8-K

 FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report:   February 7, 2008

BORGWARNER INC.

(Exact name of registrant as specified in its charter)

Delaware (State of Incorporation) 1-12162 (Commission File No.) 13-3404508  (IRS Employer Identification No.)

3850 Hamlin Road

Auburn Hills, MI 48326

(Address of principal executive offices)

Registrant=s telephone number, including area code:

(248) 754-9200

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)

Item 2.02              Results of Operations and Financial Condition

On February 7, 2008, BorgWarner Inc. issued a press release, furnished as Exhibit 99.1 and incorporated in this Item 2.02 by reference, announcing the company’s year end results.  The information contained in the Current Report on Form 8-K, including the exhibit attached hereto, is being furnished and shall not be deemed to be “filed” for the purposes of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Exchange Act or the Securities Act of 1933, as amended, regardless of any general incorporation language in any such filings.

Item 9.01              Financial Statements and Exhibits

(c)   Exhibits

99.1           Press Release of BorgWarner Inc. dated February 7, 2008 accouncing results for the fourth quarter and full-year ended December 31, 2007.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

BORGWARNER INC.

 /s/ John J. Gasparovic

-----------------------------------------------

John J. Gasparovic

Vice President, General Counsel & Secretary

Dated: February 7, 2008

EX-99.1

Immediate Release

Contact                      Mary Brevard:  (248) 754-0881

Ken Lamb:  (248) 754-0884

BORGWARNER REPORTS OUTSTANDING RESULTS FOR 2007

STRONG GROWTH IN EUROPE AND ASIA, STRUCTURAL IMPROVEMENTS IN NORTH AMERICA

DRIVE STRONG PERFORMANCE

Auburn Hills, Michigan, February 7, 2008– BorgWarner Inc. (NYSE:  BWA) today reported record fourth quarter and full year results that reflect strong performance around the globe. Strong sales growth in Europe and Asia, coupled with the benefits of structural improvements in North America, boosted results.

Fourth Quarter Highlights:

·   Sales of $1,372.9 million, up 14.2% from fourth quarter 2006

·   Sales outside of the U.S. grew 12.5% over fourth quarter 2006, excluding the impact of currency

·   Operating income margin of 9.0%, up from a comparable 7.4% in fourth quarter 2006

·   Earnings of $0.60 per diluted share on a U.S. GAAP basis. For comparison with other quarters, the quarter included $(0.11) per diluted share of unfavorable tax adjustments and $(0.02) per diluted share for purchase accounting adjustments related to the purchase of additional BERU shares. Excluding these items, earnings were $0.73 per diluted share

·   Two-for-one stock split

·   Quarterly dividend increased 29% to $0.11 per share

Full Year Highlights:

·   Sales of $5,328.6 million, up 16.2% from 2006

·   Sales outside of the U.S. grew 17.1% over 2006, excluding the impact of currency

·   Earnings of $2.45 per diluted share on a U.S. GAAP basis. For comparison with other fiscal years, the year included $0.03 per diluted share of net favorable tax adjustments and $(0.02) per diluted share for purchase accounting adjustments related to the purchase of additional BERU shares. Excluding these items, earnings were $2.44 per diluted share

·   Net cash provided by operating activities of $602.2 million

·   After-tax return on average invested capital of 13.4%

Comment and Outlook:“2007 was an excellent year for our company,” said Tim Manganello, Chairman and CEO. “Sales outside of the U.S. grew 17%, excluding the impact of currency, compared with vehicle production outside of the U.S. that was up 7%. Sales in our U.S. operations were flat despite lower domestic vehicle production in the U.S., which was down 3%.” 

“2007 was also a year during which events around the globe validated our company’s strategic plan. A number of governments, including the U.S., took steps toward increasingly stringent fuel economy standards, while the automotive industry continued to unveil powertrain strategies clearly focused on meeting tougher standards. BorgWarner, a global leader in powertrain technology that improves fuel economy, lowers emissions and enhances vehicle performance, is well positioned to enjoy sustained growth as the industry accelerates its investment in advanced powertrains.”

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Financial Results:  Sales were $1,372.9 million in fourth quarter 2007, up 14.2% from $1,201.7 million in fourth quarter 2006.  Net income in the quarter was $71.2 million, or $0.60 per diluted share, compared with $40.9 million, or $0.35 per diluted share in fourth quarter 2006. Fourth quarter 2007 net income included unfavorable tax adjustments of $(13.3) million, or $(0.11) per diluted share, and purchase accounting adjustments related to the purchase of additional BERU shares of $(2.4) million, or $(0.02) per diluted share. Fourth quarter 2006 net income included: restructuring charges, primarily related to asset impairments in North America of $(39.2) million, or $(0.34) per diluted share; final purchase accounting adjustments of $(2.4) million, or $(0.02) per diluted share, related to the third quarter 2006 acquisition of transmission and engine controls product lines from Eaton Corporation in Monaco; and $25.0 million, or $0.22 per diluted share, related to favorable tax adjustments. The impact of foreign currencies in fourth quarter 2007, primarily the Euro, increased sales by $91 million and net income by $6 million.

