Delaware | 1-1262 | 13-3404508 | ||
State or other jurisdiction of | Commission File No. | (I.R.S. Employer | ||
Incorporation or organization | Identification No.) |
3850 Hamlin Road, Auburn Hills, Michigan | 48326 | |
(Address of principal executive offices) | (Zip Code) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Exhibit Number | Description |
99.1 | Press release regarding earnings issued by BorgWarner Inc. dated October 30, 2013 |
BorgWarner Inc. | ||
Date: October 30, 2013 | By: | /s/ John J. Gasparovic |
Name: John J. Gasparovic | ||
Title: Secretary |
EXHIBIT INDEX | |
Exhibit Number | Description |
99.1 | Press release regarding earnings issued by BorgWarner Inc. dated October 30, 2013 |
Immediate Release |
Contact: Ken Lamb |
248.754.0884 |
• | Net sales of $1,806 million. |
◦ | Excluding the favorable impact of foreign currencies and 2012 dispositions, net sales were up approximately 6% compared with third quarter 2012. |
• | U.S. GAAP net earnings of $1.45 per diluted share. |
◦ | Excluding $0.05 per diluted share related to tax adjustments, net earnings were $1.40 per diluted share, up 18% from third quarter 2012 on a comparable basis. |
• | Operating income of $226 million, or 12.5% of net sales, a new third quarter record. |
• | Repurchased approximately $75 million of shares in the quarter. |
Net earnings per diluted share | Third Quarter | First Nine Months | ||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Non – U.S. GAAP | $ | 1.40 | $ | 1.19 | $ | 4.20 | $ | 3.81 | ||||||||
Reconciliations: | ||||||||||||||||
Retirement related obligations | (0.03 | ) | ||||||||||||||
Program termination agreement | (0.06 | ) | ||||||||||||||
Tax adjustments | 0.05 | (0.06 | ) | 0.06 | (0.13 | ) | ||||||||||
Loss from disposal activities | (0.11 | ) | (0.37 | ) | ||||||||||||
Restructuring expense | (0.17 | ) | (0.17 | ) | ||||||||||||
U.S. GAAP | $ | 1.45 | $ | 0.85 | $ | 4.16 | * | $ | 3.15 | * | ||||||
*Does not add due to rounding |
• | The company's board of directors declared a quarterly cash dividend of $0.25 per share of common stock. The dividend is payable on November 15, 2013 to shareholders of record on November 1, 2013. |
• | BorgWarner is building a new manufacturing facility in Lanheses, Viana do Castelo, Portugal, about 31 miles (50 km) from its currently rented site in Valença. The new building will expand production capacity and allow BorgWarner to efficiently serve customers with several environmentally friendly technologies such as exhaust gas recirculation (EGR) coolers and EGR tubes as well as glow plug control modules, all key technologies for modern engines aimed at reducing emissions. Construction began in August 2013 and is expected to be completed in 2014. |
• | Driven by growing demand for BorgWarner’s fuel-efficient technologies in Europe, the company has expanded its campus in Rzeszów, Poland, with a new production plant and engineering center. The production plant produces advanced chain-driven engine timing systems, including variable cam timing technologies, and provides expanded capacity for transmission components. Production for several major European car manufacturers began recently. The new engineering center provides capabilities for application engineering and research and development to create new technologies designed to improve fuel economy and reduce emissions while enhancing performance. |
• | BorgWarner's Eco-LaunchTM solenoid valve has been named a finalist for the prestigious 2014 Automotive News PACE Awards. |
BorgWarner Inc. | |||||||||||||||
Condensed Consolidated Statements of Operations (Unaudited) | |||||||||||||||
