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 July 31, 2014 |
BorgWarner Inc. | ||
Date: July 31, 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 July 31, 2014 |
Immediate Release |
Contact: Ken Lamb |
248.754.0884 |
• | Net sales of $2,197 million, up 16% compared with second quarter 2013. |
◦ | Excluding the impact of foreign currencies and the Wahler acquisition, net sales were up 8% compared with second quarter 2013. |
• | U.S. GAAP net earnings of $0.83 per diluted share. |
◦ | Excluding the $(0.06) per diluted share impact of restructuring activities, net earnings were $0.89 per diluted share, up 19% from second quarter 2013. |
• | Operating income of $281 million. |
◦ | Excluding the $15 million pretax impact of restructuring activities, operating income was $296 million, or 13.5% of net sales. |
Net earnings per diluted share* | Second Quarter | First Six Months | |||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Non – U.S. GAAP | $ | 0.89 | $ | 0.75 | $ | 1.71 | $ | 1.40 | |||||||
Reconciliations: | |||||||||||||||
Restructuring expense | (0.06 | ) | (0.19 | ) | |||||||||||
Program termination agreement | (0.03 | ) | |||||||||||||
Retirement related obligations | (0.02 | ) | |||||||||||||
Tax adjustments | 0.01 | ||||||||||||||
U.S. GAAP | $ | 0.83 | $ | 0.75 | $ | 1.52 | $ | 1.36 | |||||||
* Reflects a two-for-one stock split effective December 16, 2013 | |||||||||||||||
1 Column does not add due to rounding. |
• | BorgWarner began producing its electronically controlled Visctronic® fan drives at its new plant in Itatiba City, Brazil. The advanced technology provides efficient engine cooling as well as improved fuel economy and reduced emissions for trucks, buses and off-highway applications. |
• | BorgWarner supplies a number of advanced technologies for winners of the 2014 World Car Awards, including the 2014 World Car of the Year (Audi A3), the 2014 World Luxury Car (Mercedes Benz S-Class) and the 2014 World Performance Car (Porsche 911 GT3). For 12 of the 15 finalists in all categories, including the winners noted above, BorgWarner provides one or more advanced technologies, such as variable cam timing systems, chain timing systems, turbochargers, EGR coolers and valves, thermostats, ignition coils, glow plug controllers, cabin heaters, friction plates and GenV all-wheel drive couplings. |
• | BorgWarner’s next-generation HY-VO® chain drives transfer cases for the Lexus® GX and the Toyota Land Cruiser Prado, 4Runner, Tacoma and FJ Cruiser. Specifically engineered to reduce friction, the chain improves efficiency and helps increase fuel economy. BorgWarner produces HY-VO chain for these applications at its facility in Japan. |
• | BorgWarner supplies its innovative Pressure Sensor Glow Plug (PSG) for Volkswagen’s all new diesel engines starting with the 1.4-liter version and then adding the 1.6-liter and 2.0-liter versions later this year. BorgWarner’s PSG combines a highly efficient glow plug with an integrated pressure sensor to improve engine efficiency. The sensor measures the rapidly changing cylinder pressure in the combustion chamber and reports the data to the engine control unit, establishing closed-loop control of engine pressure that allows the engine controller to continuously adapt fuel injection for each cylinder. |
