Corporation

Borg-Warner Automotive Electronic & Mechanical Systems Corporation

Borg-Warner Automotive Powdered Metals Corporation

Borg-Warner de Mexico, S.A. de C.V.

B.W. Componentes Mexicanos de Transmisiones, S.A. de C.V.

Borg-Warner Automotive K.K.

Borg-Warner Automotive GmbH

Borg-Warner Automotive Korea, Inc.

Borg-Warner Automotive (Canada) Limited

Borg & Beck Torque Systems, Inc.

Regina-Warner S.p.A.

NSK-Warner K.K.

Warner-Ishi Corporation

Beijing Warner Gear Co., Ltd.

Borg-Warner Automotive

Borg-Warner Marine and Industrial

Borg-Warner Automotive Europe Corporation

Borg-Warner Automotive Japan Corporation

Borg-Warner Automotive Mexico Corporation

Borg-Warner Automotive NW Corporation

Borg-Warner Automotive W/I Corporation

BWA Receivables Corporation

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SCHEDULE B

“Security Trademarks”

I. Unites States Trademark Registration Applications

United States Registration Application Serial No. 74/357,296

BORG-WARNER SECURITY and horse & rider design

United States Registration Application Serial No. 74/356,400

BORG-WARNER SECURITY

United States Registration Application Serial No. 74/359,780

BORG-WARNER SECURITY CORPORATION

II. Trade Names

Borg-Warner Security Corporation

Borg-Warner Security

Borg-Warner Protective Services Corporation

Borg-Warner Information Services Inc.

Borg-Warner Equities Corporation

Borg-Warner Equities Corporation of California

Borg-Warner Equities of Monterey, Inc.

Borg-Warner Insurance Holding Corporation

Borg-Warner International Corporation

B-W Canada Alarm (Wells Fargo) Corporation

B-W Canadian Guard Corporation

B-W Columbian Guard Corporation

B-W U.K. Guard Corporation

B-W Chemicals Corporation

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SCHEDULEC

I.United States Trademark Registrations

United States Registration No. 787,366

United States Registration No. 790,159

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SCHEDULE C CONTINUED

II. Trade Dress

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SCHEDULE D

“Base Trademarks”

I. United States Trademark Registrations

United States Registration No. 1,412,240

BORG-WARNER

II. Common Law Trademarks

BorgWarner

Warner

Borg

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EX-10.29

Exhibit 10.29

AMENDMENT TO ASSIGNMENT OF TRADEMARKS

AND LICENSE AGREEMENT

This Amendment to Assignment of Trademarks and License Agreement ("Amendment") is entered into as of the 31st day of July, 1998, by and between Borg-Warner Security Corporation ("BWSC") and Borg-Warner Automotive, Inc. ("BWA") (collectively referred to as the "Parties").

WHEREAS, the Parties entered into an Assignment of Trademarks and License Agreement dated November 2, 1994 (the "1994 Agreement") which relates to the use and ownership of the Borg-Warner Trademarks, as therein defined, by BWSC and BWA.

WHEREAS, the Parties desire upon the terms and conditions set forth herein to prospectively modify the 1994 Agreement and for BWSC to transfer its remaining interest in the Borg-Warner Trademarks to BWA.

WHEREAS, the Parties desire that BWA license back to BWSC usage rights in transferred trademarks and trade names on a royalty-free basis for a period of time.

WHEREAS, BWSC recognizes that BWA has already paid to BWSC the amounts required under Paragraph 5.1 of the 1994 Agreement and BWSC acknowledges that effective with this Amendment, Paragraph 5.2 will be deleted.

NOW, THEREFORE, for and in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows:

1. BWA hereby agrees to pay BWSC on July 31, 1998 the sum of Three Million Six Hundred Fifty Thousand Six Hundred Fifty Dollars and no cents ($3,650,650).

2. Effective July 31, 1998, the 1994 Agreement is amended as follows:

a. Delete Paragraph 2.2 in its entirety and replaced with the following:

2.2) Security hereby assigns to Automotive all of its right, title and interest worldwide in and to the Base Trademarks, Automotive Trademarks and Bow Tie Trademarks outside the Automotive Field, together with the goodwill of the business associated with such marks, and all United States and Foreign Registrations and Registration Applications therefor. Security agrees that it will not challenge or contest the validity of the Base Trademarks, Automotive Trademarks or Bow Tie Trademarks used or licensed by Automotive outside the Automotive Field.

b. Paragraphs 2.3 and 2.4 are added as follows:

2.3) Security hereby assigns to Automotive all of its right, title and interest worldwide in and to the trademarks and trade names identified in the "Revised Schedule B" to this Amendment ("Security Trademarks"), together with the goodwill of the business associated with such marks, and all United States and Foreign Registrations and Registration Applications therefor. Security Agrees that it will not challenge or contest the validity of the Security Trademarks.

2.4) Promptly after the earlier of (a) receipt by Automotive of written request by Security or (b) the expiration or termination of the trademark license of the Security Trademarks under the

Trademark and Trade Name Licensing Agreement between Borg-Warner Security Corporation and Borg-Warner Automotive, Inc. dated as of July 31, 1998 ("1998 Agreement"), Automotive will expressly abandon the following United States Registrations and Registration Applications resulting therefrom:

(i) United States Registration No. 2,084,200

"BORG-WARNER SECURITY" and the horse & rider design

(ii) United States Registration No. 2,037,366

"BORG-WARNER SECURITY CORPORATION"

(iii) United States Registration No. 2,021,122

"BORG-WARNER SECURITY"

c. Delete Article III, including Paragraphs 3.1, 3.2 and 3.3, in its entirety and replaced as follows:

ARTICLE III - REPRESENTATION, WARRANTY AND COVENANT

3.1) Security represents and warrants that, to the best of Security's knowledge, Security has not used and is not currently using any of the Borg-Warner Trademarks or derivative or variation thereof, other than those marks and names listed on Revised Schedule B attached to this Amendment.

3.2) Security agrees that it will not use "Borg Warner" or any variation thereof as, in whole or in part, a company name, trade name, trademark, service mark, or the like, except as licensed from Automotive.

d. Delete Paragraphs 5.1 and 5.2 in their entirety.

e. Delete Article VI, including Paragraphs 6.1, 6.2, 6.3 and 6.4, in its entirety.

f. Delete Paragraph 7.1 in its entirety.

3. This Amendment, and the Revised Schedule B attached hereto, together with the 1994 Agreement, constitute the entire agreement between Security and Automotive with respect to the subject matter hereof and not other representations, oral or otherwise, have been relied upon.

4. The Parties will execute such other documents as are reasonable and necessary to effectuate the purpose of this Amendment, including but not limited to the 1998 Agreement.

5. The signatories hereto represent that they have the full authority to bind their respective principals or entities for whom they are signing to the terms and provisions of this Agreement.

IN WITNESS WHEREOF, the Parties have caused this Amendment to be executed as of the date first above written.

BORG-WARNER SECURITY CORPORATION BORG-WARNER AUTOMOTIVE, INC.

By: /s/ By: /s/ Laurene H. Horiszny

Title: Vice President and General Counsel Title: Vice President, General Counsel

and Secretary

REVISED

SCHEDULE B

Security Trademarks

I.United States Trademark Registrations

BORG-WARNERReg. No. 2,009,375

BORG-WARNER SECURITY and Design Reg. No. 2,084,200

BORG-WARNER SECURITY Reg. No. 2,021,122

BORG-WARNER, SECURITY CORPORATIONReg. No. 2,037,366

II.Trade Names

Borg-Warner Security

Borg-Warner Security Corporation

Borg-Warner Equities Corporation

Borg-Warner Equities Corporation of California

Borg-Warner Equities of Monterey, Inc.

Borg-Warner Foundation, Inc,

Borg-Warner Government Services, Inc.

Borg-Warner Information Services, Inc.

Borg-Warner Insurance Holding Corporation

Borg-Warner International Corporation

Borg-Warner Protective Services Corporation

Borg-Warner Services

Borg-Warner Staffing

B-W Canadian Guard Corporation

B-W Columbia Guard Corporation

B-W U.K. Guard Corporation

B-W Chemicals Corporation

EX-21.1

Exhibit 21.1

BORGWARNER INC. (Parent)*

NAME OF SUBSIDIARY

BorgWarner TorqTransfer Systems Inc.

BorgWarner Powdered Metals Inc.

BorgWarner South Asia Inc.

Divgi-Warner Private Limited

BorgWarner Automotive Asia Limited

BorgWarner Automotive Components (Ningbo) Co., Ltd.

BorgWarner Shenglong (Ningbo) Co. Ltd.

BorgWarner TorqTransfer Systems Beijing Co., Ltd.

BorgWarner United Transmission Systems Co., Ltd.

BorgWarner Diversified Transmission Products Inc.

BorgWarner Diversified Transmission Products Services Inc.

BorgWarner Drivetrain Management Services de Mexico S.A. de C.V.

BorgWarner Drivetrain de Mexico S.A. de C.V.

BorgWarner Poland Sp. z.o.o

BorgWarner Drivetrain Engineering GmbH

BorgWarner TorqTransfer Systems Ochang Inc.

BorgWarner Emissions Systems Inc.

BorgWarner Emissions Systems of Michigan Inc.

BorgWarner Emissions Systems Holding Inc.

BorgWarner Thermal Systems Inc.

BorgWarner Thermal Systems of Michigan Inc.

BorgWarner Cooling Systems (India) Private Limited

BorgWarner Morse TEC Inc.

BorgWarner Canada Inc.

BorgWarner Japan Inc.

BorgWarner Morse TEC Japan K.K.

BorgWarner Morse TEC Mexico, S.A. de C.V.

BorgWarner Morse TEC Private Limited

BorgWarner Morse TEC Korea Ltd.

BorgWarner Transmission Systems Inc.

BorgWarner Transmission Systems Monaco S.A.M.

BorgWarner NW Inc.

BorgWarner Transmission Systems Korea Ltd.

Transmission Systems AutoForm Ltd.

NSK-Warner K.K.

NSK-Warner (Shanghai) Co., Ltd.

NSK-Warner U.S.A., Inc.

BorgWarner Europe Inc.

BorgWarner Holding Inc.

BorgWarner Transmission Systems Tulle S.A.S.

BorgWarner Turbo & Emissions Systems France S.A.S.

BW Holding Ltd.

BorgWarner Europe GmbH

BorgWarner Holdings Limited

BorgWarner Limited

Kysor Europe Limited

Morse TEC Europe S.r.l.

BorgWarner Germany GmbH

BorgWarner BERU Systems GmbH

BERU Italia S.r.l.  

Exhibit 21.1

BERU Mexico S.A. de C.V.

BorgWarner BERU Systems Kandel GmbH

BorgWarner BERU Systems Korea Co., Ltd.

BERU Diesel Start Systems Pvt. Ltd.

BorgWarner BERU Systems Ireland Ltd.

BorgWarner Cooling Systems GmbH

BorgWarner Spain Holding, S.L.

BorgWarner Emissions Systems Spain, S.L.

BorgWarner Emissions Systems India Private Limited

BorgWarner Emissions Systems Portugal, Unipessoal LDA

BorgWarner IT Services Group Europe GmbH

BorgWarner TorqTransfer Systems AB

BorgWarner TorqTransfer Systems Holding AB

BorgWarner TTS Kft.

BorgWarner TTS, S. de R.L. de C.V.

BorgWarner Transmission Systems Arnstadt GmbH

BorgWarner Transmission Systems GmbH

BorgWarner Vertriebs und Verwaltungs GmbH

BorgWarner Turbo Systems Worldwide Headquarters GmbH

BorgWarner Turbo Systems GmbH

BorgWarner Turbo Systems Alkatreszgyarto Kft.

BorgWarner Turbo Systems Engineering GmbH

Creon Insurance Agency Limited

BorgWarner Trustees Limited

Kuhlman Corporation

BWA Turbo Systems Holding Corporation

BorgWarner Turbo Systems Inc.

BorgWarner Turbo Systems of Michigan Inc.

BorgWarner Cooling Systems Korea, Inc.

BorgWarner Brasil Ltda.

SeohanWarner Turbo Systems, Ltd.

Bronson Specialties Inc.

BWA Receivables Corporation

BorgWarner Comercial e Distribuidora de Pecas para Veiculos Automotores Ltda.

BorgWarner Investment Holding Inc.

BorgWarner (China) Investment Co., Ltd.

BorgWarner Turbo and Emissions Systems de Mexico S.A. de C.V.

BorgWarner (Thailand) Limited

BorgWarner (China) Research & Development Co., Ltd.

*This list includes significant equity investees.

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-12939, 333-45423, 333-45507, 333-45491, 333-45493, 333-45495, 333-45499, 333-51647, 333-67131, 333-67133, 333-67135, 333-85289, 333-85291, 333-85293, 333-85295, 333-85301,333-95207, 333-35716; 333-35718, 333-333-35720, 333-35722, 333-35724, 333-117171, 333-118203, 333-118202, 333-118201, 333-118200, 333-122204, 333-124086, 333-134167, 333-136604, 333-136605, 333-136606, 333-150568, 333-150569, 333-150570, 333-150571, 333-150572, 333-159694) and Registration Statements on Form S-3 (Nos. 333-06041, 333-14717, 333-20485, 333-31259, 333-66879, 333-84931, 333-99007, 333-106787, 333-163928, 333-172198) of BorgWarner Inc. of our report dated February 14, 2013 relating to the financial statements and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.

/s/  PricewaterhouseCoopers LLP

Detroit, Michigan

February 14, 2013

EX-31.1

Exhibit 31.1

Certification of the Principal Executive Officer

Pursuant to 15 U.S.C. 78m(a) or 78o(d)

(Section 302 of the Sarbanes-Oxley Act of 2002)

I, James R. Verrier, certify that:

1. I have reviewed this annual report on Form10-K of BorgWarner Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: February 14, 2013

/s/   James R. Verrier

James R. Verrier

President & Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of the Principal Financial Officer

Pursuant to 15 U.S.C. 78m(a) or 78o(d)

(Section 302 of the Sarbanes-Oxley Act of 2002)

I, Ronald T. Hundzinski, certify that:

1. I have reviewed this annual report on Form10-K of BorgWarner Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a)  All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: February 14, 2012

/s/   Ronald T. Hundzinski

Ronald T. Hundzinski

Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

Certifications of Chief Executive Officer

and Chief Financial Officer

Pursuant to 18 U.S.C. Section 1350

In connection with the Annual Report of BorgWarner Inc. (the “Company”) on Form 10-K for the period ended December 31, 2012 (the “Report”), each of the undersigned officers of the Company certifies, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to the best of such officer's knowledge:

(1)  the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: February 14, 2013

/s/ James R. Verrier

James R. Verrier

President and Chief Executive Officer

/s/ Ronald T. Hundzinski

Ronald T. Hundzinski

Vice President and Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to BorgWarner Inc. and will be retained by BorgWarner Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Reporting Segments and Related Information (Tables)

12 Months Ended

Dec. 31, 2012

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment [Table Text Block]

2012 Segment information
	Net sales								Year-end assets		Depreciation/ amortization		Long-lived asset expenditures (b)
(millions of dollars)	Customers		Inter-segment			Net
Engine	$	4,884.5	$	28.5		$	4,913.0		$	3,299.2	$	177.8	$	269.9
Drivetrain	2,298.7		—			2,298.7			1,652.2		91.3		125.6
Inter-segment eliminations	—		(28.5		)	(28.5		)	—		—		—
Total	7,183.2		—			7,183.2			4,951.4		269.1		395.5
Corporate (a)	—		—			—			1,449.4		19.5		11.9
Consolidated	$	7,183.2	$	—		$	7,183.2		$	6,400.8	$	288.6	$	407.4

2011 Segment information
	Net sales								Year-end assets		Depreciation/ amortization		Long-lived asset expenditures (b)
(millions of dollars)	Customers		Inter-segment			Net
Engine	$	5,030.2	$	20.4		$	5,050.6		$	3,329.0	$	188.6	$	264.3
Drivetrain	2,084.5		—			2,084.5			1,562.8		80.0		115.9
Inter-segment eliminations	—		(20.4		)	(20.4		)	—		—		—
Total	7,114.7		—			7,114.7			4,891.8		268.6		380.2
Corporate (a)	—		—			—			1,066.8		14.4		13.5
Consolidated	$	7,114.7	$	—		$	7,114.7		$	5,958.6	$	283.0	$	393.7

2010 Segment information
	Net sales								Year-end assets		Depreciation/ amortization		Long-lived asset expenditures (b)
(millions of dollars)	Customers		Inter-segment			Net
Engine	$	4,041.4	$	19.4		$	4,060.8		$	3,277.7	$	184.4	$	181.3
Drivetrain	1,611.4		—			1,611.4			1,230.5		63.6		83.5
Inter-segment eliminations	—		(19.4		)	(19.4		)	—		—		—
Total	5,652.8		—			5,652.8			4,508.2		248.0		264.8
Corporate (a)	—		—			—			1,046.8		4.9		11.8
Consolidated	$	5,652.8	$	—		$	5,652.8		$	5,555.0	$	252.9	$	276.6

_______________

(a) Corporate assets include investments and advances and deferred income taxes.

(b) Long-lived asset expenditures include capital expenditures and tooling outlays.

Adjusted earnings before interest, income taxes and noncontrolling interest ("Adjusted EBIT")

	Year Ended December 31,
(millions of dollars)	2012			2011			2010
Engine	$	786.4		$	774.3		$	537.9
Drivetrain	209.1			161.2			137.0
Adjusted EBIT	995.5			935.5			674.9
Loss from disposal activities	39.7			21.5			—
Restructuring expense	27.4			—			—
Retirement related obligations	17.3			—			—
Patent infringement settlement, net of legal costs incurred	—			(29.1		)	—
Environmental litigation settlement	—			—			28.0
BERU - Eichenauer equity investment gain	—			—			(8.0		)
Corporate, including equity in affiliates' earnings and stock-based compensation	115.4			107.4			111.0
Interest income	(4.7		)	(4.8		)	(2.8		)
Interest expense and finance charges	39.4			74.6			68.8
Earnings before income taxes and noncontrolling interest	761.0			765.9			477.9
Provision for income taxes	238.6			195.3			81.7
Net earnings	522.4			570.6			396.2
Net earnings attributable to the noncontrolling interest, net of tax	21.5			20.5			18.8
Net earnings attributable to BorgWarner Inc.	$	500.9		$	550.1		$	377.4

Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas [Table Text Block]

	Net sales						Long-lived assets
(millions of dollars)	2012		2011		2010		2012		2011		2010
United States	$	1,857.2	$	1,674.0	$	1,451.1	$	508.1	$	492.6	$	466.6
Europe:
Germany	1,871.3		2,200.0		1,839.9		432.2		420.4		447.5
Hungary	448.9		503.2		418.3		64.3		56.9		53.0
France	335.2		363.0		318.7		45.9		63.2		63.0
Other Europe	1,015.1		917.8		546.1		225.8		194.6		173.7
Total Europe	3,670.5		3,984.0		3,123.0		768.2		735.1		737.2
South Korea	505.6		471.7		358.0		140.4		124.5		94.8
China	499.1		416.6		330.6		184.3		148.0		104.9
Other foreign	650.8		568.4		390.1		187.0		164.1		139.1
Total	$	7,183.2	$	7,114.7	$	5,652.8	$	1,788.0	$	1,664.3	$	1,542.6

Schedule of Quarterly Financial Information [Table Text Block]

(millions of dollars, except per share amounts)	2012															2011
Quarter ended	Mar-31			Jun-30			Sep-30			Dec-31			Year			Mar-31			Jun-30			Sep-30			Dec-31			Year
Net sales	$	1,912.5		$	1,856.4		$	1,695.2		$	1,719.1		$	7,183.2		$	1,730.4		$	1,818.8		$	1,791.8		$	1,773.7		$	7,114.7
Cost of sales	1,516.7			1,473.2			1,351.5			1,374.9			5,716.3			1,387.6			1,461.7			1,441.0			1,414.0			5,704.3
Gross profit	395.8			383.2			343.7			344.2			1,466.9			342.8			357.1			350.8			359.7			1,410.4
Selling, general and administrative expenses	169.0			153.1			151.0			156.2			629.3			165.1			157.7			151.4			146.8			621.0
Other (income) expense	1.1			36.6			29.7			17.3			84.7			(1.6		)	(28.9		)	0.6			21.8			(8.1		)
Operating income	225.7			193.5			163.0			170.7			752.9			179.3			228.3			198.8			191.1			797.5
Equity in affiliates’ earnings, net of tax	(9.2		)	(12.5		)	(11.1		)	(10.0		)	(42.8		)	(8.4		)	(8.1		)	(11.5		)	(10.2		)	(38.2		)
Interest income	(1.4		)	(1.3		)	(1.0		)	(1.0		)	(4.7		)	(1.0		)	(1.2		)	(1.3		)	(1.3		)	(4.8		)
Interest expense and finance charges	15.1			12.6			5.0			6.7			39.4			18.4			20.5			18.5			17.2			74.6
Earnings before income taxes and noncontrolling interest	221.2			194.7			170.1			175.0			761.0			170.3			217.1			193.1			185.4			765.9
Provision for income taxes	57.5			68.5			64.2			48.4			238.6			40.9			49.8			46.4			58.2			195.3
Net earnings	163.7			126.2			105.9			126.6			522.4			129.4			167.3			146.7			127.2			570.6
Net earnings attributable to the noncontrolling interest, net of tax	5.7			5.6			4.8			5.4			21.5			4.9			5.3			5.1			5.2			20.5
Net earnings attributable to BorgWarner Inc. (a)	$	158.0		$	120.6		$	101.1		$	121.2		$	500.9		$	124.5		$	162.0		$	141.6		$	122.0		$	550.1
Earnings per share — basic	$	1.46		$	1.08		$	0.88		$	1.05		$	4.45		$	1.13		$	1.49		$	1.30		$	1.12		$	5.04
Earnings per share — diluted	$	1.28		$	1.00		$	0.85		$	1.03		$	4.17		$	1.00		$	1.31		$	1.15		$	1.00		$	4.45

_______________

(a) The Company's results were impacted by the following:

• Quarter ended December 31, 2012: Retirement related obligations of $17.3 million are comprised of a $5.7 million loss resulting from the settlement of a portion of the Muncie Plant's pension obligation and an $11.6 million expense associated with the retirement of certain Named Executive Officers. These obligations were partially offset by a $6.1 million tax benefit. The Company incurred tax expense of $3.9 million which included $11.1 million of U.S. tax expense to correct the income taxes payable balance, partially offset by tax benefits resulting from changes to the statutory income tax rate in certain countries and the settlement of certain tax audits.

• Quarter ended September 30, 2012: The Company incurred $1.8 million of expense and $11.2 million of tax expense associated with the completion of the sale of its spark plug business. The Company also recorded restructuring expense of $27.4 million primarily associated with the disposal and future requirements of BERU's on-going business, which was partially offset by a tax benefit of $7.7 million. Additionally, the Company incurred tax expense of $6.9 million primarily resulting from the settlement of certain tax audits.

• Quarter ended June 30, 2012: The Company recorded expense of $37.9 million primarily due to the write-down of prior purchase price accounting adjustments included within the disposal group as a result of signing a Master Purchase Agreement to sell the spark plug business to Federal-Mogul Corporation, which was partially offset by a tax benefit of $5.5 million resulting from the write-down. Additionally, the Company recorded tax expense of $9.0 million related to its decision to change its cash repatriation assertion for some of its foreign subsidiaries.

• Quarter ended December 31, 2011: The Company incurred $21.5 million in expense associated with the loss on sale of the tire pressure monitoring business, including costs related to the divestiture, and a write-down of a portion of the ignitor and electronic business. The Company recorded $1.4 million of tax benefit associated with the disposals and $4.1 million of tax expense related to an intercompany disposal transaction.

• Quarter ended June 30, 2011: The Company recorded a $29.1 million patent infringement settlement gain, net of legal costs incurred, which was partially offset by $11.0 million of additional tax expense. Additionally, the Company recorded $6.2 million related to tax adjustments resulting from a change in state corporate income tax legislation as well as an adjustment of the Company's tax accounts as a result of the closure of certain tax audits.

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Goodwill and Other Intangibles - Acquired Finite-lived Intangible Assets (Details) (USD $) In Millions, unless otherwise specified			1 Months Ended					1 Months Ended
	Jun. 02, 2009 Etatech, Inc. [Member]	Jan. 31, 2011 Haldex [Member]	Jan. 31, 2011 Haldex [Member] Unpatented technology	Jan. 31, 2011 Haldex [Member] Customer relationships	Jan. 03, 2011 Haldex [Member] Customer relationships	Jan. 03, 2011 Haldex [Member] Patented and unpatented technology [Member]	Jan. 03, 2011 Haldex [Member] Other Intangible Assets [Member]	Jan. 31, 2011 Haldex [Member] Unamortized trade names
Acquired Finite-Lived Intangible Assets [Line Items]
Business acquisition, percentage of voting interests acquired		100.00%
Acquired Finite-lived Intangible Asset, Amount	$ 10.8				$ 96.7	$ 17.5	$ 3.0
Amortized intangible assets, useful life, minimum			11 years	12 years				2 years

XML

Income Taxes - Deferred Tax Assets (Liabilities) (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2012		Dec. 31, 2011
Deferred Tax Assets (Liabilities), Net [Abstract]
Deferred income taxes — current assets	$ 94.7		$ 58.5
Deferred income taxes — current liabilities	(1.4)		(6.5)
Other non-current assets	244.1	[1]	313.9	[1]
Other non-current liabilities	(89.4)	[1]	(120.2)	[1]
Net deferred tax asset	$ 248.0		$ 245.7

[1] urrent and non-current assets and liabilities have been netted within their respective taxing jurisdictions.

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Retirement Benefit Plans - Health Care Trend Rates (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2012
Assumed health care cost trend rates [Abstract]
Health care cost trend rate assumed for next fiscal year	7.50%
Ultimate health care cost trend rate	5.00%
Effect of one-percentage point change in assumed health care cost trend rates [Abstract]
Effect of one percentage point increase on accumulated postretirement benefit obligation	$ 16.2
Effect of one percentage point decrease on accumulated postretirement benefit obligation	(14.3)
Effect of one percentage point increase on service and interest cost components	0.5
Effect of one percentage point decrease on service and interest cost components	$ (0.5)

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Product Warranty (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Movement in Standard and Extended Product Warranty, Increase (Decrease) [Roll Forward]
Beginning balance, January 1	$ 72.7	$ 66.8
Acquisition	0	4.5
Provisions	33.7	47.5
Payments	(42.8)	(43.5)
Translation adjustment	1.3	(2.6)
Ending balance, December 31	64.9	72.7
Product Warranty Accrual, Balance Sheet Classification [Abstract]
Accounts payable and accrued expenses	33.1	38.6
Other non-current liabilities	31.8	34.1
Total product warranty liability	$ 64.9	$ 72.7

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Reporting Segments and Related Information (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended										12 Months Ended
	Dec. 31, 2012		Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011		Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012		Dec. 31, 2011		Dec. 31, 2010
Segment Reporting Information [Line Items]
Net sales	$ 1,719.1		$ 1,695.2	$ 1,856.4	$ 1,912.5	$ 1,773.7		$ 1,791.8	$ 1,818.8	$ 1,730.4	$ 7,183.2		$ 7,114.7		$ 5,652.8
Inter-segment sales											0		0		0
Net sales by reportable segment											7,183.2		7,114.7		5,652.8
Year-end assets	6,400.8					5,958.6					6,400.8		5,958.6		5,555.0
Depreciation and amortization											288.6		283.0		252.9
Long-lived asset expenditures											407.4	[1]	393.7	[1]	276.6	[1]
Operating Segments [Member]
Segment Reporting Information [Line Items]
Net sales											7,183.2		7,114.7		5,652.8
Inter-segment sales											0		0		0
Net sales by reportable segment											7,183.2		7,114.7		5,652.8
Year-end assets	4,951.4					4,891.8					4,951.4		4,891.8		4,508.2
Depreciation and amortization											269.1		268.6		248.0
Long-lived asset expenditures											395.5	[1]	380.2	[1]	264.8	[1]
Engine [Member]
Segment Reporting Information [Line Items]
Net sales											4,884.5		5,030.2		4,041.4
Inter-segment sales											28.5		20.4		19.4
Net sales by reportable segment											4,913.0		5,050.6		4,060.8
Year-end assets	3,299.2					3,329.0					3,299.2		3,329.0		3,277.7
Depreciation and amortization											177.8		188.6		184.4
Long-lived asset expenditures											269.9	[1]	264.3	[1]	181.3	[1]
Drivetrain [Member]
Segment Reporting Information [Line Items]
Net sales											2,298.7		2,084.5		1,611.4
Inter-segment sales											0		0		0
Net sales by reportable segment											2,298.7		2,084.5		1,611.4
Year-end assets	1,652.2					1,562.8					1,652.2		1,562.8		1,230.5
Depreciation and amortization											91.3		80.0		63.6
Long-lived asset expenditures											125.6	[1]	115.9	[1]	83.5	[1]
Inter-segment eliminations [Member]
Segment Reporting Information [Line Items]
Net sales											0		0		0
Inter-segment sales											(28.5)		(20.4)		(19.4)
Net sales by reportable segment											(28.5)		(20.4)		(19.4)
Year-end assets	0					0					0		0		0
Depreciation and amortization											0		0		0
Long-lived asset expenditures											0	[1]	0	[1]	0	[1]
Corporate [Member]
Segment Reporting Information [Line Items]
Net sales											0	[2]	0	[2]	0	[2]
Inter-segment sales											0	[2]	0	[2]	0	[2]
Net sales by reportable segment											0	[2]	0	[2]	0	[2]
Year-end assets	1,449.4	[2]				1,066.8	[2]				1,449.4	[2]	1,066.8	[2]	1,046.8	[2]
Depreciation and amortization											19.5	[2]	14.4	[2]	4.9	[2]
Long-lived asset expenditures											$ 11.9	[1],[2]	$ 13.5	[1],[2]	$ 11.8	[1],[2]

[1] Long-lived asset expenditures include capital expenditures and tooling outlays.

[2] Corporate assets include investments and advances and deferred income taxes.

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Income Taxes - Income Tax Examinations (Details)	12 Months Ended
	Dec. 31, 2012
U.S. Federal
Major tax payer in tax Jurisdiction
Years no longer subject to examination	2010 and prior
China
Major tax payer in tax Jurisdiction
Years no longer subject to examination	2007 and prior
France
Major tax payer in tax Jurisdiction
Years no longer subject to examination	2007 and prior
Germany
Major tax payer in tax Jurisdiction
Years no longer subject to examination	2007 and prior
Hungary
Major tax payer in tax Jurisdiction
Years no longer subject to examination	2008 and prior
Japan
Major tax payer in tax Jurisdiction
Years no longer subject to examination	2011 and prior
Sweden
Major tax payer in tax Jurisdiction
Years no longer subject to examination	2006 and prior
South Korea
Major tax payer in tax Jurisdiction
Years no longer subject to examination	2006 and prior

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Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2012

Derivative [Line Items]

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value [Text Block]

	Assets					Liabilities
(millions of dollars)	Location	December 31, 2012		December 31, 2011		Location	December 31, 2012		December 31, 2011
Foreign currency	Prepayments and other current assets	$	5.7	$	2.6	Accounts payable and accrued expenses	$	9.8	$	2.4
	Other non-current assets	$	0.2	$	0.1	Other non-current liabilities	$	—	$	0.5
Net investment hedges	Other non-current assets	$	—	$	—	Other non-current liabilities	$	58.1	$	85.0

Deferred Losses Reported In Other Comprehensive Income Loss [Text Block]

	Deferred gain (loss) in AOCI at						Gain (loss) expected to be reclassified to income in one year or less
(millions of dollars)	December 31, 2012			December 31, 2011
Foreign currency	$	(3.5	)	$	(0.6	)	$	(3.8	)
Net investment hedges	(54.5		)	(78.9		)	—
Total	$	(58.0	)	$	(79.5	)	$	(3.8	)

Derivatives Designated As Cash Flow Hedging Instruments [Text Block]

		Gain (loss) reclassified from AOCI to Income (effective portion)						Gain (loss) recognized in income (ineffective portion)
		Year Ended December 31,						Year Ended December 31,
(millions of dollars)	Location	2012		2011			Location	2012		2011
Foreign currency	Sales	$	5.3	$	(1.4	)	SG&A expense	$	—	$	—
Foreign currency	Cost of goods sold	$	3.5	$	(0.6	)	SG&A expense	$	0.1	$	—
Foreign currency	SG&A expense	$	—	$	0.5		SG&A expense	$	—	$	—
Net investment hedges	N/A						Interest expense	$	2.3	$	0.5

Net investment hedge contracts [Member]

Derivative [Line Items]

Foreign Exchange Derivative Contracts Outstanding [Text Block]

	Cross-currency swaps
(millions of dollars)	Notional in USD		Notional in local currency		Duration
Floating $ to Floating €	$	75.0	€	58.5	Oct - 19
Floating $ to Floating ¥	$	150.0	¥	17,581.5	Nov - 16

Foreign currency contracts [Member]

Derivative [Line Items]

Foreign Exchange Derivative Contracts Outstanding [Text Block]

Foreign currency derivatives (in millions)
Functional currency	Traded currency	Notional in traded currency December 31, 2012	Notional in traded currency December 31, 2011	Duration
British pound	Euro	28.8	64.8	Dec - 13
Euro	British pound	4.7	7.0	Dec - 13
Euro	Hungarian forint	9,300.0	5,400.0	Nov - 13
Euro	Japanese yen	6,760.0	—	Dec - 13
Euro	Polish zloty	87.4	24.5	Dec - 13
Euro	US dollar	15.2	16.1	Dec - 13
Japanese yen	US dollar	9.5	7.4	Dec - 13
Korean won	Euro	32.4	34.5	Dec - 14
Korean won	US dollar	17.5	2.4	Dec - 13
Mexican peso	Euro	—	9.2	Dec - 12
Mexican peso	US dollar	20.9	40.7	Dec - 13
Swedish krona	Euro	—	6.1	Dec - 12
US dollar	Euro	—	3.0	Dec - 12
US dollar	Indian rupee	111.1	—	Oct - 13
US dollar	Japanese yen	3,000.0	3,000.0	Mar - 13

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Reporting Segments and Related Information - Adjusted EBIT (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended																12 Months Ended
	Dec. 31, 2012		Sep. 30, 2012		Jun. 30, 2012		Mar. 31, 2012		Dec. 31, 2011		Sep. 30, 2011		Jun. 30, 2011		Mar. 31, 2011		Dec. 31, 2012		Dec. 31, 2011		Dec. 31, 2010
Segment Reporting Information [Line Items]
Adjusted EBIT																	$ 995.5		$ 935.5		$ 674.9
Loss on disposals																	(39.7)		(21.5)		0
Restructuring expense																	27.4		0		0
Retirement related obligations																	17.3		0		0
Patent infringement settlement, net of legal costs incurred																	0		29.1		0
Environmental litigation settlement																	0		0		28.0
BERU - Eichenauer equity investment gain																	0		0		(8.0)
Corporate, including equity in affiliates' earnings and stock-based compensation																	115.4		107.4		111.0
Interest income	1.0		1.0		1.3		1.4		1.3		1.3		1.2		1.0		4.7		4.8		2.8
Interest expense and finance charges	6.7		5.0		12.6		15.1		17.2		18.5		20.5		18.4		39.4		74.6		68.8
Earnings before income taxes and noncontrolling interest	175.0		170.1		194.7		221.2		185.4		193.1		217.1		170.3		761.0		765.9		477.9
Provision for income taxes	48.4		64.2		68.5		57.5		58.2		46.4		49.8		40.9		238.6		195.3		81.7
Net earnings	126.6		105.9		126.2		163.7		127.2		146.7		167.3		129.4		522.4		570.6		396.2
Net earnings attributable to the noncontrolling interest, net of tax	5.4		4.8		5.6		5.7		5.2		5.1		5.3		4.9		21.5		20.5		18.8
Net earnings attributable to BorgWarner Inc.	121.2	[1]	101.1	[1]	120.6	[1]	158.0	[1]	122.0	[1]	141.6	[1]	162.0	[1]	124.5	[1]	500.9	[1]	550.1	[1]	377.4
Engine [Member]
Segment Reporting Information [Line Items]
Adjusted EBIT																	786.4		774.3		537.9
Drivetrain [Member]
Segment Reporting Information [Line Items]
Adjusted EBIT																	$ 209.1		$ 161.2		$ 137.0

[1] The Company's results were impacted by the following:•Quarter ended December 31, 2012: Retirement related obligations of $17.3 million are comprised of a $5.7 million loss resulting from the settlement of a portion of the Muncie Plant's pension obligation and an $11.6 million expense associated with the retirement of certain Named Executive Officers. These obligations were partially offset by a $6.1 million tax benefit. The Company incurred tax expense of $3.9 million which included $11.1 million of U.S. tax expense to correct the income taxes payable balance, partially offset by tax benefits resulting from changes to the statutory income tax rate in certain countries and the settlement of certain tax audits. •Quarter ended September 30, 2012: The Company incurred $1.8 million of expense and $11.2 million of tax expense associated with the completion of the sale of its spark plug business. The Company also recorded restructuring expense of $27.4 million primarily associated with the disposal and future requirements of BERU's on-going business, which was partially offset by a tax benefit of $7.7 million. Additionally, the Company incurred tax expense of $6.9 million primarily resulting from the settlement of certain tax audits.•Quarter ended June 30, 2012: The Company recorded expense of $37.9 million primarily due to the write-down of prior purchase price accounting adjustments included within the disposal group as a result of signing a Master Purchase Agreement to sell the spark plug business to Federal-Mogul Corporation, which was partially offset by a tax benefit of $5.5 million resulting from the write-down. Additionally, the Company recorded tax expense of $9.0 million related to its decision to change its cash repatriation assertion for some of its foreign subsidiaries.•Quarter ended December 31, 2011: The Company incurred $21.5 million in expense associated with the loss on sale of the tire pressure monitoring business, including costs related to the divestiture, and a write-down of a portion of the ignitor and electronic business. The Company recorded $1.4 million of tax benefit associated with the disposals and $4.1 million of tax expense related to an intercompany disposal transaction.•Quarter ended June 30, 2011: The Company recorded a $29.1 million patent infringement settlement gain, net of legal costs incurred, which was partially offset by $11.0 million of additional tax expense. Additionally, the Company recorded $6.2 million related to tax adjustments resulting from a change in state corporate income tax legislation as well as an adjustment of the Company's tax accounts as a result of the closure of certain tax audits.