(millions, except per share amounts) | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Net sales | $ | 1,806.2 | $ | 1,695.2 | $ | 5,551.2 | $ | 5,464.1 | |||||||
Cost of sales | 1,426.6 | 1,351.5 | 4,400.3 | 4,341.4 | |||||||||||
Gross profit | 379.6 | 343.7 | 1,150.9 | 1,122.7 | |||||||||||
Selling, general and administrative expenses | 157.7 | 151.0 | 472.6 | 473.1 | |||||||||||
Other (income) expense | (3.7 | ) | 29.7 | 10.8 | 67.4 | ||||||||||
Operating income | 225.6 | 163.0 | 667.5 | 582.2 | |||||||||||
Equity in affiliates’ earnings, net of tax | (10.4 | ) | (11.1 | ) | (31.2 | ) | (32.8 | ) | |||||||
Interest income | (1.3 | ) | (1.0 | ) | (3.3 | ) | (3.7 | ) | |||||||
Interest expense and finance charges | 8.1 | 5.0 | 26.6 | 32.7 | |||||||||||
Earnings before income taxes and noncontrolling interest | 229.2 | 170.1 | 675.4 | 586.0 | |||||||||||
Provision for income taxes | 56.3 | 64.2 | 173.8 | 190.2 | |||||||||||
Net earnings | 172.9 | 105.9 | 501.6 | 395.8 | |||||||||||
Net earnings attributable to the noncontrolling interest, net of tax | 6.1 | 4.8 | 18.7 | 16.1 | |||||||||||
Net earnings attributable to BorgWarner Inc. | $ | 166.8 | $ | 101.1 | $ | 482.9 | $ | 379.7 | |||||||
Reconciliation to diluted earnings per share: | |||||||||||||||
Net earnings attributable to BorgWarner Inc. | $ | 166.8 | $ | 101.1 | $ | 482.9 | $ | 379.7 | |||||||
Adjustment for net interest expense on convertible notes | — | — | — | 5.8 | |||||||||||
Diluted net earnings attributable to BorgWarner Inc. | $ | 166.8 | $ | 101.1 | $ | 482.9 | $ | 385.5 | |||||||
Earnings per share — diluted | $ | 1.45 | $ | 0.85 | $ | 4.16 | $ | 3.15 | |||||||
Weighted average shares outstanding — diluted | 115.2 | 118.5 | 116.0 | 122.6 | |||||||||||
Supplemental Information (Unaudited) | |||||||||||||||
(millions of dollars) | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Capital expenditures, including tooling outlays | $ | 103.1 | $ | 94.6 | $ | 297.9 | $ | 283.0 | |||||||
Depreciation and amortization: | |||||||||||||||
Fixed assets and tooling | $ | 64.9 | $ | 63.0 | $ | 202.4 | $ | 189.8 | |||||||
Intangible assets and other | 6.7 | 6.8 | 20.1 | 21.5 | |||||||||||
$ | 71.6 | $ | 69.8 | $ | 222.5 | $ | 211.3 |
BorgWarner Inc. | |||||||||||||||
Net Sales by Reporting Segment (Unaudited) | |||||||||||||||
(millions of dollars) | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Engine | $ | 1,210.3 | $ | 1,168.0 | $ | 3,756.1 | $ | 3,745.8 | |||||||
Drivetrain | 604.0 | 534.4 | 1,818.9 | 1,739.7 | |||||||||||
Inter-segment eliminations | (8.1 | ) | (7.2 | ) | (23.8 | ) | (21.4 | ) | |||||||
Net sales | $ | 1,806.2 | $ | 1,695.2 | $ | 5,551.2 | $ | 5,464.1 | |||||||
Adjusted Earnings Before Interest, Income Taxes and Noncontrolling Interest ("Adjusted EBIT") (Unaudited) | |||||||||||||||
(millions of dollars) | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Engine | $ | 195.5 | $ | 184.1 | $ | 618.1 | $ | 604.4 | |||||||
Drivetrain | 65.9 | 44.1 | 181.7 | 159.9 | |||||||||||
Adjusted EBIT | 261.4 | 228.2 | 799.8 | 764.3 | |||||||||||
Program termination agreement | — | — | 11.3 | — | |||||||||||
Retirement related obligations | — | — | 5.9 | — | |||||||||||
Loss from disposal activities | — | 1.8 | — | 39.7 | |||||||||||
Restructuring expense | — | 27.4 | — | 27.4 | |||||||||||
Corporate, including equity in affiliates' earnings and stock-based compensation | 25.4 | 24.9 | 83.9 | 82.2 | |||||||||||
Interest income | (1.3 | ) | (1.0 | ) | (3.3 | ) | (3.7 | ) | |||||||
Interest expense and finance charges | 8.1 | 5.0 | 26.6 | 32.7 | |||||||||||