• | BorgWarner is producing multi-spark ignition coils for Daimler’s six- and eight-cylinder engines. Specially designed for gasoline direct-injection (GDI) engines running stratified combustion, BorgWarner’s compact multi-spark ignition coil technology enlarges the ignition zone for more controlled and optimized combustion, improved fuel economy and reduced emissions. |
BorgWarner Inc. | |||||||||||||||
Condensed Consolidated Statements of Operations (Unaudited) | |||||||||||||||
(millions, except per share amounts) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Net sales | $ | 2,197.0 | $ | 1,893.9 | $ | 4,281.1 | $ | 3,745.0 | |||||||
Cost of sales | 1,724.2 | 1,497.3 | 3,362.5 | 2,973.7 | |||||||||||
Gross profit | 472.8 | 396.6 | 918.6 | 771.3 | |||||||||||
Selling, general and administrative expenses | 181.2 | 155.6 | 355.0 | 314.9 | |||||||||||
Other expense (income), net | 11.0 | (2.4 | ) | 49.8 | 14.5 | ||||||||||
Operating income | 280.6 | 243.4 | 513.8 | 441.9 | |||||||||||
Equity in affiliates’ earnings, net of tax | (12.2 | ) | (11.1 | ) | (21.0 | ) | (20.8 | ) | |||||||
Interest income | (1.4 | ) | (1.0 | ) | (2.9 | ) | (2.0 | ) | |||||||
Interest expense and finance charges | 9.0 | 8.8 | 17.2 | 18.5 | |||||||||||
Earnings before income taxes and noncontrolling interest | 285.2 | 246.7 | 520.5 | 446.2 | |||||||||||
Provision for income taxes | 85.3 | 66.6 | 153.4 | 117.5 | |||||||||||
Net earnings | 199.9 | 180.1 | 367.1 | 328.7 | |||||||||||
Net earnings attributable to the noncontrolling interest, net of tax | 9.7 | 6.0 | 17.8 | 12.6 | |||||||||||
Net earnings attributable to BorgWarner Inc. | $ | 190.2 | $ | 174.1 | $ | 349.3 | $ | 316.1 | |||||||
Earnings per share — diluted | $ | 0.83 | $ | 0.75 | $ | 1.52 | $ | 1.36 | |||||||
Weighted average shares outstanding — diluted | 229.670 | 232.202 | 229.499 | 232.666 | |||||||||||
Supplemental Information (Unaudited) | |||||||||||||||
(millions of dollars) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Capital expenditures, including tooling outlays | $ | 131.1 | $ | 107.4 | $ | 257.3 | $ | 194.8 | |||||||
Depreciation and amortization: | |||||||||||||||
Fixed assets and tooling | $ | 77.3 | $ | 69.3 | $ | 151.4 | $ | 137.5 | |||||||
Intangible assets and other | 7.8 | 6.7 | 13.8 | 13.4 | |||||||||||
$ | 85.1 | $ | 76.0 | $ | 165.2 | $ | 150.9 |
BorgWarner Inc. | |||||||||||||||
Net Sales by Reporting Segment (Unaudited) | |||||||||||||||
(millions of dollars) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Engine | $ | 1,497.5 | $ | 1,288.3 | $ | 2,909.6 | $ | 2,545.8 | |||||||
Drivetrain | 708.7 | 613.5 | 1,389.4 | 1,214.9 | |||||||||||
Inter-segment eliminations | (9.2 | ) | (7.9 | ) | (17.9 | ) | (15.7 | ) | |||||||
Net sales | $ | 2,197.0 | $ | 1,893.9 | $ | 4,281.1 | $ | 3,745.0 | |||||||
Adjusted Earnings Before Interest, Income Taxes and Noncontrolling Interest ("Adjusted EBIT") (Unaudited) | |||||||||||||||
(millions of dollars) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Engine | $ | 241.7 | $ | 220.3 | $ | 473.4 | $ | 422.6 | |||||||
Drivetrain | 89.1 | 59.8 | 169.6 | 115.8 | |||||||||||
Adjusted EBIT | 330.8 | 280.1 | 643.0 | 538.4 | |||||||||||
Restructuring expense | 15.0 | — | 54.5 | — | |||||||||||
Program termination agreement | — | — | — | 11.3 | |||||||||||
Retirement related obligations | — | — | — | 5.9 | |||||||||||
Corporate, including equity in affiliates' earnings and stock-based compensation | 23.0 | 25.6 | 53.7 | 58.5 | |||||||||||
Interest income | (1.4 | ) | (1.0 | ) | (2.9 | ) | (2.0 | ) | |||||||
Interest expense and finance charges | 9.0 | 8.8 | 17.2 | 18.5 | |||||||||||