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Stock Incentive Plans - Performance Share Plans (Details) (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2012		Dec. 31, 2011		Dec. 31, 2010
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance Share Plan Expense, Liability Portion			$ 19.6		$ 16.6
Incremental modification expense	7.0
Performance Share Plans [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awarding of performance shares earned payable in cash	40.00%
Awarding of performance shares earned payable in common stock	60.00%
Compensation expense recognized in cash by Company over the performance period	40.00%
Compensation expense recognized in common stock by Company over the performance period	60.00%
Performance share plan expense	$ 35.5		$ 26.3		$ 23.9
Performance share plan, shares issued in period	558,000	[1]	538,180	[1]	104,205	[1]

[1] Shares are issued in February of the following year.

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Fair Value Measurements (Details) (Fair Value, Measurements, Recurring [Member], USD $) In Millions, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Estimate of Fair Value, Fair Value Disclosure [Member]
Assets, Fair Value Disclosure [Abstract]
Foreign currency contracts	$ 5.9	$ 2.7
Other non-current assets (insurance settlement agreement note receivable)	41.0	21.3
Liabilities, Fair Value Disclosure [Abstract]
Foreign currency contracts	9.8	2.9
Net investment hedge contracts	58.1	85.0
Fair Value, Inputs, Level 1 [Member]
Assets, Fair Value Disclosure [Abstract]
Foreign currency contracts	0	0
Other non-current assets (insurance settlement agreement note receivable)	0	0
Liabilities, Fair Value Disclosure [Abstract]
Foreign currency contracts	0	0
Net investment hedge contracts	0	0
Fair Value, Inputs, Level 2 [Member]
Assets, Fair Value Disclosure [Abstract]
Foreign currency contracts	5.9	2.7
Other non-current assets (insurance settlement agreement note receivable)	41.0	21.3
Liabilities, Fair Value Disclosure [Abstract]
Foreign currency contracts	9.8	2.9
Net investment hedge contracts	58.1	85.0
Fair Value, Inputs, Level 3 [Member]
Assets, Fair Value Disclosure [Abstract]
Foreign currency contracts	0	0
Other non-current assets (insurance settlement agreement note receivable)	0	0
Liabilities, Fair Value Disclosure [Abstract]
Foreign currency contracts	0	0
Net investment hedge contracts	$ 0	$ 0

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Earnings Per Share (Details) (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended																12 Months Ended
	Dec. 31, 2012		Sep. 30, 2012		Jun. 30, 2012		Mar. 31, 2012		Dec. 31, 2011		Sep. 30, 2011		Jun. 30, 2011		Mar. 31, 2011		Dec. 31, 2012		Dec. 31, 2011		Dec. 31, 2010
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Treasury stock received from bond hedge, shares																	6,500,000
Companys Weighted Average Share Price Of Bond Hedge																	$ 32.82
Treasury stock issued due to settlement of warrant, shares																	4,900,000
Investment Warrants, Exercise Price																	$ 38.61
Basic earnings per share [Abstract]
Weighted average shares of common stock outstanding																	112,652,000		109,229,000		114,155,000
Earnings per share — basic	$ 1.05		$ 0.88		$ 1.08		$ 1.46		$ 1.12		$ 1.30		$ 1.49		$ 1.13		$ 4.45		$ 5.04		$ 3.31
Diluted earnings per share [Abstract]
Net earnings attributable to BorgWarner Inc.	$ 121.2	[1]	$ 101.1	[1]	$ 120.6	[1]	$ 158.0	[1]	$ 122.0	[1]	$ 141.6	[1]	$ 162.0	[1]	$ 124.5	[1]	$ 500.9	[1]	$ 550.1	[1]	$ 377.4
Adjusted for net interest expense on convertible notes																	5.8		21.5		20.4
Diluted net earnings attributable to BorgWarner Inc.																	$ 506.7		$ 571.6		$ 397.8
Effect of 3.50% convertible senior notes																	3,322,000		11,389,000		11,389,000
Effect of warrant																	3,400,000		5,215,000		1,464,000
Effect of stock-based compensation																	2,003,000		2,635,000		2,567,000
Total dilutive effect on weighted average shares of common stock outstanding																	8,725,000		19,239,000		15,420,000
Weighted average shares of common stock outstanding including dilutive shares																	121,377,000		128,468,000		129,575,000
Earnings per share — diluted	$ 1.03		$ 0.85		$ 1.00		$ 1.28		$ 1.00		$ 1.15		$ 1.31		$ 1.00		$ 4.17	[2]	$ 4.45	[2]	$ 3.07	[2]
Bond hedge [Member]
Diluted earnings per share [Abstract]
Total anti-dilutive shares																	1,939,000		6,141,000		2,836,000
Convertible Senior Notes Due April 2012 [Member]
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Debt instrument stated interest rate	3.50%																3.50%

[1] The Company's results were impacted by the following:•Quarter ended December 31, 2012: Retirement related obligations of $17.3 million are comprised of a $5.7 million loss resulting from the settlement of a portion of the Muncie Plant's pension obligation and an $11.6 million expense associated with the retirement of certain Named Executive Officers. These obligations were partially offset by a $6.1 million tax benefit. The Company incurred tax expense of $3.9 million which included $11.1 million of U.S. tax expense to correct the income taxes payable balance, partially offset by tax benefits resulting from changes to the statutory income tax rate in certain countries and the settlement of certain tax audits. •Quarter ended September 30, 2012: The Company incurred $1.8 million of expense and $11.2 million of tax expense associated with the completion of the sale of its spark plug business. The Company also recorded restructuring expense of $27.4 million primarily associated with the disposal and future requirements of BERU's on-going business, which was partially offset by a tax benefit of $7.7 million. Additionally, the Company incurred tax expense of $6.9 million primarily resulting from the settlement of certain tax audits.•Quarter ended June 30, 2012: The Company recorded expense of $37.9 million primarily due to the write-down of prior purchase price accounting adjustments included within the disposal group as a result of signing a Master Purchase Agreement to sell the spark plug business to Federal-Mogul Corporation, which was partially offset by a tax benefit of $5.5 million resulting from the write-down. Additionally, the Company recorded tax expense of $9.0 million related to its decision to change its cash repatriation assertion for some of its foreign subsidiaries.•Quarter ended December 31, 2011: The Company incurred $21.5 million in expense associated with the loss on sale of the tire pressure monitoring business, including costs related to the divestiture, and a write-down of a portion of the ignitor and electronic business. The Company recorded $1.4 million of tax benefit associated with the disposals and $4.1 million of tax expense related to an intercompany disposal transaction.•Quarter ended June 30, 2011: The Company recorded a $29.1 million patent infringement settlement gain, net of legal costs incurred, which was partially offset by $11.0 million of additional tax expense. Additionally, the Company recorded $6.2 million related to tax adjustments resulting from a change in state corporate income tax legislation as well as an adjustment of the Company's tax accounts as a result of the closure of certain tax audits.

[2] * The Company's diluted earnings per share for the years ended December 31, 2012, 2011 and 2010 includes the impact of the Company's 3.50% convertible senior notes and associated warrants. Refer to Note 15, "Earnings Per Share," for further information on the diluted earnings per share calculation.

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Reporting Segments and Related Information - Major Customers & Products (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Revenue from External Customer [Line Items]
Percentage of net sales	10.00%
Sales Revenue, Goods, Net [Member] | Turbochargers [Member]
Revenue from External Customer [Line Items]
Concentration Risk, Percentage	26.00%	26.00%	26.00%
Sales Revenue, Goods, Net [Member] | Volkswagen [Member]
Revenue from External Customer [Line Items]
Concentration Risk, Percentage	17.00%	0.00%	19.00%
Sales Revenue, Goods, Net [Member] | Ford [Member]
Revenue from External Customer [Line Items]
Concentration Risk, Percentage	13.00%	12.00%	11.00%
Accounts Receivable [Member] | Volkswagen and Ford [Member]
Revenue from External Customer [Line Items]
Concentration Risk, Percentage	18.00%
Accounts Receivable, Net	218.8

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Recent Transactions (Details)	12 Months Ended				3 Months Ended		12 Months Ended		0 Months Ended	1 Months Ended		12 Months Ended		12 Months Ended
	Dec. 31, 2012 USD ($)	Dec. 31, 2011 USD ($)	Dec. 31, 2010 USD ($)	Dec. 31, 2012 BERU Korea [Member] USD ($)	Sep. 30, 2012 Spark Plug Business [Member] USD ($)	Jun. 30, 2012 Spark Plug Business [Member] USD ($)	Dec. 31, 2012 Spark Plug Business [Member] USD ($)	Dec. 31, 2012 Tire pressure monitoring [Member] USD ($)	Aug. 02, 2011 Vikas Emissions Systems India Private Limited [Member] USD ($)	Jan. 31, 2011 Haldex [Member] USD ($)	Jan. 31, 2011 Haldex [Member] SEK	Dec. 31, 2011 Beru Eichenauer [Member] USD ($)	May 01, 2010 Beru Eichenauer [Member] USD ($)	Dec. 31, 2012 Dytech [Member] USD ($)	Apr. 10, 2010 Dytech [Member] USD ($)	Jun. 30, 2011 Etatech, Inc. [Member] USD ($)	Jun. 30, 2010 Etatech, Inc. [Member] USD ($)	Dec. 31, 2009 BERU [Member] EUR (€)
Business Acquisition [Line Items]
Ownership percentage of noncontrolling owners				49.00%					40.00%
Purchase of noncontrolling interest	$ 15,000,000	$ 29,400,000	$ 0	$ 15,000,000
Purchase of subsidiary shares from noncontrolling interest				7,000,000					2,800,000
Adjustments to capital in excess of par value				8,000,000					26,600,000
Ownership percentage of parent				100.00%					100.00%
Loss on disposals	(39,700,000)	(21,500,000)	0		(1,800,000)	(37,900,000)
Proceeds from sale of business							55,200,000	22,900,000
Business acquisition, percentage of voting interests acquired										100.00%					100.00%
Gross cost of acquisition										214,900,000	1,380,000,000	9,600,000			147,700,000	7,500,000	7,500,000
Payments for businesses acquired, net of cash acquired	0	203,700,000	164,700,000											147,600,000
Liabilities assumed from businesses acquired										5,300,000
Debt assumed from business acquired										5,900,000
BERU-Eichenauer equity investment gain												8,000,000
Other intangible assets	206,300,000	243,300,000											17,600,000
Squeeze Out Share Price																		€ 73.39

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Stock Incentive Plans (Details) (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized for grant	12,500,000
Shares available for future issuance	1,900,000
Status of Stock Options
Shares outstanding under option, beginning balance	2,220,000	3,253,000	5,177,000
Shares outstanding under option, exercised	(784,000)	(1,033,000)	(1,888,000)
Shares outstanding under option, forfeited			(36,000)
Shares outstanding under option, ending balance	1,436,000	2,220,000	3,253,000	5,177,000
Weighted average exercise price, beginning balance	$ 29.36	$ 28.64	$ 27.98
Weighted average exercise price, exercised	$ 26.86	$ 27.15	$ 26.73
Weighted average exercise price, forfeited			$ 33.95
Weighted average exercise price, ending balance	$ 30.65	$ 29.36	$ 28.64	$ 27.98
Weighted average remaining contractual life outstanding, beginning balance		4 years 1 month	4 years 11 months	5 years 9 months
Aggregate intrinsic value, outstanding, beginning balance	$ 76.3	$ 142.2	$ 29.7
Aggregate intrinsic value, exercised	40.1	48.4	50.3
Aggregate intrinsic value, outstanding, ending balance	58.8	76.3	142.2	29.7
Share under option, option exercisable	1,436,000
Weighted average exercise price, options exercisable	$ 30.65
Weighted average remaining contractual life option exercisable	3 years 5 months
Aggregate intrinsic value, option exercisable	58.8
Proceeds from stock based compensation - gross	20.9	28.6	55.4
Tax benefit (loss)	31.1	24.4	11.7
Proceeds from stock based compensation - net	$ 52.0	$ 53.0	$ 67.1
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Outstanding Options, Weighted Average Remaining Contractual Term	3 years 5 months

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Research and Development Costs (Tables)

12 Months Ended

Dec. 31, 2012

Research and Development [Abstract]

Schedule of Research and Development Costs

	Year Ended December 31,
(millions of dollars)	2012			2011			2010
Gross R&D expenditures	$	309.3		$	294.7		$	233.2
Customer reimbursements	(43.4		)	(51.0		)	(48.2		)
Net R&D expenditures	$	265.9		$	243.7		$	185.0

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Balance Sheet Information (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2012		Dec. 31, 2011		Dec. 31, 2010
Receivables, net:
Customers	$ 1,014.6		$ 1,037.4
Other	134.8		149.9
Gross receivables	1,149.4		1,187.3
Bad debt allowance(a)	(2.1)	[1]	(4.3)	[1]
Total receivables, net	1,147.3		1,183.0
Inventories, net:
Raw material and supplies	264.0		254.4
Work in progress	82.0		90.9
Finished goods	117.6		124.3
FIFO inventories	463.6		469.6
LIFO reserve	(16.0)		(15.3)
Total inventories, net	447.6		454.3
Prepayments and other current assets:
Prepaid tooling	39.1		23.5
Product liability insurance asset	0		28.8
Derivatives	5.7		2.7
Prepaid taxes	0.7		0.8
Other	22.0		26.6
Total prepayments and other current assets	67.5		82.4
Property, plant and equipment, net:
Property, plant and equipment, gross	3,245.6		2,903.9
Accumulated depreciation	1,567.0		1,343.9
Property, plant & equipment, net, excluding tooling	1,678.6		1,560.0
Tooling, net of amortization	109.4		104.3
Property, plant & equipment, net	1,788.0		1,664.3
Investments and advances:
Investment in equity affiliates	217.7		217.4
Other investments and advances	165.0		127.9
Total investments and advances	382.7		345.3
Other non-current assets:
Deferred income taxes	244.1	[2]	313.9	[2]
Other intangible assets	206.3		243.3
Product liability insurance asset	85.6		32.9
Other	39.9		34.9
Total other non-current assets	575.9		625.0
Accounts payable and accrued expenses:
Trade payables	815.4		820.7
Trade payables for capital expenditures	39.8		48.9
Payroll and employee related	180.7		201.9
Product liability	36.5		28.8
Customer related	36.3		29.9
Product warranties	33.1		38.6
Retirement related	27.9		30.9
Interest	11.7		14.2
Derivatives	9.8		2.4
Dividends payable to noncontrolling shareholders	9.5		11.7
Insurance	9.2		10.5
Severance	8.9		5.6
Legal and professional fees	4.2		6.8
Environmental	1.6		3.4
Current deferred income taxes	1.4		6.5
Other	61.2		37.0
Total accounts payable and accrued expenses	1,287.2		1,297.8
Other non-current liabilities:
Deferred income taxes	89.4	[2]	120.2	[2]
Cross currency swaps and derivatives	58.1		85.5
Product liability	49.1		32.9
Product warranties	31.8		34.1
Deferred revenue	30.5		26.0
Environmental	2.3		8.1
Other	56.9		85.1
Total other non-current liabilities	318.1		391.9
Accumulated other comprehensive loss
Foreign currency translation adjustments	140.8		85.8
Market value of hedge instruments	(37.2)		(50.5)
Defined benefit postretirement plans	(225.8)		(187.2)
Other	0.9		1.1
Accumulated other comprehensive loss	(121.3)		(150.8)
Bad debt allowance
Interest costs capitalized	17.8		15.0
Allowance for Doubtful Accounts [Member]
Bad debt allowance
Beginning balance, January 1	(4.3)		(4.0)		(4.3)
Provision	(0.8)		(1.4)		(1.1)
Write-offs	3.0		1.0		2.5
Translation adjustment and other	0		0.1		(1.1)
Ending balance, December 31	(2.1)		(4.3)		(4.0)
Land [Member]
Property, plant and equipment, net:
Property, plant and equipment, gross	76.4		71.2
Building [Member]
Property, plant and equipment, net:
Property, plant and equipment, gross	640.8		616.7
Machinery and equipments
Property, plant and equipment, net:
Property, plant and equipment, gross	2,282.4		2,006.9
Capital leases
Property, plant and equipment, net:
Property, plant and equipment, gross	2.3		2.3
Construction in progress
Property, plant and equipment, net:
Property, plant and equipment, gross	$ 243.7		$ 206.8

[1] (a) Bad debt allowance:2012 2011 2010Beginning balance, January 1$(4.3) $(4.0) $(4.3)Provision(0.8) (1.4) (1.1)Write-offs3.0 1.0 2.5Translation adjustment and other— 0.1 (1.1)Ending balance, December 31$(2.1) $(4.3) $(4.0)

[2] urrent and non-current assets and liabilities have been netted within their respective taxing jurisdictions.

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Other Income Expense (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Other Income and Expenses [Abstract]
Loss from disposal activities									$ 39.7	$ 21.5	$ 0
Restructuring expense									27.4	0	0
Retirement related obligations									17.3	0	0
Patent infringement settlement, net of legal costs incurred									0	(29.1)	0
Environmental litigation settlement									0	0	28.0
BERU - Eichenauer equity investment gain									0	0	8.0
Other									0.3		2.4
Other Operating Income										(0.5)
Other (income) expense	(17.3)	(29.7)	(36.6)	(1.1)	(21.8)	(0.6)	28.9	1.6	(84.7)	8.1	(22.4)
Employee termination benefits									9.0
Loss on cancellation of contracts									6.3
Other restructuring charges									12.1
Recognized net (gain) loss due to settlements									5.7
Executive retirement incremental compensation expense									11.6
Patent infringement settlement - Cash received									32.5
Patent infringement settlement - Expense									$ 3.4

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Leases and Commitments (Details) (USD $) In Millions, unless otherwise specified	1 Months Ended	12 Months Ended
	Sep. 30, 2010	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Leases [Abstract]
Total lease rent expense		$ 31.3	$ 30.7	$ 25.6
Payment for property, plant and equipment	6.0	407.4	393.7	276.6
Future minimum operating lease payments
2013		18.1
2014		13.9
2015		13.3
2016		10.2
2017		9.8
After 2017		3.4
Total minimum lease payments		$ 68.7

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Leases and Commitments (Tables)

12 Months Ended

Dec. 31, 2012

Leases [Abstract]

Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block]

Future minimum operating lease payments at December 31, 2012 were as follows:

(millions of dollars)
2013	$	18.1
2014	13.9
2015	13.3
2016	10.2
2017	9.8
After 2017	3.4
Total minimum lease payments	$	68.7

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Goodwill and Other Intangibles - Goodwill (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Changes in the carrying amount of goodwill
Net goodwill balance, January 1	$ 1,186.2
Ending balance, December 31	1,181.4
Goodwill impairment test, weighted average cost of capital discount rate for future cash flow	10.00%
Sensitivity analysis Increase in discount rate	1.00%
Sensitivity analysis decrease in operating margin assumption	1.00%
Engine [Member]
Changes in the carrying amount of goodwill
Gross goodwill balance, January 1	1,334.7	1,351.9
Accumulated impairment losses, January 1	(501.8)	(501.8)
Net goodwill balance, January 1	832.9	850.1
Acquisition	0	0	[1]
Divestitures	(16.9)	(7.9)	[1]
Translation adjustment	6.3	(9.3)
Ending balance, December 31	822.3	832.9
Drivetrain [Member]
Changes in the carrying amount of goodwill
Gross goodwill balance, January 1	353.5	263.6
Accumulated impairment losses, January 1	(0.2)	(0.2)
Net goodwill balance, January 1	353.3	263.4
Acquisition	0	96.2	[1]
Divestitures	0	0	[1]
Translation adjustment	5.8	(6.3)
Ending balance, December 31	$ 359.1	$ 353.3

[1] Goodwill acquired relates to the 2011 purchase of Haldex Traction AB. Goodwill divested relates to the Company's 2011 sale of the tire pressure monitoring business and 2012 sale of the spark plug business.

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Retirement Benefit Plans - Net Periodic Benefit Cost (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Defined Benefit Plan, Net Periodic Benefit Cost [Abstract]
Recognized net (gain) loss due to settlements		$ 5.7
U.S. Plans:
Defined Benefit Plan, Net Periodic Benefit Cost [Abstract]
Service cost		0	0	0
Interest cost		14.3	16.1	17.5
Expected return on plan assets		(18.8)	(20.8)	(19.7)
Settlements, curtailments and other		5.7	0	0
Amortization of unrecognized prior service benefit		(0.7)	(0.7)	(0.7)
Amortization of unrecognized loss		8.1	6.5	6.6
Net periodic benefit cost		8.6	1.1	3.7
Non-U.S. Plans:
Defined Benefit Plan, Net Periodic Benefit Cost [Abstract]
Service cost		9.1	9.1	7.4
Interest cost		17.2	17.8	17.6
Expected return on plan assets		(9.3)	(11.2)	(9.7)
Settlements, curtailments and other		0.5	(0.1)	0
Amortization of unrecognized prior service benefit		0	0	0
Amortization of unrecognized loss		1.2	0.8	0.8
Net periodic benefit cost		18.7	16.4	16.1
U.S. other postretirement benefit plans [Member]
Defined Benefit Plan, Net Periodic Benefit Cost [Abstract]
Service cost		0.5	0.7	0.8
Interest cost		10.1	11.8	14.5
Expected return on plan assets		0	0	0
Settlements, curtailments and other		0	0	0
Amortization of unrecognized prior service benefit		(6.4)	(6.9)	(6.9)
Amortization of unrecognized loss		6.9	7.9	9.1
Net periodic benefit cost		11.1	13.5	17.5
Other post employment plans amortization of net losses expected in the next year	4.9
Amortization of net prior service cost expected in the next year	(6.4)
Pension Plans, Defined Benefit [Member]
Defined Benefit Plan, Net Periodic Benefit Cost [Abstract]
Amortization of net (losses) expected in next year	$ 13.5

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Financial Instruments - Balance Sheet (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Foreign currency contracts [Member] | Prepayments and other current assets
Derivatives, Fair Value [Line Items]
Derivative assets	$ 5.7	$ 2.6
Foreign currency contracts [Member] | Other non-current assets
Derivatives, Fair Value [Line Items]
Derivative assets	0.2	0.1
Foreign currency contracts [Member] | Accounts payable and accrued expenses
Derivatives, Fair Value [Line Items]
Derivative liabilities	9.8	2.4
Foreign currency contracts [Member] | Other non-current liabilities
Derivatives, Fair Value [Line Items]
Derivative liabilities	0	0.5
Net investment hedge contracts [Member] | Other non-current assets
Derivatives, Fair Value [Line Items]
Derivative assets	0	0
Net investment hedge contracts [Member] | Other non-current liabilities
Derivatives, Fair Value [Line Items]
Derivative liabilities	$ 58.1	$ 85.0

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Income Taxes - Components of Deferred Tax Assets and Liabilities (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2012		Dec. 31, 2011
Current deferred tax assets:
Deferred tax assets, foreign tax credits, current	$ 29.0		$ 0
Employee related	25.7		28.0
Deferred tax assets, research and development credits, current	13.4		0
Inventory	8.4		14.5
Warranties	5.3		4.5
Customer claims	3.6		2.2
Other	13.1		11.5
Total current deferred tax assets	98.5		60.7
Current deferred tax liabilities:
Unremitted Foreign Earnings, Current	(1.1)		0
Other	(2.6)		(3.7)
Total current deferred tax liabilities	3.7		3.7
Non-current deferred tax assets:
Deferred tax assets, foreign tax credits, noncurrent	117.0		158.2
Other comprehensive income	113.7		116.7
Research and development capitalization	89.1		76.7
Net operating loss and capital loss carryforwards	44.3	[1]	35.1	[1]
Pension and other postretirement benefits	37.7		33.9
Employee related	27.4		22.9
Research and development credits	4.9		3.0
Warranties	4.5		4.7
Litigation and environmental	1.2		2.0
Other	3.1		5.1
Total non-current deferred tax assets	442.9		458.3
Non-current deferred tax liabilities:
Goodwill & intangibles	(130.9)		(155.5)
Fixed assets	(101.9)		(79.7)
Undremitted Foreign Earnings, Non-current	(12.3)		(1.3)
Other comprehensive income	(3.0)		(2.9)
Other	(6.6)		(6.6)
Total non-current deferred tax liabilities	254.7		246.0
Total deferred tax items	283.0		269.3
Valuation allowances	(35.0)	[1]	(23.6)	[1]
Net deferred tax asset	$ 248.0		$ 245.7

[1] Net operating loss and capital loss carryforwards are shown gross with the corresponding valuation allowances located at the end of the table

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Other Income Expense

12 Months Ended

Dec. 31, 2012

Other Income and Expenses [Abstract]

Other (income) expense

OTHER (INCOME) EXPENSE

The following table presents items included in other (income) expense:

	Year Ended December 31,
(millions of dollars)	2012		2011			2010
Loss from disposal activities	$	39.7	$	21.5		$	—
Restructuring expense	27.4		—			—
Retirement related obligations	17.3		—			—
Patent infringement settlement, net of legal costs incurred	—		(29.1		)	—
Environmental litigation settlement	—		—			28.0
BERU - Eichenauer equity investment gain	—		—			(8.0		)
Other	0.3		(0.5		)	2.4
Other (income) expense	$	84.7	$	(8.1	)	$	22.4

During the second and third quarters of 2012, the Company incurred $39.7 million in expense associated with the loss on sale of the spark plug business, primarily related to the to write-down of prior purchase price accounting adjustments included within the disposal group. These purchase price accounting adjustments were originally reported in the Engine segment and related to the BERU acquisition. The Company also recorded restructuring expense of $27.4 million in the third quarter of 2012 primarily associated with the disposal and future requirements of BERU's on-going business, which included $9.0 million of employee termination benefits, $6.3 million of contract cancellation costs and $12.1 million of other charges, primarily related to the write-down of certain assets. The Company expects to pay all employee termination benefits in the next 12 months.

During the fourth quarter of 2012, the Company recorded retirement related obligations of $17.3 million comprised of a $5.7 million loss resulting from the settlement of a portion of the Muncie Plant's pension obligation and an $11.6 million expense associated with the retirement of certain Named Executive Officers. Refer to Notes 11 and 12 to the Consolidated Financial Statements for further information regarding the Muncie Plant's settlement loss and the Company's decision to waive the forfeiture provisions of existing restricted stock and performance share grants made to certain retiring Named Executive Officers.

On May 16, 2011, BorgWarner and Honeywell settled a lawsuit resolving BorgWarner's patent infringement claims. As a result of the settlement, Honeywell paid $32.5 million for a paid up license to use the asserted BorgWarner patents. During 2011, the Company incurred $3.4 million in legal costs related to this lawsuit and after deducting these costs, the Company recorded a net gain of $29.1 million.

Refer to Note 16 to the Consolidated Financial Statements for information regarding the Company's loss from disposal activities and BERU - Eichenauer equity investment gain and Note 13 to the Consolidated Financial Statements for information regarding the Company's environmental litigation settlement.

