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 30, 2015 |
BorgWarner Inc. | ||
Date: July 30, 2015 | 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 30, 2015 |
Immediate Release |
Contact: Ken Lamb |
248.754.0884 |
• | U.S. GAAP net sales of $2,032 million, down 7% compared with second quarter 2014. |
◦ | The impact of foreign currencies decreased second quarter 2015 net sales growth by approximately 11% compared with second quarter 2014. |
◦ | Excluding the impact of foreign currencies, net sales were up 4% compared with second quarter 2014. |
• | U.S. GAAP net earnings of $0.65 per diluted share. |
◦ | Excluding the $(0.08) per diluted share impact of restructuring and the $(0.02) per diluted share impact of tax adjustments, net earnings were $0.75 per diluted share. |
◦ | The impact of foreign currencies decreased net earnings by approximately $0.09 per diluted share in second quarter 2015 compared with second quarter 2014. |
• | U.S. GAAP operating income of $243 million. |
◦ | Excluding the $20 million pretax impact of restructuring expense, operating income was $262 million, or 12.9% of net sales, down from 13.5% in second quarter 2014. |
• | Net sales growth is now expected to be within a range of -5.5% to -2.5% compared with 2014, down from -4% to 0% previously. |
• | Net earnings per share, excluding non-comparable items, is now expected to be within a range of $2.95 to $3.10 per diluted share compared with a previous range of $3.10 to $3.30 per diluted share. |
• | Operating income, as a percentage of net sales, excluding non-comparable items, is now expected to be "approximately 13%" compared with "above 13%", previously. |
Net earnings per diluted share | Second Quarter | First Six Months | ||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Non – U.S. GAAP | $ | 0.75 | $ | 0.89 | $ | 1.53 | $ | 1.71 | ||||||||
Reconciliations: | ||||||||||||||||
Restructuring expense | (0.08 | ) | (0.06 | ) | (0.13 | ) | (0.19 | ) | ||||||||
Gain on previously held equity interest | 0.05 | |||||||||||||||
Tax adjustments | (0.02 | ) | (0.01 | ) | ||||||||||||
U.S. GAAP | $ | 0.65 | $ | 0.83 | $ | 1.44 | $ | 1.52 |
• | BorgWarner has entered into a definitive agreement to acquire Remy International, Inc. (Remy), a global market leading producer of rotating electrical components. Under the terms of the agreement, BorgWarner will acquire each of the outstanding shares of Remy for $29.50 in cash, which implies an enterprise value of Remy of approximately $1.2 billion.The transaction is expected to close in the fourth quarter of 2015. |
• | BorgWarner supplies its latest wet friction technology for ZF’s new 8- and 9-speed automatic transmissions. The 8-speed transmission features BorgWarner’s multi-segment friction plates with intricate groove designs, and the torque converter for the 9-speed transmission utilizes a piston plate with BorgWarner proprietary friction material. |
• | BorgWarner produces a number of its advanced engine and drivetrain technologies for the new Great Wall Haval H9. The domestically produced sport utility vehicle is powered by a turbocharged 2.0-liter gasoline engine and features a BorgWarner engine timing system, turbocharger and 2-speed Torque-On-Demand® (TOD) transfer case. |
• | The first dual-clutch transmission (DCT) for class 6 and 7 medium-duty trucks in North America is powered by BorgWarner’s DualTronic™ clutch module. BorgWarner’s fuel-efficient technology helps Eaton’s new Procision™ 7-speed DCT improve fuel economy 8 to 10 percent compared with similarly equipped vehicles with torque converter automatic transmissions. |
• | BorgWarner’s facilities in Bellwood and Frankfort, Illinois, received 2014 Certificates of Achievement from Toyota Motor Engineering & Manufacturing North America, Inc. for Quality Performance. This Achievement Award recognizes suppliers that maintain less than 15 defects per million parts (PPMs). Both facilities achieved 100% quality ratings and 0 PPMs in 2014. |