Earnings before income taxes and noncontrolling interest | 285.2 | 246.7 | 520.5 | 446.2 | |||||||||||
Provision for income taxes | 85.3 | 66.6 | 153.4 | 117.5 | |||||||||||
Net earnings | 199.9 | 180.1 | 367.1 | 328.7 | |||||||||||
Net earnings attributable to the noncontrolling interest, net of tax | 9.7 | 6.0 | 17.8 | 12.6 | |||||||||||
Net earnings attributable to BorgWarner Inc. | $ | 190.2 | $ | 174.1 | $ | 349.3 | $ | 316.1 |
BorgWarner Inc. | |||||||
Condensed Consolidated Balance Sheets (Unaudited) | |||||||
(millions of dollars) | |||||||
June 30, 2014 | December 31, 2013 | ||||||
Assets | |||||||
Cash | $ | 771.4 | $ | 939.5 | |||
Receivables, net | 1,571.7 | 1,248.5 | |||||
Inventories, net | 528.0 | 458.1 | |||||
Other current assets | 166.2 | 152.4 | |||||
Total current assets | 3,037.3 | 2,798.5 | |||||
Property, plant and equipment, net | 2,089.3 | 1,939.4 | |||||
Other non-current assets | 2,330.4 | 2,179.1 | |||||
Total assets | $ | 7,457.0 | $ | 6,917.0 | |||
Liabilities and Equity | |||||||
Notes payable and other short-term debt | $ | 541.1 | $ | 201.6 | |||
Accounts payable and accrued expenses | 1,622.0 | 1,383.8 | |||||
Income taxes payable | 7.6 | 38.5 | |||||
Total current liabilities | 2,170.7 | 1,623.9 | |||||
Long-term debt | 704.2 | 1,021.0 | |||||
Other non-current liabilities | 688.4 | 639.7 | |||||
Total BorgWarner Inc. stockholders’ equity | 3,828.8 | 3,560.6 | |||||
Noncontrolling interest | 64.9 | 71.8 | |||||
Total equity | 3,893.7 | 3,632.4 | |||||
Total liabilities and equity | $ | 7,457.0 | $ | 6,917.0 |
BorgWarner Inc. | |||||||
Condensed Consolidated Statements of Cash Flows (Unaudited) | |||||||
(millions of dollars) | |||||||
Six Months Ended June 30, | |||||||
2014 | 2013 | ||||||
Operating | |||||||
Net earnings | $ | 367.1 | $ | 328.7 | |||
Non-cash charges (credits) to operations: | |||||||
Depreciation and amortization | 165.2 | 150.9 | |||||
Restructuring expense, net of cash paid | 38.9 | — | |||||
Deferred income tax provision (benefit) | 37.6 | (10.3 | ) | ||||
Other non-cash items | (5.0 | ) | (3.6 | ) | |||
Net earnings adjusted for non-cash charges to operations | 603.8 | 465.7 | |||||
Changes in assets and liabilities | (277.6 | ) | (165.7 | ) | |||
Net cash provided by operating activities | 326.2 | 300.0 | |||||
Investing | |||||||
Capital expenditures, including tooling outlays | (257.3 | ) | (194.8 | ) | |||
Net proceeds from asset disposals | 2.0 | 15.7 | |||||
Payments for business acquired, net of cash acquired | (106.4 | ) | — | ||||
Net cash used in investing activities | (361.7 | ) | (179.1 | ) | |||
Financing | |||||||
Net increase in notes payable | 304.5 | 77.4 | |||||
Additions to long-term debt, net of debt issuance costs | 97.8 | 165.7 | |||||
Repayments of long-term debt, including current portion | (420.2 | ) | (76.8 | ) | |||
Payments for purchase of treasury stock | (25.0 | ) | (150.5 | ) | |||
Proceeds from stock options exercised, including the tax benefit | 12.8 | 20.0 | |||||
Taxes paid on employees' restricted stock award vestings | (23.4 | ) | (29.0 | ) | |||
Dividends paid to BorgWarner stockholders | (56.8 | ) | — | ||||
Dividends paid to noncontrolling stockholders | (18.8 | ) | (9.0 | ) | |||
Net cash used in financing activities | (129.1 | ) | (2.2 | ) | |||
Effect of exchange rate changes on cash | (3.5 | ) | (17.4 | ) | |||
Net (decrease) increase in cash | (168.1 | ) | 101.3 | ||||
Cash at beginning of year | 939.5 | 715.7 | |||||
Cash at end of period | $ | 771.4 | $ | 817.0 |