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Financial Instruments - Income Statement (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Derivative Instruments, Gain (Loss) [Line Items]
Market value of hedge instruments	$ (58.0)	$ (79.5)
Cash Flow Hedge Gain (Loss) to be Reclassified within Twelve Months	(3.8)
Foreign currency contracts [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Market value of hedge instruments	(3.5)	(0.6)
Cash Flow Hedge Gain (Loss) to be Reclassified within Twelve Months	(3.8)
Foreign currency contracts [Member] | Sales [Member]
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net [Abstract]
Gain (loss) reclassified from AOCI to income (effective portion)	5.3	(1.4)
Foreign currency contracts [Member] | Selling general and administrative expenses [Member]
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net [Abstract]
Gain (loss) reclassified from AOCI to income (effective portion)	0	0.5
Gain (loss) recognized in income (ineffective portion)	0	0
Foreign currency contracts [Member] | Selling general and administrative expenses Two [Member]
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net [Abstract]
Gain (loss) recognized in income (ineffective portion)	0	0
Foreign currency contracts [Member] | Cost of goods sold [Member]
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net [Abstract]
Gain (loss) reclassified from AOCI to income (effective portion)	3.5	(0.6)
Foreign currency contracts [Member] | Selling general and administrative expenses One [Member]
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net [Abstract]
Gain (loss) recognized in income (ineffective portion)	0.1	0
Net investment hedge contracts [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Market value of hedge instruments	(54.5)	(78.9)
Cash Flow Hedge Gain (Loss) to be Reclassified within Twelve Months	0
Net investment hedge contracts [Member] | Interest expense [Member]
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net [Abstract]
Gain (loss) recognized in income (ineffective portion)	$ 2.3	$ 0.5

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Income Taxes (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Earnings before income taxes and the provision for income taxes
Earnings (loss) before income taxes	$ 175.0	$ 170.1	$ 194.7	$ 221.2	$ 185.4	$ 193.1	$ 217.1	$ 170.3	$ 761.0	$ 765.9	$ 477.9
Current:
Federal/foreign									245.9	194.7	131.7
State									3.4	1.7	2.2
Total current									249.3	196.4	133.9
Deferred									(10.7)	(1.1)	(52.2)
Provision for income taxes	48.4	64.2	68.5	57.5	58.2	46.4	49.8	40.9	238.6	195.3	81.7
Effective tax rate									31.40%	25.50%	17.10%
U.S. Federal
Earnings before income taxes and the provision for income taxes
Loss before income taxes - U.S.									132.3	119.2	(26.7)
Current:
Federal/foreign									59.8	31.8	14.0
State									3.4	1.7	2.2
Total current									63.2	33.5	16.2
Deferred									19.5	17.4	(48.9)
Provision for income taxes									82.7	50.9	(32.7)
Effective tax rate									62.50%	42.70%	(122.50%)
Non-U.S. Tax Jurisdiction
Earnings before income taxes and the provision for income taxes
Earnings before income taxes - Non-U.S.									628.7	646.7	504.6
Current:
Federal/foreign									186.1	162.9	117.7
State									0	0	0
Total current									186.1	162.9	117.7
Deferred									(30.2)	(18.5)	(3.3)
Provision for income taxes									$ 155.9	$ 144.4	$ 114.4
Effective tax rate									24.80%	22.30%	22.70%

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Goodwill and Other Intangibles (Tables)

12 Months Ended

Dec. 31, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of goodwill [Text Block]

The changes in the carrying amount of goodwill for the years ended December 31, 2012 and 2011 are as follows:

	2012						2011
(millions of dollars)	Engine			Drivetrain			Engine			Drivetrain
Gross goodwill balance, January 1	$	1,334.7		$	353.5		$	1,351.9		$	263.6
Accumulated impairment losses, January 1	(501.8		)	(0.2		)	(501.8		)	(0.2		)
Net goodwill balance, January 1	$	832.9		$	353.3		$	850.1		$	263.4
Goodwill during the year:
Acquisition*	$	—		$	—		$	—		$	96.2
Divestitures*	(16.9		)	—			(7.9		)	—
Translation adjustment	6.3			5.8			(9.3		)	(6.3		)
Ending balance, December 31	$	822.3		$	359.1		$	832.9		$	353.3

Intangible assets disclosure [Text Block]

The Company’s other intangible assets, primarily from acquisitions, consist of the following:

	December 31, 2012						December 31, 2011
(millions of dollars)	Gross carrying amount		Accumulated amortization		Net carrying amount		Gross carrying amount		Accumulated amortization		Net carrying amount
Amortized intangible assets:
Patented and unpatented technology	$	80.0	$	26.2	$	53.8	$	81.2	$	20.4	$	60.8
Customer relationships	216.3		100.0		116.3		213.4		76.7		136.7
Miscellaneous	2.9		2.9		—		2.8		1.3		1.5
Total amortized intangible assets	299.2		129.1		170.1		297.4		98.4		199.0
In-process R&D	10.8		—		10.8		10.8		—		10.8
Unamortized trade names	25.4		—		25.4		33.5		—		33.5
Total other intangible assets	$	335.4	$	129.1	$	206.3	$	341.7	$	98.4	$	243.3

Intangible assets gross roll forward [Text Block]

A roll forward of the gross carrying amounts of the Company's other intangible assets is presented below:

(millions of dollars)	2012			2011
Beginning balance, January 1	$	341.7		$	244.3
Acquisition	—			117.2
Divestitures*	(15.7		)	(5.6		)
Translation adjustment	9.4			(14.2		)
Ending balance, December 31	$	335.4		$	341.7

Accumulated amortization net [Text Block]

A roll forward of the accumulated amortization associated with the Company's other intangible assets is presented below:

(millions of dollars)	2012			2011
Beginning balance, January 1	$	98.4		$	75.5
Amortization	28.4			30.8
Divestitures*	(0.6		)	(3.8		)
Translation adjustment	2.9			(4.1		)
Ending balance, December 31	$	129.1		$	98.4

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Balance Sheet Information (Tables)

12 Months Ended

Dec. 31, 2012

Balance Sheet Information (Tables) [Abstract]

Balance sheet information

	December 31,
(millions of dollars)	2012			2011
Receivables, net:
Customers	$	1,014.6		$	1,037.4
Other	134.8			149.9
Gross receivables	1,149.4			1,187.3
Bad debt allowance(a)	(2.1		)	(4.3		)
Total receivables, net	$	1,147.3		$	1,183.0
Inventories, net:
Raw material and supplies	$	264.0		$	254.4
Work in progress	82.0			90.9
Finished goods	117.6			124.3
FIFO inventories	463.6			469.6
LIFO reserve	(16.0		)	(15.3		)
Total inventories, net	$	447.6		$	454.3
Prepayments and other current assets:
Prepaid tooling	$	39.1		$	23.5
Product liability insurance asset	—			28.8
Derivatives	5.7			2.7
Prepaid taxes	0.7			0.8
Other	22.0			26.6
Total prepayments and other current assets	$	67.5		$	82.4
Property, plant and equipment, net:
Land and land use rights	$	76.4		$	71.2
Buildings	640.8			616.7
Machinery and equipment	2,282.4			2,006.9
Capital leases	2.3			2.3
Construction in progress	243.7			206.8
Property, plant and equipment, gross	3,245.6			2,903.9
Accumulated depreciation	(1,567.0		)	(1,343.9		)
Property, plant & equipment, net, excluding tooling	1,678.6			1,560.0
Tooling, net of amortization	109.4			104.3
Property, plant & equipment, net	$	1,788.0		$	1,664.3
Investments and advances:
Investment in equity affiliates	$	217.7		$	217.4
Other investments and advances	165.0			127.9
Total investments and advances	$	382.7		$	345.3
Other non-current assets:
Deferred income taxes	$	244.1		$	313.9
Other intangible assets	206.3			243.3
Product liability insurance asset	85.6			32.9
Other	39.9			34.9
Total other non-current assets	$	575.9		$	625.0

	December 31,
(millions of dollars)	2012			2011
Accounts payable and accrued expenses:
Trade payables	$	815.4		$	820.7
Trade payables for capital expenditures	39.8			48.9
Payroll and employee related	180.7			201.9
Product liability	36.5			28.8
Customer related	36.3			29.9
Product warranties	33.1			38.6
Retirement related	27.9			30.9
Interest	11.7			14.2
Derivatives	9.8			2.4
Dividends payable to noncontrolling shareholders	9.5			11.7
Insurance	9.2			10.5
Severance	8.9			5.6
Legal and professional fees	4.2			6.8
Environmental	1.6			3.4
Current deferred income taxes	1.4			6.5
Other	61.2			37.0
Total accounts payable and accrued expenses	$	1,287.2		$	1,297.8
Other non-current liabilities:
Deferred income taxes	$	89.4		$	120.2
Cross currency swaps and derivatives	58.1			85.5
Product liability	49.1			32.9
Product warranties	31.8			34.1
Deferred revenue	30.5			26.0
Environmental	2.3			8.1
Other	56.9			85.1
Total other non-current liabilities	$	318.1		$	391.9
Accumulated other comprehensive loss
Foreign currency translation adjustments	$	140.8		$	85.8
Market value of hedge instruments	(37.2		)	(50.5		)
Defined benefit postretirement plans	(225.8		)	(187.2		)
Other	0.9			1.1
Total accumulated other comprehensive loss	$	(121.3	)	$	(150.8	)

(a) Bad debt allowance:	2012			2011			2010
Beginning balance, January 1	$	(4.3	)	$	(4.0	)	$	(4.3	)
Provision	(0.8		)	(1.4		)	(1.1		)
Write-offs	3.0			1.0			2.5
Translation adjustment and other	—			0.1			(1.1		)
Ending balance, December 31	$	(2.1	)	$	(4.3	)	$	(4.0	)

Summarized financial data for NSK-Warner

	November 30,
(millions of dollars)	2012		2011
Balance sheets:
Cash and securities	$	123.3	$	119.4
Current assets, including cash and securities	320.0		344.1
Non-current assets	175.3		182.0
Current liabilities	147.4		172.1
Non-current liabilities	50.2		45.3
Total equity	297.7		308.7
	Year Ended November 30,
(millions of dollars)	2012		2011		2010
Statements of operations:
Net sales	$	696.7	$	655.2	$	634.7
Gross profit	138.2		128.5		131.9
Net earnings	68.5		61.6		68.3

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Notes Payable and Long-Term Debt (Details) (USD $)	12 Months Ended											12 Months Ended					12 Months Ended		12 Months Ended		12 Months Ended		12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2012 Total Short Term Debt [Member]	Dec. 31, 2011 Total Short Term Debt [Member]	Dec. 31, 2012 Short Term Borrowings [Member]	Dec. 31, 2011 Short Term Borrowings [Member]	Dec. 31, 2012 Receivables Securitization [Member]	Nov. 01, 2012 Receivables Securitization [Member]	Dec. 31, 2011 Receivables Securitization [Member]	Sep. 08, 2010 Receivables Securitization [Member]	Dec. 21, 2009 Receivables Securitization [Member]	Dec. 31, 2012 Convertible Senior Notes Due April 2012 [Member]	Dec. 31, 2011 Convertible Senior Notes Due April 2012 [Member]	Dec. 31, 2010 Convertible Senior Notes Due April 2012 [Member]	Apr. 09, 2009 Convertible Senior Notes Due April 2012 [Member]	Dec. 31, 2012 Senior Notes One [Member]	Dec. 31, 2012 Senior Notes Due November 2016 [Member]	Dec. 31, 2011 Senior Notes Due November 2016 [Member]	Dec. 31, 2012 Senior Notes Due October 2019 [Member]	Dec. 31, 2011 Senior Notes Due October 2019 [Member]	Dec. 31, 2012 Senior Notes Due September 2020 [Member]	Dec. 31, 2011 Senior Notes Due September 2020 [Member]	Dec. 31, 2012 Senior Notes Due February 2029 [Member]	Dec. 31, 2011 Senior Notes Due February 2029 [Member]	Dec. 31, 2012 Multi Currency Revolving Credit Facility [Member]	Dec. 31, 2011 Multi Currency Revolving Credit Facility [Member]	Dec. 31, 2012 Term Loan Facilities And Other [Member]	Dec. 31, 2011 Term Loan Facilities And Other [Member]	Dec. 31, 2012 Unamortized portion of debt derivative [Member]	Dec. 31, 2011 Unamortized portion of debt derivative [Member]
Short-term debt
Total short-term debt			$ 239,100,000	$ 196,300,000	$ 129,100,000	$ 116,300,000	$ 110,000,000	$ 110,000,000	$ 80,000,000	$ 80,000,000	$ 50,000,000
Long-term Debt, by Current and Noncurrent [Abstract]
Total long-term debt	828,100,000	1,132,800,000										0	368,500,000				149,600,000	149,500,000	133,900,000	133,900,000	247,900,000	247,700,000	119,400,000	119,300,000	140,000,000	70,000,000	17,100,000	19,800,000	20,200,000	24,100,000
Current portion of long-term debt	4,300,000	381,500,000
Long-term debt, net of current portion	823,800,000	751,300,000
Debt instrument par value															373,800,000		150,000,000		134,000,000		250,000,000		121,000,000
Debt instrument stated interest rate												3.50%					5.75%		8.00%		4.625%		7.125%
Debt instrument maturity period																	Nov. 01, 2016		Oct. 01, 2019		Sep. 15, 2020		Feb. 15, 2029
Weighted average interest rate	4.00%	5.90%
Long-term Debt, by Maturity [Abstract]
2013	243,400,000
2014	400,000
2015	12,400,000
2016	290,000,000
2017	0
After 2017	524,800,000
Total payments	1,071,000,000
Less: unamortized discounts	(3,800,000)
Total	1,067,200,000
Multi-currency revolving credit agreement, current borrowing capacity																									650,000,000
Multi-currency revolving credit agreement, maximum borrowing capacity																									1,000,000,000
Debt conversion, original debt, amount	373,800,000
Stock Issued During Period, Shares, Conversion of Convertible Securities	11,400,000
Conversion of convertible securities, value of shares issued	617,300,000
Adjustments to additional paid in capital, equity component of convertible debt	243,500,000
Interest expense												9,000,000	33,100,000	31,300,000
Non-cash portion												5,300,000	20,000,000	18,300,000
Bond hedge overlay at net pre-tax cost																25,200,000
Conversion premium after bond hedge overlay																50.00%
Conversion price per share after bond hedge overlay																$ 38.61
Treasury stock received from bond hedge, shares	6,500,000
Treasury stock received from bond hedge, value	503,900,000
Adjustments to additional paid in capital, bond hedge	503,900,000
Treasury stock issued due to settlement of warrant, shares	4,900,000
Treasury stock issue due to settlement of warrant, value	338,500,000
Adjustments to additional paid in capital, warrant	338,500,000
Estimated fair value of senior unsecured notes	770,300,000	1,454,400,000
Fair value higher than carrying value for senior unsecured notes	119,500,000	435,500,000
Outstanding letters of credit	$ 59,100,000	$ 58,500,000

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Income Taxes - Income Tax Reconciliation (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Income Tax Expense (Benefit), Continuing Operations, Income Tax Reconciliation [Abstract]
Income taxes at U.S. statutory rate of 35%									$ 266.4	$ 268.1	$ 167.3
Income from non-U.S. sources, including withholding taxes									(58.3)	(74.8)	(55.8)
Affiliates' earnings									(15.0)	(13.4)	(13.8)
State taxes, net of federal benefit									2.2	1.1	1.4
Business and foreign tax credits									8.8	11.5	0.2
Accrual adjustment and settlement of prior year tax matters									9.3	(1.0)	0.4
Medicare Part D									0	0.1	2.9
Capital loss carryforward valuation allowance									9.7	0	0
Reversal of foreign tax credit valuation allowance									0	0	(21.2)
Unremitted foreign earnings									13.4	0	0
Non-temporary differences and other									2.1	3.7	0.3
Provision for income taxes	48.4	64.2	68.5	57.5	58.2	46.4	49.8	40.9	238.6	195.3	81.7
Tax benefit (expense) associated with disposal activities and restructuring									(2.0)
Tax benefit associated with restructuring		7.7							7.7
Tax impact of loss on disposals		11.2	(5.5)		(1.4)				5.7	2.7
Tax benefit associated retirement obligations									6.1
Other tax adjustments	3.9	6.9					6.2		19.8
Tax settlements									5.9
Impact of change in repatriation assertion			9.0						7.5
Change in enacted tax rate									4.7
Tax impact of writedown of tax accounts									11.1
Tax impact of patent infringement settlement										11.0
Favorable Impact Due Reversal Of Company Valuation Allowance											21.2
Additional Tax Expense For Company's Loss Of Future Tax Benefit											2.9
Tax impact of equity investment gain											2.3
Tax impact of environmental litigation settlement											$ 9.8

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Product Warranty (Tables)

12 Months Ended

Dec. 31, 2012

Product Warranties Disclosures [Abstract]

Product warranty liability [Text Block]

The changes in the carrying amount of the Company’s total product warranty liability for the years ended December 31, 2012 and 2011 were as follows:

(millions of dollars)	2012			2011
Beginning balance, January 1	$	72.7		$	66.8
Acquisition	—			4.5
Provisions	33.7			47.5
Payments	(42.8		)	(43.5		)
Translation adjustment	1.3			(2.6		)
Ending balance, December 31	$	64.9		$	72.7

The product warranty liability is classified in the Consolidated Balance Sheets as follows:

	December 31,
(millions of dollars)	2012		2011
Accounts payable and accrued expenses	$	33.1	$	38.6
Other non-current liabilities	31.8		34.1
Total product warranty liability	$	64.9	$	72.7

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Notes Payable and Long-Term Debt (Tables)

12 Months Ended

Dec. 31, 2012

Debt Disclosure [Abstract]

Outstanding Notes Payable And Long Term Debt [Text Block]

	December 31,
(millions of dollars)	2012		2011
Short-term debt
Short-term borrowings	$	129.1	$	116.3
Receivables securitization	110.0		80.0
Total short-term debt	$	239.1	$	196.3
Long-term debt
3.50% Convertible senior notes due 04/15/12	$	—	$	368.5
5.75% Senior notes due 11/01/16 ($150 million par value)	149.6		149.5
8.00% Senior notes due 10/01/19 ($134 million par value)	133.9		133.9
4.625% Senior notes due 09/15/20 ($250 million par value)	247.9		247.7
7.125% Senior notes due 02/15/29 ($121 million par value)	119.4		119.3
Multi-currency revolving credit facility	140.0		70.0
Term loan facilities and other	17.1		19.8
Unamortized portion of debt derivatives	20.2		24.1
Total long-term debt	$	828.1	$	1,132.8
Less: current portion	4.3		381.5
Long-term debt, net of current portion	$	823.8	$	751.3

Annual principal payments [Text Block]

(millions of dollars)
2013	$	243.4
2014	0.4
2015	12.4
2016	290.0
2017	—
After 2017	524.8
Total payments	$	1,071.0
Less: unamortized discounts	3.8
Total	$	1,067.2

Total interest expense related to convertible notes in company's Consolidated Statement Of Operations [Text Block]

	Year Ended December 31,
(millions of dollars)	2012		2011		2010
Interest expense	$	9.0	$	33.1	31.3
Non-cash portion	5.3		20.0		18.3

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Research and Development Costs

12 Months Ended

Dec. 31, 2012

Research and Development [Abstract]

Research and development costs

RESEARCH AND DEVELOPMENT COSTS

The Company's net Research & Development ("R&D") expenditures are included in selling, general and administrative expenses of the Consolidated Statements of Operations. Customer reimbursements are netted against gross R&D expenditures as they are considered a recovery of cost. Customer reimbursements for prototypes are recorded net of prototype costs based on customer contracts, typically either when the prototype is shipped or when it is accepted by the customer. Customer reimbursements for engineering services are recorded when performance obligations are satisfied in accordance with the contract and accepted by the customer. Financial risks and rewards transfer upon shipment, acceptance of a prototype component by the customer or upon completion of the performance obligation as stated in the respective customer agreement.

The following table presents the Company’s gross and net expenditures on R&D activities:

	Year Ended December 31,
(millions of dollars)	2012			2011			2010
Gross R&D expenditures	$	309.3		$	294.7		$	233.2
Customer reimbursements	(43.4		)	(51.0		)	(48.2		)
Net R&D expenditures	$	265.9		$	243.7		$	185.0

Net R&D expenditures as a percentage of net sales were 3.7%, 3.4% and 3.3% in the years ended December 31, 2012, 2011 and 2010, respectively. The Company has contracts with several customers at the Company's various R&D locations. No such contract exceeded 5% of net R&D expenditures in any of the years presented.

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Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2012

Fair Value Disclosures [Abstract]

Assets and liabilities measured at fair value [Text Block]

			Basis of fair value measurements
	Balance at December 31, 2012		Quoted prices in active markets for identical items (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Valuation technique
(millions of dollars)
Assets:
Foreign currency contracts	$	5.9	$	—	$	5.9	$	—	A
Other non-current assets (insurance settlement agreement note receivable)	$	41.0	$	—	$	41.0	$	—	C
Liabilities:
Foreign currency contracts	$	9.8	$	—	$	9.8	$	—	A
Net investment hedge contracts	$	58.1	$	—	$	58.1	$	—	A

			Basis of fair value measurements
(millions of dollars)	Balance at December 31, 2011		Quoted prices in active markets for identical items (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Valuation technique
Assets:
Foreign currency contracts	$	2.7	$	—	$	2.7	$	—	A
Other non-current assets (insurance settlement agreement note receivable)	$	21.3	$	—	$	21.3	$	—	C
Liabilities:
Foreign currency contracts	$	2.9	$	—	$	2.9	$	—	A
Net investment hedge contracts	$	85.0	$	—	$	85.0	$	—	A

Fair value defined benefit plan assets measured at recurring and non-recurring basis [Text Block]

The following tables classify the Company's defined benefit plan assets measured at fair value on a recurring basis as of December 31, 2012 and 2011:

			Basis of fair value measurements
(millions of dollars)	Balance at December 31, 2012		Quoted prices in active markets for identical items (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Valuation technique
U.S. Plans:
Fixed income securities	$	157.4	$	—	$	157.4	$	—	A
Equity securities	100.0		48.9		51.1		—		A
Real estate and other	25.3		—		25.3		—		A
	$	282.7	$	48.9	$	233.8	$	—
Non-U.S. Plans:
Fixed income securities	$	67.3	$	—	$	67.3	$	—	A
Equity securities	99.0		—		99.0		—		A
Real estate and other	11.6		—		11.6		—		A
	$	177.9	$	—	$	177.9	$	—

			Basis of fair value measurements
(millions of dollars)	Balance at December 31, 2011		Quoted prices in active markets for identical items (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Valuation technique
U.S. Plans:
Fixed income securities	$	158.2	$	—	$	158.2	$	—	A
Equity securities	101.5		49.6		51.9		—		A
Real estate and other	30.7		—		30.7		—		A
	$	290.4	$	49.6	$	240.8	$	—
Non-U.S. Plans:
Fixed income securities	$	63.5	$	—	$	63.5	$	—	A
Equity securities	78.3		—		78.3		—		A
Real estate and other	13.1		—		13.1		—		A
	$	154.9	$	—	$	154.9	$	—

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Summary of Significant Accounting Policies (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended				12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2012 United States	Dec. 31, 2011 United States	Dec. 31, 2012 Minimum [Member]	Dec. 31, 2012 Minimum [Member] Long-term Supply Arrangements [Member]	Dec. 31, 2012 Minimum [Member] Building [Member]	Dec. 31, 2012 Minimum [Member] Machinery and equipments	Dec. 31, 2012 Maximum [Member]	Dec. 31, 2012 Maximum [Member] Long-term Supply Arrangements [Member]	Dec. 31, 2012 Maximum [Member] Building [Member]	Dec. 31, 2012 Maximum [Member] Machinery and equipments	Dec. 31, 2012 Receivables Securitization [Member]	Nov. 01, 2012 Receivables Securitization [Member]	Dec. 31, 2011 Receivables Securitization [Member]	Sep. 08, 2010 Receivables Securitization [Member]	Dec. 21, 2009 Receivables Securitization [Member]
Percentage owned affiliates accounted for under equity method, minimum	20.00%
Percentage owned affiliates accounted for under equity method, maximum	50.00%
Inventory Disclosure [Abstract]
Inventories, net	$ 447.6	$ 454.3	$ 102.1	$ 100.6
Inventory, LIFO Reserve	16.0	15.3
Total short-term debt													$ 110.0	$ 110.0	$ 80.0	$ 80.0	$ 50.0
Property, Plant and Equipment [Abstract]
Property, Plant and Equipment, Useful Life, Minimum						3 years	15 years	3 years		5 years	40 years	12 years
Standard Product Warranty Disclosure [Abstract]
Standard Product Warranty Description					1 year				3 years

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Goodwill and Other Intangibles - Intangible Assets (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2012		Dec. 31, 2011		Dec. 31, 2010
Intangible Assets, Net (Excluding Goodwill) [Abstract]
Amortized intangible assets, gross	$ 299.2		$ 297.4
Amortized intangible assets, accumulated amortization	129.1		98.4		75.5
Amortized intangible assets, net	170.1		199.0
Other intangible assets	206.3		243.3
Amortization of intangible assets and other	28.4		30.8		28.4
Amortized intangible assets, future amortization expense [Abstract]
Future Amortization Expense - 2013	26.8
Future Amortization Expense - 2014	26.8
Future Amortization Expense - 2015	18.1
Future Amortization Expense - 2016	17.6
Future Amortization Expense - 2017	15.9
Intangible assets (excluding goodwill), gross [Roll Forward]
Beginning balance, January 1	341.7		244.3
Acquisitions	0		117.2
Divestiture	15.7	[1]	5.6	[1]
Translation adjustment	9.4		(14.2)
Ending balance, December 31	335.4		341.7		244.3
Intangible assets, accumulated amortization [Roll Forward]
Beginning balance, January 1	98.4		75.5
Divestiture	(0.6)	[1]	(3.8)	[1]
Translation adjustment	2.9		(4.1)
Ending balance, December 31	129.1		98.4		75.5
Patented and unpatented technology [Member]
Intangible Assets, Net (Excluding Goodwill) [Abstract]
Amortized intangible assets, gross	80.0		81.2
Amortized intangible assets, accumulated amortization	26.2		20.4
Amortized intangible assets, net	53.8		60.8
Intangible assets, accumulated amortization [Roll Forward]
Ending balance, December 31	26.2		20.4
Customer relationships
Intangible Assets, Net (Excluding Goodwill) [Abstract]
Amortized intangible assets, gross	216.3		213.4
Amortized intangible assets, accumulated amortization	100.0		76.7
Amortized intangible assets, net	116.3		136.7
Intangible assets, accumulated amortization [Roll Forward]
Ending balance, December 31	100.0		76.7
Miscellaneous amortizable assets
Intangible Assets, Net (Excluding Goodwill) [Abstract]
Amortized intangible assets, gross	2.9		2.8
Amortized intangible assets, accumulated amortization	2.9		1.3
Amortized intangible assets, net	0		1.5
Intangible assets, accumulated amortization [Roll Forward]
Ending balance, December 31	2.9		1.3
In-process research and development
Intangible Assets, Net (Excluding Goodwill) [Abstract]
Indefinite-lived intangible assets (excluding goodwill)	10.8		10.8
Unamortized trade names
Intangible Assets, Net (Excluding Goodwill) [Abstract]
Indefinite-Lived Trade Names	$ 25.4		$ 33.5
Minimum [Member]
Amortized intangible assets, future amortization expense [Abstract]
Amortized intangible assets, useful life, minimum	3 years
Maximum [Member]
Amortized intangible assets, future amortization expense [Abstract]
Amortized intangible assets, useful life, minimum	15 years

[1] Divestitures relate to the Company's 2011 sale of the tire pressure monitoring business and 2012 sale of the spark plug business.

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Stock Incentive Plans - Restricted Stock (Details) (Restricted Stock [Member], USD $) In Millions, except Share data, unless otherwise specified	1 Months Ended	12 Months Ended			1 Months Ended
	Feb. 28, 2011	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Apr. 30, 2011 Director [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock expense		$ 21.2	$ 15.1	$ 18.9
Restricted stock expense, net of tax		$ 15.5	$ 11.4	$ 14.7
Status of nonvested restricted stock [Roll Forward]
Nonvested shares subject to restriction, beginning balance		1,430,000	1,871,000	1,547,000
Nonvested shares subject to restriction, weighted average price, beginning balance		$ 39.02	$ 30.55	$ 29.90
Nonvested shares subject to restriction, granted	328,138	338,000	274,000	603,000	9,677
Nonvested shares subject to restriction, weighted average price, granted		$ 78.41	$ 70.57	$ 36.16
Nonvested shares subject to restriction, vested		(675,000)	(609,000)	(188,000)
Nonvested shares subject to restriction, weighted average price, vested		$ 27.43	$ 27.39	$ 44.80
Nonvested shares subject to restriction, forfeited		(61,000)	(106,000)	(91,000)
Nonvested shares subject to restriction, weighted average price, forfeited		$ 54.35	$ 38.05	$ 27.10
Nonvested shares subject to restriction, ending balance		1,032,000	1,430,000	1,871,000
Nonvested shares subject to restriction, weighted average price, ending balance		$ 58.77	$ 39.02	$ 30.55

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BorgWarner Inc. and Consolidated Subsidiaries Consolidated Balance Sheets (USD $) In Millions, except Share data, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
ASSETS
Cash	$ 715.7	$ 359.6
Receivables, net	1,147.3	1,183.0
Inventories, net	447.6	454.3
Deferred income taxes	94.7	58.5
Prepayments and other current assets	67.5	82.4
Total current assets	2,472.8	2,137.8
Property, plant and equipment, net	1,788.0	1,664.3
Investments and advances	382.7	345.3
Goodwill	1,181.4	1,186.2
Other non-current assets	575.9	625.0
Total assets	6,400.8	5,958.6
LIABILITIES AND EQUITY
Notes payable and other short-term debt	239.1	196.3
Current portion of long-term debt	4.3	381.5
Accounts payable and accrued expenses	1,287.2	1,297.8
Income taxes payable	72.5	29.8
Total current liabilities	1,603.1	1,905.4
Long-term debt	823.8	751.3
Other non-current liabilities:
Retirement-related liabilities	509.7	457.0
Other	318.1	391.9
Total other non-current liabilities	827.8	848.9
Capital stock:
Preferred stock	0	0
Common stock	1.2	1.2
Capital in excess of par value	1,160.7	1,134.3
Retained earnings	2,611.2	2,110.3
Accumulated other comprehensive loss	(121.3)	(150.8)
Common stock held in treasury	(569.2)	(707.1)
Total BorgWarner Inc. stockholders’ equity	3,082.6	2,387.9
Noncontrolling interest	63.5	65.1
Total equity	3,146.1	2,453.0
Total liabilities and equity	6,400.8	5,958.6
Preferred Stock, Par or Stated Value Per Share	$ 0.01	$ 0.01
Preferred Stock, Shares Authorized	5,000,000	5,000,000
Preferred Stock, Shares Issued	0	0
Common Stock, Par or Stated Value Per Share	$ 0.01	$ 0.01
Common Stock, Shares Authorized	390,000,000	390,000,000
Common Stock, Shares, Issued	123,023,159	121,315,705
Common Stock, Shares, Outstanding	115,572,699	108,514,462
Treasury Stock, Shares	7,450,460	12,801,243
Nonvoting Common Stock [Member]
Capital stock:
Common stock	$ 0	$ 0
Common Stock, Par or Stated Value Per Share	$ 0.01	$ 0.01
Common Stock, Shares Authorized	25,000,000	25,000,000
Common Stock, Shares, Issued	0	0
Common Stock, Shares, Outstanding	0	0

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Income Taxes - Unrecognized Tax Benefits (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Income Tax Disclosure [Abstract]
Unrecognized tax benefits that would impact effective tax rate		$ 23.4
Reconciliation of the total gross unrecognized tax benefits
Balance, January 1	25.8	26.2	27.6
Additions based on tax positions related to current year		2.0	0.5
Additions for tax positions of prior years		13.4	3.9
Reductions for closure of tax audits and settlements		(14.6)	(4.3)
Reductions for lapse in statute of limitations		(1.7)	(0.8)
Increases resulting from foreign currency translation		0.5
Decreases resulting from foreign currency translation			(0.7)
Balance, December 31		25.8	26.2
Income tax penalties and interest expense		0.5	1.7
Income tax penalties and interest accrued on unrecognized tax benefits		8.3	7.8
Estimated tax payment year 1	$ 18.5

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BorgWarner Inc. and Consolidated Subsidiaries Consolidated Statements of Equity (USD $) In Millions, except Share data, unless otherwise specified	Total		Issued common stock	Common stock held in treasury	Capital in excess of par value	Retained earnings	Accumulated other comprehensive income (loss)	Noncontrolling interests
Beginning Balance at Dec. 31, 2009			$ (1.2)	$ (57.9)	$ (1,034.1)	$ (1,193.4)	$ (14.5)	$ (37.4)
Beginning Balance, shares at Dec. 31, 2009			118,336,410
Treasury Stock, Shares				(7,769,762)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Dividends declared								(9.5)
Stock option expense					0.1
Stock incentive plans				22.6	43.5	(10.6)
Shares outstanding under option, exercised	1,888,000		1,020,375	525,297
Executive stock plan				11.5	3.8
Executive stock plan, shares				269,896
Net issuance of restricted stock					18.9
Net issuance of restricted stock, less amortization, shares			1,749,796
Purchase of treasury stock				(325.7)
Net earnings attributable to BorgWarner Inc.	377.4					377.4		18.8
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent	(68.2)
Comprehensive income (loss) attributable to the noncontrolling interest	2.5
Purchases of treasury stock, shares				(7,066,100)
Net earnings attributable to the noncontrolling interest, net of tax	(18.8)
Capital contribution from noncontrolling interest	0
Dytech Ensa, S.L. acquisition								2.0
Ending Balance at Dec. 31, 2010			(1.2)	(349.5)	(1,100.4)	(1,560.2)	53.7	(51.2)
Ending Balance, shares at Dec. 31, 2010			120,086,206
Treasury Stock, Shares	(12,801,243)			(12,801,243)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Dividends declared								(22.0)
Stock incentive plans					38.7
Shares outstanding under option, exercised	1,033,000
Executive stock plan					6.8
Executive stock plan, shares			104,205
Net issuance of restricted stock					15.0
Net issuance of restricted stock, less amortization, shares			104,919
Purchase of treasury stock				(357.6)
Net earnings attributable to BorgWarner Inc.	550.1	[1]				550.1		20.5
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent	(97.1)
Comprehensive income (loss) attributable to the noncontrolling interest	(1.3)
Purchases of treasury stock, shares				(5,031,481)
Net earnings attributable to the noncontrolling interest, net of tax	(20.5)
Capital contribution from noncontrolling interest	19.5							19.5
Adjustments to capital in excess of par value					(26.6)
Purchase of subsidiary shares from noncontrolling interest								2.8
Ending Balance at Dec. 31, 2011	(2,453.0)		(1.2)	(707.1)	(1,134.3)	(2,110.3)	150.8	(65.1)
Ending Balance, shares at Dec. 31, 2011			121,315,705
Treasury Stock, Shares	(7,450,460)			(7,450,460)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Dividends declared								(18.9)
Stock incentive plans					52.0
Shares outstanding under option, exercised	784,000		777,925
Executive stock plan					39.3
Executive stock plan, shares			538,180
Net issuance of restricted stock					21.2
Adjustments Related to Tax Withholding for Share-based Compensation				(18.1)
Net issuance of restricted stock, less amortization, shares			391,349
Shares Paid for Tax Withholding for Share Based Compensation				(241,250)
Purchase of treasury stock				(295.9)
Net earnings attributable to BorgWarner Inc.	500.9	[1]				500.9
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent	29.5
Comprehensive income (loss) attributable to the noncontrolling interest	2.8
Stock Issued During Period, Shares, Conversion of Convertible Securities	11,400,000			11,382,771
Adjustments to additional paid in capital, equity component of convertible debt	243.5				(243.5)
Conversion of convertible securities, value of shares issued	617.3			617.3
Treasury stock received from bond hedge, shares	(6,500,000)			(6,489,698)
Adjustments to additional paid in capital, bond hedge	503.9				503.9
Treasury stock received from bond hedge, value	(503.9)			(503.9)
Treasury stock issued due to settlement of warrant, shares	4,900,000			4,854,654
Adjustments to additional paid in capital, warrant	338.5				(338.5)
Treasury stock issue due to settlement of warrant, value	338.5			338.5
Purchases of treasury stock, shares				(4,155,694)
Net earnings attributable to the noncontrolling interest, net of tax	(21.5)							(21.5)
Capital contribution from noncontrolling interest	0
Adjustments to capital in excess of par value					(8.0)
Purchase of subsidiary shares from noncontrolling interest								7.0
Ending Balance at Dec. 31, 2012	$ (3,146.1)		$ (1.2)	$ (569.2)	$ (1,160.7)	$ (2,611.2)	$ 121.3	$ (63.5)
Ending Balance, shares at Dec. 31, 2012			123,023,159

[1] The Company's results were impacted by the following:•Quarter ended December 31, 2012: Retirement related obligations of $17.3 million are comprised of a $5.7 million loss resulting from the settlement of a portion of the Muncie Plant's pension obligation and an $11.6 million expense associated with the retirement of certain Named Executive Officers. These obligations were partially offset by a $6.1 million tax benefit. The Company incurred tax expense of $3.9 million which included $11.1 million of U.S. tax expense to correct the income taxes payable balance, partially offset by tax benefits resulting from changes to the statutory income tax rate in certain countries and the settlement of certain tax audits. •Quarter ended September 30, 2012: The Company incurred $1.8 million of expense and $11.2 million of tax expense associated with the completion of the sale of its spark plug business. The Company also recorded restructuring expense of $27.4 million primarily associated with the disposal and future requirements of BERU's on-going business, which was partially offset by a tax benefit of $7.7 million. Additionally, the Company incurred tax expense of $6.9 million primarily resulting from the settlement of certain tax audits.•Quarter ended June 30, 2012: The Company recorded expense of $37.9 million primarily due to the write-down of prior purchase price accounting adjustments included within the disposal group as a result of signing a Master Purchase Agreement to sell the spark plug business to Federal-Mogul Corporation, which was partially offset by a tax benefit of $5.5 million resulting from the write-down. Additionally, the Company recorded tax expense of $9.0 million related to its decision to change its cash repatriation assertion for some of its foreign subsidiaries.•Quarter ended December 31, 2011: The Company incurred $21.5 million in expense associated with the loss on sale of the tire pressure monitoring business, including costs related to the divestiture, and a write-down of a portion of the ignitor and electronic business. The Company recorded $1.4 million of tax benefit associated with the disposals and $4.1 million of tax expense related to an intercompany disposal transaction.•Quarter ended June 30, 2011: The Company recorded a $29.1 million patent infringement settlement gain, net of legal costs incurred, which was partially offset by $11.0 million of additional tax expense. Additionally, the Company recorded $6.2 million related to tax adjustments resulting from a change in state corporate income tax legislation as well as an adjustment of the Company's tax accounts as a result of the closure of certain tax audits.