• | BorgWarner’s regulated two-stage (R2S®) turbocharging technology improves the performance and fuel economy of Ford’s new powerful 2.0-liter diesel engine, the first Ford engine for passenger cars equipped with a two-stage turbocharging system. The fuel-efficient diesel engine will debut in the Ford Mondeo, S-Max and Galaxy in mid-2015 and will replace the 2.2-liter TDCi diesel engine. |
• | BorgWarner’s manufacturing plant in Seneca, South Carolina, was presented with an Excellence in Quality Award from Honda North America. The award recognized outstanding product quality in 2014. Since 2002, BorgWarner’s facility in Seneca has earned 12 supplier awards from Honda, including seven awards for quality, four for delivery and one for engineering innovation. |
BorgWarner Inc. | |||||||||||||||
Condensed Consolidated Statements of Operations (Unaudited) | |||||||||||||||
(millions, except per share amounts) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Net sales | $ | 2,031.9 | $ | 2,197.0 | $ | 4,016.1 | $ | 4,281.1 | |||||||
Cost of sales | 1,602.9 | 1,724.2 | 3,158.1 | 3,362.5 | |||||||||||
Gross profit | 429.0 | 472.8 | 858.0 | 918.6 | |||||||||||
Selling, general and administrative expenses | 167.4 | 181.2 | 335.6 | 355.0 | |||||||||||
Other expense, net | 19.1 | 11.0 | 20.3 | 49.8 | |||||||||||
Operating income | 242.5 | 280.6 | 502.1 | 513.8 | |||||||||||
Equity in affiliates’ earnings, net of tax | (11.1 | ) | (12.2 | ) | (19.6 | ) | (21.0 | ) | |||||||
Interest income | (1.6 | ) | (1.4 | ) | (3.3 | ) | (2.9 | ) | |||||||
Interest expense and finance charges | 17.6 | 9.0 | 27.6 | 17.2 | |||||||||||
Earnings before income taxes and noncontrolling interest | 237.6 | 285.2 | 497.4 | 520.5 | |||||||||||
Provision for income taxes | 80.2 | 85.3 | 152.3 | 153.4 | |||||||||||
Net earnings | 157.4 | 199.9 | 345.1 | 367.1 | |||||||||||
Net earnings attributable to the noncontrolling interest, net of tax | 9.3 | 9.7 | 18.1 | 17.8 | |||||||||||
Net earnings attributable to BorgWarner Inc. | $ | 148.1 | $ | 190.2 | $ | 327.0 | $ | 349.3 | |||||||
Earnings per share — diluted | $ | 0.65 | $ | 0.83 | $ | 1.44 | $ | 1.52 | |||||||
Weighted average shares outstanding — diluted | 226.615 | 229.670 | 226.852 | 229.499 | |||||||||||
Supplemental Information (Unaudited) | |||||||||||||||
(millions of dollars) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Capital expenditures, including tooling outlays | $ | 145.0 | $ | 131.1 | $ | 285.0 | $ | 257.3 | |||||||
Depreciation and amortization: | |||||||||||||||
Fixed assets and tooling | $ | 76.6 | $ | 77.3 | $ | 149.3 | $ | 151.4 | |||||||
Intangible assets and other | 4.3 | 7.8 | 8.7 | 13.8 | |||||||||||
$ | 80.9 | $ | 85.1 | $ | 158.0 | $ | 165.2 |
BorgWarner Inc. | |||||||||||||||
Net Sales by Reporting Segment (Unaudited) | |||||||||||||||
(millions of dollars) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Engine | $ | 1,413.0 | $ | 1,497.5 | $ | 2,793.9 | $ | 2,909.6 | |||||||
Drivetrain | 626.9 | 708.7 | 1,238.1 | 1,389.4 | |||||||||||
Inter-segment eliminations | (8.0 | ) | (9.2 | ) | (15.9 | ) | (17.9 | ) | |||||||
Net sales | $ | 2,031.9 | $ | 2,197.0 | $ | 4,016.1 | $ | 4,281.1 | |||||||
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, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Engine | $ | 228.0 | $ | 241.7 | $ | 458.4 | $ | 473.4 | |||||||
Drivetrain | 72.1 | 89.1 | 143.1 | 169.6 | |||||||||||
Adjusted EBIT | 300.1 | 330.8 | 601.5 | 643.0 | |||||||||||
Restructuring expense | 19.9 | 15.0 | 32.0 | 54.5 | |||||||||||
Gain on previously held equity interest | — | — | (10.8 | ) | — | ||||||||||