Sales were $5,328.6 million in 2007, up 16.2% from $4,585.4 million in 2006. 2007 net income was $288.5 million, or $2.45 per diluted share, compared with $211.6 million, or $1.83 per diluted share in 2006. 2007 net income included net favorable tax adjustments, recorded in the third and fourth quarters, of $3.4 million, or $0.03 per diluted share, and purchase accounting adjustments related to the purchase of additional BERU shares of $(2.4) million, or $(0.02) per diluted share. 2006 net income included: charges related to restructuring activities in North America, reported in the third and fourth quarters, of $(47.6) million, or $(0.41) per diluted share; final purchase accounting adjustments of $(2.4) million, or $(0.02) per diluted share, related to the third quarter 2006 acquisition of transmission and engine controls product lines from Eaton Corporation in Monaco; a gain related to a previous divestiture, reported in the third quarter, of $3.5 million, or $0.03 per diluted share; and $22.3 million, or $0.19 per diluted share, related to favorable tax adjustments. The impact of foreign currencies, primarily the Euro, added $262 million to sales in 2007 compared with 2006, and $15 million to net income.

The following table reconciles the Company's non-U.S. GAAP amounts included in the press release to the most directly comparable U.S. GAAP amounts and is provided for comparisons with other results:

Net earnings per share – diluted	Fourth Quarter						Full Year
	2007			2006			2007				2006	1
Non-U.S. GAAP:	$	0.73		$	0.49		$	2.44		$	2.03
Reconciliations:
One-time write-off of the excess purchase price related to the Monaco acquisition (Eaton) in 2006 and for purchase accounting adjustments related to the purchase of additional BERU shares in 2007		(0.02	)		(0.02	)		(0.02	)		(0.02	)
Net gain from divestitures											0.03
Restructuring charge					(0.34	)					(0.41	)
Adjustment to tax accounts		(0.11	)		0.19			0.03			0.19
Fourth quarter 2006 impact of annual effective tax rate adjustment for the first 9 months of 2006 from 27% to 26%					0.03
U.S. GAAP1	$	0.60		$	0.35		$	2.45		$	1.83

¹Does not add due to rounding

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Net cash provided by operating activities was $602.2 million in 2007 compared to $442.1 million in 2006. Investments in capital expenditures, including tooling outlays, totaled $293.9 million in 2007, compared with $268.3 million in 2006.  Debt decreased $84.8 million, cash and cash equivalents increased $65.2 million and marketable securities decreased by $44.5 million during 2007.

Engine Group Results:  Fourth quarter 2007 sales were up 16% versus fourth quarter 2006 to $977.9 million with a 26% increase in segment earnings before interest and income taxes to $123.5 million. Sales outside of the U.S. were up 13% excluding the impact of foreign currencies, while sales in the U.S. were down 5%.

For the full year, 2007 sales were up 19% versus 2006 to $3,761.3 million with a 14% increase in segment earnings before interest and income taxes to $418.0 million. Sales outside of the U.S. were up 16% excluding the impact of foreign currencies, while sales in the U.S. were up 4%.

In the quarter and in the full year, the group continued to benefit from European and Asian automaker demand for turbochargers, timing systems, thermal management products and emissions products as well as higher sales of turbochargers and emissions products in the U.S.

Drivetrain Group Results:  Fourth quarter 2007 sales were up 9% versus fourth quarter 2006 to $401.9 million with a 16% increase in segment earnings before interest and income taxes to $30.3 million. Sales outside of the U.S. were up 12% excluding the impact of foreign currencies, while sales in the U.S. were down 1%.

For the full year, 2007 sales were up 9% versus 2006 to $1,598.8 million with a 30% increase in segment earnings before interest and income taxes to $118.1 million. Sales outside of the U.S. were up 11% excluding the impact of foreign currencies and sales during the first nine months of 2007 related to the acquisition of the European transmission and engine solenoid product lines from Eaton Corporation, while sales in the U.S. were down 3%.

In the quarter and in the full year, the group benefited from increased demand for dual-clutch transmission components and transmission solenoids and control modules, but was negatively impacted by lower domestic production of vehicles equipped with its traditional transmission and torque management products.

Recent Highlights:  During the quarter, BorgWarner announced $1.95 billion of net new business for the three-year period ending in 2010, an implied growth rate of approximately 11% for the three-year period.  50% of the net new business is expected to be in Europe, 30% in Asia, and 20% in North America.