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Financial Instruments (Details) (Net investment hedge contracts [Member]) In Millions, unless otherwise specified	Dec. 31, 2012 Oct - 19 USD ($)	Dec. 31, 2012 Oct - 19 EUR (€)	Dec. 31, 2011 Oct - 19 USD ($)	Dec. 31, 2011 Oct - 19 EUR (€)	Dec. 31, 2012 Nov - 16 USD ($)	Dec. 31, 2012 Nov - 16 JPY (¥)	Dec. 31, 2011 Nov - 16 USD ($)	Dec. 31, 2011 Nov - 16 JPY (¥)
Derivative [Line Items]
Derivative, Notional Amount	$ 75.0	€ 58.5	$ 75.0	€ 58.5	$ 150.0	¥ 17,581.5	$ 150.0	¥ 17,581.5

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Stock Incentive Plans (Tables)

12 Months Ended

Dec. 31, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Proceeds from stock option exercises [Text Block]

Proceeds from stock option exercises for the years ended December 31, 2012, 2011 and 2010 were as follows:

	Year Ended December 31,
(millions of dollars)	2012		2011		2010
Proceeds from stock options exercised — gross	$	20.9	$	28.6	$	55.4
Tax benefit	31.1		24.4		11.7
Proceeds from stock options exercised, net of tax	$	52.0	$	53.0	$	67.1

Restricted stock compensation expense [Text Block]

	Year Ended December 31,
(millions of dollars, except per share data)	2012		2011		2010
Restricted stock compensation expense	$	21.2	$	15.1	$	18.9
Restricted stock compensation expense, net of tax	$	15.5	$	11.4	$	14.7

Status of nonvested restricted stock [Text Block]

A summary of the status of the Company’s nonvested restricted stock for employees and non-employee directors at December 31, 2012, 2011 and 2010 is as follows:

	Shares subject to restriction (thousands)		Weighted average price
Nonvested at January 1, 2010	1,547		$	29.90
Granted	603		$	36.16
Vested	(188	)	$	44.80
Forfeited	(91	)	$	27.10
Nonvested at December 31, 2010	1,871		$	30.55
Granted	274		$	70.57
Vested	(609	)	$	27.39
Forfeited	(106	)	$	38.05
Nonvested at December 31, 2011	1,430		$	39.02
Granted	338		$	78.41
Vested	(675	)	$	27.43
Forfeited	(61	)	$	54.35
Nonvested at December 31, 2012	1,032		$	58.77

Amounts expensed under plan and share issuances [Text Block]

The amounts expensed under the plan and the share issuances for the three-year measurement periods ended December 31, 2012, 2011 and 2010 were as follows:

	Year Ended December 31,
(millions of dollars, except share data)	2012		2011		2010
Expense	$	35.5	$	26.3	$	23.9
Number of shares*	558,000		538,180		104,205

________________

*Shares are issued in February of the following year.

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Retirement Benefit Plans Retirement Benefit Plans - Funded status of plans with ABO in excess of plan assets (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Pension Plans with Accumulated Benefit Obligations in Excess of Plan Assets, Aggregate Accumulated Benefit Obligation	$ 757.7	$ 656.9
Defined Benefit Plan, Pension Plans with Accumulated Benefit Obligations in Excess of Plan Assets, Aggregate Fair Value of Plan Assets	458.0	435.5
Defined Benefit Plan, Plans with Benefit Obligations in Excess of Plan Assets, Deficiency	299.7	221.4
United States Pension Deficiency [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Plans with Benefit Obligations in Excess of Plan Assets, Deficiency	47.4	47.0
United Kingdom Pension Deficiency [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Plans with Benefit Obligations in Excess of Plan Assets, Deficiency	22.4	13.4
Germany Pension Deficiency [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Plans with Benefit Obligations in Excess of Plan Assets, Deficiency	192.4	128.7
Other Countries Pension Deficiency [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Plans with Benefit Obligations in Excess of Plan Assets, Deficiency	$ 37.5	$ 32.3

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Recent Transactions

12 Months Ended

Dec. 31, 2012

Business Combinations [Abstract]

Recent transactions

RECENT TRANSACTIONS

BorgWarner BERU Systems Korea Co., Ltd.

During the third and fourth quarters of 2012, the Company completed the purchase of the remaining 49% of BorgWarner BERU Systems Korea Co., Ltd. for $15.0 million in cash, which has been classified as a financing activity within the Consolidated Statement of Cash Flows. In accordance with ASC Topic 810,"Consolidation," the Company reduced its noncontrolling interest balance by $7.0 million and reduced capital in excess of par value by $8.0 million. As a result of these transactions, the Company now owns 100% of BorgWarner BERU Systems Korea Co., Ltd.

Spark plug business

During the second and third quarters of 2012, the Company incurred $39.7 million in expense associated with the loss on sale of the spark plug business to Federal-Mogul Corporation primarily related to the write-down of prior purchase price accounting adjustments. These purchase price accounting adjustments were originally reported in the Engine segment and related to the BERU acquisition. As a result of the sale, the Company received $55.2 million in cash, which is classified as an investing activity within the Consolidated Statement of Cash Flows. The sale will allow BorgWarner to continue to focus on expanding BERU Systems' core products of glow plugs, diesel cold start systems and other gasoline ignition technologies.

Tire pressure monitoring business

During the fourth quarter of 2011, the Company incurred $21.5 million in expense associated with the loss on sale of the tire pressure monitoring business, including the write-down of prior purchase price accounting adjustments related to the BERU acquisition, costs related to the divestiture, and a write-down of a portion of the ignitor and electronic business. The Company received $22.9 million in cash, classified as an investing activity within the Consolidated Statement of Cash Flows, from the sale of its tire pressure monitoring business to Huf Electronics GmbH. The sale will allow BorgWarner to continue to focus on expanding BERU Systems' core products of glow plugs, diesel cold start systems and other gasoline ignition technologies.

BorgWarner Vikas Emissions Systems India Private Limited

On August 2, 2011, the Company purchased the noncontrolling interest's 40% share of BorgWarner Vikas Emissions Systems India Private Limited for $29.4 million in cash, which has been classified as a financing activity within the Consolidated Statement of Cash Flows. In accordance with ASC Topic 810, the Company reduced its noncontrolling interest balance by $2.8 million and reduced capital in excess of par value by $26.6 million. As a result of this transaction, the Company owns 100% of BorgWarner Vikas Emissions Systems India Private Limited.

Traction Systems division of Haldex Group

On January 31, 2011, the Company acquired 100% of the stock of Haldex Traction Holding AB ("Haldex Traction Systems"). Haldex Traction Systems has operations in Sweden, Hungary and Mexico. The consideration for the acquisition, net of cash acquired, was $214.9 million (1.38 billion Swedish Krona).

The acquisition is expected to accelerate the Company's growth in the global all-wheel drive (AWD) market as it continues to shift toward front-wheel drive (FWD) based vehicles.  The acquisition will add industry leading FWD/AWD technologies, with a strong European customer base, to the Company's existing portfolio of front and rear-wheel drive based products.  This enables the Company to provide global customers a broader range of AWD solutions to meet their vehicle needs.

The operating results are reported within the Company's Drivetrain reporting segment as of the date of acquisition. The Company paid $203.7 million, which is recorded as an investing activity in the Consolidated Statement of Cash Flows. Additionally, the Company assumed retirement-related liabilities of $5.3 million and assumed debt of $5.9 million, which are considered non-cash transactions in the Consolidated Statement of Cash Flows.

BERU-Eichenauer GmbH

In anticipation of market growth expected for its electric cabin heaters, the Company completed the acquisition of BERU-Eichenauer GmbH by acquiring the shares of its former joint venture partner, Eichenauer Heizelemente GmbH & Co. KG. The former 50/50 joint venture was formed in 2000 to develop and manufacture electric cabin heaters. The acquisition formally took effect on May 1, 2010.

The pre-tax impact of this acquisition was an increase in intangible and other assets of $17.6 million related to adjusting the Company's 50% investment to fair value under ASC Topic 805, a gain of $8.0 million and a decrease in cash of $9.6 million. The Company's $9.6 million payment has been recorded as an investing activity in the Consolidated Statement of Cash Flows.

Dytech ENSA S.L.

On April 10, 2010, the Company acquired 100% of Dytech ENSA S.L. (“Dytech”), headquartered in Vigo, Spain. The gross cost of this acquisition is $147.7 million, or $147.6 million, net of cash and cash equivalents. Dytech is a leading producer of exhaust gas recirculation (EGR) coolers, EGR tubes, and integrated EGR modules including valves for automotive and commercial vehicle applications, both on- and off-road. This acquisition enhances the Company's emissions products offering and system/module expertise, further differentiating BorgWarner as a leader in highly engineered automotive systems. In addition, Dytech's geographic footprint and customer base complements and strengthens the Company's market presence with global automakers. The operating results of Dytech are reported within the Company's Engine reporting segment from the date of acquisition. The Company's $147.6 million payment has been recorded as an investing activity in the Consolidated Statement of Cash Flows.

Etatech, Inc. Technology

On June 2, 2009, the Company announced the purchase of advanced gasoline ignition technology and related intellectual property from Florida-based Etatech, Inc. The high-frequency ignition technology enables high-performing, lean burning engines to significantly improve fuel economy and reduce emissions compared with conventional combustion technologies. The Company made a cash payment of $7.5 million in both June 2009 and May 2010 for the purchase of Etatech, Inc., which has been reflected as an investing activity in the Consolidated Statements of Cash Flows.

BERU

In 2009, the Company completed the acquisition of 100% of BERU Aktiengesellschaft's ("BERU") outstanding shares through a German legal process referred to as a "squeeze out," which required the Company to pay €73.39 per share to the non-controlling shareholders. Certain non-controlling shareholders  had challenged the "squeeze out" share price of €73.39 . In November 2012, the court ruled confirming the adequacy of the share price of €73.39, therefore the Company would not be required to pay any additional amount to the “squeezed-out” shareholders. However, the non-controlling  shareholders have appealed the ruling and no date has been set by the court to rule on the appeal.

In addition, certain non-controlling shareholders had challenged the 2008 Domination and Profit Sharing Agreement ("DPTA"). In the same ruling on the "squeeze out," the court ruled on the adequacy of the guaranteed dividend calculated in the DPTA. The ruling increased the guaranteed divided by a negligible amount. The non-controlling shareholders and the Company have appealed this ruling and no date has yet been set by the court to rule on the appeals.

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Contingencies (Tables)

12 Months Ended

Dec. 31, 2012

Commitments and Contingencies Disclosure [Abstract]

Estimated Future Settlement Of Existing Claims

The amounts recorded in the Consolidated Balance Sheets related to the estimated future settlement of existing claims are as follows:

	December 31,
(millions of dollars)	2012		2011
Assets:
Prepayments and other current assets	$	—	$	28.8
Other non-current assets	85.6		32.9
Total insurance assets	$	85.6	$	61.7
Liabilities:
Accounts payable and accrued expenses	$	36.5	$	28.8
Other non-current liabilities	49.1		32.9
Total accrued liabilities	$	85.6	$	61.7

The 2012 increase in the accrued liability and associated insurance asset is primarily due to an expected higher rate of claim settlement based on recent litigation claim activity.

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2012

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Use of estimates

Use of estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the accompanying notes, as well as, the amounts of revenues and expenses reported during the periods covered by these financial statements and accompanying notes. Actual results could differ from those estimates.

Concentrations of risk

Concentrations of risk Cash is maintained with several financial institutions. Deposits held with banks may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand and are maintained with financial institutions of reputable credit and therefore bear minimal risk.

The Company performs ongoing credit evaluations of its suppliers and customers and, with the exception of certain financing transactions, does not require collateral from its OEM customers. Some automotive parts suppliers continue to experience commodity cost pressures and the effects of industry overcapacity. These factors have increased pressure on the industry's supply base, as suppliers cope with higher commodity costs, lower production volumes and other challenges. The Company receives certain of its raw materials from sole suppliers or a limited number of suppliers. The inability of a supplier to fulfill supply requirements of the Company could materially affect future operating results.

Consolidations

Principles of consolidation The Consolidated Financial Statements include all majority-owned subsidiaries with a controlling financial interest. All inter-company accounts and transactions have been eliminated in consolidation. Investments in 20% to 50% owned affiliates are accounted for under the equity method when the Company does not have a controlling financial interest.

Revenue recognition

Revenue recognition The Company recognizes revenue when title and risk of loss pass to the customer, which is usually upon shipment of product. Although the Company may enter into long-term supply agreements with its major customers, each shipment of goods is treated as a separate sale and the prices are not fixed over the life of the agreements.

Cost of sales

Cost of sales The Company includes materials, direct labor and manufacturing overhead within cost of sales. Manufacturing overhead is comprised of indirect materials, indirect labor, factory operating costs and other such costs associated with manufacturing products for sale.

Cash

Cash Cash is valued at fair market value. It is the Company's policy to classify all highly liquid investments with original maturities of three months or less as cash.

Receivables, net

Receivables, net The Company securitizes certain receivables through third party financial institutions without recourse and continues to administer the collection of these receivables on behalf of the third party. The amount can vary each month based on the amount of underlying receivables. On December 21, 2009, the Company entered into a $50 million accounts receivable securitization facility, which was amended on September 8, 2010 to increase the facility to $80 million and then again on November 1, 2012 to increase the facility to $110 million. The amended facility matures on October 31, 2014.

Inventories, net

Inventories, net Inventories are valued at the lower of cost or market. Cost of U.S. inventories is determined using the last-in, first-out (“LIFO”) method, while the foreign operations use the first-in, first-out (“FIFO”) or average-cost methods.

Pre-production costs related to long-term supply arrangements

Pre-production costs related to long-term supply arrangements Engineering, research and development and other design and development costs for products sold on long-term supply arrangements are expensed as incurred unless the Company has a contractual guarantee for reimbursement from the customer. Costs for molds, dies and other tools used to make products sold on long-term supply arrangements for which the Company either has title to the assets or has the non-cancelable right to use the assets during the term of the supply arrangement are capitalized in property, plant and equipment and amortized to cost of sales over the shorter of the term of the arrangement or over the estimated useful lives of the assets, typically 3 to 5 years. Costs for molds, dies and other tools used to make products sold on long-term supply arrangements for which the Company has a contractual guarantee for lump sum reimbursement from the customer are capitalized in prepayments and other current assets.

Property, plant and equipment and depreciation, net

Property, plant and equipment, netProperty, plant and equipment is valued at cost less accumulated depreciation. Expenditures for maintenance, repairs and renewals of relatively minor items are generally charged to expense as incurred. Renewals of significant items are capitalized. Depreciation is generally computed on a straight-line basis over the estimated useful lives of the assets. Useful lives for buildings range from 15 to 40 years and useful lives for machinery and equipment range from three to 12 years. For income tax purposes, accelerated methods of depreciation are generally used.

Impairment of long-lived assets

Impairment of long-lived assets, including definite-lived intangible assets The Company reviews the carrying value of its long-lived assets, whether held for use or disposal, including other amortizing intangible assets, when events and circumstances warrant such a review under Accounting Standards Codification ("ASC") Topic 360. A recoverability review is performed using the undiscounted cash flows if there is a triggering event. If the undiscounted cash flow test for recoverability identifies a possible impairment, management will perform a fair value analysis. Management determines fair value under ASC Topic 820 using the appropriate valuation technique of market, income or cost approach. If the carrying value of a long-lived asset is considered impaired, an impairment charge is recorded for the amount by which the carrying value of the long-lived asset exceeds its fair value.

Management believes that the estimates of future cash flows and fair value assumptions are reasonable; however, changes in assumptions underlying these estimates could affect the valuations. Long-lived assets held for sale are recorded at the lower of their carrying amount or fair value less cost to sell. Significant judgments and estimates used by management when evaluating long-lived assets for impairment include: (i) an assessment as to whether an adverse event or circumstance has triggered the need for an impairment review; (ii) undiscounted future cash flows generated by the asset; and (iii) fair valuation of the asset.

Goodwill and other indefinite-lived intangible assets

Goodwill and other indefinite-lived intangible assets During the fourth quarter of each year, the Company qualitatively assesses its goodwill and indefinite-lived intangible assets assigned to each of its reporting units. This qualitative assessment evaluates various events and circumstances, such as macro economic conditions, industry and market conditions, cost factors, relevant events and financial trends, that may impact a reporting unit's fair value. Using this qualitative assessment, the Company determines whether it is more-likely-than not the reporting unit's fair value exceeds its carrying value. If it is determined that it is not more-likely-than-not the reporting unit's fair value exceeds the carrying value, or upon a triggering event, including recent acquisition or divestiture activity, the Company performs a quantitative, "step one," goodwill impairment analysis.

Product warranties

Product warranties The Company provides warranties on some, but not all, of its products. The warranty terms are typically from one to three years. Provisions for estimated expenses related to product warranty are made at the time products are sold. These estimates are established using historical information about the nature, frequency and average cost of warranty claim settlements as well as product manufacturing and industry developments and recoveries from third parties. Management actively studies trends of warranty claims and takes action to improve product quality and minimize warranty claims. Management believes that the warranty accrual is appropriate; however, actual claims incurred could differ from the original estimates, requiring adjustments to the accrual. The product warranty accrual is allocated to current and non-current liabilities in the Consolidated Balance Sheets.

Other loss accruals and valuation allowances

Other loss accruals and valuation allowances The Company has numerous other loss exposures, such as customer claims, workers' compensation claims, litigation and recoverability of assets. Establishing loss accruals or valuation allowances for these matters requires the use of estimates and judgment in regard to the risk exposure and ultimate realization. The Company estimates losses under the programs using consistent and appropriate methods, however, changes to its assumptions could materially affect the recorded accrued liabilities for loss or asset valuation allowances.

Derivative financial instruments

Derivative financial instruments The Company recognizes that certain normal business transactions generate risk. Examples of risks include exposure to exchange rate risk related to transactions denominated in currencies other than the functional currency, changes in commodity costs and interest rates. It is the objective and responsibility of the Company to assess the impact of these transaction risks and offer protection from selected risks through various methods, including financial derivatives. Virtually all derivative instruments held by the Company are designated as hedges, have high correlation with the underlying exposure and are highly effective in offsetting underlying price movements. Accordingly, gains and losses from changes in qualifying hedge fair values are matched with the underlying transactions. All hedge instruments are carried at their fair value based on quoted market prices for contracts with similar maturities. The Company does not engage in any derivative transactions for purposes other than hedging specific risks.

Foreign currency

Foreign currency The financial statements of foreign subsidiaries are translated to U.S. dollars using the period-end exchange rate for assets and liabilities and an average exchange rate for each period for revenues, expenses and capital expenditures. The local currency is the functional currency for substantially all of the Company's foreign subsidiaries. Translation adjustments for foreign subsidiaries are recorded as a component of accumulated other comprehensive income (loss) in equity. The Company recognizes transaction gains and losses arising from fluctuations in currency exchange rates on transactions denominated in currencies other than the functional currency in earnings as incurred.

Environmental contingencies

Environmental contingencies  The Company accounts for environmental costs in accordance with ASC Topic 450. Costs related to environmental assessments and remediation efforts at operating facilities are accrued when it is probable that a liability has been incurred and the amount of that liability can be reasonably estimated. Estimated costs are recorded at undiscounted amounts, based on experience and assessments and are regularly evaluated. The liabilities are recorded in accounts payable and accrued expenses and other non-current liabilities in the Company's Consolidated Balance Sheets.

Pension and other postretirement plans

Pensions and other postretirement employee defined benefits  The Company's defined benefit pension and other postretirement employee benefit plans are accounted for in accordance with ASC Topic 715. Disability, early retirement and other postretirement employee benefits are accounted for in accordance with ASC Topic 712.

Pensions and other postretirement employee benefit costs and related liabilities and assets are dependent upon assumptions used in calculating such amounts. These assumptions include discount rates, expected returns on plan assets, health care cost trends, compensation and other factors. In accordance with GAAP, actual results that differ from the assumptions used are accumulated and amortized over future periods, and accordingly, generally affect recognized expense in future periods.

Income taxes

Income taxes  In accordance with ASC Topic 740, the Company's income tax expense is calculated based on expected income and statutory tax rates in the various jurisdictions in which the Company operates and requires the use of management's estimates and judgments.

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Retirement Benefit Plans - Assumptions Used (Details)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Net Periodic Benefit Cost [Abstract]
Assumptions used calculating benefit obligation, rounding of the discount rate	0.25%
U.S. Plans:
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Benefit Obligation [Abstract]
Assumptions used calculating benefit obligation, discount rate	3.67%	4.42%
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Net Periodic Benefit Cost [Abstract]
Assumptions used calculating net periodic benefit cost, discount rate	4.42%	5.17%	5.75%
Assumptions used calculating net periodic benefit cost, rate of compensation increase			3.50%
Assumptions used calculating net periodic benefit cost, expected long-term return on assets	6.75%	7.50%	7.50%
Non-U.S. Plans:
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Benefit Obligation [Abstract]
Assumptions used calculating benefit obligation, discount rate	3.86%	5.13%
Assumptions used calculating benefit obligation, rate of compensation increase	2.72%	2.78%
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Net Periodic Benefit Cost [Abstract]
Assumptions used calculating net periodic benefit cost, discount rate	5.13%	5.37%	5.47%
Assumptions used calculating net periodic benefit cost, rate of compensation increase	2.78%	2.80%	2.75%
Assumptions used calculating net periodic benefit cost, expected long-term return on assets	6.49%	7.07%	7.12%
U.S. other postretirement benefit plans [Member]
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Benefit Obligation [Abstract]
Assumptions used calculating benefit obligation, discount rate	3.25%	4.25%
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Net Periodic Benefit Cost [Abstract]
Assumptions used calculating net periodic benefit cost, discount rate	4.25%	4.75%	5.50%

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Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2012

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Summary of significant accounting policies

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The following paragraphs briefly describe the Company's significant accounting policies.

Basis of presentation The Company retrospectively adopted the amendment to Accounting Standards Codification ("ASC") Topic 220, "Comprehensive Income," which requires companies to separately disclose reclassifications from other comprehensive income into net income on the face of the financial statements. Prior year balances within the Consolidated Statements of Comprehensive Income conform to this requirement.

Use of estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the accompanying notes, as well as, the amounts of revenues and expenses reported during the periods covered by these financial statements and accompanying notes. Actual results could differ from those estimates.

Concentrations of risk Cash is maintained with several financial institutions. Deposits held with banks may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand and are maintained with financial institutions of reputable credit and therefore bear minimal risk.

The Company performs ongoing credit evaluations of its suppliers and customers and, with the exception of certain financing transactions, does not require collateral from its OEM customers. Some automotive parts suppliers continue to experience commodity cost pressures and the effects of industry overcapacity. These factors have increased pressure on the industry's supply base, as suppliers cope with higher commodity costs, lower production volumes and other challenges. The Company receives certain of its raw materials from sole suppliers or a limited number of suppliers. The inability of a supplier to fulfill supply requirements of the Company could materially affect future operating results.

Principles of consolidation The Consolidated Financial Statements include all majority-owned subsidiaries with a controlling financial interest. All inter-company accounts and transactions have been eliminated in consolidation. Investments in 20% to 50% owned affiliates are accounted for under the equity method when the Company does not have a controlling financial interest.

Revenue recognition The Company recognizes revenue when title and risk of loss pass to the customer, which is usually upon shipment of product. Although the Company may enter into long-term supply agreements with its major customers, each shipment of goods is treated as a separate sale and the prices are not fixed over the life of the agreements.

Cost of sales The Company includes materials, direct labor and manufacturing overhead within cost of sales. Manufacturing overhead is comprised of indirect materials, indirect labor, factory operating costs and other such costs associated with manufacturing products for sale.

Cash Cash is valued at fair market value. It is the Company's policy to classify all highly liquid investments with original maturities of three months or less as cash.

Receivables, net The Company securitizes certain receivables through third party financial institutions without recourse and continues to administer the collection of these receivables on behalf of the third party. The amount can vary each month based on the amount of underlying receivables. On December 21, 2009, the Company entered into a $50 million accounts receivable securitization facility, which was amended on September 8, 2010 to increase the facility to $80 million and then again on November 1, 2012 to increase the facility to $110 million. The amended facility matures on October 31, 2014.

Inventories, net Inventories are valued at the lower of cost or market. Cost of U.S. inventories is determined using the last-in, first-out (“LIFO”) method, while the foreign operations use the first-in, first-out (“FIFO”) or average-cost methods. Inventory held by U.S. operations was $102.1 million and $100.6 million at December 31, 2012 and 2011, respectively. Such inventories, if valued at current cost instead of LIFO, would have been greater by $16.0 million and $15.3 million at December 31, 2012 and 2011, respectively.

See Note 5 to the Consolidated Financial Statements for more information on inventories, net.

Pre-production costs related to long-term supply arrangements Engineering, research and development and other design and development costs for products sold on long-term supply arrangements are expensed as incurred unless the Company has a contractual guarantee for reimbursement from the customer. Costs for molds, dies and other tools used to make products sold on long-term supply arrangements for which the Company either has title to the assets or has the non-cancelable right to use the assets during the term of the supply arrangement are capitalized in property, plant and equipment and amortized to cost of sales over the shorter of the term of the arrangement or over the estimated useful lives of the assets, typically 3 to 5 years. Costs for molds, dies and other tools used to make products sold on long-term supply arrangements for which the Company has a contractual guarantee for lump sum reimbursement from the customer are capitalized in prepayments and other current assets.

Property, plant and equipment, netProperty, plant and equipment is valued at cost less accumulated depreciation. Expenditures for maintenance, repairs and renewals of relatively minor items are generally charged to expense as incurred. Renewals of significant items are capitalized. Depreciation is generally computed on a straight-line basis over the estimated useful lives of the assets. Useful lives for buildings range from 15 to 40 years and useful lives for machinery and equipment range from three to 12 years. For income tax purposes, accelerated methods of depreciation are generally used.

See Note 5 to the Consolidated Financial Statements for more information on property, plant and equipment, net.

Impairment of long-lived assets, including definite-lived intangible assets The Company reviews the carrying value of its long-lived assets, whether held for use or disposal, including other amortizing intangible assets, when events and circumstances warrant such a review under Accounting Standards Codification ("ASC") Topic 360. A recoverability review is performed using the undiscounted cash flows if there is a triggering event. If the undiscounted cash flow test for recoverability identifies a possible impairment, management will perform a fair value analysis. Management determines fair value under ASC Topic 820 using the appropriate valuation technique of market, income or cost approach. If the carrying value of a long-lived asset is considered impaired, an impairment charge is recorded for the amount by which the carrying value of the long-lived asset exceeds its fair value.

Management believes that the estimates of future cash flows and fair value assumptions are reasonable; however, changes in assumptions underlying these estimates could affect the valuations. Long-lived assets held for sale are recorded at the lower of their carrying amount or fair value less cost to sell. Significant judgments and estimates used by management when evaluating long-lived assets for impairment include: (i) an assessment as to whether an adverse event or circumstance has triggered the need for an impairment review; (ii) undiscounted future cash flows generated by the asset; and (iii) fair valuation of the asset.

Goodwill and other indefinite-lived intangible assets During the fourth quarter of each year, the Company qualitatively assesses its goodwill and indefinite-lived intangible assets assigned to each of its reporting units. This qualitative assessment evaluates various events and circumstances, such as macro economic conditions, industry and market conditions, cost factors, relevant events and financial trends, that may impact a reporting unit's fair value. Using this qualitative assessment, the Company determines whether it is more-likely-than not the reporting unit's fair value exceeds its carrying value. If it is determined that it is not more-likely-than-not the reporting unit's fair value exceeds the carrying value, or upon a triggering event, including recent acquisition or divestiture activity, the Company performs a quantitative, "step one," goodwill impairment analysis.

See Note 6 to the Consolidated Financial Statements for more information on goodwill and other indefinite-lived intangible assets.

Product warranties The Company provides warranties on some, but not all, of its products. The warranty terms are typically from one to three years. Provisions for estimated expenses related to product warranty are made at the time products are sold. These estimates are established using historical information about the nature, frequency and average cost of warranty claim settlements as well as product manufacturing and industry developments and recoveries from third parties. Management actively studies trends of warranty claims and takes action to improve product quality and minimize warranty claims. Management believes that the warranty accrual is appropriate; however, actual claims incurred could differ from the original estimates, requiring adjustments to the accrual. The product warranty accrual is allocated to current and non-current liabilities in the Consolidated Balance Sheets.

See Note 7 to the Consolidated Financial Statements for more information on product warranties.

Other loss accruals and valuation allowances The Company has numerous other loss exposures, such as customer claims, workers' compensation claims, litigation and recoverability of assets. Establishing loss accruals or valuation allowances for these matters requires the use of estimates and judgment in regard to the risk exposure and ultimate realization. The Company estimates losses under the programs using consistent and appropriate methods, however, changes to its assumptions could materially affect the recorded accrued liabilities for loss or asset valuation allowances.

Derivative financial instruments The Company recognizes that certain normal business transactions generate risk. Examples of risks include exposure to exchange rate risk related to transactions denominated in currencies other than the functional currency, changes in commodity costs and interest rates. It is the objective and responsibility of the Company to assess the impact of these transaction risks and offer protection from selected risks through various methods, including financial derivatives. Virtually all derivative instruments held by the Company are designated as hedges, have high correlation with the underlying exposure and are highly effective in offsetting underlying price movements. Accordingly, gains and losses from changes in qualifying hedge fair values are matched with the underlying transactions. All hedge instruments are carried at their fair value based on quoted market prices for contracts with similar maturities. The Company does not engage in any derivative transactions for purposes other than hedging specific risks.

See Note 10 to the Consolidated Financial Statements for more information on derivative financial instruments.

Foreign currency The financial statements of foreign subsidiaries are translated to U.S. dollars using the period-end exchange rate for assets and liabilities and an average exchange rate for each period for revenues, expenses and capital expenditures. The local currency is the functional currency for substantially all of the Company's foreign subsidiaries. Translation adjustments for foreign subsidiaries are recorded as a component of accumulated other comprehensive income (loss) in equity. The Company recognizes transaction gains and losses arising from fluctuations in currency exchange rates on transactions denominated in currencies other than the functional currency in earnings as incurred.

See Note 5 to the Consolidated Financial Statements for more information on accumulated other comprehensive income (loss).

Environmental contingencies  The Company accounts for environmental costs in accordance with ASC Topic 450. Costs related to environmental assessments and remediation efforts at operating facilities are accrued when it is probable that a liability has been incurred and the amount of that liability can be reasonably estimated. Estimated costs are recorded at undiscounted amounts, based on experience and assessments and are regularly evaluated. The liabilities are recorded in accounts payable and accrued expenses and other non-current liabilities in the Company's Consolidated Balance Sheets.

See Note 13 to the Consolidated Financial Statements for more information regarding environmental contingencies.

Pensions and other postretirement employee defined benefits  The Company's defined benefit pension and other postretirement employee benefit plans are accounted for in accordance with ASC Topic 715. Disability, early retirement and other postretirement employee benefits are accounted for in accordance with ASC Topic 712.

Pensions and other postretirement employee benefit costs and related liabilities and assets are dependent upon assumptions used in calculating such amounts. These assumptions include discount rates, expected returns on plan assets, health care cost trends, compensation and other factors. In accordance with GAAP, actual results that differ from the assumptions used are accumulated and amortized over future periods, and accordingly, generally affect recognized expense in future periods.

See Note 11 to the Consolidated Financial Statements for more information regarding the Company's pension and other postretirement employee defined benefit plans.

Income taxes  In accordance with ASC Topic 740, the Company's income tax expense is calculated based on expected income and statutory tax rates in the various jurisdictions in which the Company operates and requires the use of management's estimates and judgments.

See Note 4 to the Consolidated Financial Statements for more information regarding income taxes.

New Accounting Pronouncements

In November 2012, the Financial Accounting Standards Board ("FASB") amended ASC Topic 220, "Comprehensive Income," requiring companies to disclose the income statement line items impacted by the reclassification of comprehensive income (loss) into net earnings. This guidance is effective retrospectively for interim and annual periods beginning on or after December 15, 2012. The Company anticipates the adoption of this guidance will not have a material impact on its Consolidated Financial Statements.

In December 2011, the FASB amended ASC Topic 210, "Balance Sheet," requiring companies to disclose both gross and net information about instruments and transactions eligible for offset in the statement of financial position as well as instruments and transactions subject to an agreement similar to a master netting arrangement. This guidance is effective retrospectively for interim and annual periods beginning on or after January 1, 2013. The Company anticipates the adoption of this guidance will not have a material impact on its Consolidated Financial Statements.