Corporate, including equity in affiliates' earnings and stock-based compensation | 26.6 | 23.0 | 58.6 | 53.7 | |||||||||||
Interest income | (1.6 | ) | (1.4 | ) | (3.3 | ) | (2.9 | ) | |||||||
Interest expense and finance charges | 17.6 | 9.0 | 27.6 | 17.2 | |||||||||||
Earnings before income taxes and noncontrolling interest | 237.6 | 285.2 | 497.4 | 520.5 | |||||||||||
Provision for income taxes | 80.2 | 85.3 | 152.3 | 153.4 | |||||||||||
Net earnings | 157.4 | 199.9 | 345.1 | 367.1 | |||||||||||
Net earnings attributable to the noncontrolling interest, net of tax | 9.3 | 9.7 | 18.1 | 17.8 | |||||||||||
Net earnings attributable to BorgWarner Inc. | $ | 148.1 | $ | 190.2 | $ | 327.0 | $ | 349.3 |
BorgWarner Inc. | |||||||
Condensed Consolidated Balance Sheets (Unaudited) | |||||||
(millions of dollars) | |||||||
June 30, 2015 | December 31, 2014 | ||||||
Assets | |||||||
Cash | $ | 1,107.9 | $ | 797.8 | |||
Receivables, net | 1,573.0 | 1,443.5 | |||||
Inventories, net | 525.7 | 505.7 | |||||
Other current assets | 194.8 | 223.8 | |||||
Total current assets | 3,401.4 | 2,970.8 | |||||
Property, plant and equipment, net | 2,160.5 | 2,093.9 | |||||
Other non-current assets | 2,204.4 | 2,163.3 | |||||
Total assets | $ | 7,766.3 | $ | 7,228.0 | |||
Liabilities and Equity | |||||||
Notes payable and other short-term debt | $ | 72.1 | $ | 623.7 | |||
Accounts payable and accrued expenses | 1,528.2 | 1,530.3 | |||||
Income taxes payable | 35.3 | 14.2 | |||||
Total current liabilities | 1,635.6 | 2,168.2 | |||||
Long-term debt | 1,731.7 | 716.3 | |||||
Other non-current liabilities | 647.5 | 652.6 | |||||
Total BorgWarner Inc. stockholders’ equity | 3,686.7 | 3,616.2 | |||||
Noncontrolling interest | 64.8 | 74.7 | |||||
Total equity | 3,751.5 | 3,690.9 | |||||
Total liabilities and equity | $ | 7,766.3 | $ | 7,228.0 |
BorgWarner Inc. | |||||||
Condensed Consolidated Statements of Cash Flows (Unaudited) | |||||||
(millions of dollars) | |||||||
Six Months Ended June 30, | |||||||
2015 | 2014 | ||||||
Operating | |||||||
Net earnings | $ | 345.1 | $ | 367.1 | |||
Non-cash charges (credits) to operations: | |||||||
Depreciation and amortization | 158.0 | 165.2 | |||||
Restructuring expense, net of cash paid | 19.1 | 38.9 | |||||
Gain on previously held equity interest | (10.8 | ) | — | ||||
Deferred income tax provision | 22.3 | 37.6 | |||||
Other non-cash items | 1.9 | (5.0 | ) | ||||
Net earnings adjusted for non-cash charges to operations | 535.6 | 603.8 | |||||
Changes in assets and liabilities | (216.3 | ) | (277.6 | ) | |||
Net cash provided by operating activities | 319.3 | 326.2 | |||||
Investing | |||||||
Capital expenditures, including tooling outlays | (285.0 | ) | (257.3 | ) | |||
Payments for businesses acquired, net of cash acquired | (12.6 | ) | (106.4 | ) | |||
Proceeds from asset disposals and other | 2.5 | 2.0 | |||||
Net cash used in investing activities | (295.1 | ) | (361.7 | ) | |||
Financing | |||||||
Net (decrease) increase in notes payable | (539.0 | ) | 304.5 | ||||
Additions to long-term debt, net of debt issuance costs | 1,015.9 | 97.8 | |||||
Repayments of long-term debt, including current portion | (15.5 | ) | (420.2 | ) | |||
Payments for purchase of treasury stock | (62.9 | ) | (25.0 | ) | |||
Proceeds from stock options exercised, including the tax benefit | 13.6 | 12.8 | |||||
Taxes paid on employees' restricted stock award vestings | (13.2 | ) | (23.4 | ) | |||
Dividends paid to BorgWarner stockholders | (58.7 | ) | (56.8 | ) | |||
Dividends paid to noncontrolling stockholders | (18.1 | ) | (18.8 | ) | |||
Net cash provided by (used in) financing activities | 322.1 | (129.1 | ) | ||||
Effect of exchange rate changes on cash | (36.2 | ) | (3.5 | ) | |||
Net increase (decrease) in cash | 310.1 | (168.1 | ) | ||||
Cash at beginning of year | 797.8 | 939.5 | |||||
Cash at end of period | $ | 1,107.9 | $ | 771.4 |