Earnings before income taxes and noncontrolling interest | 229.2 | 170.1 | 675.4 | 586.0 | |||||||||||
Provision for income taxes | 56.3 | 64.2 | 173.8 | 190.2 | |||||||||||
Net earnings | 172.9 | 105.9 | 501.6 | 395.8 | |||||||||||
Net earnings attributable to the noncontrolling interest, net of tax | 6.1 | 4.8 | 18.7 | 16.1 | |||||||||||
Net earnings attributable to BorgWarner Inc. | $ | 166.8 | $ | 101.1 | $ | 482.9 | $ | 379.7 |
BorgWarner Inc. | |||||||
Condensed Consolidated Balance Sheets (Unaudited) | |||||||
(millions of dollars) | |||||||
September 30, 2013 | December 31, 2012 | ||||||
Assets | |||||||
Cash | $ | 920.4 | $ | 715.7 | |||
Receivables, net | 1,347.5 | 1,147.3 | |||||
Inventories, net | 454.7 | 447.6 | |||||
Other current assets | 183.6 | 162.2 | |||||
Total current assets | 2,906.2 | 2,472.8 | |||||
Property, plant and equipment, net | 1,875.4 | 1,788.0 | |||||
Other non-current assets | 2,182.7 | 2,140.0 | |||||
Total assets | $ | 6,964.3 | $ | 6,400.8 | |||
Liabilities and Equity | |||||||
Notes payable and other short-term debt | $ | 253.7 | $ | 243.4 | |||
Accounts payable and accrued expenses | 1,377.7 | 1,287.2 | |||||
Income taxes payable | 43.3 | 72.5 | |||||
Total current liabilities | 1,674.7 | 1,603.1 | |||||
Long-term debt | 1,018.6 | 823.8 | |||||
Other non-current liabilities | 836.3 | 827.8 | |||||
Total BorgWarner Inc. stockholders’ equity | 3,367.3 | 3,082.6 | |||||
Noncontrolling interest | 67.4 | 63.5 | |||||
Total equity | 3,434.7 | 3,146.1 | |||||
Total liabilities and equity | $ | 6,964.3 | $ | 6,400.8 |
BorgWarner Inc. | |||||||
Condensed Consolidated Statements of Cash Flows (Unaudited) | |||||||
(millions of dollars) | |||||||
Nine Months Ended September 30, | |||||||
2013 | 2012 | ||||||
Operating | |||||||
Net earnings | $ | 501.6 | $ | 395.8 | |||
Non-cash charges (credits) to operations: | |||||||
Depreciation and amortization | 222.5 | 211.3 | |||||
Loss from disposal activities, net of cash paid | — | 31.7 | |||||
Restructuring expense, net of cash paid | — | 25.5 | |||||
Bond amortization | — | 5.3 | |||||
Deferred income tax benefit | (9.0 | ) | (0.4 | ) | |||
Other non-cash items | 1.1 | 25.1 | |||||
Net earnings adjusted for non-cash charges to operations | 716.2 | 694.3 | |||||
Changes in assets and liabilities | (201.4 | ) | (151.7 | ) | |||
Net cash provided by operating activities | 514.8 | 542.6 | |||||
Investing | |||||||
Capital expenditures, including tooling outlays | (297.9 | ) | (283.0 | ) | |||
Net proceeds from asset disposals | 22.8 | 3.9 | |||||
Net proceeds from sale of business | — | 56.8 | |||||
Net cash used in investing activities | (275.1 | ) | (222.3 | ) | |||
Financing | |||||||
Net increase in notes payable | 14.3 | 34.7 | |||||
Additions to long-term debt, net of debt issuance costs | 272.0 | 313.9 | |||||
Repayments of long-term debt, including current portion | (76.9 | ) | (203.6 | ) | |||
Payments for purchase of treasury stock | (225.5 | ) | (200.3 | ) | |||
Proceeds from stock options exercised, including the tax benefit | 25.3 | 49.9 | |||||
Taxes paid on employees' restricted stock award vestings | (29.2 | ) | (17.8 | ) | |||
Purchase of noncontrolling interest | — | (7.4 | ) | ||||
Dividends paid to BorgWarner stockholders | (28.5 | ) | — | ||||
Dividends paid to noncontrolling stockholders | (10.7 | ) | (20.5 | ) | |||
Net cash used in financing activities | (59.2 | ) | (51.1 | ) | |||
Effect of exchange rate changes on cash | 24.2 | (7.3 | ) | ||||
Net increase in cash | 204.7 | 261.9 | |||||
Cash at beginning of year | 715.7 | 359.6 | |||||
Cash at end of period | $ | 920.4 | $ | 621.5 |