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BorgWarner Inc. and Consolidated Subsidiaries Consolidated Statements of Operations (USD $) In Millions, except Share data in Thousands, unless otherwise specified	3 Months Ended																12 Months Ended
	Dec. 31, 2012		Sep. 30, 2012		Jun. 30, 2012		Mar. 31, 2012		Dec. 31, 2011		Sep. 30, 2011		Jun. 30, 2011		Mar. 31, 2011		Dec. 31, 2012		Dec. 31, 2011		Dec. 31, 2010
Income Statement [Abstract]
Net sales	$ 1,719.1		$ 1,695.2		$ 1,856.4		$ 1,912.5		$ 1,773.7		$ 1,791.8		$ 1,818.8		$ 1,730.4		$ 7,183.2		$ 7,114.7		$ 5,652.8
Cost of sales	1,374.9		1,351.5		1,473.2		1,516.7		1,414.0		1,441.0		1,461.7		1,387.6		5,716.3		5,704.3		4,559.5
Gross profit	344.2		343.7		383.2		395.8		359.7		350.8		357.1		342.8		1,466.9		1,410.4		1,093.3
Selling, general and administrative expenses	156.2		151.0		153.1		169.0		146.8		151.4		157.7		165.1		629.3		621.0		566.6
Other (income) expense	17.3		29.7		36.6		1.1		21.8		0.6		(28.9)		(1.6)		84.7		(8.1)		22.4
Operating income	170.7		163.0		193.5		225.7		191.1		198.8		228.3		179.3		752.9		797.5		504.3
Equity in affiliates’ earnings, net of tax	(10.0)		(11.1)		(12.5)		(9.2)		(10.2)		(11.5)		(8.1)		(8.4)		(42.8)		(38.2)		(39.6)
Interest income	(1.0)		(1.0)		(1.3)		(1.4)		(1.3)		(1.3)		(1.2)		(1.0)		(4.7)		(4.8)		(2.8)
Interest expense and finance charges	6.7		5.0		12.6		15.1		17.2		18.5		20.5		18.4		39.4		74.6		68.8
Earnings before income taxes and noncontrolling interest	175.0		170.1		194.7		221.2		185.4		193.1		217.1		170.3		761.0		765.9		477.9
Provision for income taxes	48.4		64.2		68.5		57.5		58.2		46.4		49.8		40.9		238.6		195.3		81.7
Net earnings	126.6		105.9		126.2		163.7		127.2		146.7		167.3		129.4		522.4		570.6		396.2
Net earnings attributable to the noncontrolling interest, net of tax	(5.4)		(4.8)		(5.6)		(5.7)		(5.2)		(5.1)		(5.3)		(4.9)		(21.5)		(20.5)		(18.8)
Net earnings attributable to BorgWarner Inc.	$ 121.2	[1]	$ 101.1	[1]	$ 120.6	[1]	$ 158.0	[1]	$ 122.0	[1]	$ 141.6	[1]	$ 162.0	[1]	$ 124.5	[1]	$ 500.9	[1]	$ 550.1	[1]	$ 377.4
Earnings per share — basic	$ 1.05		$ 0.88		$ 1.08		$ 1.46		$ 1.12		$ 1.30		$ 1.49		$ 1.13		$ 4.45		$ 5.04		$ 3.31
Earnings per share — diluted	$ 1.03		$ 0.85		$ 1.00		$ 1.28		$ 1.00		$ 1.15		$ 1.31		$ 1.00		$ 4.17	[2]	$ 4.45	[2]	$ 3.07	[2]
Weighted average shares outstanding:
Basic																	112,652		109,229		114,155
Diluted																	121,377		128,468		129,575

[1] The Company's results were impacted by the following:•Quarter ended December 31, 2012: Retirement related obligations of $17.3 million are comprised of a $5.7 million loss resulting from the settlement of a portion of the Muncie Plant's pension obligation and an $11.6 million expense associated with the retirement of certain Named Executive Officers. These obligations were partially offset by a $6.1 million tax benefit. The Company incurred tax expense of $3.9 million which included $11.1 million of U.S. tax expense to correct the income taxes payable balance, partially offset by tax benefits resulting from changes to the statutory income tax rate in certain countries and the settlement of certain tax audits. •Quarter ended September 30, 2012: The Company incurred $1.8 million of expense and $11.2 million of tax expense associated with the completion of the sale of its spark plug business. The Company also recorded restructuring expense of $27.4 million primarily associated with the disposal and future requirements of BERU's on-going business, which was partially offset by a tax benefit of $7.7 million. Additionally, the Company incurred tax expense of $6.9 million primarily resulting from the settlement of certain tax audits.•Quarter ended June 30, 2012: The Company recorded expense of $37.9 million primarily due to the write-down of prior purchase price accounting adjustments included within the disposal group as a result of signing a Master Purchase Agreement to sell the spark plug business to Federal-Mogul Corporation, which was partially offset by a tax benefit of $5.5 million resulting from the write-down. Additionally, the Company recorded tax expense of $9.0 million related to its decision to change its cash repatriation assertion for some of its foreign subsidiaries.•Quarter ended December 31, 2011: The Company incurred $21.5 million in expense associated with the loss on sale of the tire pressure monitoring business, including costs related to the divestiture, and a write-down of a portion of the ignitor and electronic business. The Company recorded $1.4 million of tax benefit associated with the disposals and $4.1 million of tax expense related to an intercompany disposal transaction.•Quarter ended June 30, 2011: The Company recorded a $29.1 million patent infringement settlement gain, net of legal costs incurred, which was partially offset by $11.0 million of additional tax expense. Additionally, the Company recorded $6.2 million related to tax adjustments resulting from a change in state corporate income tax legislation as well as an adjustment of the Company's tax accounts as a result of the closure of certain tax audits.

[2] * The Company's diluted earnings per share for the years ended December 31, 2012, 2011 and 2010 includes the impact of the Company's 3.50% convertible senior notes and associated warrants. Refer to Note 15, "Earnings Per Share," for further information on the diluted earnings per share calculation.

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Retirement Benefit Plans

12 Months Ended

Dec. 31, 2012

Compensation and Retirement Disclosure [Abstract]

Retirement benefit plans

RETIREMENT BENEFIT PLANS

The Company sponsors various defined contribution savings plans, primarily in the U.S., that allow employees to contribute a portion of their pre-tax and/or after-tax income in accordance with plan specified guidelines. Under specified conditions, the Company will make contributions to the plans and/or match a percentage of the employee contributions up to certain limits. Total expense related to the defined contribution plans was $24.8 million, $18.9 million and $19.2 million in the years ended December 31, 2012, 2011 and 2010, respectively.

The Company has a number of defined benefit pension plans and other postretirement benefit plans covering eligible salaried and hourly employees and their dependents. The defined pension benefits provided are primarily based on (i) years of service and (ii) average compensation or a monthly retirement benefit amount. The Company provides defined benefit pension plans in France, Germany, Ireland, Italy, Japan, Mexico, Monaco, South Korea, Sweden, U.K. and U.S. The other postretirement benefit plans, which provide medical and life insurance benefits, are unfunded plans. All pension and other postretirement benefit plans in the U.S. have been closed to new employees since 1999. The measurement date for all plans is December 31.

On February 26, 2009, the Company's subsidiary BorgWarner Diversified Transmission Products Inc. ("DTP"), entered into a Plant Shutdown Agreement with the United Auto Workers ("UAW") for its Muncie, Indiana automotive component plant (the "Muncie Plant"). Management subsequently wound-down production activity at the plant, with operations effectively ceased as of March 31, 2009. The Plant Shutdown Agreement included terms allowing for lump sum payment of the pension obligation for certain participants if funding of the plan exceeded a defined level. In accordance with these terms, in December 2012, the Company settled a portion of the pension obligation resulting in a non-cash loss of $5.7 million, which was recorded in other (income) expense within the Consolidated Statement of Operations.

On March 24, 2010, the Company finalized its settlement agreement regarding the closure of the Muncie Plant with the Pension Benefit Guaranty Corporation ("PBGC") in which the Company agreed to make certain payments directly to the Muncie Plant's defined benefit pension plan (the “Plan”). In accordance with the settlement agreement, the Company made an initial cash contribution of $23 million for the 2009 Plan year and a cash contribution of $15 million in the year ended December 31, 2011. During the fourth quarter of 2012, the Company received notification from the PBGC that the terms of the settlement have been suspended pending review of the Company's financial strength under the PBGC's revised enforcement policy pilot program announced on November 2, 2012. The evaluation was confirmed in January 2013 and as a result the Company currently does not have any obligations as described in the original agreement.

The following table summarizes the expenses for the Company's defined contribution and defined benefit pension plans and the other postretirement defined benefit plans.

	Year Ended December 31,
(millions of dollars)	2012		2011		2010
Defined contribution expense	$	24.8	$	18.9	$	19.2
Defined benefit pension expense	27.3		17.5		19.8
Other postretirement benefit expense	11.1		13.5		17.5
Total	$	63.2	$	49.9	$	56.5

The following provides a roll forward of the plans’ benefit obligations, plan assets, funded status and recognition in the Consolidated Balance Sheets.

	Pension benefits												Other post-
	Year Ended December 31,												retirement benefits
	2012						2011						Year Ended December 31,
(millions of dollars)	US			Non-US			US			Non-US			2012			2011
Change in projected benefit obligation:
Projected benefit obligation, January 1	$	337.4		$	344.3		$	326.2		$	326.0		$	251.0		$	261.9
Service cost	—			9.1			—			9.1			0.5			0.7
Interest cost	14.3			17.2			16.1			17.8			10.1			11.8
Plan participants’ contributions	—			0.5			—			0.3			—			—
Plan amendments	—			—			—			(0.5		)	(0.3		)	3.9
Actuarial (gain) loss	15.5			84.1			21.8			11.9			(20.7		)	(6.8		)
Currency translation	—			11.3			—			(5.8		)	—			—
Other	—			(4.5		)	—			0.9			—			—
Benefits paid	(37.1		)	(14.4		)	(26.7		)	(15.4		)	(20.1		)	(20.5		)
Projected benefit obligation, December 31	$	330.1		$	447.6		$	337.4		$	344.3		$	220.5		$	251.0
Change in plan assets:
Fair value of plan assets, January 1	$	290.4		$	154.9		$	287.2		$	154.6
Actual return on plan assets	29.4			15.0			8.9			5.0
Employer contribution	—			18.0			21.0			16.0
Plan participants’ contribution	—			0.5			—			0.3
Currency translation	—			6.0			—			(0.7		)
Other	—			(2.1		)	—			(4.9		)
Benefits paid	(37.1		)	(14.4		)	(26.7		)	(15.4		)
Fair value of plan assets, December 31	$	282.7		$	177.9		$	290.4		$	154.9
Funded status	$	(47.4	)	$	(269.7	)	$	(47.0	)	$	(189.4	)	$	(220.5	)	$	(251.0	)
Amounts in the Consolidated Balance Sheets consist of:
Non-current assets	$	—		$	—		$	—		$	0.5		$	—		$	—
Current liabilities	(0.1		)	(7.0		)	(0.1		)	(6.5		)	(20.8		)	(24.3		)
Non-current liabilities	(47.3		)	(262.7		)	(46.9		)	(183.4		)	(199.7		)	(226.7		)
Net amount	$	(47.4	)	$	(269.7	)	$	(47.0	)	$	(189.4	)	$	(220.5	)	$	(251.0	)
Amounts in accumulated other comprehensive loss consist of:
Net actuarial loss	$	163.8		$	135.1		$	172.8		$	54.4		$	78.7		$	106.3
Net prior service cost (credit)	(10.5		)	0.5			(11.3		)	0.8			(42.6		)	(48.7		)
Net amount*	$	153.3		$	135.6		$	161.5		$	55.2		$	36.1		$	57.6
Total accumulated benefit obligation for all plans	$	330.1		$	430.2		$	337.4		$	327.9

________________

* AOCI shown above does not include our equity investee, NSK-Warner. NSK-Warner had an AOCI loss of $7.9 million and $6.9 million at December 31, 2012 and 2011, respectively.

The funded status of pension plans with accumulated benefit obligations in excess of plan assets at December 31 is as follows:

	December 31,
(millions of dollars)	2012			2011
Accumulated benefit obligation	$	(757.7	)	$	(656.9	)
Plan assets	458.0			435.5
Deficiency	$	(299.7	)	$	(221.4	)
Pension deficiency by country:
United States	$	(47.4	)	$	(47.0	)
United Kingdom	(22.4		)	(13.4		)
Germany	(192.4		)	(128.7		)
Other	(37.5		)	(32.3		)
Total pension deficiency	$	(299.7	)	$	(221.4	)

The weighted average asset allocations of the Company’s funded pension plans and target allocations by asset category are as follows:

	December 31,				Target Allocation
	2012		2011
U.S. Plans:
Real estate and other	9	%	11	%	5%-15%
Fixed income securities	56	%	54	%	45%-65%
Equity securities	35	%	35	%	25%-45%
	100	%	100	%
Non-U.S. Plans:
Real estate and other	6	%	8	%	2% - 8%
Fixed income securities	38	%	41	%	37% - 43%
Equity securities	56	%	51	%	52% - 58%
	100	%	100	%

The Company's investment strategy is to maintain actual asset weightings within a preset range of target allocations. The Company believes these ranges represent an appropriate risk profile for the planned benefit payments of the plans based on the timing of the estimated benefit payments. Within each asset category, separate portfolios are maintained for additional diversification. Investment managers are retained within each asset category to manage each portfolio against its benchmark. Each investment manager has appropriate investment guidelines. In addition, the entire portfolio is evaluated against a relevant peer group. The defined benefit pension plans did not hold any Company securities as investments as of December 31, 2012 and 2011. A portion of pension assets are invested in common and comingled trusts.

The Company expects to contribute a total of $15 million to $25 million into its defined benefit pension plans during 2013. Of the $15 million to $25 million in projected 2013 contributions, $7.1 million are contractually obligated, while the remaining payments are discretionary.

Refer to Note 9, “Fair Value Measurements," for more detail surrounding the fair value of each major category of plan assets as well as the inputs and valuation techniques used to develop the fair value measurements of the plans' assets at December 31, 2012 and 2011.

See the table below for a breakout of net periodic benefit cost between U.S. and non-U.S. pension plans:

	Pension benefits																		Other postretirement benefits
	Year Ended December 31,
	2012						2011						2010						Year Ended December 31,
(millions of dollars)	US			Non-US			US			Non-US			US			Non-US			2012			2011			2010
Service cost	$	—		$	9.1		$	—		$	9.1		$	—		$	7.4		$	0.5		$	0.7		$	0.8
Interest cost	14.3			17.2			16.1			17.8			17.5			17.6			10.1			11.8			14.5
Expected return on plan assets	(18.8		)	(9.3		)	(20.8		)	(11.2		)	(19.7		)	(9.7		)	—			—			—
Settlements, curtailments and other	5.7			0.5			—			(0.1		)	—			—			—			—			—
Amortization of unrecognized prior service benefit	(0.7		)	—			(0.7		)	—			(0.7		)	—			(6.4		)	(6.9		)	(6.9		)
Amortization of unrecognized loss	8.1			1.2			6.5			0.8			6.6			0.8			6.9			7.9			9.1
Net periodic benefit cost	$	8.6		$	18.7		$	1.1		$	16.4		$	3.7		$	16.1		$	11.1		$	13.5		$	17.5

The estimated net loss for the defined benefit pension plans that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost over the next fiscal year is $13.5 million. The estimated net loss and prior service credit for the other postretirement plans that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost over the next fiscal year are $4.9 million and $(6.4) million, respectively.

The Company's weighted-average assumptions used to determine the benefit obligations for its defined benefit pension and other postretirement plans as of December 31, 2012 and 2011 were as follows:

	December 31,
(percent)	2012	2011
U.S. pension plans:
Discount rate	3.67	4.42
Rate of compensation increase	N/A	N/A
U.S. other postretirement plans:
Discount rate	3.25	4.25
Rate of compensation increase	N/A	N/A
Non-U.S. pension plans:
Discount rate	3.86	5.13
Rate of compensation increase	2.72	2.78

The Company’s weighted-average assumptions used to determine the net periodic benefit cost for its defined benefit pension and other postretirement benefit plans for the years ended December 31, 2012, 2011 and 2010 were as follows:

	Year Ended December 31,
(percent)	2012	2011	2010
U.S. pension plans:
Discount rate	4.42	5.17	5.75
Rate of compensation increase	N/A	N/A	3.50
Expected return on plan assets	6.75	7.50	7.50
U.S. other postretirement plans:
Discount rate	4.25	4.75	5.50
Rate of compensation increase	N/A	N/A	N/A
Expected return on plan assets	N/A	N/A	N/A
Non-U.S. pension plans:
Discount rate	5.13	5.37	5.47
Rate of compensation increase	2.78	2.80	2.75
Expected return on plan assets	6.49	7.07	7.12

The Company's approach to establishing the discount rate is based upon the market yields of high-quality corporate bonds, with appropriate consideration of each plan's defined benefit payment terms and duration of the liabilities.

The Company determines its expected return on plan asset assumptions by evaluating estimates of future market returns and the plans' asset allocation. The Company also considers the impact of active management of the plans' invested assets.

The estimated future benefit payments for the pension and other postretirement benefits are as follows:

	Pension benefits				Other postretirement benefits
(millions of dollars)					w/o Medicare Part D reimbursements		with Medicare Part D reimbursements
Year	U.S.		Non-U.S.
2013	$	24.9	$	15.7	$	21.9	$	21.1
2014	24.2		18.0		21.3		20.5
2015	23.4		19.8		20.6		19.8
2016	22.9		18.8		19.9		19.1
2017	22.3		20.1		19.3		18.5
2018-2022	105.4		110.1		82.1		78.8

The weighted-average rate of increase in the per capita cost of covered health care benefits is projected to be 7.50% in 2013 for pre-65 and post-65 participants, decreasing to 5.0% by the year 2019. A one-percentage point change in the assumed health care cost trend would have the following effects:

	One Percentage Point
(millions of dollars)	Increase		Decrease
Effect on other postretirement benefit obligation	$	16.2	$	(14.3	)
Effect on total service and interest cost components	$	0.5	$	(0.5	)

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Document and Entity Information Document (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Feb. 08, 2013	Jun. 30, 2012
DEI Information [Abstract]
Entity Registrant Name	BORGWARNER INC.
Entity Central Index Key	0000908255
Document Type	10-K
Document Period End Date	Dec. 31, 2012
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	FY
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$ 7,400
Entity Common Stock, Shares Outstanding		115,639,856

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Stock Incentive Plans

12 Months Ended

Dec. 31, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock incentive plans

STOCK INCENTIVE PLANS

Under the Company's 1993 Stock Incentive Plan (“1993 Plan”), the Company granted options to purchase shares of the Company's common stock at the fair market value on the date of grant. The options vested over periods up to three years and have a term of 10 years from date of grant. As of December 31, 2003, there were no options available for future grants under the 1993 Plan. The 1993 Plan expired at the end of 2003 and was replaced by the Company's 2004 Stock Incentive Plan, which was amended at the Company's 2009 Annual Stockholders Meeting, among other things, to increase the number of shares available for issuance under the Plan. Under the BorgWarner Inc. Amended and Restated 2004 Stock Incentive Plan (“2004 Stock Incentive Plan”), 12.5 million shares are authorized for grant, of which approximately 1.9 million shares are available for future issuance.

Stock Options A summary of the plans’ shares under option at December 31, 2012, 2011 and 2010 is as follows:

	Shares (thousands)		Weighted average exercise price		Weighted average remaining contractual life (in years)	Aggregate intrinsic value (in millions)
Outstanding at January 1, 2010	5,177		$	27.98	5.8	$	29.7
Exercised	(1,888	)	$	26.73		$	50.3
Forfeited	(36	)	$	33.95
Outstanding at December 31, 2010	3,253		$	28.64	4.9	$	142.2
Exercised	(1,033	)	$	27.15		$	48.4
Outstanding at December 31, 2011	2,220		$	29.36	4.1	$	76.3
Exercised	(784	)	$	26.86		$	40.1
Outstanding at December 31, 2012	1,436		$	30.65	3.4	$	58.8
Options exercisable at December 31, 2012	1,436		$	30.65	3.4	$	58.8

Proceeds from stock option exercises for the years ended December 31, 2012, 2011 and 2010 were as follows:

	Year Ended December 31,
(millions of dollars)	2012		2011		2010
Proceeds from stock options exercised — gross	$	20.9	$	28.6	$	55.4
Tax benefit	31.1		24.4		11.7
Proceeds from stock options exercised, net of tax	$	52.0	$	53.0	$	67.1

Restricted Stock At its November 2007 meeting, the Company's Compensation Committee decided that restricted common stock awards and stock units ("restricted stock") would be awarded in place of stock options for long-term incentive award grants to employees. Restricted stock granted to employees vests 50% after two years and the remainder after three years from the date of grant. Restricted stock granted to non-employee directors generally vests on the anniversary date of the grant.

The value of restricted stock is determined by the market value of the Company’s common stock at the date of grant. In 2012, restricted stock in the amount of 328,138 and 9,677 shares was granted to employees and non-employee directors, respectively, under the 2004 Stock Incentive Plan.The value of the awards is recorded as unearned compensation within capital in excess of par value in equity and is amortized as compensation expense over the restriction periods.

Restricted stock compensation expense recorded in the Consolidated Statements of Operations is as follows:

	Year Ended December 31,
(millions of dollars, except per share data)	2012		2011		2010
Restricted stock compensation expense	$	21.2	$	15.1	$	18.9
Restricted stock compensation expense, net of tax	$	15.5	$	11.4	$	14.7

A summary of the status of the Company’s nonvested restricted stock for employees and non-employee directors at December 31, 2012, 2011 and 2010 is as follows:

	Shares subject to restriction (thousands)		Weighted average price
Nonvested at January 1, 2010	1,547		$	29.90
Granted	603		$	36.16
Vested	(188	)	$	44.80
Forfeited	(91	)	$	27.10
Nonvested at December 31, 2010	1,871		$	30.55
Granted	274		$	70.57
Vested	(609	)	$	27.39
Forfeited	(106	)	$	38.05
Nonvested at December 31, 2011	1,430		$	39.02
Granted	338		$	78.41
Vested	(675	)	$	27.43
Forfeited	(61	)	$	54.35
Nonvested at December 31, 2012	1,032		$	58.77

Performance Share Plans The 2004 Stock Incentive Plan provides for awarding of performance shares to members of senior management at the end of successive three-year periods based on the Company's performance in terms of total shareholder return relative to a peer group of automotive companies. In the first quarter of 2012, the Company modified all outstanding Performance Share Award Agreements to allow for the payment of these awards entirely in the Company's common stock, rather than 40% in cash and 60% in the Company's common stock. Using the lattice model (Monte Carlo simulation) at the date of modification, the Company determined the first quarter 2012 compensation expense associated with the modification to be negligible. Within the Consolidated Statement of Cash Flows for the years ended December 31, 2011 and 2010, the Company's $19.6 million and $16.6 million of expense associated with the 40% cash portion of the award was included in the changes in accounts payable and accrued expenses and other non-current assets and liabilities line items.

The Company recognizes compensation expense relating to its performance share plans ratably over the performance period. Prior to the modification, compensation expense for the 60% stock component was based on the performance share's fair value at the date of grant using a lattice model (Monte Carlo simulation) and the 40% cash component was based on quarterly mark to market of the cash liability on a quarterly basis. After the first quarter 2012 modification, 100% of compensation expense associated with the performance share plans is calculated using a lattice model (Monte Carlo simulation). The amounts expensed under the plan and the share issuances for the three-year measurement periods ended December 31, 2012, 2011 and 2010 were as follows:

	Year Ended December 31,
(millions of dollars, except share data)	2012		2011		2010
Expense	$	35.5	$	26.3	$	23.9
Number of shares*	558,000		538,180		104,205

________________

*Shares are issued in February of the following year.

The restricted stock and performance share plan compensation expense disclosed above includes $7.0 million of expense related to the Company's fourth quarter 2012 decision to waive the forfeiture provisions of existing restricted stock and performance share grants made to certain retiring Named Executive Officers. The Company recorded this expense within other (income) expense in the Consolidated Statement of Operations.

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Reporting Segments and Related Information - Geographic Information (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Revenues from External Customers and Long-Lived Assets [Line Items]
Maximum percentage in consolidated sales of countries outside the US other than Germany France Hungary and South Korea									5.00%
Investment in NSK-Warner	$ 217.7				$ 217.4				$ 217.7	$ 217.4
Net sales	1,719.1	1,695.2	1,856.4	1,912.5	1,773.7	1,791.8	1,818.8	1,730.4	7,183.2	7,114.7	5,652.8
Long-lived assets	1,788.0				1,664.3				1,788.0	1,664.3	1,542.6
United States
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales									1,857.2	1,674.0	1,451.1
Long-lived assets	508.1				492.6				508.1	492.6	466.6
Total Europe [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales									3,670.5	3,984.0	3,123.0
Long-lived assets	768.2				735.1				768.2	735.1	737.2
Germany
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales									1,871.3	2,200.0	1,839.9
Long-lived assets	432.2				420.4				432.2	420.4	447.5
Hungary
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales									448.9	503.2	418.3
Long-lived assets	64.3				56.9				64.3	56.9	53.0
France
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales									335.2	363.0	318.7
Long-lived assets	45.9				63.2				45.9	63.2	63.0
Other Europe [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales									1,015.1	917.8	546.1
Long-lived assets	225.8				194.6				225.8	194.6	173.7
South Korea [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales									505.6	471.7	358.0
Long-lived assets	140.4				124.5				140.4	124.5	94.8
China
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales									499.1	416.6	330.6
Long-lived assets	184.3				148.0				184.3	148.0	104.9
Other Foreign [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales									650.8	568.4	390.1
Long-lived assets	187.0				164.1				187.0	164.1	139.1
NSK Warner [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Equity investment in NSK Warner, percent	50.00%								50.00%
Investment in NSK-Warner	$ 184.4				$ 189.2				$ 184.4	$ 189.2	$ 180.3

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BorgWarner Inc. and Consolidated Subsidiaries Statements of Comprehensive Income (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2012		Dec. 31, 2011		Dec. 31, 2010
Statement of Other Comprehensive Income [Abstract]
Net earnings attributable to BorgWarner Inc.	$ 500.9	[1]	$ 550.1	[1]	$ 377.4
Foreign currency translation adjustments
Foreign currency translation adjustments	38.2		(62.2)		(63.6)
Foreign currency loss reclassified into net earnings related to disposal activities	16.8		0		0
Net change in foreign currency translation adjustments	55.0		(62.2)		(63.6)
Hedge instrument adjustments
Market value change of hedge instruments	30.3		(9.2)		(14.3)
Income taxes associated with the market value change of hedge instruments	(10.4)		3.0		6.7
(Gain) loss reclassified into net earnings	(8.8)		1.5		(6.2)
Income taxes reclassified into net earnings	2.2		(1.0)		0.2
Net change in hedge instruments	13.3		(5.7)		(13.6)
Defined benefit postretirement plans
Net unrecognized gain (loss) arising during the period	(60.8)		(45.3)		15.0
Income taxes associated with net unrecognized gain (loss) arising during the period	16.2		12.8		(12.9)
Amortization of prior service benefit and unrecognized loss into net earnings	9.1		7.6		8.9
Income taxes reclassified into net earnings	(3.1)		(2.7)		(3.2)
Acquisition	0		(2.0)		0
Income taxes associated with acquisition	0		0.5		0
Net change in defined benefit postretirement plans	(38.6)		(29.1)		7.8
Other changes in comprehensive income, net of tax	(0.2)		(0.1)		1.2
Total other comprehensive income attributable to BorgWarner Inc.	29.5		(97.1)		(68.2)
Comprehensive income attributable to BorgWarner Inc.	530.4		453.0		309.2
Comprehensive income (loss) attributable to the noncontrolling interest	2.8		(1.3)		2.5
Comprehensive income	$ 533.2		$ 451.7		$ 311.7

[1] The Company's results were impacted by the following:•Quarter ended December 31, 2012: Retirement related obligations of $17.3 million are comprised of a $5.7 million loss resulting from the settlement of a portion of the Muncie Plant's pension obligation and an $11.6 million expense associated with the retirement of certain Named Executive Officers. These obligations were partially offset by a $6.1 million tax benefit. The Company incurred tax expense of $3.9 million which included $11.1 million of U.S. tax expense to correct the income taxes payable balance, partially offset by tax benefits resulting from changes to the statutory income tax rate in certain countries and the settlement of certain tax audits. •Quarter ended September 30, 2012: The Company incurred $1.8 million of expense and $11.2 million of tax expense associated with the completion of the sale of its spark plug business. The Company also recorded restructuring expense of $27.4 million primarily associated with the disposal and future requirements of BERU's on-going business, which was partially offset by a tax benefit of $7.7 million. Additionally, the Company incurred tax expense of $6.9 million primarily resulting from the settlement of certain tax audits.•Quarter ended June 30, 2012: The Company recorded expense of $37.9 million primarily due to the write-down of prior purchase price accounting adjustments included within the disposal group as a result of signing a Master Purchase Agreement to sell the spark plug business to Federal-Mogul Corporation, which was partially offset by a tax benefit of $5.5 million resulting from the write-down. Additionally, the Company recorded tax expense of $9.0 million related to its decision to change its cash repatriation assertion for some of its foreign subsidiaries.•Quarter ended December 31, 2011: The Company incurred $21.5 million in expense associated with the loss on sale of the tire pressure monitoring business, including costs related to the divestiture, and a write-down of a portion of the ignitor and electronic business. The Company recorded $1.4 million of tax benefit associated with the disposals and $4.1 million of tax expense related to an intercompany disposal transaction.•Quarter ended June 30, 2011: The Company recorded a $29.1 million patent infringement settlement gain, net of legal costs incurred, which was partially offset by $11.0 million of additional tax expense. Additionally, the Company recorded $6.2 million related to tax adjustments resulting from a change in state corporate income tax legislation as well as an adjustment of the Company's tax accounts as a result of the closure of certain tax audits.

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Goodwill and Other Intangibles

12 Months Ended

Dec. 31, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and other intangibles

GOODWILL AND OTHER INTANGIBLES

During the fourth quarter of each year, the Company qualitatively assesses its goodwill and indefinite-lived intangible assets assigned to each of its reporting units. This qualitative assessment evaluates various events and circumstances, such as macro economic conditions, industry and market conditions, cost factors, relevant events and financial trends, that may impact a reporting unit's fair value. Using this qualitative assessment, the Company determines whether it is more-likely-than not the reporting unit's fair value exceeds its carrying value. If it is determined that it is not more-likely-than-not the reporting unit's fair value exceeds the carrying value, or upon a triggering event, including recent acquisition or divestiture activity, the Company performs a quantitative, "step one," goodwill impairment analysis.

During the fourth quarter of 2012, the Company performed a qualitative analysis on each reporting unit and determined it was more-likely-than-not the fair value exceeded the carrying value of these reporting units. For the reporting unit with recent divestiture activity, the Company performed a quantitative, "step one," goodwill impairment analysis, which requires the Company to make significant assumptions and estimates about the extent and timing of future cash flows, discount rates and growth rates. The basis of this goodwill impairment analysis is the Company's annual budget and long-range plan (“LRP”). The annual budget and LRP includes a five year projection of future cash flows based on actual new products and customer commitments and assumes the last year of the LRP data is a fair indication of the future performance. Because the LRP is estimated over a significant future period of time, those estimates and assumptions are subject to a high degree of uncertainty. Further, the market valuation models and other financial ratios used by the Company require certain assumptions and estimates regarding the applicability of those models to the Company's facts and circumstances.

The Company believes the assumptions and estimates used to determine its estimated fair value are reasonable. Different assumptions could materially affect the estimated fair value. The primary assumptions affecting the Company's December 31, 2012 goodwill quantitative, "step one," impairment review are as follows:

• Discount rate: The Company used a 10% weighted average cost of capital (“WACC”) as the discount rate for future cash flows. The WACC is intended to represent a rate of return that would be expected by a market participant.

• Operating income margin: The Company used historical and expected operating income margins, which may vary based on the projections of the reporting unit being evaluated.

In addition to the above primary assumptions, the Company notes the following risks to volume and operating income assumptions that could have an impact on the discounted cash flow model:

• The automotive industry is cyclical and the Company's results of operations would be adversely affected by industry downturns.

• The Company is dependent on market segments that use our key products and would be affected by decreasing demand in those segments.

• The Company is subject to risks related to international operations.

Based on the assumptions outlined above, the impairment testing conducted in the fourth quarter of 2012 indicated the Company's goodwill assigned to the reporting unit quantitatively assessed was not impaired. Additionally, a sensitivity analysis was completed indicating a 1% increase in the discount rate or a 1% decrease in the operating margin assumptions would not result in the carrying value exceeding the fair value of the reporting unit quantitatively assessed.

The changes in the carrying amount of goodwill for the years ended December 31, 2012 and 2011 are as follows:

	2012						2011
(millions of dollars)	Engine			Drivetrain			Engine			Drivetrain
Gross goodwill balance, January 1	$	1,334.7		$	353.5		$	1,351.9		$	263.6
Accumulated impairment losses, January 1	(501.8		)	(0.2		)	(501.8		)	(0.2		)
Net goodwill balance, January 1	$	832.9		$	353.3		$	850.1		$	263.4
Goodwill during the year:
Acquisition*	$	—		$	—		$	—		$	96.2
Divestitures*	(16.9		)	—			(7.9		)	—
Translation adjustment	6.3			5.8			(9.3		)	(6.3		)
Ending balance, December 31	$	822.3		$	359.1		$	832.9		$	353.3

________________

* Goodwill acquired relates to the 2011 purchase of Haldex Traction AB. Goodwill divested relates to the Company's 2011 sale of the tire pressure monitoring business and 2012 sale of the spark plug business.

The Company’s other intangible assets, primarily from acquisitions, consist of the following:

	December 31, 2012						December 31, 2011
(millions of dollars)	Gross carrying amount		Accumulated amortization		Net carrying amount		Gross carrying amount		Accumulated amortization		Net carrying amount
Amortized intangible assets:
Patented and unpatented technology	$	80.0	$	26.2	$	53.8	$	81.2	$	20.4	$	60.8
Customer relationships	216.3		100.0		116.3		213.4		76.7		136.7
Miscellaneous	2.9		2.9		—		2.8		1.3		1.5
Total amortized intangible assets	299.2		129.1		170.1		297.4		98.4		199.0
In-process R&D	10.8		—		10.8		10.8		—		10.8
Unamortized trade names	25.4		—		25.4		33.5		—		33.5
Total other intangible assets	$	335.4	$	129.1	$	206.3	$	341.7	$	98.4	$	243.3

Amortization of other intangible assets was $28.4 million, $30.8 million and $28.4 million for the years ended December 31, 2012, 2011 and 2010, respectively. The estimated useful lives of the Company's amortized intangible assets range from three to 15 years. The Company utilizes the straight line method of amortization recognized over the estimated useful lives of the assets. The estimated future annual amortization expense, primarily for acquired intangible assets, is as follows: $26.8 million in 2013, $26.8 million in 2014, $18.1 million in 2015, $17.6 million in 2016 and $15.9 million in 2017.

A roll forward of the gross carrying amounts of the Company's other intangible assets is presented below:

(millions of dollars)	2012			2011
Beginning balance, January 1	$	341.7		$	244.3
Acquisition	—			117.2
Divestitures*	(15.7		)	(5.6		)
Translation adjustment	9.4			(14.2		)
Ending balance, December 31	$	335.4		$	341.7

________________

* Divestitures relate to the Company's 2011 sale of the tire pressure monitoring business and 2012 sale of the spark plug business.

A roll forward of the accumulated amortization associated with the Company's other intangible assets is presented below:

(millions of dollars)	2012			2011
Beginning balance, January 1	$	98.4		$	75.5
Amortization	28.4			30.8
Divestitures*	(0.6		)	(3.8		)
Translation adjustment	2.9			(4.1		)
Ending balance, December 31	$	129.1		$	98.4

________________

* Divestitures relate to the Company's 2011 sale of the tire pressure monitoring business and 2012 sale of the spark plug business.

On January 31, 2011, the Company acquired 100% of the stock of Haldex Traction AB. In connection with the acquisition, the Company utilized the multi-period excess earnings method under the income approach, to determine the value of the customer relationships capitalized, $96.7 million. Additionally, the Company capitalized $17.5 million for patented and unpatented technology and $3.0 million for trade names. Customer relationships, patented and unpatented technology and trade names will be amortized over 12, 11 and 2 year useful lives, respectively.

On June 2, 2009, the Company announced the purchase of advanced gasoline ignition technology and related intellectual property from Florida-based Etatech, Inc. In connection with ASC Topic 805, "Business Combinations," the Company capitalized $10.8 million of in-process R&D. The Company intends to commercialize a high-frequency ignition system based on Etatech technology in the next five years. Amortization of the $10.8 million of in-process R&D will coincide with the commercial application of the technology.

