Delaware | 1-12162 | 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 May 1, 2014 |
BorgWarner Inc. | ||
Date: May 1, 2014 | 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 May 1, 2014 |
Immediate Release |
Contact: Ken Lamb |
248.754.0884 |
• | Completed the previously-announced acquisition of Gustav Wahler GmbH & Co. KG and its general partner (“Wahler”). The total consideration was $143 million. |
• | Net sales of $2,084 million. |
◦ | Excluding the impact of foreign currencies and the Wahler acquisition, net sales were up 9% compared with first quarter 2013. |
• | U.S. GAAP earnings of $0.69 per diluted share. |
◦ | Excluding the $(0.13) per diluted share impact of restructuring activities, net earnings were $0.83 per diluted share, up 28% from first quarter 2013. |
• | Operating income of $233 million, or 11.2% of net sales. |
◦ | Excluding the $40 million pretax impact of restructuring activities, operating income was $273 million, or 13.1% of net sales. |
• | Net sales growth is now expected to be 12% to 15% compared with 2013, up from 7% to 11% previously, primarily due to the impact of the Wahler acquisition. |
• | The Wahler acquisition is expected to have minimal impact on 2014 operating income and net earnings as purchase accounting adjustments will likely offset most of the operating income generated by the business. However, due to an improved outlook for its other businesses, the company's operating income margin is expected to remain at 12.5% or better. |
• | The company's effective tax rate, excluding non-comparable items, is now expected to be 28%, up from 27% previously, primarily due to cash repatriation from its operations in China. However, due to an improved outlook for its businesses, the company is raising its net earnings guidance to a range of $3.15 to $3.30 per diluted share from a previous range of $3.10 to $3.25 per diluted share. Both ranges exclude non-comparable items. |
Net earnings per diluted share* | First Quarter | |||||||
2014 | 2013 | |||||||
Non – U.S. GAAP | $ | 0.83 | $ | 0.65 | ||||
Reconciliations: | ||||||||
Restructuring expense | (0.13 | ) | ||||||
Program termination agreement | (0.03 | ) | ||||||
Retirement related obligations | (0.02 | ) | ||||||
Tax adjustments | 0.01 | |||||||
U.S. GAAP | $ | 0.69 | ** | $ | 0.61 | |||
* Reflects a two-for-one stock split effective December 16, 2013 | ||||||||
** Column does not add due to rounding |
• | BorgWarner finalized its acquisition of Gustav Wahler GmbH & Co. KG. A producer of exhaust gas recirculation (EGR) valves and tubes as well as engine thermostats for both on- and off-road applications, Wahler’s customers include leading automotive manufacturers from around the world. |
• | The board of directors declared a quarterly cash dividend of $0.125 per share of common stock. The dividend is payable on May 16, 2014 to shareholders of record on May 2, 2014. |
• | BorgWarner received an Automotive News PACE Innovation Partnership Award for its collaboration with General Motors (GM) on the Eco-Launch™ solenoid valve. Several patents are pending for the innovation, and GM has already committed to using the technology on an upcoming vehicle. BorgWarner’s innovation also received a 2014 Automotive News PACE Award. |
• | BorgWarner’s facility in Seneca, South Carolina, was formally named the North American supplier of two-speed, part-time four-wheel drive transfer cases for the Toyota Tundra pickup truck. |
BorgWarner Inc. | |||||||
Condensed Consolidated Statements of Operations (Unaudited) | |||||||
(millions, except per share amounts) | |||||||
Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
Net sales | $ | 2,084.1 | $ | 1,851.1 | |||
Cost of sales | 1,638.3 | 1,476.4 | |||||
Gross profit | 445.8 | 374.7 | |||||
Selling, general and administrative expenses | 173.8 | 159.3 | |||||
Other expense | 38.8 | 16.9 | |||||
Operating income | 233.2 | 198.5 | |||||
Equity in affiliates’ earnings, net of tax | (8.8 | ) | (9.7 | ) | |||
Interest income | (1.5 | ) | (1.0 | ) | |||
Interest expense and finance charges | 8.2 | 9.7 | |||||
Earnings before income taxes and noncontrolling interest | 235.3 | 199.5 | |||||
Provision for income taxes | 68.1 | 50.9 | |||||
Net earnings | 167.2 | 148.6 | |||||
Net earnings attributable to the noncontrolling interest, net of tax | 8.1 | 6.6 | |||||
Net earnings attributable to BorgWarner Inc. | $ | 159.1 | $ | 142.0 | |||
Earnings per share — diluted | $ | 0.69 | $ | 0.61 | |||
Weighted average shares outstanding — diluted | 229.3 | 233.1 | |||||
Supplemental Information (Unaudited) | |||||||
(millions of dollars) | |||||||
Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
