Borg Warner (BWA) Revises 2008 Earnings Guidance Downward

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09:20:03 am on December 12, 2008

Borg Warner announced today that it is once again revising its 2008 earnings guidance downward. Previously, Borg Warner had expected non-GAAP earnings of $2.25 to $2.35 per share. However, due to current economic conditions, the company now expects non-GAAP earnings of $1.85 to $1.95 per share. The following special items will also impact the company’s balance sheets for 2008:

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);

— Fourth quarter 2008 restructuring charges which are currently being quantified;

— 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.

Borg Warner is dealing with the current economic situation by letting go of up to 17% of its workforce, reducing hours for employees, increasing holiday time, and will be closing on if its UK Drivetrain plants.

Timothy Manganello, Chairman and CEO of BorgWarner, made the following comments about the current crisis:

"The downward spiral of the auto industry continues to accelerate across the globe. 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."

"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."

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