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Balance Sheet Information

12 Months Ended

Dec. 31, 2012

Balance Sheet Related Disclosures [Abstract]

Balance Sheet information

BALANCE SHEET INFORMATION

Detailed balance sheet data is as follows:

	December 31,
(millions of dollars)	2012			2011
Receivables, net:
Customers	$	1,014.6		$	1,037.4
Other	134.8			149.9
Gross receivables	1,149.4			1,187.3
Bad debt allowance(a)	(2.1		)	(4.3		)
Total receivables, net	$	1,147.3		$	1,183.0
Inventories, net:
Raw material and supplies	$	264.0		$	254.4
Work in progress	82.0			90.9
Finished goods	117.6			124.3
FIFO inventories	463.6			469.6
LIFO reserve	(16.0		)	(15.3		)
Total inventories, net	$	447.6		$	454.3
Prepayments and other current assets:
Prepaid tooling	$	39.1		$	23.5
Product liability insurance asset	—			28.8
Derivatives	5.7			2.7
Prepaid taxes	0.7			0.8
Other	22.0			26.6
Total prepayments and other current assets	$	67.5		$	82.4
Property, plant and equipment, net:
Land and land use rights	$	76.4		$	71.2
Buildings	640.8			616.7
Machinery and equipment	2,282.4			2,006.9
Capital leases	2.3			2.3
Construction in progress	243.7			206.8
Property, plant and equipment, gross	3,245.6			2,903.9
Accumulated depreciation	(1,567.0		)	(1,343.9		)
Property, plant & equipment, net, excluding tooling	1,678.6			1,560.0
Tooling, net of amortization	109.4			104.3
Property, plant & equipment, net	$	1,788.0		$	1,664.3
Investments and advances:
Investment in equity affiliates	$	217.7		$	217.4
Other investments and advances	165.0			127.9
Total investments and advances	$	382.7		$	345.3
Other non-current assets:
Deferred income taxes	$	244.1		$	313.9
Other intangible assets	206.3			243.3
Product liability insurance asset	85.6			32.9
Other	39.9			34.9
Total other non-current assets	$	575.9		$	625.0

	December 31,
(millions of dollars)	2012			2011
Accounts payable and accrued expenses:
Trade payables	$	815.4		$	820.7
Trade payables for capital expenditures	39.8			48.9
Payroll and employee related	180.7			201.9
Product liability	36.5			28.8
Customer related	36.3			29.9
Product warranties	33.1			38.6
Retirement related	27.9			30.9
Interest	11.7			14.2
Derivatives	9.8			2.4
Dividends payable to noncontrolling shareholders	9.5			11.7
Insurance	9.2			10.5
Severance	8.9			5.6
Legal and professional fees	4.2			6.8
Environmental	1.6			3.4
Current deferred income taxes	1.4			6.5
Other	61.2			37.0
Total accounts payable and accrued expenses	$	1,287.2		$	1,297.8
Other non-current liabilities:
Deferred income taxes	$	89.4		$	120.2
Cross currency swaps and derivatives	58.1			85.5
Product liability	49.1			32.9
Product warranties	31.8			34.1
Deferred revenue	30.5			26.0
Environmental	2.3			8.1
Other	56.9			85.1
Total other non-current liabilities	$	318.1		$	391.9
Accumulated other comprehensive loss
Foreign currency translation adjustments	$	140.8		$	85.8
Market value of hedge instruments	(37.2		)	(50.5		)
Defined benefit postretirement plans	(225.8		)	(187.2		)
Other	0.9			1.1
Total accumulated other comprehensive loss	$	(121.3	)	$	(150.8	)

(a) Bad debt allowance:	2012			2011			2010
Beginning balance, January 1	$	(4.3	)	$	(4.0	)	$	(4.3	)
Provision	(0.8		)	(1.4		)	(1.1		)
Write-offs	3.0			1.0			2.5
Translation adjustment and other	—			0.1			(1.1		)
Ending balance, December 31	$	(2.1	)	$	(4.3	)	$	(4.0	)

As of December 31, 2012 and December 31, 2011, accounts payable of $39.8 million and $48.9 million, respectively, were related to property, plant and equipment purchases.

Interest costs capitalized for the years ended December 31, 2012 and 2011 were $17.8 million and $15.0 million, respectively.

NSK-Warner KK ("NSK-Warner")

The Company has a 50% interest in NSK-Warner, a joint venture based in Japan that manufactures automatic transmission components. The Company's share of the earnings reported by NSK-Warner is accounted for using the equity method of accounting. NSK-Warner is the joint venture partner with a 40% interest in the Drivetrain Group's South Korean subsidiary, BorgWarner Transmission Systems Korea Inc. Dividends received from NSK-Warner were $28.1 million, $33.4 million and $35.5 million in calendar years ended December 31, 2012, 2011 and 2010, respectively.

NSK-Warner has a fiscal year-end of March 31. The Company's equity in the earnings of NSK-Warner consists of the 12 months ended November 30. Following is summarized financial data for NSK-Warner, translated using the ending or periodic rates, as of and for the years ended November 30, 2012, 2011 and 2010 (unaudited):

	November 30,
(millions of dollars)	2012		2011
Balance sheets:
Cash and securities	$	123.3	$	119.4
Current assets, including cash and securities	320.0		344.1
Non-current assets	175.3		182.0
Current liabilities	147.4		172.1
Non-current liabilities	50.2		45.3
Total equity	297.7		308.7
	Year Ended November 30,
(millions of dollars)	2012		2011		2010
Statements of operations:
Net sales	$	696.7	$	655.2	$	634.7
Gross profit	138.2		128.5		131.9
Net earnings	68.5		61.6		68.3

NSK-Warner had no debt outstanding as of November 30, 2012 and 2011. Purchases by the Company from NSK-Warner were $22.8 million, $16.6 million and $14.6 million for the years ended December 31, 2012, 2011 and 2010, respectively.

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Reporting Segments and Related Information

12 Months Ended

Dec. 31, 2012

Segment Reporting [Abstract]

Reporting segments and related information

REPORTING SEGMENTS AND RELATED INFORMATION

The Company's business is comprised of two reporting segments: Engine and Drivetrain. These segments are strategic business groups, which are managed separately as each represents a specific grouping of related automotive components and systems.

The Company allocates resources to each segment based upon the projected after-tax return on invested capital ("ROIC") of its business initiatives. ROIC is comprised of Adjusted EBIT after deducting notional taxes compared to the projected average capital investment required. Adjusted EBIT is comprised of earnings before interest, income taxes and noncontrolling interest (“EBIT") adjusted for restructuring, goodwill impairment charges, affiliates' earnings and other items not reflective of on-going operating income or loss.

Adjusted EBIT is the measure of segment income or loss used by the Company. The Company believes Adjusted EBIT is most reflective of the operational profitability or loss of our reporting segments. The following tables show segment information and Adjusted EBIT for the Company's reporting segments.

2012 Segment information
	Net sales								Year-end assets		Depreciation/ amortization		Long-lived asset expenditures (b)
(millions of dollars)	Customers		Inter-segment			Net
Engine	$	4,884.5	$	28.5		$	4,913.0		$	3,299.2	$	177.8	$	269.9
Drivetrain	2,298.7		—			2,298.7			1,652.2		91.3		125.6
Inter-segment eliminations	—		(28.5		)	(28.5		)	—		—		—
Total	7,183.2		—			7,183.2			4,951.4		269.1		395.5
Corporate (a)	—		—			—			1,449.4		19.5		11.9
Consolidated	$	7,183.2	$	—		$	7,183.2		$	6,400.8	$	288.6	$	407.4

2011 Segment information
	Net sales								Year-end assets		Depreciation/ amortization		Long-lived asset expenditures (b)
(millions of dollars)	Customers		Inter-segment			Net
Engine	$	5,030.2	$	20.4		$	5,050.6		$	3,329.0	$	188.6	$	264.3
Drivetrain	2,084.5		—			2,084.5			1,562.8		80.0		115.9
Inter-segment eliminations	—		(20.4		)	(20.4		)	—		—		—
Total	7,114.7		—			7,114.7			4,891.8		268.6		380.2
Corporate (a)	—		—			—			1,066.8		14.4		13.5
Consolidated	$	7,114.7	$	—		$	7,114.7		$	5,958.6	$	283.0	$	393.7

2010 Segment information
	Net sales								Year-end assets		Depreciation/ amortization		Long-lived asset expenditures (b)
(millions of dollars)	Customers		Inter-segment			Net
Engine	$	4,041.4	$	19.4		$	4,060.8		$	3,277.7	$	184.4	$	181.3
Drivetrain	1,611.4		—			1,611.4			1,230.5		63.6		83.5
Inter-segment eliminations	—		(19.4		)	(19.4		)	—		—		—
Total	5,652.8		—			5,652.8			4,508.2		248.0		264.8
Corporate (a)	—		—			—			1,046.8		4.9		11.8
Consolidated	$	5,652.8	$	—		$	5,652.8		$	5,555.0	$	252.9	$	276.6

_______________

(a) Corporate assets include investments and advances and deferred income taxes.

(b) Long-lived asset expenditures include capital expenditures and tooling outlays.

Adjusted earnings before interest, income taxes and noncontrolling interest ("Adjusted EBIT")

	Year Ended December 31,
(millions of dollars)	2012			2011			2010
Engine	$	786.4		$	774.3		$	537.9
Drivetrain	209.1			161.2			137.0
Adjusted EBIT	995.5			935.5			674.9
Loss from disposal activities	39.7			21.5			—
Restructuring expense	27.4			—			—
Retirement related obligations	17.3			—			—
Patent infringement settlement, net of legal costs incurred	—			(29.1		)	—
Environmental litigation settlement	—			—			28.0
BERU - Eichenauer equity investment gain	—			—			(8.0		)
Corporate, including equity in affiliates' earnings and stock-based compensation	115.4			107.4			111.0
Interest income	(4.7		)	(4.8		)	(2.8		)
Interest expense and finance charges	39.4			74.6			68.8
Earnings before income taxes and noncontrolling interest	761.0			765.9			477.9
Provision for income taxes	238.6			195.3			81.7
Net earnings	522.4			570.6			396.2
Net earnings attributable to the noncontrolling interest, net of tax	21.5			20.5			18.8
Net earnings attributable to BorgWarner Inc.	$	500.9		$	550.1		$	377.4

Geographic Information

Outside the U.S., only China, Germany, Hungary and South Korea exceeded 5% of consolidated net sales during the year ended December 31, 2012, attributing sales to the location of production rather than the location of the customer. Also, the Company's 50% equity investment in NSK-Warner (see Note 5) of $184.4 million, $189.2 million and $180.3 million at December 31, 2012, 2011 and 2010, respectively, is excluded from the definition of long-lived assets, as are goodwill and certain other non-current assets.

	Net sales						Long-lived assets
(millions of dollars)	2012		2011		2010		2012		2011		2010
United States	$	1,857.2	$	1,674.0	$	1,451.1	$	508.1	$	492.6	$	466.6
Europe:
Germany	1,871.3		2,200.0		1,839.9		432.2		420.4		447.5
Hungary	448.9		503.2		418.3		64.3		56.9		53.0
France	335.2		363.0		318.7		45.9		63.2		63.0
Other Europe	1,015.1		917.8		546.1		225.8		194.6		173.7
Total Europe	3,670.5		3,984.0		3,123.0		768.2		735.1		737.2
South Korea	505.6		471.7		358.0		140.4		124.5		94.8
China	499.1		416.6		330.6		184.3		148.0		104.9
Other foreign	650.8		568.4		390.1		187.0		164.1		139.1
Total	$	7,183.2	$	7,114.7	$	5,652.8	$	1,788.0	$	1,664.3	$	1,542.6

Sales to Major Customers

Consolidated net sales to a single customer (including their subsidiaries), which exceeded 10% of our total net sales, were to Volkswagen of approximately 17% for the year ended December 31, 2012 and 19% for the years ended December 31, 2011 and 2010, respectively; and to Ford of approximately 13%, 12%, and 11% for the years ended December 31, 2012, 2011 and 2010, respectively. Both of the Company's reporting segments had significant sales to Volkswagen and Ford in 2012, 2011 and 2010. Accounts receivable from these customers at December 31, 2012 comprised approximately 18% ($218.8 million) of total accounts receivable. Such sales consisted of a variety of products to a variety of customer locations and regions. No other single customer accounted for more than 10% of consolidated net sales in any of the years presented.

Sales by Product Line

Sales of turbochargers for light vehicles represented approximately 26% of total net sales for the years ended December 31, 2012, 2011 and 2010, respectively. The Company currently supplies light vehicle turbochargers to many OEMs including BMW, Daimler, Fiat, Ford, General Motors, Hyundai, PSA, Renault and Volkswagen. No other single product line accounted for more than 10% of consolidated net sales in any of the years presented.

Interim Financial Information (Unaudited)

(millions of dollars, except per share amounts)	2012															2011
Quarter ended	Mar-31			Jun-30			Sep-30			Dec-31			Year			Mar-31			Jun-30			Sep-30			Dec-31			Year
Net sales	$	1,912.5		$	1,856.4		$	1,695.2		$	1,719.1		$	7,183.2		$	1,730.4		$	1,818.8		$	1,791.8		$	1,773.7		$	7,114.7
Cost of sales	1,516.7			1,473.2			1,351.5			1,374.9			5,716.3			1,387.6			1,461.7			1,441.0			1,414.0			5,704.3
Gross profit	395.8			383.2			343.7			344.2			1,466.9			342.8			357.1			350.8			359.7			1,410.4
Selling, general and administrative expenses	169.0			153.1			151.0			156.2			629.3			165.1			157.7			151.4			146.8			621.0
Other (income) expense	1.1			36.6			29.7			17.3			84.7			(1.6		)	(28.9		)	0.6			21.8			(8.1		)
Operating income	225.7			193.5			163.0			170.7			752.9			179.3			228.3			198.8			191.1			797.5
Equity in affiliates’ earnings, net of tax	(9.2		)	(12.5		)	(11.1		)	(10.0		)	(42.8		)	(8.4		)	(8.1		)	(11.5		)	(10.2		)	(38.2		)
Interest income	(1.4		)	(1.3		)	(1.0		)	(1.0		)	(4.7		)	(1.0		)	(1.2		)	(1.3		)	(1.3		)	(4.8		)
Interest expense and finance charges	15.1			12.6			5.0			6.7			39.4			18.4			20.5			18.5			17.2			74.6
Earnings before income taxes and noncontrolling interest	221.2			194.7			170.1			175.0			761.0			170.3			217.1			193.1			185.4			765.9
Provision for income taxes	57.5			68.5			64.2			48.4			238.6			40.9			49.8			46.4			58.2			195.3
Net earnings	163.7			126.2			105.9			126.6			522.4			129.4			167.3			146.7			127.2			570.6
Net earnings attributable to the noncontrolling interest, net of tax	5.7			5.6			4.8			5.4			21.5			4.9			5.3			5.1			5.2			20.5
Net earnings attributable to BorgWarner Inc. (a)	$	158.0		$	120.6		$	101.1		$	121.2		$	500.9		$	124.5		$	162.0		$	141.6		$	122.0		$	550.1
Earnings per share — basic	$	1.46		$	1.08		$	0.88		$	1.05		$	4.45		$	1.13		$	1.49		$	1.30		$	1.12		$	5.04
Earnings per share — diluted	$	1.28		$	1.00		$	0.85		$	1.03		$	4.17		$	1.00		$	1.31		$	1.15		$	1.00		$	4.45

_______________

(a) The Company's results were impacted by the following:

• Quarter ended December 31, 2012: Retirement related obligations of $17.3 million are comprised of a $5.7 million loss resulting from the settlement of a portion of the Muncie Plant's pension obligation and an $11.6 million expense associated with the retirement of certain Named Executive Officers. These obligations were partially offset by a $6.1 million tax benefit. The Company incurred tax expense of $3.9 million which included $11.1 million of U.S. tax expense to correct the income taxes payable balance, partially offset by tax benefits resulting from changes to the statutory income tax rate in certain countries and the settlement of certain tax audits.

• Quarter ended September 30, 2012: The Company incurred $1.8 million of expense and $11.2 million of tax expense associated with the completion of the sale of its spark plug business. The Company also recorded restructuring expense of $27.4 million primarily associated with the disposal and future requirements of BERU's on-going business, which was partially offset by a tax benefit of $7.7 million. Additionally, the Company incurred tax expense of $6.9 million primarily resulting from the settlement of certain tax audits.

• Quarter ended June 30, 2012: The Company recorded expense of $37.9 million primarily due to the write-down of prior purchase price accounting adjustments included within the disposal group as a result of signing a Master Purchase Agreement to sell the spark plug business to Federal-Mogul Corporation, which was partially offset by a tax benefit of $5.5 million resulting from the write-down. Additionally, the Company recorded tax expense of $9.0 million related to its decision to change its cash repatriation assertion for some of its foreign subsidiaries.

• Quarter ended December 31, 2011: The Company incurred $21.5 million in expense associated with the loss on sale of the tire pressure monitoring business, including costs related to the divestiture, and a write-down of a portion of the ignitor and electronic business. The Company recorded $1.4 million of tax benefit associated with the disposals and $4.1 million of tax expense related to an intercompany disposal transaction.

• Quarter ended June 30, 2011: The Company recorded a $29.1 million patent infringement settlement gain, net of legal costs incurred, which was partially offset by $11.0 million of additional tax expense. Additionally, the Company recorded $6.2 million related to tax adjustments resulting from a change in state corporate income tax legislation as well as an adjustment of the Company's tax accounts as a result of the closure of certain tax audits.

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Contingencies

12 Months Ended

Dec. 31, 2012

Commitments and Contingencies Disclosure [Abstract]

Contingencies

CONTINGENCIES

In the normal course of business, the Company is party to various commercial and legal claims, actions and complaints, including matters involving warranty claims, intellectual property claims, general liability and various other risks. It is not possible to predict with certainty whether or not the Company will ultimately be successful in any of these commercial and legal matters or, if not, what the impact might be. The Company's environmental and product liability contingencies are discussed separately below. The Company's management does not expect that the results in any of these commercial and legal claims, actions and complaints will have a material adverse effect on the Company's results of operations, financial position or cash flows.

Litigation

In January 2006, BorgWarner Diversified Transmission Products Inc. ("DTP"), a subsidiary of the Company, filed a declaratory judgment action in United States District Court, Southern District of Indiana (Indianapolis Division) against the United Automobile, Aerospace, and Agricultural Implements Workers of America (“UAW”) Local No. 287 and Gerald Poor, individually and as the representative of a defendant class. DTP sought the Court's affirmation that DTP did not violate the Labor-Management Relations Act or the Employee Retirement Income Security Act (ERISA) by unilaterally amending certain medical plans effective April 1, 2006 and October 1, 2006, prior to the expiration of the then-current collective bargaining agreements. On September 10, 2008, the Court found that DTP's reservation of the right to make such amendments reducing the level of benefits provided to retirees was limited by its collectively bargained health insurance agreement with the UAW, which did not expire until April 24, 2009. Thus, the amendments were untimely. In 2008, the Company recorded a charge of $4.0 million as a result of the Court's decision.

DTP filed a declaratory judgment action in the United States District Court, Southern District of Indiana (Indianapolis Division) against the UAW Local No. 287 and Jim Barrett and others, individually and as representatives of a defendant class, on February 26, 2009 again seeking the Court's affirmation that DTP did not violate the Labor - Management Relations Act or ERISA by modifying the level of benefits provided retirees to make them comparable to other Company retiree benefit plans after April 24, 2009. Certain retirees, on behalf of themselves and others, filed a mirror-image action in the United States District Court, Eastern District of Michigan (Southern Division) on March 11, 2009, for which a class has been certified. During the last quarter of 2009, the action pending in Indiana was dismissed, while the action in Michigan is continuing. The Company is vigorously defending against the suit.  This contingency is subject to many uncertainties, therefore based on the information available to date, the Company cannot reasonably estimate the amount or the range of potential loss, if any. A decision on the merits of the suit could be rendered sometime in 2013.

Environmental

The Company and certain of its current and former direct and indirect corporate predecessors, subsidiaries and divisions have been identified by the United States Environmental Protection Agency and certain state environmental agencies and private parties as potentially responsible parties (“PRPs”) at various hazardous waste disposal sites under the Comprehensive Environmental Response, Compensation and Liability Act (“Superfund”) and equivalent state laws and, as such, may presently be liable for the cost of clean-up and other remedial activities at 32 such sites. Responsibility for clean-up and other remedial activities at a Superfund site is typically shared among PRPs based on an allocation formula.

The Company believes that none of these matters, individually or in the aggregate, will have a material adverse effect on its results of operations, financial position or cash flows. Generally, this is because either the estimates of the maximum potential liability at a site are not material or the liability will be shared with other PRPs, although no assurance can be given with respect to the ultimate outcome of any such matter.

Based on information available to the Company (which in most cases includes: an estimate of allocation of liability among PRPs; the probability that other PRPs, many of whom are large, solvent public companies, will fully pay the cost apportioned to them; currently available information from PRPs and/or federal or state environmental agencies concerning the scope of contamination and estimated remediation and consulting costs; and remediation alternatives), the Company has an accrual for indicated environmental liabilities of $3.9 million at December 31, 2012. The Company expects to pay out substantially all of the amounts accrued for environmental liability over the next five years.

In connection with the sale of Kuhlman Electric Corporation, the Company agreed to indemnify the buyer and Kuhlman Electric for certain environmental liabilities, then unknown to the Company, relating to certain operations of Kuhlman Electric that pre-date the Company's 1999 acquisition of Kuhlman Electric. In 2007 and 2008, lawsuits were filed against Kuhlman Electric and others, including the Company, on behalf of approximately 340 plaintiffs alleging personal injury relating to alleged environmental contamination at its Crystal Springs, Mississippi plant. The Company entered into a settlement in July 2010 regarding the personal injury claims of the plaintiffs and those of approximately 2,700 unfiled claimants represented by those plaintiffs' attorneys. In exchange for, among other things, the dismissal with prejudice of these lawsuits and the release of claims by the unfiled claimants, the Company agreed to pay up to $28 million in settlement funds, which was expensed in the second quarter of 2010. The Company paid $13.9 million in November 2010 and made the final payment of $13.9 million in February 2011. Litigation concerning indemnification is pending and the Company may in the future become subject to further legal proceedings.

Product Liability

Like many other industrial companies who have historically operated in the U.S., the Company (or parties the Company is obligated to indemnify) continues to be named as one of many defendants in asbestos-related personal injury actions. We believe that the Company's involvement is limited because, in general, these claims relate to a few types of automotive friction products that were manufactured many years ago and contained encapsulated asbestos. The nature of the fibers, the encapsulation and the manner of use lead the Company to believe that these products are highly unlikely to cause harm. As of both December 31, 2012 and December 31, 2011, the Company had approximately 16,000 pending asbestos-related product liability claims, respectively. Of the approximately 16,000 outstanding claims at December 31, 2012, approximately half were pending in jurisdictions that have undergone significant tort and judicial reform activities subsequent to the filing of these claims.

The Company's policy is to vigorously defend against these lawsuits and the Company has been successful in obtaining dismissal of many claims without any payment. The Company expects that the vast majority of the pending asbestos-related product liability claims where it is a defendant (or has an obligation to indemnify a defendant) will result in no payment being made by the Company or its insurers. In 2012, of the approximately 2,400 claims resolved, 308 (13%) resulted in payment being made to a claimant by or on behalf of the Company. In the full year of 2011, of the approximately 1,800 claims resolved, 288 (16%) resulted in any payment being made to a claimant by or on behalf of the Company.

Prior to June 2004, the settlement and defense costs associated with all claims were paid by the Company's primary layer insurance carriers under a series of funding arrangements. In addition to the primary insurance available for asbestos-related claims, the Company has substantial excess insurance coverage available for potential future asbestos-related product claims. In June 2004, primary layer insurance carriers notified the Company of the alleged exhaustion of their policy limits.

A declaratory judgment action was filed in January 2004 in the Circuit Court of Cook County, Illinois by Continental Casualty Company and related companies against the Company and certain of its historical general liability insurers. The court has issued a number of interim rulings and discovery is continuing. The Company has entered into settlement agreements with some of its insurance carriers, resolving their coverage disputes by agreeing to pay specified amounts to the Company. The Company is vigorously pursuing the litigation against the remaining insurers.

On April 5, 2010, the Superior Court of New Jersey Appellate Division affirmed a lower court judgment in an asbestos-related action against the Company and others. The Company filed its Notice of Petition to the Supreme Court of New Jersey in late April, seeking to appeal the decisions of the lower courts. On July 8, 2010, the Supreme Court of New Jersey denied the Company's Notice of Petition appealing the decision of the lower courts. The total claim of $40.7 million was paid by the Company in July 2010.

Although it is impossible to predict the outcome of pending or future claims or the impact of tort reform legislation that may be enacted at the state or federal levels, due to the encapsulated nature of the products, the Company's experience in vigorously defending and resolving claims in the past, and the Company's significant insurance coverage with solvent carriers as of the date of this filing, management does not believe that asbestos-related product liability claims are likely to have a material adverse effect on the Company's results of operations, financial position or cash flows.

To date, the Company has paid and accrued $235.8 million in defense and indemnity in advance of insurers' reimbursement and has received $124.8 million in cash and notes from insurers. The net balance of $111.0 million, is expected to be fully recovered, of which approximately $20 million is expected to be recovered within one year. Timing of recovery is dependent on final resolution of the declaratory judgment action referred to above or additional negotiated settlements. At December 31, 2011, insurers owed $109.8 million in association with these claims.

In addition to the $111.0 million net balance relating to past settlements and defense costs, the Company has estimated a liability of $85.6 million for claims asserted, but not yet resolved and their related defense costs at December 31, 2012. The Company also has a related asset of $85.6 million to recognize proceeds from the insurance carriers, which is expected to be fully recovered. Receipt of these proceeds is not expected prior to the resolution of the declaratory judgment action referred to above, which, more-likely-than-not, will occur subsequent to December 31, 2013. At December 31, 2011, the comparable value of the accrued liability and associated insurance asset was $61.7 million.

The amounts recorded in the Consolidated Balance Sheets related to the estimated future settlement of existing claims are as follows:

	December 31,
(millions of dollars)	2012		2011
Assets:
Prepayments and other current assets	$	—	$	28.8
Other non-current assets	85.6		32.9
Total insurance assets	$	85.6	$	61.7
Liabilities:
Accounts payable and accrued expenses	$	36.5	$	28.8
Other non-current liabilities	49.1		32.9
Total accrued liabilities	$	85.6	$	61.7

The 2012 increase in the accrued liability and associated insurance asset is primarily due to an expected higher rate of claim settlement based on recent litigation claim activity.

The Company cannot reasonably estimate possible losses, if any, in excess of those for which it has accrued, because it cannot predict how many additional claims may be brought against the Company (or parties the Company has an obligation to indemnify) in the future, the allegations in such claims, the possible outcomes, or the impact of tort reform legislation that may be enacted at the State or Federal levels.

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Fair Value Measurements

12 Months Ended

Dec. 31, 2012

Fair Value Disclosures [Abstract]

Fair value measurements

FAIR VALUE MEASUREMENTS

ASC Topic 820 emphasizes that fair value is a market-based measurement, not an entity specific measurement. Therefore, a fair value measurement should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering market participant assumptions in fair value measurements, ASC Topic 820 establishes a fair value hierarchy, which prioritizes the inputs used in measuring fair values as follows:

Level 1: Observable inputs such as quoted prices for identical assets or liabilities in active markets;

Level 2: Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and

Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

Assets and liabilities measured at fair value are based on one or more of the following three valuation techniques noted in ASC Topic 820:

A. Market approach: Prices and other relevant information generated by market transactions involving identical or comparable assets, liabilities or a group of assets or liabilities, such as a business.

B. Cost approach: Amount that would be required to replace the service capacity of an asset (replacement cost).

C. Income approach: Techniques to convert future amounts to a single present amount based upon market expectations (including present value techniques, option-pricing and excess earnings models).

The following tables classify assets and liabilities measured at fair value on a recurring basis as of December 31, 2012 and 2011:

			Basis of fair value measurements
	Balance at December 31, 2012		Quoted prices in active markets for identical items (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Valuation technique
(millions of dollars)
Assets:
Foreign currency contracts	$	5.9	$	—	$	5.9	$	—	A
Other non-current assets (insurance settlement agreement note receivable)	$	41.0	$	—	$	41.0	$	—	C
Liabilities:
Foreign currency contracts	$	9.8	$	—	$	9.8	$	—	A
Net investment hedge contracts	$	58.1	$	—	$	58.1	$	—	A

			Basis of fair value measurements
(millions of dollars)	Balance at December 31, 2011		Quoted prices in active markets for identical items (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Valuation technique
Assets:
Foreign currency contracts	$	2.7	$	—	$	2.7	$	—	A
Other non-current assets (insurance settlement agreement note receivable)	$	21.3	$	—	$	21.3	$	—	C
Liabilities:
Foreign currency contracts	$	2.9	$	—	$	2.9	$	—	A
Net investment hedge contracts	$	85.0	$	—	$	85.0	$	—	A

The following tables classify the Company's defined benefit plan assets measured at fair value on a recurring basis as of December 31, 2012 and 2011:

			Basis of fair value measurements
(millions of dollars)	Balance at December 31, 2012		Quoted prices in active markets for identical items (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Valuation technique
U.S. Plans:
Fixed income securities	$	157.4	$	—	$	157.4	$	—	A
Equity securities	100.0		48.9		51.1		—		A
Real estate and other	25.3		—		25.3		—		A
	$	282.7	$	48.9	$	233.8	$	—
Non-U.S. Plans:
Fixed income securities	$	67.3	$	—	$	67.3	$	—	A
Equity securities	99.0		—		99.0		—		A
Real estate and other	11.6		—		11.6		—		A
	$	177.9	$	—	$	177.9	$	—

			Basis of fair value measurements
(millions of dollars)	Balance at December 31, 2011		Quoted prices in active markets for identical items (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Valuation technique
U.S. Plans:
Fixed income securities	$	158.2	$	—	$	158.2	$	—	A
Equity securities	101.5		49.6		51.9		—		A
Real estate and other	30.7		—		30.7		—		A
	$	290.4	$	49.6	$	240.8	$	—
Non-U.S. Plans:
Fixed income securities	$	63.5	$	—	$	63.5	$	—	A
Equity securities	78.3		—		78.3		—		A
Real estate and other	13.1		—		13.1		—		A
	$	154.9	$	—	$	154.9	$	—

Refer to Note 11, “Retirement Benefit Plans," for more detail surrounding the defined plan’s asset investment policies and strategies, target allocation percentages and expected return on plan asset assumptions.

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Financial Instruments - Foreign currency derivatives (Details) (Foreign currency contracts [Member]) In Millions, unless otherwise specified	Dec. 31, 2012 Maturity Of Derivatives Period Three [Member] British pound EUR (€)	Dec. 31, 2011 Maturity Of Derivatives Period Three [Member] British pound EUR (€)	Dec. 31, 2012 Maturity Of Derivatives Period Three [Member] Euro USD ($)	Dec. 31, 2012 Maturity Of Derivatives Period Three [Member] Euro GBP (£)	Dec. 31, 2012 Maturity Of Derivatives Period Three [Member] Euro JPY (¥)	Dec. 31, 2012 Maturity Of Derivatives Period Three [Member] Euro PLN	Dec. 31, 2011 Maturity Of Derivatives Period Three [Member] Euro USD ($)	Dec. 31, 2011 Maturity Of Derivatives Period Three [Member] Euro GBP (£)	Dec. 31, 2011 Maturity Of Derivatives Period Three [Member] Euro JPY (¥)	Dec. 31, 2011 Maturity Of Derivatives Period Three [Member] Euro PLN	Dec. 31, 2012 Maturity Of Derivatives Period Three [Member] Japanese yen USD ($)	Dec. 31, 2011 Maturity Of Derivatives Period Three [Member] Japanese yen USD ($)	Dec. 31, 2012 Maturity Of Derivatives Period Three [Member] Korean won USD ($)	Dec. 31, 2011 Maturity Of Derivatives Period Three [Member] Korean won USD ($)	Dec. 31, 2012 Maturity Of Derivatives Period Three [Member] Mexican peso USD ($)	Dec. 31, 2011 Maturity Of Derivatives Period Three [Member] Mexican peso USD ($)	Dec. 31, 2012 Maturity Of Derivatives Period Three [Member] US dollar JPY (¥)	Dec. 31, 2011 Maturity Of Derivatives Period Three [Member] US dollar JPY (¥)	Dec. 31, 2012 Maturity Of Derivatives Period Five [Member] Korean won EUR (€)	Dec. 31, 2011 Maturity Of Derivatives Period Five [Member] Korean won EUR (€)	Dec. 31, 2012 Maturity Of Derivatives Period Two [Member] Mexican peso EUR (€)	Dec. 31, 2011 Maturity Of Derivatives Period Two [Member] Mexican peso EUR (€)	Dec. 31, 2012 Maturity Of Derivatives Period Two [Member] Swedish krona EUR (€)	Dec. 31, 2011 Maturity Of Derivatives Period Two [Member] Swedish krona EUR (€)	Dec. 31, 2012 Maturity Of Derivatives Period Two [Member] US dollar EUR (€)	Dec. 31, 2011 Maturity Of Derivatives Period Two [Member] US dollar EUR (€)	Dec. 31, 2012 Maturity Of Derivatives Period One [Member] Euro HUF	Dec. 31, 2011 Maturity Of Derivatives Period One [Member] Euro HUF	Dec. 31, 2012 Maturity Of Derivatives Period Four [Member] US dollar INR	Dec. 31, 2011 Maturity Of Derivatives Period Four [Member] US dollar INR
Derivative [Line Items]
Notional Amount of Foreign Currency Derivatives	€ 28.8	€ 64.8	$ 15.2	£ 4.7	¥ 6,760.0	87.4	$ 16.1	£ 7.0	¥ 0	24.5	$ 9.5	$ 7.4	$ 17.5	$ 2.4	$ 20.9	$ 40.7	¥ 3,000.0	¥ 3,000.0	€ 32.4	€ 34.5	€ 0	€ 9.2	€ 0	€ 6.1	€ 0	€ 3.0	9,300.0	5,400.0	111.1	0

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Product Warranty

12 Months Ended

Dec. 31, 2012

Product Warranties Disclosures [Abstract]

Product warranty

PRODUCT WARRANTY

The changes in the carrying amount of the Company’s total product warranty liability for the years ended December 31, 2012 and 2011 were as follows:

(millions of dollars)	2012			2011
Beginning balance, January 1	$	72.7		$	66.8
Acquisition	—			4.5
Provisions	33.7			47.5
Payments	(42.8		)	(43.5		)
Translation adjustment	1.3			(2.6		)
Ending balance, December 31	$	64.9		$	72.7

The product warranty liability is classified in the Consolidated Balance Sheets as follows:

	December 31,
(millions of dollars)	2012		2011
Accounts payable and accrued expenses	$	33.1	$	38.6
Other non-current liabilities	31.8		34.1
Total product warranty liability	$	64.9	$	72.7

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Notes Payable and Long-Term Debt

12 Months Ended

Dec. 31, 2012

Debt Disclosure [Abstract]

Notes payable and long-term debt

NOTES PAYABLE AND LONG-TERM DEBT

As of December 31, 2012 and 2011, the Company had short-term and long-term debt outstanding as follows:

	December 31,
(millions of dollars)	2012		2011
Short-term debt
Short-term borrowings	$	129.1	$	116.3
Receivables securitization	110.0		80.0
Total short-term debt	$	239.1	$	196.3
Long-term debt
3.50% Convertible senior notes due 04/15/12	$	—	$	368.5
5.75% Senior notes due 11/01/16 ($150 million par value)	149.6		149.5
8.00% Senior notes due 10/01/19 ($134 million par value)	133.9		133.9
4.625% Senior notes due 09/15/20 ($250 million par value)	247.9		247.7
7.125% Senior notes due 02/15/29 ($121 million par value)	119.4		119.3
Multi-currency revolving credit facility	140.0		70.0
Term loan facilities and other	17.1		19.8
Unamortized portion of debt derivatives	20.2		24.1
Total long-term debt	$	828.1	$	1,132.8
Less: current portion	4.3		381.5
Long-term debt, net of current portion	$	823.8	$	751.3

The weighted average interest rate on all borrowings outstanding as of December 31, 2012 and 2011 was 4.0% and 5.9%, respectively.