Capital expenditures, including tooling outlays | $ | 126.2 | $ | 87.4 | |||
Depreciation and amortization: | |||||||
Fixed assets and tooling | $ | 74.1 | $ | 68.2 | |||
Intangible assets and other | 6.0 | 6.7 | |||||
$ | 80.1 | $ | 74.9 |
BorgWarner Inc. | |||||||
Net Sales by Reporting Segment (Unaudited) | |||||||
(millions of dollars) | |||||||
Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
Engine | $ | 1,412.1 | $ | 1,257.5 | |||
Drivetrain | 680.7 | 601.4 | |||||
Inter-segment eliminations | (8.7 | ) | (7.8 | ) | |||
Net sales | $ | 2,084.1 | $ | 1,851.1 | |||
Adjusted Earnings Before Interest, Income Taxes and Noncontrolling Interest ("Adjusted EBIT") (Unaudited) | |||||||
(millions of dollars) | |||||||
Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
Engine | $ | 231.7 | $ | 202.3 | |||
Drivetrain | 80.5 | 56.0 | |||||
Adjusted EBIT | 312.2 | 258.3 | |||||
Restructuring expense | 39.5 | — | |||||
Program termination agreement | — | 11.3 | |||||
Retirement related obligations | — | 5.9 | |||||
Corporate, including equity in affiliates' earnings and stock-based compensation | 30.7 | 32.9 | |||||
Interest income | (1.5 | ) | (1.0 | ) | |||
Interest expense and finance charges | 8.2 | 9.7 | |||||
Earnings before income taxes and noncontrolling interest | 235.3 | 199.5 | |||||
Provision for income taxes | 68.1 | 50.9 | |||||
Net earnings | 167.2 | 148.6 | |||||
Net earnings attributable to the noncontrolling interest, net of tax | 8.1 | 6.6 | |||||
Net earnings attributable to BorgWarner Inc. | $ | 159.1 | $ | 142.0 |
BorgWarner Inc. | |||||||
Condensed Consolidated Balance Sheets (Unaudited) | |||||||
(millions of dollars) | |||||||
March 31, 2014 | December 31, 2013 | ||||||
Assets | |||||||
Cash | $ | 808.1 | $ | 939.5 | |||
Receivables, net | 1,546.1 | 1,248.5 | |||||
Inventories, net | 516.9 | 458.1 | |||||
Other current assets | 150.2 | 152.4 | |||||
Total current assets | 3,021.3 | 2,798.5 | |||||
Property, plant and equipment, net | 2,027.8 | 1,939.4 | |||||
Other non-current assets | 2,308.7 | 2,179.1 | |||||
Total assets | $ | 7,357.8 | $ | 6,917.0 | |||
Liabilities and Equity | |||||||
Notes payable and other short-term debt | $ | 338.5 | $ | 201.6 | |||
Accounts payable and accrued expenses | 1,562.6 | 1,383.8 | |||||
Income taxes payable | 9.8 | 38.5 | |||||
Total current liabilities | 1,910.9 | 1,623.9 | |||||
Long-term debt | 1,027.6 | 1,021.0 | |||||
Other non-current liabilities | 682.0 | 639.7 | |||||
Total BorgWarner Inc. stockholders’ equity | 3,683.5 | 3,560.6 | |||||
Noncontrolling interest | 53.8 | 71.8 | |||||
Total equity | 3,737.3 | 3,632.4 | |||||
Total liabilities and equity | $ | 7,357.8 | $ | 6,917.0 |
BorgWarner Inc. | |||||||
Condensed Consolidated Statements of Cash Flows (Unaudited) | |||||||
(millions of dollars) | |||||||
Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
Operating | |||||||
Net earnings | $ | 167.2 | $ | 148.6 | |||
Non-cash charges (credits) to operations: | |||||||
Depreciation and amortization | 80.1 | 74.9 | |||||
Restructuring expense, net of cash paid | 34.3 | — | |||||
Deferred income tax provision (benefit) | 15.6 | (17.0 | ) | ||||
Other non-cash items | (1.2 | ) | (0.4 | ) | |||
Net earnings adjusted for non-cash charges to operations | 296.0 | 206.1 | |||||
Changes in assets and liabilities | (249.6 | ) | (189.8 | ) | |||
Net cash provided by operating activities | 46.4 | 16.3 | |||||
Investing | |||||||
Capital expenditures, including tooling outlays | (126.2 | ) | (87.4 | ) | |||
Net proceeds from asset disposals | 1.5 | 13.8 | |||||
Payments for businesses acquired, net of cash acquired | (106.4 | ) | — | ||||
Net cash used in investing activities | (231.1 | ) | (73.6 | ) | |||
Financing | |||||||
Net increase (decrease) in notes payable | 111.3 | (11.0 | ) | ||||
Additions to long-term debt, net of debt issuance costs | 100.0 | 161.0 | |||||
Repayments of long-term debt, including current portion | (100.1 | ) | (15.6 | ) | |||
Payments for purchase of treasury stock | — | (49.9 | ) | ||||
Proceeds from stock options exercised, including the tax benefit | 9.4 | 11.4 | |||||
Taxes paid on employees' restricted stock award vestings | (22.2 | ) | (27.2 | ) | |||
Dividends paid to BorgWarner stockholders | (28.4 | ) | — | ||||
Dividends paid to noncontrolling stockholders | (14.0 | ) | (9.0 | ) | |||
Net cash provided by financing activities | 56.0 | 59.7 | |||||
Effect of exchange rate changes on cash | (2.7 | ) | (22.7 | ) | |||
Net decrease in cash | (131.4 | ) | (20.3 | ) | |||
Cash at beginning of year | 939.5 | 715.7 | |||||
Cash at end of period | $ | 808.1 | $ | 695.4 |