BorgWarner Reduces 2008 Earnings Guidance to Reflect Global Auto Industry Free-Fall, Warranty Related Charge
AUBURN HILLS, Mich., Dec. 11 -- BorgWarner (NYSE:
BWA) today reduced its earnings guidance for 2008 to a range of $1.85 to $1.95
per share before special items. Guidance was reduced to reflect rapidly
deteriorating conditions in the auto industry that continue in every
geographic region of the world. Previous guidance was $2.25 to $2.35 before
special items.
Special items will include:
o Previously announced nine-month year-to-date charges: goodwill
adjustment of $(1.27) related to the BERU acquisition, BERU purchase
accounting adjustment of ($0.04), tax adjustment of $(0.12),
third-quarter restructuring charge of $(0.16), and a charge related to
the outcome of retiree healthcare benefits litigation of $(0.03);
o Fourth quarter 2008 restructuring charges which are currently being
quantified;
o And a fourth quarter 2008 charge of approximately $0.23 per share due
to a warranty issue associated with the company's dual-clutch
transmission products sold in Europe, limited to mid-2007 through May
2008 production.
"The downward spiral of the auto industry continues to accelerate across
the globe," said Timothy Manganello, Chairman and CEO of BorgWarner. "The
crisis is not solely a North American automotive industry issue, nor about
perceptions of domestic automakers not having the right products for the
market. Rather, this is a situation where consumers in every geographic
region of the world have become paralyzed by the global financial and economic
crisis. We are actively adjusting our cost structure, but are struggling to
respond fast enough to the daily stream of new customer information on plant
closings, extended holiday shutdowns and production schedule reductions."
In response, the company will have reduced 2008 global employee levels by
approximately 2,900 people or 17% of its workforce by year-end. Most North
American operations will shut down for extended holiday periods starting the
week of December 15, 2008, and will re-open at various times in January,
depending on customer schedules. In Europe, in addition to workforce
reductions and extended holiday shutdown periods similar to those in North
America, the company has gone to four-day work weeks in many facilities for an
indefinite period of time. The company plans to close a Drivetrain facility
in the United Kingdom when its current four-wheel-drive product ends
production there in 2010 and is evaluating other smaller product lines and
manufacturing facilities for longer-term strategic importance and viability.
"The uncertainty of the financial and economic markets around the world
has made this one of the most difficult times in the history of the auto
industry. This uncertainty has severely impacted our ability to plan for and
manage our day-to-day operations," said Mr. Manganello. "The earliest we
expect to see any clarity in this situation is the end of the first quarter of
2009. We continue to have a strong balance sheet and ample liquidity. The
fundamentals of our business remain strong with growth driven by a technology
focus on fuel economy and emissions reductions."
Auburn Hills, Michigan-based BorgWarner Inc. (NYSE: BWA) is a product
leader in highly engineered components and systems for vehicle powertrain
applications worldwide. The FORTUNE 500 company operates manufacturing and
technical facilities in 64 locations in 17 countries. Customers include
VW/Audi, Ford, Toyota, Renault/Nissan, General Motors, Hyundai/Kia, Daimler,
Chrysler, Fiat, BMW, Honda, John Deere, PSA, and MAN. The Internet address for
BorgWarner is: www.borgwarner.com.
SOURCE BorgWarner Inc.
CONTACT: Mary Brevard, BorgWarner Inc., +1-248-754-0881/
Web site: www.borgwarner.com /
(BWA)