Annual principal payments required as of December 31, 2012 are as follows :

(millions of dollars)
2013	$	243.4
2014	0.4
2015	12.4
2016	290.0
2017	—
After 2017	524.8
Total payments	$	1,071.0
Less: unamortized discounts	3.8
Total	$	1,067.2

The Company's long-term debt includes various financial covenants, none of which are expected to restrict future operations.

The Company's $650 million multi-currency revolving credit facility, which includes a feature that allows the Company's borrowings to be increased to $1 billion, provides for borrowings through June 30, 2016 and is guaranteed by the Company's material domestic subsidiaries. The Company has two key financial covenants as part of the credit agreement. These covenants are a debt compared to EBITDA (“Earnings Before Interest, Taxes, Depreciation and Amortization”) test and an interest coverage test. The Company was in compliance with all covenants at December 31, 2012 and expects to remain compliant in future periods. At December 31, 2012 and 2011, the Company had outstanding borrowings of $140.0 million and $70.0 million, respectively, under this facility.

On April 9, 2009, the Company issued $373.8 million in convertible senior notes, which were settled in April 2012 by delivering approximately 11.4 million shares of common stock held in treasury to the note holders. The settlement resulted in a reduction in the current portion of long-term debt of $373.8 million, a reduction in common stock held in treasury of $617.3 million and a reduction in capital in excess of par value of $243.5 million. Prior to the settlement, the Company accreted the discounted carrying value of the convertible notes to their face value over the term of the notes.

The total interest expense related to the convertible senior notes in the Company’s Consolidated Statements of Operations for the years ended December 31, 2012, 2011 and 2010 was as follows:

	Year Ended December 31,
(millions of dollars)	2012		2011		2010
Interest expense	$	9.0	$	33.1	31.3
Non-cash portion	5.3		20.0		18.3

In conjunction with the convertible senior note offering, the Company entered into a bond hedge overlay, including both call options and warrants, at a net pre-tax cost of $25.2 million, effectively raising the conversion premium to 50%, or approximately $38.61 per share. On April 16, 2012, the Company settled the call option portion of the bond hedge overlay, receiving approximately 6.5 million shares of its common stock. The settlement resulted in an increase to common stock held in treasury of $503.9 million offset by an increase to capital in excess of par value of $503.9 million.

During the third and fourth quarters of 2012, the Company settled the warrants included in the bond hedge overlay, delivering approximately 4.9 million shares of its common stock held in treasury, resulting in a decrease to common stock held in treasury of $338.5 million offset by a decrease to capital in excess of par value of $338.5 million.

As of December 31, 2012 and 2011, the estimated fair values of the Company's senior unsecured notes totaled $770.3 million and $1,454.4 million, respectively. The estimated fair values were $119.5 million and $435.5 million higher than their carrying value at December 31, 2012 and 2011, respectively. Fair market values of the senior unsecured notes are developed using observable values for similar debt instruments, which are considered Level 2 inputs as defined by ASC Topic 820. The carrying value of the Company's multi-currency revolving credit facility is equal to its fair value. The fair value estimates do not necessarily reflect the values the Company could realize in the current markets.

The Company had outstanding letters of credit of $59.1 million and $58.5 million at December 31, 2012 and 2011, respectively. The letters of credit typically act as guarantees of payment to certain third parties in accordance with specified terms and conditions.

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Financial Instruments

12 Months Ended

Dec. 31, 2012

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Financial instruments

FINANCIAL INSTRUMENTS

The Company’s financial instruments include cash and marketable securities. Due to the short-term nature of these instruments, their book value approximates their fair value. The Company’s financial instruments also include long-term debt, interest rate and cross-currency swaps, commodity derivative contracts and foreign currency derivatives. All derivative contracts are placed with counterparties that have an S&P, or equivalent, investment grade credit rating at the time of the contracts’ placement. At December 31, 2012 and 2011, the Company had no derivative contracts that contained credit risk related contingent features.

The Company selectively uses cross-currency swaps to hedge the foreign currency exposure associated with our net investment in certain foreign operations (net investment hedges). At December 31, 2012 and 2011, the following cross-currency swaps were outstanding:

	Cross-currency swaps
(millions of dollars)	Notional in USD		Notional in local currency		Duration
Floating $ to Floating €	$	75.0	€	58.5	Oct - 19
Floating $ to Floating ¥	$	150.0	¥	17,581.5	Nov - 16

The Company uses certain commodity derivative contracts to protect against commodity price changes related to forecasted raw material and supplies purchases. The Company primarily utilizes forward and option contracts, which are designated as cash flow hedges. The Company did not have any commodity derivative contracts outstanding at December 31, 2012 and 2011.

The Company uses foreign currency forward and option contracts to protect against exchange rate movements for forecasted cash flows, including capital expenditures, purchases, operating expenses or sales transactions designated in currencies other than the functional currency of the operating unit. Foreign currency derivative contracts require the Company, at a future date, to either buy or sell foreign currency in exchange for the operating units’ local currency. At December 31, 2012 and 2011, the following foreign currency derivative contracts were outstanding:

Foreign currency derivatives (in millions)
Functional currency	Traded currency	Notional in traded currency December 31, 2012	Notional in traded currency December 31, 2011	Duration
British pound	Euro	28.8	64.8	Dec - 13
Euro	British pound	4.7	7.0	Dec - 13
Euro	Hungarian forint	9,300.0	5,400.0	Nov - 13
Euro	Japanese yen	6,760.0	—	Dec - 13
Euro	Polish zloty	87.4	24.5	Dec - 13
Euro	US dollar	15.2	16.1	Dec - 13
Japanese yen	US dollar	9.5	7.4	Dec - 13
Korean won	Euro	32.4	34.5	Dec - 14
Korean won	US dollar	17.5	2.4	Dec - 13
Mexican peso	Euro	—	9.2	Dec - 12
Mexican peso	US dollar	20.9	40.7	Dec - 13
Swedish krona	Euro	—	6.1	Dec - 12
US dollar	Euro	—	3.0	Dec - 12
US dollar	Indian rupee	111.1	—	Oct - 13
US dollar	Japanese yen	3,000.0	3,000.0	Mar - 13

At December 31, 2012 and 2011, the following amounts were recorded in the Consolidated Balance Sheets as being payable to or receivable from counterparties under ASC Topic 815:

	Assets					Liabilities
(millions of dollars)	Location	December 31, 2012		December 31, 2011		Location	December 31, 2012		December 31, 2011
Foreign currency	Prepayments and other current assets	$	5.7	$	2.6	Accounts payable and accrued expenses	$	9.8	$	2.4
	Other non-current assets	$	0.2	$	0.1	Other non-current liabilities	$	—	$	0.5
Net investment hedges	Other non-current assets	$	—	$	—	Other non-current liabilities	$	58.1	$	85.0

Effectiveness for cash flow and net investment hedges is assessed at the inception of the hedging relationship and quarterly, thereafter. To the extent that derivative instruments are deemed to be effective, gains and losses arising from these contracts are deferred into accumulated other comprehensive income (loss) ("AOCI") and reclassified into income as the underlying operating transactions are recognized. These realized gains or losses offset the hedged transaction and are recorded on the same line in the statement of operations. To the extent that derivative instruments are deemed to be ineffective, gains or losses are recognized into income.

The table below shows deferred gains (losses) reported in AOCI as well as the amount expected to be reclassified to income in one year or less. The amount expected to be reclassified to income in one year or less assumes no change in the current relationship of the hedged item at December 31, 2012 market rates.

	Deferred gain (loss) in AOCI at						Gain (loss) expected to be reclassified to income in one year or less
(millions of dollars)	December 31, 2012			December 31, 2011
Foreign currency	$	(3.5	)	$	(0.6	)	$	(3.8	)
Net investment hedges	(54.5		)	(78.9		)	—
Total	$	(58.0	)	$	(79.5	)	$	(3.8	)

Derivative instruments designated as hedging instruments as defined by ASC Topic 815 held during the period resulted in the following gains and losses recorded in income:

		Gain (loss) reclassified from AOCI to Income (effective portion)						Gain (loss) recognized in income (ineffective portion)
		Year Ended December 31,						Year Ended December 31,
(millions of dollars)	Location	2012		2011			Location	2012		2011
Foreign currency	Sales	$	5.3	$	(1.4	)	SG&A expense	$	—	$	—
Foreign currency	Cost of goods sold	$	3.5	$	(0.6	)	SG&A expense	$	0.1	$	—
Foreign currency	SG&A expense	$	—	$	0.5		SG&A expense	$	—	$	—
Net investment hedges	N/A						Interest expense	$	2.3	$	0.5

At December 31, 2012, derivative instruments that were not designated as hedging instruments as defined by ASC Topic 815 were immaterial.

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Retirement Benefit Plans - Benefit Obligation and Plan Assets (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2012		Dec. 31, 2011		Dec. 31, 2010
Amounts recognized in Balance Sheet [Abstract]
Non-current liabilities	$ 509.7		$ 457.0
NSK Warner [Member]
Amounts recognized in accumulated other comprehensive Income Loss) [Abstract]
Net amount recognized	7.9	[1]	6.9	[1]
U.S. Plans:
Change in benefit obligation [Roll Forward]
Projected benefit obligation, January 1	337.4		326.2
Service cost	0		0		0
Interest cost	14.3		16.1		17.5
Plan participants’ contributions	0		0
Plan amendments	0		0
Actuarial (gain) loss	15.5		21.8
Currency translation	0		0
Other	0		0
Benefits paid	(37.1)		(26.7)
Projected benefit obligation, December 31	330.1		337.4		326.2
Change in plan assets:
Fair value of plan assets, January 1	290.4		287.2
Actual return on plan assets	29.4		8.9
Employer contribution	0		21.0
Currency translation	0		0
Other	0		0
Fair value of plan assets, December 31	282.7		290.4		287.2
Funded status of plan	(47.4)		(47.0)
Amounts recognized in Balance Sheet [Abstract]
Non-current assets	0		0
Current liabilities	0.1		0.1
Non-current liabilities	47.3		46.9
Net amount recognized	(47.4)		(47.0)
Amounts recognized in accumulated other comprehensive Income Loss) [Abstract]
Net actuarial loss	(163.8)		(172.8)
Net prior service cost (credit)	(10.5)		(11.3)
Net amount recognized	153.3	[1]	161.5	[1]
Defined Benefit Plan, Accumulated Benefit Obligation	330.1		337.4
Non-U.S. Plans:
Change in benefit obligation [Roll Forward]
Projected benefit obligation, January 1	344.3		326.0
Service cost	9.1		9.1		7.4
Interest cost	17.2		17.8		17.6
Plan participants’ contributions	0.5		0.3
Plan amendments	0		(0.5)
Actuarial (gain) loss	84.1		11.9
Currency translation	11.3		(5.8)
Other	(4.5)		0.9
Benefits paid	(14.4)		(15.4)
Projected benefit obligation, December 31	447.6		344.3		326.0
Change in plan assets:
Fair value of plan assets, January 1	154.9		154.6
Actual return on plan assets	15.0		5.0
Employer contribution	18.0		16.0
Currency translation	6.0		(0.7)
Other	(2.1)		(4.9)
Fair value of plan assets, December 31	177.9		154.9		154.6
Funded status of plan	(269.7)		(189.4)
Amounts recognized in Balance Sheet [Abstract]
Non-current assets	0		0.5
Current liabilities	7.0		6.5
Non-current liabilities	262.7		183.4
Net amount recognized	(269.7)		(189.4)
Amounts recognized in accumulated other comprehensive Income Loss) [Abstract]
Net actuarial loss	(135.1)		(54.4)
Net prior service cost (credit)	0.5		0.8
Net amount recognized	135.6	[1]	55.2	[1]
Defined Benefit Plan, Accumulated Benefit Obligation	430.2		327.9
U.S. other postretirement benefit plans [Member]
Change in benefit obligation [Roll Forward]
Projected benefit obligation, January 1	251.0		261.9
Service cost	0.5		0.7		0.8
Interest cost	10.1		11.8		14.5
Plan participants’ contributions	0		0
Plan amendments	(0.3)		3.9
Actuarial (gain) loss	(20.7)		(6.8)
Currency translation	0		0
Other	0		0
Benefits paid	(20.1)		(20.5)
Projected benefit obligation, December 31	220.5		251.0		261.9
Change in plan assets:
Funded status of plan	(220.5)		(251.0)
Amounts recognized in Balance Sheet [Abstract]
Non-current assets	0		0
Current liabilities	20.8		24.3
Non-current liabilities	199.7		226.7
Net amount recognized	(220.5)		(251.0)
Amounts recognized in accumulated other comprehensive Income Loss) [Abstract]
Net actuarial loss	(78.7)		(106.3)
Net prior service cost (credit)	(42.6)		(48.7)
Net amount recognized	$ 36.1	[1]	$ 57.6	[1]

[1] AOCI shown above does not include our equity investee, NSK-Warner. NSK-Warner had an AOCI loss of $7.9 million and $6.9 million at December 31, 2012 and 2011, respectively.

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Retirement Benefit Plans - Asset Allocations (Details)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
U.S. Plans:
Defined Benefit Plan, Assets for Plan Benefits [Abstract]
Fixed income securities	100.00%	100.00%
Non-U.S. Plans:
Defined Benefit Plan, Assets for Plan Benefits [Abstract]
Fixed income securities	100.00%	100.00%
Cash and Cash Equivalents [Member] | U.S. Plans:
Defined Benefit Plan, Assets for Plan Benefits [Abstract]
Fixed income securities	9.00%	11.00%
Defined Benefit Plan, Assets, Target Allocations [Abstract]
Target allocation percentage of assets, fixed income securities, range minimum	5.00%
Target allocation percentage of assets, fixed income securities, range maximum	15.00%
Cash and Cash Equivalents [Member] | Non-U.S. Plans:
Defined Benefit Plan, Assets for Plan Benefits [Abstract]
Fixed income securities	6.00%	8.00%
Defined Benefit Plan, Assets, Target Allocations [Abstract]
Target allocation percentage of assets, fixed income securities, range minimum	2.00%
Target allocation percentage of assets, fixed income securities, range maximum	8.00%
Fixed Income Funds [Member] | U.S. Plans:
Defined Benefit Plan, Assets for Plan Benefits [Abstract]
Fixed income securities	56.00%	54.00%
Defined Benefit Plan, Assets, Target Allocations [Abstract]
Target allocation percentage of assets, fixed income securities, range minimum	45.00%
Target allocation percentage of assets, fixed income securities, range maximum	65.00%
Fixed Income Funds [Member] | Non-U.S. Plans:
Defined Benefit Plan, Assets for Plan Benefits [Abstract]
Fixed income securities	38.00%	41.00%
Defined Benefit Plan, Assets, Target Allocations [Abstract]
Target allocation percentage of assets, fixed income securities, range minimum	37.00%
Target allocation percentage of assets, fixed income securities, range maximum	43.00%
Equity Securities [Member] | U.S. Plans:
Defined Benefit Plan, Assets for Plan Benefits [Abstract]
Fixed income securities	35.00%	35.00%
Defined Benefit Plan, Assets, Target Allocations [Abstract]
Target allocation percentage of assets, fixed income securities, range minimum	25.00%
Target allocation percentage of assets, fixed income securities, range maximum	45.00%
Equity Securities [Member] | Non-U.S. Plans:
Defined Benefit Plan, Assets for Plan Benefits [Abstract]
Fixed income securities	56.00%	51.00%
Defined Benefit Plan, Assets, Target Allocations [Abstract]
Target allocation percentage of assets, fixed income securities, range minimum	52.00%
Target allocation percentage of assets, fixed income securities, range maximum	58.00%

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Retirement Benefit Plans (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended						3 Months Ended	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2013	Dec. 31, 2013 Minimum [Member]	Dec. 31, 2013 Maximum [Member]	Dec. 31, 2010 Muncie Plant [Member]	Dec. 31, 2011 Muncie Plant [Member]
Defined Benefit Plan Disclosure [Line Items]
Recognized net (gain) loss due to settlements	$ 5.7
Employer contribution							23.0	15.0
Estimated future employer contributions in next fiscal year					15	25
Outstanding letters of credit	59.1	58.5
Expense for defined contribution and defined benefit pension plans and other post employment defined benefit plans
Defined contribution expense	24.8	18.9	19.2
Defined benefit pension expense	27.3	17.5	19.8
Other postretirement benefit expense	11.1	13.5	17.5
Total	63.2	49.9	56.5
Defined Benefit Plan, Estimated Future Employer Contributions in Next Fiscal Year, Under Contractual Obligation				$ 7.1

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Retirement Benefit Plans (Tables)

12 Months Ended

Dec. 31, 2012

Compensation and Retirement Disclosure [Abstract]

Expense for defined contribution and defined benefit pension plans and other post employment defined benefit plans [Text Block]

	Year Ended December 31,
(millions of dollars)	2012		2011		2010
Defined contribution expense	$	24.8	$	18.9	$	19.2
Defined benefit pension expense	27.3		17.5		19.8
Other postretirement benefit expense	11.1		13.5		17.5
Total	$	63.2	$	49.9	$	56.5

Reconciliation of the plans' benefit obligations, plan assets, funded status and recognition [Text Block]

	Pension benefits												Other post-
	Year Ended December 31,												retirement benefits
	2012						2011						Year Ended December 31,
(millions of dollars)	US			Non-US			US			Non-US			2012			2011
Change in projected benefit obligation:
Projected benefit obligation, January 1	$	337.4		$	344.3		$	326.2		$	326.0		$	251.0		$	261.9
Service cost	—			9.1			—			9.1			0.5			0.7
Interest cost	14.3			17.2			16.1			17.8			10.1			11.8
Plan participants’ contributions	—			0.5			—			0.3			—			—
Plan amendments	—			—			—			(0.5		)	(0.3		)	3.9
Actuarial (gain) loss	15.5			84.1			21.8			11.9			(20.7		)	(6.8		)
Currency translation	—			11.3			—			(5.8		)	—			—
Other	—			(4.5		)	—			0.9			—			—
Benefits paid	(37.1		)	(14.4		)	(26.7		)	(15.4		)	(20.1		)	(20.5		)
Projected benefit obligation, December 31	$	330.1		$	447.6		$	337.4		$	344.3		$	220.5		$	251.0
Change in plan assets:
Fair value of plan assets, January 1	$	290.4		$	154.9		$	287.2		$	154.6
Actual return on plan assets	29.4			15.0			8.9			5.0
Employer contribution	—			18.0			21.0			16.0
Plan participants’ contribution	—			0.5			—			0.3
Currency translation	—			6.0			—			(0.7		)
Other	—			(2.1		)	—			(4.9		)
Benefits paid	(37.1		)	(14.4		)	(26.7		)	(15.4		)
Fair value of plan assets, December 31	$	282.7		$	177.9		$	290.4		$	154.9
Funded status	$	(47.4	)	$	(269.7	)	$	(47.0	)	$	(189.4	)	$	(220.5	)	$	(251.0	)
Amounts in the Consolidated Balance Sheets consist of:
Non-current assets	$	—		$	—		$	—		$	0.5		$	—		$	—
Current liabilities	(0.1		)	(7.0		)	(0.1		)	(6.5		)	(20.8		)	(24.3		)
Non-current liabilities	(47.3		)	(262.7		)	(46.9		)	(183.4		)	(199.7		)	(226.7		)
Net amount	$	(47.4	)	$	(269.7	)	$	(47.0	)	$	(189.4	)	$	(220.5	)	$	(251.0	)
Amounts in accumulated other comprehensive loss consist of:
Net actuarial loss	$	163.8		$	135.1		$	172.8		$	54.4		$	78.7		$	106.3
Net prior service cost (credit)	(10.5		)	0.5			(11.3		)	0.8			(42.6		)	(48.7		)
Net amount*	$	153.3		$	135.6		$	161.5		$	55.2		$	36.1		$	57.6
Total accumulated benefit obligation for all plans	$	330.1		$	430.2		$	337.4		$	327.9

________________

* AOCI shown above does not include our equity investee, NSK-Warner. NSK-Warner had an AOCI loss of $7.9 million and $6.9 million at December 31, 2012 and 2011, respectively.

Funded status of pension plans with accumulated benefit obligations in excess of plan assets [Text Block]

	December 31,
(millions of dollars)	2012			2011
Accumulated benefit obligation	$	(757.7	)	$	(656.9	)
Plan assets	458.0			435.5
Deficiency	$	(299.7	)	$	(221.4	)
Pension deficiency by country:
United States	$	(47.4	)	$	(47.0	)
United Kingdom	(22.4		)	(13.4		)
Germany	(192.4		)	(128.7		)
Other	(37.5		)	(32.3		)
Total pension deficiency	$	(299.7	)	$	(221.4	)

Weighted average asset allocations of funded pensions plans and target allocations [Text Block]

	December 31,				Target Allocation
	2012		2011
U.S. Plans:
Real estate and other	9	%	11	%	5%-15%
Fixed income securities	56	%	54	%	45%-65%
Equity securities	35	%	35	%	25%-45%
	100	%	100	%
Non-U.S. Plans:
Real estate and other	6	%	8	%	2% - 8%
Fixed income securities	38	%	41	%	37% - 43%
Equity securities	56	%	51	%	52% - 58%
	100	%	100	%

Components of net periodic benefit cost [Text Block]

See the table below for a breakout of net periodic benefit cost between U.S. and non-U.S. pension plans:

	Pension benefits																		Other postretirement benefits
	Year Ended December 31,
	2012						2011						2010						Year Ended December 31,
(millions of dollars)	US			Non-US			US			Non-US			US			Non-US			2012			2011			2010
Service cost	$	—		$	9.1		$	—		$	9.1		$	—		$	7.4		$	0.5		$	0.7		$	0.8
Interest cost	14.3			17.2			16.1			17.8			17.5			17.6			10.1			11.8			14.5
Expected return on plan assets	(18.8		)	(9.3		)	(20.8		)	(11.2		)	(19.7		)	(9.7		)	—			—			—
Settlements, curtailments and other	5.7			0.5			—			(0.1		)	—			—			—			—			—
Amortization of unrecognized prior service benefit	(0.7		)	—			(0.7		)	—			(0.7		)	—			(6.4		)	(6.9		)	(6.9		)
Amortization of unrecognized loss	8.1			1.2			6.5			0.8			6.6			0.8			6.9			7.9			9.1
Net periodic benefit cost	$	8.6		$	18.7		$	1.1		$	16.4		$	3.7		$	16.1		$	11.1		$	13.5		$	17.5

Defined benefit plan weighted average assumptions used in calculating benefit obligations [Text Block]

	December 31,
(percent)	2012	2011
U.S. pension plans:
Discount rate	3.67	4.42
Rate of compensation increase	N/A	N/A
U.S. other postretirement plans:
Discount rate	3.25	4.25
Rate of compensation increase	N/A	N/A
Non-U.S. pension plans:
Discount rate	3.86	5.13
Rate of compensation increase	2.72	2.78

The Company’s weighted-average assumptions used to determine the net periodic benefit cost for its defined benefit pension and other postretirement benefit plans for the years ended December 31, 2012, 2011 and 2010 were as follows:

	Year Ended December 31,
(percent)	2012	2011	2010
U.S. pension plans:
Discount rate	4.42	5.17	5.75
Rate of compensation increase	N/A	N/A	3.50
Expected return on plan assets	6.75	7.50	7.50
U.S. other postretirement plans:
Discount rate	4.25	4.75	5.50
Rate of compensation increase	N/A	N/A	N/A
Expected return on plan assets	N/A	N/A	N/A
Non-U.S. pension plans:
Discount rate	5.13	5.37	5.47
Rate of compensation increase	2.78	2.80	2.75
Expected return on plan assets	6.49	7.07	7.12

Defined benefit plan estimated future benefit payments [Text Block]

The estimated future benefit payments for the pension and other postretirement benefits are as follows:

	Pension benefits				Other postretirement benefits
(millions of dollars)					w/o Medicare Part D reimbursements		with Medicare Part D reimbursements
Year	U.S.		Non-U.S.
2013	$	24.9	$	15.7	$	21.9	$	21.1
2014	24.2		18.0		21.3		20.5
2015	23.4		19.8		20.6		19.8
2016	22.9		18.8		19.9		19.1
2017	22.3		20.1		19.3		18.5
2018-2022	105.4		110.1		82.1		78.8

Defined benefit plan effect of one percentage point change in assumed health care cost trend rates [Text Block]

A one-percentage point change in the assumed health care cost trend would have the following effects:

	One Percentage Point
(millions of dollars)	Increase		Decrease
Effect on other postretirement benefit obligation	$	16.2	$	(14.3	)
Effect on total service and interest cost components	$	0.5	$	(0.5	)

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Balance Sheet Information - Equity Method Investment (Details) (NSK Warner [Member], USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Nov. 30, 2011	Dec. 31, 2010	Nov. 30, 2010	Nov. 30, 2009
NSK Warner [Member]
Schedule of Equity Method Investments [Line Items]
Equity investment in NSK Warner, percent	50.00%
Joint Venture Partner Interest In Subsidiary	40.00%
Equity Method Investment, Dividends or Distributions	$ 28.1	$ 33.4		$ 35.5
Equity Method Investment, Summarized Financial Information [Abstract]
Cash and securities			123.3		119.4
Current assets, including cash and securities			320.0		344.1
Non-current assets			175.3		182.0
Current liabilities			147.4		172.1
Non-current liabilities			50.2		45.3
Total equity			297.7		308.7
Equity Method Investment, Summarized Financial Information, Income Statement [Abstract]
Net sales			696.7		655.2	634.7
Gross profit			138.2		128.5	131.9
Net earnings			68.5		61.6	68.3
Purchases from Equity Method Investee	$ 22.8	$ 16.6		$ 14.6

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Earnings Per Share

12 Months Ended

Dec. 31, 2012

Earnings Per Share [Abstract]

Earnings per share

EARNINGS PER SHARE

The Company presents both basic and diluted earnings per share of common stock (“EPS”) amounts. Basic EPS is calculated by dividing net earnings attributable to BorgWarner Inc. by the weighted average shares of common stock outstanding during the reporting period. Diluted EPS is calculated by dividing net earnings attributable to BorgWarner Inc. by the weighted average shares of common stock and common equivalent stock outstanding during the reporting period.

The dilutive impact of stock-based compensation is calculated using the treasury stock method. The treasury stock method assumes that the Company uses the assumed proceeds from the exercise of awards to repurchase common stock at the average market price during the period. The assumed proceeds under the treasury stock method include the purchase price that the grantee will pay in the future, compensation cost for future service that the Company has not yet recognized and any windfall/(shortfall) tax benefits that would be credited/(debited) to capital in excess of par value when the award generates a tax deduction. Options are only dilutive when the average market price of the underlying common stock exceeds the exercise price of the options.

In April 2012, the Company settled its 3.50% convertible senior notes. Prior to the settlement, the potential common shares associated with these notes were reflected in diluted EPS using the “if-converted” method. Under this method, if dilutive, the common shares were assumed issued as of the beginning of the reporting period and included in calculating diluted EPS. In addition, if dilutive, interest expense, net of tax, related to the convertible senior notes was added back to the numerator in calculating diluted EPS.

In conjunction with the convertible senior note offering, the Company entered into a bond hedge overlay, including both call options and warrants. On April 16, 2012, the Company settled the call option portion of the bond hedge overlay, receiving approximately 6.5 million shares, which reduced the weighted average basic and dilutive shares outstanding. Prior to the settlement, if the Company's weighted average share price exceeded $32.82 per share, the call options were anti-dilutive. During the third and fourth quarters of 2012, the Company settled the warrant portion of the bond hedge overlay, delivering approximately 4.9 million shares. Prior to settlement, if the Company's weighted-average share price exceeded $38.61 per share, the warrants were dilutive to the Company's earnings.

The following table reconciles the numerators and denominators used to calculate basic and diluted earnings per share of common stock:

	Year Ended December 31,
(in millions except per share amounts)	2012		2011		2010
Basic earnings per share:
Net earnings attributable to BorgWarner Inc.	$	500.9	$	550.1	$	377.4
Weighted average shares of common stock outstanding	112.652		109.229		114.155
Basic earnings per share of common stock	$	4.45	$	5.04	$	3.31
Diluted earnings per share:
Net earnings attributable to BorgWarner Inc.	$	500.9	$	550.1	$	377.4
Adjusted for net interest expense on convertible notes	5.8		21.5		20.4
Diluted net earnings attributable to BorgWarner Inc.	$	506.7	$	571.6	$	397.8
Weighted average shares of common stock outstanding	112.652		109.229		114.155
Effect of 3.50% convertible senior notes	3.322		11.389		11.389
Effect of warrant	3.400		5.215		1.464
Effect of stock-based compensation	2.003		2.635		2.567
Total dilutive effect on weighted average shares of common stock outstanding	8.725		19.239		15.420
Weighted average shares of common stock outstanding including dilutive shares	121.377		128.468		129.575
Diluted earnings per share of common stock	$	4.17	$	4.45	$	3.07
Total anti-dilutive shares:
Call options	1.939		6.141		2.836

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Other Income Expense (Tables)

12 Months Ended

Dec. 31, 2012

Other Income and Expenses [Abstract]

Schedule of Other Nonoperating Income (Expense)

	Year Ended December 31,
(millions of dollars)	2012		2011			2010
Loss from disposal activities	$	39.7	$	21.5		$	—
Restructuring expense	27.4		—			—
Retirement related obligations	17.3		—			—
Patent infringement settlement, net of legal costs incurred	—		(29.1		)	—
Environmental litigation settlement	—		—			28.0
BERU - Eichenauer equity investment gain	—		—			(8.0		)
Other	0.3		(0.5		)	2.4
Other (income) expense	$	84.7	$	(8.1	)	$	22.4

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Income Taxes Income Taxes - Operating Loss Carryforwards (Details) (USD $)	3 Months Ended	12 Months Ended
	Jun. 30, 2012	Dec. 31, 2012	Dec. 31, 2012 Non-U.S. Tax Jurisdiction	Dec. 31, 2011 Non-U.S. Tax Jurisdiction
Operating Loss Carryforwards [Line Items]
Operating Loss Carryforwards			$ 42,400,000
Deferred Tax Assets, Operating Loss Carryforwards, Subject to Expiration			35,400,000
Deferred Tax Assets, Operating Loss Carryforwards, Not Subject to Expiration			7,000,000
Operating Loss Carryforwards, Valuation Allowance			700,000
Deferred Tax Assets, Operating Loss Carryforwards			2,500,000
Deferred Tax Assets, Operating Loss Carryforwards, State and Local		490,700,000
Income Tax Holiday, Aggregate Dollar Amount			26,700,000	21,800,000
Foreign Tax Credits		146,100,000
Unremitted foreign earnings		(13,400,000)
Impact of change in repatriation assertion	9,000,000	7,500,000
Deferred tax liability, unremitted foreign earnings, portion relating to current year earnings		5,900,000
Undistributed Earnings of Foreign Subsidiaries		$ 2,100,000,000

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Research and Development Costs (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Research and Development [Abstract]
Gross R&D expenditures	$ 309.3	$ 294.7	$ 233.2
Customer reimbursements	(43.4)	(51.0)	(48.2)
Net R&D expenditures	$ 265.9	$ 243.7	$ 185.0
Net R&D expenditures as a percentage of net sales	3.70%	3.40%	3.30%
Research and Development Contract, Percent of Net Research and Development, Maximum	5.00%	5.00%	5.00%

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BorgWarner Inc. and Consolidated Subsidiaries Consolidated Statements of Cash Flows (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
OPERATING
Net earnings	$ 522.4	$ 570.6	$ 396.2
Adjustments to reconcile net earnings to net cash flows from operations:
Depreciation and tooling amortization	260.2	252.2	224.5
Amortization of intangible assets and other	28.4	30.8	28.4
Loss from disposal activities, net of cash paid	31.7	21.5	0
Restructuring expense, net of cash paid	23.3	0	0
Environmental litigation settlement, net of cash paid	0	0	(14.0)
Stock-based compensation expense	56.7	21.8	22.8
Deferred income tax benefit	(10.7)	(1.1)	(52.2)
Bond amortization	5.3	20.3	18.3
BERU - Eichenauer equity investment gain	0	0	(8.0)
Equity in affiliates’ earnings, net of dividends received, and other	(13.0)	(7.8)	1.7
Net earnings adjusted for non-cash charges to operations	904.3	908.3	645.7
Changes in assets and liabilities:
Receivables	43.8	(150.6)	(239.0)
Inventories	(5.3)	(38.6)	(79.0)
Prepayments and other current assets	(15.4)	(2.4)	0.6
Accounts payable and accrued expenses	(27.1)	53.0	169.4
Income taxes payable	44.9	(15.4)	37.3
Other non-current assets and liabilities	(66.5)	(46.1)	3.9
Net cash provided by operating activities	878.7	708.2	538.9
INVESTING
Capital expenditures, including tooling outlays	(407.4)	(393.7)	(276.6)
Net proceeds from asset disposals	5.4	7.9	6.8
Payments for businesses acquired, net of cash acquired	0	(203.7)	(164.7)
Net proceeds from sale of businesses	56.8	25.0	5.0
Net cash used in investing activities	(345.2)	(564.5)	(429.5)
FINANCING
Net increase (decrease) in notes payable	12.8	67.6	(29.8)
Additions to long-term debt, net of debt issuance costs	313.9	364.6	372.2
Repayments of long-term debt, including current portion	(246.4)	(309.1)	(116.1)
Proceeds from accounts receivable securitization facility	30.0	0	30.0
Payments for purchase of treasury stock	(295.9)	(357.6)	(325.7)
Proceeds from stock options exercised, including the tax benefit	52.0	53.0	67.1
Taxes paid on employees' restricted stock award vestings	(18.1)	(14.4)	0
Purchase of noncontrolling interest	(15.0)	(29.4)	0
Capital contribution from noncontrolling interest	0	19.5	0
Dividends paid to noncontrolling stockholders	(21.9)	(13.9)	(10.9)
Net cash used in financing activities	(188.6)	(219.7)	(13.2)
Effect of exchange rate changes on cash	11.2	(14.3)	(3.7)
Net increase (decrease) in cash	356.1	(90.3)	92.5
Cash at beginning of year	359.6	449.9	357.4
Cash at end of year	715.7	359.6	449.9
SUPPLEMENTAL CASH FLOW INFORMATION
Net cash paid during the year for interest	57.0	68.5	53.4
Net cash paid during the year for income taxes	$ 158.9	$ 175.5	$ 83.1

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Income Taxes

12 Months Ended

Dec. 31, 2012

Income Tax Disclosure [Abstract]

Income taxes

INCOME TAXES

Earnings (loss) before income taxes and the provision for income taxes are presented in the following table.

	Year Ended December 31, 2012									Year Ended December 31, 2011									Year Ended December 31, 2010
(millions of dollars)	U.S.			Non-U.S.			Total			U.S.			Non-U.S.			Total			U.S.			Non-U.S.			Total
Earnings (loss) before income taxes	$	132.3		$	628.7		$	761.0		$	119.2		$	646.7		$	765.9		$	(26.7	)	$	504.6		$	477.9
Provision for income taxes:
Current:
Federal/foreign	$	59.8		$	186.1		$	245.9		$	31.8		$	162.9		$	194.7		$	14.0		$	117.7		$	131.7
State	3.4			—			3.4			1.7			—			1.7			2.2			—			2.2
Total current	63.2			186.1			249.3			33.5			162.9			196.4			16.2			117.7			133.9
Deferred	19.5			(30.2		)	(10.7		)	17.4			(18.5		)	(1.1		)	(48.9		)	(3.3		)	(52.2		)
Total provision for income taxes	$	82.7		$	155.9		$	238.6		$	50.9		$	144.4		$	195.3		$	(32.7	)	$	114.4		$	81.7
Effective tax rate	62.5		%	24.8		%	31.4		%	42.7		%	22.3		%	25.5		%	(122.5		)%	22.7		%	17.1		%

The provision for income taxes resulted in an effective tax rate of 31.4%, 25.5% and 17.1% for the years ended December 31, 2012, 2011 and 2010, respectively. An analysis of the differences between the effective tax rate and the U.S. statutory rate for the years ended December 31, 2012, 2011 and 2010 is presented below.

	Year Ended December 31,
(millions of dollars)	2012			2011			2010
Income taxes at U.S. statutory rate of 35%	$	266.4		$	268.1		$	167.3
Increases (decreases) resulting from:
Income from non-U.S. sources, including withholding taxes	(58.3		)	(74.8		)	(55.8		)
Affiliates' earnings	(15.0		)	(13.4		)	(13.8		)
State taxes, net of federal benefit	2.2			1.1			1.4
Business and foreign tax credits	8.8			11.5			0.2
Accrual adjustment and settlement of prior year tax matters	9.3			(1.0		)	0.4
Medicare Part D	—			0.1			2.9
Capital loss carryforward valuation allowance	9.7			—			—
Reversal of foreign tax credit valuation allowance	—			—			(21.2		)
Unremitted foreign earnings	13.4			—			—
Non-temporary differences and other	2.1			3.7			0.3
Provision for income taxes, as reported	$	238.6		$	195.3		$	81.7

The Company's provision for income taxes for the year ended December 31, 2012 includes a net tax benefit of $2.0 million associated with the loss from disposal activities and restructuring expense. The $2.0 million net benefit is comprised of a tax benefit of $7.7 million associated with restructuring expense, partially offset by tax expense of $5.7 million resulting from the sale of the spark plug business. The provision also includes additional tax expense of $19.8 million resulting from other tax adjustments. These other tax adjustments include $5.9 million of tax expense primarily resulting from the settlement of certain tax audits, $7.5 million of tax expense associated with the Company's second quarter 2012 decision to change its cash repatriation assertion for some of its foreign subsidiaries, $4.7 million of tax benefit related to certain countries enacting changes to their respective statutory income tax rates and $11.1 million of U.S. tax expense to correct the income taxes payable balance. The Company concluded this item was not material to the current or prior period financial statements.

The Company's provision for income taxes for the year ended December 31, 2011 includes $11.0 million of tax expense associated with the Company's patent infringement settlement, $2.7 million of tax expense associated with the loss from disposal activities and a tax benefit of $6.2 million resulting from other tax adjustments. These other tax adjustments related to a change in state corporate income tax legislation as well as an adjustment of the Company's tax accounts as a result of the closure of certain tax audits. During 2011, several countries enacted changes to their respective statutory income tax rates. None of these changes had a material impact on the Company's effective tax rate.

The Company's provision for income taxes for the year ended December 31, 2010 includes a favorable impact of $21.2 million related to the reversal of the Company's valuation allowance on U.S. based foreign tax credit carryforwards, the impact of the change in tax legislation related to Medicare Part D subsidies of $2.9 million, additional tax expense of $2.3 million associated with the BERU - Eichenauer equity investment gain and the tax benefit of $9.8 million associated with the Company's environmental litigation settlement.

A roll forward of the Company's total gross unrecognized tax benefits for the years ended December 31, 2012 and 2011, respectively, is presented below. Of the total $25.8 million of unrecognized tax benefits as of December 31, 2012, approximately $23.4 million of the total represents the amount, if recognized, wouldaffect the Company's effective income tax rate in future periods. This amount differs from the gross unrecognized tax benefits presented in the table due to the decrease in the U.S. federal income taxes which would occur upon recognition of the state tax benefits included therein.

(millions of dollars)	2012			2011
Balance, January 1	$	26.2		$	27.6
Additions based on tax positions related to current year	2.0			0.5
Additions for tax positions of prior years	13.4			3.9
Reductions for closure of tax audits and settlements	(14.6		)	(4.3		)
Reductions for lapse in statute of limitations	(1.7		)	(0.8		)
Translation adjustment	0.5			(0.7		)
Balance, December 31	$	25.8		$	26.2

The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense. The amount recognized in income tax expense for 2012 and 2011 is $0.5 million and $1.7 million, respectively. The Company has an accrual of approximately $8.3 million and $7.8 million for the payment of interest and penalties at December 31, 2012 and 2011, respectively. Included in the $25.8 million of unrecognized tax benefits is $18.5 million for the settlement of audits and resulting amended returns in certain foreign jurisdictions, most of which the Company expects to pay in the first quarter of 2013. Possible changes within the next 12 months related to other examinations cannot be reasonably estimated at this time.

The Company and/or one of its subsidiaries files income tax returns in the U.S. federal, various state jurisdictions and various foreign jurisdictions. In certain tax jurisdictions, the Company may have more than one taxpayer. The Company is no longer subject to income tax examinations by tax authorities in its major tax jurisdictions as follows:

Tax jurisdiction	Years no longer subject to audit	Tax jurisdiction	Years no longer subject to audit
U.S. Federal	2010 and prior	Hungary	2008 and prior
China	2007 and prior	Japan	2011 and prior
France	2007 and prior	South Korea	2006 and prior
Germany	2007 and prior	Sweden	2006 and prior

The gross components of deferred tax assets and liabilities as of December 31, 2012 and 2011 consist of the following:

	December 31,
(millions of dollars)	2012			2011
Current deferred tax assets:
Foreign tax credits	$	29.0		$	—
Employee related	25.7			28.0
Research and development capitalization	13.4			—
Inventory	8.4			14.5
Warranties	5.3			4.5
Customer claims	3.6			2.2
Other	13.1			11.5
Total current deferred tax assets	$	98.5		$	60.7
Current deferred tax liabilities:
Unremitted foreign earnings	$	(1.1	)	$	—
Other	(2.6		)	(3.7		)
Total current deferred tax liabilities	$	(3.7	)	$	(3.7	)
Non-current deferred tax assets:
Foreign tax credits	$	117.0		$	158.2
Other comprehensive income	113.7			116.7
Research and development capitalization	89.1			76.7
Net operating loss and capital loss carryforwards*	44.3			35.1
Pension and other postretirement benefits	37.7			33.9
Employee related	27.4			22.9
Research and development credits	4.9			3.0
Warranties	4.5			4.7
Litigation and environmental	1.2			2.0
Other	3.1			5.1
Total non-current deferred tax assets	$	442.9		$	458.3
Non-current deferred tax liabilities:
Goodwill & intangibles	$	(130.9	)	$	(155.5	)
Fixed assets	(101.9		)	(79.7		)
Unremitted foreign earnings	(12.3		)	(1.3		)
Other comprehensive income	(3.0		)	(2.9		)
Other	(6.6		)	(6.6		)
Total non-current deferred tax liabilities	$	(254.7	)	$	(246.0	)
Total deferred tax items	$	283.0		$	269.3
Valuation allowances*	(35.0		)	(23.6		)
Net deferred tax asset	$	248.0		$	245.7

_______________

*Net operating loss and capital loss carryforwards are shown gross with the corresponding valuation allowances located at the end of the table.

The deferred tax assets and liabilities recognized in the Company’s Consolidated Balance Sheets are as follows:

	December 31,
(millions of dollars)	2012			2011
Deferred income taxes — current assets*	$	94.7		$	58.5
Deferred income taxes — current liabilities*	(1.4		)	(6.5		)
Other non-current assets*	244.1			313.9
Other non-current liabilities*	(89.4		)	(120.2		)
Net deferred tax asset (current and non-current)	$	248.0		$	245.7

________________

*Current and non-current assets and liabilities have been netted within their respective taxing jurisdictions.

Deferred income taxes - current assets are primarily comprised of amounts from the U.S., China, France, Italy, Japan, Mexico and South Korea. Deferred income taxes - current liabilities are primarily comprised of amounts from the U.K. Other non-current assets are primarily comprised of amounts from the U.S., China and Japan. Other non-current liabilities are primarily comprised of amounts from Germany, Sweden and the U.K.

At December 31, 2012, certain non-U.S. subsidiaries have net operating loss carryforwards totaling $42.4 million available to offset future taxable income. Of the total $42.4 million, $35.4 million expire at various dates from 2013 through 2032 and the remaining $7.0 million have no expiration date. The Company has a valuation allowance of $0.7 million recorded on $2.5 million of non-U.S net operating loss carryforwards. Certain U.S. subsidiaries have state net operating loss carryforwards totaling $490.7 million which are completely offset by a valuation allowance due to risk of realization. Certain non-U.S. subsidiaries located in China, Korea and Poland have tax exemptions or tax holidays, which reduced tax expense approximately $26.7 million and $21.8 million in 2012 and 2011, respectively. Most existing tax holidays remain in effect during 2013. The U.S. has foreign tax credit carryforwards of $146.1 million, which expire at various dates from 2015 through 2020.

The Company is not required to provide U.S. federal or state income taxes on cumulative undistributed earnings of foreign subsidiaries when such earnings are considered permanently reinvested. At December 31, 2011, the Company considered most of its foreign unremitted earnings to be permanently reinvested. The Company's policy is to evaluate this assertion on a quarterly basis. During the second quarter of 2012, the Company changed the assertion for some of its foreign subsidiaries to provide management additional financial flexibility.

At December 31, 2012, the Company's deferred tax liability associated with unremitted foreign earnings was $13.4 million, which includes the $7.5 million of tax expense associated with the second quarter 2012 decision to change its cash repatriation assertion for some of its foreign subsidiaries and $5.9 million of tax expense associated with unremitted foreign earnings during the current year.

The Company has not recorded deferred income taxes on the difference between the book and tax basis of investments in foreign subsidiaries or foreign equity affiliates totaling approximately $2.1 billion in 2012, as these amounts are essentially permanent in nature. The difference will become taxable upon repatriation of assets, sale or liquidation of the investment. Due to fluctuation in tax laws around the world and fluctuations in foreign exchange rates, it is not practicable to determine the unrecognized deferred tax liability on this difference because the actual tax liability, if any, is dependent on circumstances existing when the repatriation occurs.

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Fair Value Measurements - Defined Benefit Plan Assets (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
U.S. Plans:
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	$ 282.7	$ 290.4	$ 287.2
Non-U.S. Plans:
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	177.9	154.9	154.6
Fair Value, Measurements, Recurring [Member] | U.S. Plans: | Estimate of Fair Value, Fair Value Disclosure [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	282.7	290.4
Fair Value, Measurements, Recurring [Member] | U.S. Plans: | Fair Value, Inputs, Level 1 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	48.9	49.6
Fair Value, Measurements, Recurring [Member] | U.S. Plans: | Fair Value, Inputs, Level 2 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	233.8	240.8
Fair Value, Measurements, Recurring [Member] | U.S. Plans: | Fair Value, Inputs, Level 3 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	0	0
Fair Value, Measurements, Recurring [Member] | Non-U.S. Plans: | Estimate of Fair Value, Fair Value Disclosure [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	177.9	154.9
Fair Value, Measurements, Recurring [Member] | Non-U.S. Plans: | Fair Value, Inputs, Level 1 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	0	0
Fair Value, Measurements, Recurring [Member] | Non-U.S. Plans: | Fair Value, Inputs, Level 2 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	177.9	154.9
Fair Value, Measurements, Recurring [Member] | Non-U.S. Plans: | Fair Value, Inputs, Level 3 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	0	0
Fixed Income Securities [Member] | Fair Value, Measurements, Recurring [Member] | U.S. Plans: | Estimate of Fair Value, Fair Value Disclosure [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	157.4	158.2
Fixed Income Securities [Member] | Fair Value, Measurements, Recurring [Member] | U.S. Plans: | Fair Value, Inputs, Level 1 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	0	0
Fixed Income Securities [Member] | Fair Value, Measurements, Recurring [Member] | U.S. Plans: | Fair Value, Inputs, Level 2 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	157.4	158.2
Fixed Income Securities [Member] | Fair Value, Measurements, Recurring [Member] | U.S. Plans: | Fair Value, Inputs, Level 3 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	0	0
Fixed Income Securities [Member] | Fair Value, Measurements, Recurring [Member] | Non-U.S. Plans: | Estimate of Fair Value, Fair Value Disclosure [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	67.3	63.5
Fixed Income Securities [Member] | Fair Value, Measurements, Recurring [Member] | Non-U.S. Plans: | Fair Value, Inputs, Level 1 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	0	0
Fixed Income Securities [Member] | Fair Value, Measurements, Recurring [Member] | Non-U.S. Plans: | Fair Value, Inputs, Level 2 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	67.3	63.5
Fixed Income Securities [Member] | Fair Value, Measurements, Recurring [Member] | Non-U.S. Plans: | Fair Value, Inputs, Level 3 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	0	0
Equity Securities [Member] | Fair Value, Measurements, Recurring [Member] | U.S. Plans: | Estimate of Fair Value, Fair Value Disclosure [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	100.0	101.5
Equity Securities [Member] | Fair Value, Measurements, Recurring [Member] | U.S. Plans: | Fair Value, Inputs, Level 1 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	48.9	49.6
Equity Securities [Member] | Fair Value, Measurements, Recurring [Member] | U.S. Plans: | Fair Value, Inputs, Level 2 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	51.1	51.9
Equity Securities [Member] | Fair Value, Measurements, Recurring [Member] | U.S. Plans: | Fair Value, Inputs, Level 3 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	0	0
Equity Securities [Member] | Fair Value, Measurements, Recurring [Member] | Non-U.S. Plans: | Estimate of Fair Value, Fair Value Disclosure [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	99.0	78.3
Equity Securities [Member] | Fair Value, Measurements, Recurring [Member] | Non-U.S. Plans: | Fair Value, Inputs, Level 1 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	0	0
Equity Securities [Member] | Fair Value, Measurements, Recurring [Member] | Non-U.S. Plans: | Fair Value, Inputs, Level 2 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	99.0	78.3
Equity Securities [Member] | Fair Value, Measurements, Recurring [Member] | Non-U.S. Plans: | Fair Value, Inputs, Level 3 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	0	0
Real estate and other | Fair Value, Measurements, Recurring [Member] | U.S. Plans: | Estimate of Fair Value, Fair Value Disclosure [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	25.3	30.7
Real estate and other | Fair Value, Measurements, Recurring [Member] | U.S. Plans: | Fair Value, Inputs, Level 1 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	0	0
Real estate and other | Fair Value, Measurements, Recurring [Member] | U.S. Plans: | Fair Value, Inputs, Level 2 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	25.3	30.7
Real estate and other | Fair Value, Measurements, Recurring [Member] | U.S. Plans: | Fair Value, Inputs, Level 3 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	0	0
Real estate and other | Fair Value, Measurements, Recurring [Member] | Non-U.S. Plans: | Estimate of Fair Value, Fair Value Disclosure [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	11.6	13.1
Real estate and other | Fair Value, Measurements, Recurring [Member] | Non-U.S. Plans: | Fair Value, Inputs, Level 1 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	0	0
Real estate and other | Fair Value, Measurements, Recurring [Member] | Non-U.S. Plans: | Fair Value, Inputs, Level 2 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	11.6	13.1
Real estate and other | Fair Value, Measurements, Recurring [Member] | Non-U.S. Plans: | Fair Value, Inputs, Level 3 [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	$ 0	$ 0

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Reporting Segments and Related Information - Quarterly Information (Details) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended																12 Months Ended
	Dec. 31, 2012		Sep. 30, 2012		Jun. 30, 2012		Mar. 31, 2012		Dec. 31, 2011		Sep. 30, 2011		Jun. 30, 2011		Mar. 31, 2011		Dec. 31, 2012		Dec. 31, 2011		Dec. 31, 2010
Net sales	$ 1,719.1		$ 1,695.2		$ 1,856.4		$ 1,912.5		$ 1,773.7		$ 1,791.8		$ 1,818.8		$ 1,730.4		$ 7,183.2		$ 7,114.7		$ 5,652.8
Cost of sales	1,374.9		1,351.5		1,473.2		1,516.7		1,414.0		1,441.0		1,461.7		1,387.6		5,716.3		5,704.3		4,559.5
Gross profit	344.2		343.7		383.2		395.8		359.7		350.8		357.1		342.8		1,466.9		1,410.4		1,093.3
Equity in affiliates’ earnings, net of tax	(10.0)		(11.1)		(12.5)		(9.2)		(10.2)		(11.5)		(8.1)		(8.4)		(42.8)		(38.2)		(39.6)
Net earnings	126.6		105.9		126.2		163.7		127.2		146.7		167.3		129.4		522.4		570.6		396.2
Net earnings attributable to the noncontrolling interest, net of tax	5.4		4.8		5.6		5.7		5.2		5.1		5.3		4.9		21.5		20.5		18.8
Selling, general and administrative expenses	156.2		151.0		153.1		169.0		146.8		151.4		157.7		165.1		629.3		621.0		566.6
Net earnings attributable to BorgWarner Inc.	121.2	[1]	101.1	[1]	120.6	[1]	158.0	[1]	122.0	[1]	141.6	[1]	162.0	[1]	124.5	[1]	500.9	[1]	550.1	[1]	377.4
Interest income	1.0		1.0		1.3		1.4		1.3		1.3		1.2		1.0		4.7		4.8		2.8
Interest expense and finance charges	6.7		5.0		12.6		15.1		17.2		18.5		20.5		18.4		39.4		74.6		68.8
Earnings per share — basic	$ 1.05		$ 0.88		$ 1.08		$ 1.46		$ 1.12		$ 1.30		$ 1.49		$ 1.13		$ 4.45		$ 5.04		$ 3.31
Other (income) expense	17.3		29.7		36.6		1.1		21.8		0.6		(28.9)		(1.6)		84.7		(8.1)		22.4
Operating income	170.7		163.0		193.5		225.7		191.1		198.8		228.3		179.3		752.9		797.5		504.3
Earnings before income taxes and noncontrolling interest	175.0		170.1		194.7		221.2		185.4		193.1		217.1		170.3		761.0		765.9		477.9
Provision for income taxes	48.4		64.2		68.5		57.5		58.2		46.4		49.8		40.9		238.6		195.3		81.7
Earnings per share — diluted	$ 1.03		$ 0.85		$ 1.00		$ 1.28		$ 1.00		$ 1.15		$ 1.31		$ 1.00		$ 4.17	[2]	$ 4.45	[2]	$ 3.07	[2]
Retirement related obligations																	17.3		0		0
Recognized net (gain) loss due to settlements																	5.7
Executive retirement incremental compensation expense																	11.6
Tax benefit associated retirement obligations																	6.1
Other tax adjustments	3.9		6.9										6.2				19.8
Tax impact of writedown of tax accounts																	11.1
Loss on disposals																	(39.7)		(21.5)		0
Tax impact of loss on disposals			(11.2)		5.5				1.4								(5.7)		(2.7)
Tax expense associated with intercompany disposal																			4.1
Restructuring expense																	27.4		0		0
Tax benefit associated with restructuring			7.7														7.7
Impact of change in repatriation assertion					9.0												7.5
Patent infringement settlement, net of legal costs incurred																	0		29.1		0
Tax impact of patent infringement settlement																			11.0
Spark Plug Business [Member]
Loss on disposals			$ (1.8)		$ (37.9)

[1] The Company's results were impacted by the following:•Quarter ended December 31, 2012: Retirement related obligations of $17.3 million are comprised of a $5.7 million loss resulting from the settlement of a portion of the Muncie Plant's pension obligation and an $11.6 million expense associated with the retirement of certain Named Executive Officers. These obligations were partially offset by a $6.1 million tax benefit. The Company incurred tax expense of $3.9 million which included $11.1 million of U.S. tax expense to correct the income taxes payable balance, partially offset by tax benefits resulting from changes to the statutory income tax rate in certain countries and the settlement of certain tax audits. •Quarter ended September 30, 2012: The Company incurred $1.8 million of expense and $11.2 million of tax expense associated with the completion of the sale of its spark plug business. The Company also recorded restructuring expense of $27.4 million primarily associated with the disposal and future requirements of BERU's on-going business, which was partially offset by a tax benefit of $7.7 million. Additionally, the Company incurred tax expense of $6.9 million primarily resulting from the settlement of certain tax audits.•Quarter ended June 30, 2012: The Company recorded expense of $37.9 million primarily due to the write-down of prior purchase price accounting adjustments included within the disposal group as a result of signing a Master Purchase Agreement to sell the spark plug business to Federal-Mogul Corporation, which was partially offset by a tax benefit of $5.5 million resulting from the write-down. Additionally, the Company recorded tax expense of $9.0 million related to its decision to change its cash repatriation assertion for some of its foreign subsidiaries.•Quarter ended December 31, 2011: The Company incurred $21.5 million in expense associated with the loss on sale of the tire pressure monitoring business, including costs related to the divestiture, and a write-down of a portion of the ignitor and electronic business. The Company recorded $1.4 million of tax benefit associated with the disposals and $4.1 million of tax expense related to an intercompany disposal transaction.•Quarter ended June 30, 2011: The Company recorded a $29.1 million patent infringement settlement gain, net of legal costs incurred, which was partially offset by $11.0 million of additional tax expense. Additionally, the Company recorded $6.2 million related to tax adjustments resulting from a change in state corporate income tax legislation as well as an adjustment of the Company's tax accounts as a result of the closure of certain tax audits.

[2] * The Company's diluted earnings per share for the years ended December 31, 2012, 2011 and 2010 includes the impact of the Company's 3.50% convertible senior notes and associated warrants. Refer to Note 15, "Earnings Per Share," for further information on the diluted earnings per share calculation.

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Retirement Benefit Plans - Estimated Future Payments (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2012
With Medicare Part D Reimbursement Other Post Employment Benefits [Member]
Defined Benefit Plan, Expected Future Benefit Payments, Fiscal Year Maturity [Abstract]
2013	$ 21.1
2014	20.5
2015	19.8
2016	19.1
2017	18.5
2018-2022	78.8
U.S. Plans:
Defined Benefit Plan, Expected Future Benefit Payments, Fiscal Year Maturity [Abstract]
2013	24.9
2014	24.2
2015	23.4
2016	22.9
2017	22.3
2018-2022	105.4
Non-U.S. Plans:
Defined Benefit Plan, Expected Future Benefit Payments, Fiscal Year Maturity [Abstract]
2013	15.7
2014	18.0
2015	19.8
2016	18.8
2017	20.1
2018-2022	110.1
Without Medicare Part D Reimbursement Other Post Employment Benefits [Member]
Defined Benefit Plan, Expected Future Benefit Payments, Fiscal Year Maturity [Abstract]
2013	21.9
2014	21.3
2015	20.6
2016	19.9
2017	19.3
2018-2022	$ 82.1

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2012

Income Tax Disclosure [Abstract]

Components of income tax expense (benefit)

	Year Ended December 31, 2012									Year Ended December 31, 2011									Year Ended December 31, 2010
(millions of dollars)	U.S.			Non-U.S.			Total			U.S.			Non-U.S.			Total			U.S.			Non-U.S.			Total
Earnings (loss) before income taxes	$	132.3		$	628.7		$	761.0		$	119.2		$	646.7		$	765.9		$	(26.7	)	$	504.6		$	477.9
Provision for income taxes:
Current:
Federal/foreign	$	59.8		$	186.1		$	245.9		$	31.8		$	162.9		$	194.7		$	14.0		$	117.7		$	131.7
State	3.4			—			3.4			1.7			—			1.7			2.2			—			2.2
Total current	63.2			186.1			249.3			33.5			162.9			196.4			16.2			117.7			133.9
Deferred	19.5			(30.2		)	(10.7		)	17.4			(18.5		)	(1.1		)	(48.9		)	(3.3		)	(52.2		)
Total provision for income taxes	$	82.7		$	155.9		$	238.6		$	50.9		$	144.4		$	195.3		$	(32.7	)	$	114.4		$	81.7
Effective tax rate	62.5		%	24.8		%	31.4		%	42.7		%	22.3		%	25.5		%	(122.5		)%	22.7		%	17.1		%

Effective Income Tax Rate Reconciliation

An analysis of the differences between the effective tax rate and the U.S. statutory rate for the years ended December 31, 2012, 2011 and 2010 is presented below.

	Year Ended December 31,
(millions of dollars)	2012			2011			2010
Income taxes at U.S. statutory rate of 35%	$	266.4		$	268.1		$	167.3
Increases (decreases) resulting from:
Income from non-U.S. sources, including withholding taxes	(58.3		)	(74.8		)	(55.8		)
Affiliates' earnings	(15.0		)	(13.4		)	(13.8		)
State taxes, net of federal benefit	2.2			1.1			1.4
Business and foreign tax credits	8.8			11.5			0.2
Accrual adjustment and settlement of prior year tax matters	9.3			(1.0		)	0.4
Medicare Part D	—			0.1			2.9
Capital loss carryforward valuation allowance	9.7			—			—
Reversal of foreign tax credit valuation allowance	—			—			(21.2		)
Unremitted foreign earnings	13.4			—			—
Non-temporary differences and other	2.1			3.7			0.3
Provision for income taxes, as reported	$	238.6		$	195.3		$	81.7

Reconciliation of the total gross unrecognized tax benefits

(millions of dollars)	2012			2011
Balance, January 1	$	26.2		$	27.6
Additions based on tax positions related to current year	2.0			0.5
Additions for tax positions of prior years	13.4			3.9
Reductions for closure of tax audits and settlements	(14.6		)	(4.3		)
Reductions for lapse in statute of limitations	(1.7		)	(0.8		)
Translation adjustment	0.5			(0.7		)
Balance, December 31	$	25.8		$	26.2

Tax jurisdiction

The Company is no longer subject to income tax examinations by tax authorities in its major tax jurisdictions as follows:

Tax jurisdiction	Years no longer subject to audit	Tax jurisdiction	Years no longer subject to audit
U.S. Federal	2010 and prior	Hungary	2008 and prior
China	2007 and prior	Japan	2011 and prior
France	2007 and prior	South Korea	2006 and prior
Germany	2007 and prior	Sweden	2006 and prior

Deferred Tax Assets (Liabilities)

The gross components of deferred tax assets and liabilities as of December 31, 2012 and 2011 consist of the following:

	December 31,
(millions of dollars)	2012			2011
Current deferred tax assets:
Foreign tax credits	$	29.0		$	—
Employee related	25.7			28.0
Research and development capitalization	13.4			—
Inventory	8.4			14.5
Warranties	5.3			4.5
Customer claims	3.6			2.2
Other	13.1			11.5
Total current deferred tax assets	$	98.5		$	60.7
Current deferred tax liabilities:
Unremitted foreign earnings	$	(1.1	)	$	—
Other	(2.6		)	(3.7		)
Total current deferred tax liabilities	$	(3.7	)	$	(3.7	)
Non-current deferred tax assets:
Foreign tax credits	$	117.0		$	158.2
Other comprehensive income	113.7			116.7
Research and development capitalization	89.1			76.7
Net operating loss and capital loss carryforwards*	44.3			35.1
Pension and other postretirement benefits	37.7			33.9
Employee related	27.4			22.9
Research and development credits	4.9			3.0
Warranties	4.5			4.7
Litigation and environmental	1.2			2.0
Other	3.1			5.1
Total non-current deferred tax assets	$	442.9		$	458.3
Non-current deferred tax liabilities:
Goodwill & intangibles	$	(130.9	)	$	(155.5	)
Fixed assets	(101.9		)	(79.7		)
Unremitted foreign earnings	(12.3		)	(1.3		)
Other comprehensive income	(3.0		)	(2.9		)
Other	(6.6		)	(6.6		)
Total non-current deferred tax liabilities	$	(254.7	)	$	(246.0	)
Total deferred tax items	$	283.0		$	269.3
Valuation allowances*	(35.0		)	(23.6		)
Net deferred tax asset	$	248.0		$	245.7

_______________

*Net operating loss and capital loss carryforwards are shown gross with the corresponding valuation allowances located at the end of the table.

The deferred tax assets and liabilities recognized in the Company’s Consolidated Balance Sheets are as follows:

	December 31,
(millions of dollars)	2012			2011
Deferred income taxes — current assets*	$	94.7		$	58.5
Deferred income taxes — current liabilities*	(1.4		)	(6.5		)
Other non-current assets*	244.1			313.9
Other non-current liabilities*	(89.4		)	(120.2		)
Net deferred tax asset (current and non-current)	$	248.0		$	245.7

________________

*Current and non-current assets and liabilities have been netted within their respective taxing jurisdictions.

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Contingencies (Details) (USD $) In Millions, unless otherwise specified	1 Months Ended	12 Months Ended			24 Months Ended			12 Months Ended			12 Months Ended
	Jul. 31, 2010	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2008	Feb. 28, 2011	Nov. 30, 2010	Dec. 31, 2009 UAW Litigation [Member]	Dec. 31, 2012 Estimated future settlement of existing claims [Member]	Dec. 31, 2011 Estimated future settlement of existing claims [Member]	Dec. 31, 2012 Asbestos Issue [Member]	Dec. 31, 2011 Asbestos Issue [Member]
Accrual for Environmental Loss Contingencies Disclosure [Abstract]
Waste disposal sites with potential liability under the Comprehensive Environmental Response, Compensation and Liability Act		32
Accrual for indicated environmental liabilities		$ 3.9
Number of plaintiffs					340
Number of claimants settled and dismissed	2,700										2,400	1,800
Amount agreed to pay against settlement of unfiled claimants			28
First settlement payment made							13.9
Final settlement payment made						13.9
Contingencies [Abstract]
Loss as a result of the September 2008 DTP ruling		0	29.1	0				4.0
Number of pending claims											16,000	16,000
Payment being made to a claimant by or on behalf of the Company											308	288
Payment being made to a claimant by or on behalf of the company, percentage											13.00%	16.00%
Company paid in defense and indemnity in advance of insurers reimbursement											235.8
Cash and notes received from insurers											124.8
Outstanding balance to be fully recovered											111.0	109.8
Payments for Legal Settlements	40.7
Outstanding balance expected to recovered in next twelve months											20
Assets
Prepayments and other current assets		0	28.8						0	28.8
Other non-current assets		85.6	32.9						85.6	32.9
Total insurance assets									85.6	61.7
Liabilities [Abstract]
Accounts payable and accrued expenses		36.5	28.8						36.5	28.8
Other non-current liabilities		49.1	32.9						49.1	32.9
Total accrued liabilities									$ 85.6	$ 61.7

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Earnings Per Share (Tables)

12 Months Ended

Dec. 31, 2012

Earnings Per Share [Abstract]

Schedule of Earnings per Share reconciliation [Text Block]

The following table reconciles the numerators and denominators used to calculate basic and diluted earnings per share of common stock:

	Year Ended December 31,
(in millions except per share amounts)	2012		2011		2010
Basic earnings per share:
Net earnings attributable to BorgWarner Inc.	$	500.9	$	550.1	$	377.4
Weighted average shares of common stock outstanding	112.652		109.229		114.155
Basic earnings per share of common stock	$	4.45	$	5.04	$	3.31
Diluted earnings per share:
Net earnings attributable to BorgWarner Inc.	$	500.9	$	550.1	$	377.4
Adjusted for net interest expense on convertible notes	5.8		21.5		20.4
Diluted net earnings attributable to BorgWarner Inc.	$	506.7	$	571.6	$	397.8
Weighted average shares of common stock outstanding	112.652		109.229		114.155
Effect of 3.50% convertible senior notes	3.322		11.389		11.389
Effect of warrant	3.400		5.215		1.464
Effect of stock-based compensation	2.003		2.635		2.567
Total dilutive effect on weighted average shares of common stock outstanding	8.725		19.239		15.420
Weighted average shares of common stock outstanding including dilutive shares	121.377		128.468		129.575
Diluted earnings per share of common stock	$	4.17	$	4.45	$	3.07
Total anti-dilutive shares:
Call options	1.939		6.141		2.836

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Leases and Commitments

12 Months Ended

Dec. 31, 2012

Leases [Abstract]

Leases and commitments

LEASES AND COMMITMENTS

Certain assets are leased under long-term operating leases, including rent for the corporate headquarters and one airplane. Most leases contain renewal options for various periods. Leases generally require the Company to pay for insurance, taxes and maintenance of the leased property. The Company leases other equipment such as vehicles and certain office equipment under short-term leases. Total rent expense was $31.3 million, $30.7 million and $25.6 million in the years ended December 31, 2012, 2011 and 2010, respectively. The Company does not have any material capital leases.

On September 30, 2010, the Company paid $6.0 million for certain machinery and equipment it had previously leased, which was recorded as a capital expenditure within the investing activities section of the Company's Consolidated Statement of Cash Flows for the year ended December 31, 2010.

Future minimum operating lease payments at December 31, 2012 were as follows:

(millions of dollars)
2013	$	18.1
2014	13.9
2015	13.3
2016	10.2
2017	9.8
After 2017	3.4
Total minimum lease payments	$	68.7