The company's board of directors declared a 29% increase in the quarterly cash dividend and approved a two-for-one stock split effected in the form of a stock dividend on its common stock. To implement the stock split, shares of common stock were issued on December 17, 2007 to stockholders of record as of the close of business on December 6, 2007. The increased cash dividend will be paid February 15, 2008 to stockholders of record as of the close of business on February 1, 2008.

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In the Drivetrain Group, the company announced advances in its market-leading dual-clutch transmission technology during the quarter. Innovations in materials science and controls enable its next generation dual-clutch modules to operate in a “humid” environment, with less lubrication and a smaller fluid pump, thereby delivering fuel efficiency improvements over the current modules.  In addition to advances in traditional modules, the company has developed an entirely new dual-clutch transmission.  The unique transmission combines leading-edge dual-clutch technology with a compact design.  The transmission provides the convenience of an automatic in a wide range of power and vehicle applications from the small vehicle segment, which is expected to grow 30% worldwide over the next five years, up through the mid-size vehicle segment.

In the Engine Group, BorgWarner’s majority-owned subsidiary, SeohanWarner Turbo Systems, opened a facility on the BorgWarner Engine Group campus in Pyongtaek, Korea. The world-class facility includes office, production and warehousing space for a workforce expected to reach 130 within five years. In addition, the facility will house the first on-site engine and turbocharger testing cells for a turbocharger supplier in Korea.  Also in Asia, BorgWarner Thermal Systems has broken ground for a new facility near Chennai, India. Located in a high-tech business park near several automakers, the new facility will include manufacturing, training, design services and administrative space for over 100 employees with room for future expansion

At 4:00 p.m. ET today, a brief conference call concerning fourth quarter and full year results will be webcast at: http://www.borgwarner.com/invest/webcasts.shtml.

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: http://www.borgwarner.com.

Additional Important Information

Statements contained in this news release may contain forward-looking statements as contemplated by the 1995 Private Securities Litigation Reform Act that are based on management’s current expectations, estimates and projections.  Words such as "expects," "anticipates," "intends," "plans," "believes," "estimates," variations of such words and similar expressions are intended to identify such forward-looking statements.  Forward-looking statements are subject to risks and uncertainties, many of which are difficult to predict and generally beyond our control, that could cause actual results to differ materially from those expressed, projected or implied in or by the forward-looking statements.  Such risks and uncertainties include: fluctuations in domestic or foreign vehicle production, the continued use of outside suppliers, fluctuations in demand for vehicles containing our products, changes in general economic conditions, and other risks detailed in our filings with the Securities and Exchange Commission, including the Risk Factors, identified in our most recently filed Annual Report on Form 10-K.  We do not undertake any obligation to update any forward-looking statements.

Financial Tables Follow

# # #

BorgWarner Inc.
Condensed Consolidated Statement of Operations (Unaudited)
(millions of dollars, except per share data)
	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2007			2006			2007			2006
Net Sales	$	1,372.9		$	1,201.7		$	5,328.6		$	4,585.4
Cost of Sales		1,115.2			989.5			4,378.7			3,735.5
Gross profit		257.7			212.2			949.9			849.9
Selling, general and administrative expenses		135.9			127.5			531.9			498.1
Restructuring expense		-			73.2			-			84.7
Other (income) expense		(1.2	)		(0.7	)		(6.8	)		(7.5	)
Operating income		123.0			12.2			424.8			274.6
Equity in affiliates' earnings, net of tax		(12.4	)		(9.6	)		(40.3	)		(35.9	)
Interest expense and finance charges		8.1			11.4			34.7			40.2
Earnings before income taxes		127.3			10.4			430.4			270.3
Provision for income taxes		48.1			(37.8	)		113.9			32.4
Minority interest, net of tax		8.0			7.3			28.0			26.3
Net earnings	$	71.2		$	40.9		$	288.5		$	211.6
Earnings per share - Diluted	$	0.60		$	0.35		$	2.45		$	1.83
Weighted average shares outstanding -
Diluted (millions)		118.3			116.2			117.8			115.9
Supplemental Information (Unaudited)
(millions of dollars)
	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2007			2006			2007			2006
Capital expenditures, including tooling outlays	$	99.3		$	76.4		$	293.9		$	268.3
Depreciation and amortization:
Fixed assets and tooling	$	65.8		$	65.5		$	243.1		$	239.1
Other		8.9			7.4			21.5			17.5
	$	74.7		$	72.9		$	264.6		$	256.6

BorgWarner Inc.
Net Sales by Operating Segment (Unaudited)
(millions of dollars)
	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2007			2006			2007			2006
Engine	$	977.9		$	840.6		$	3,761.3		$	3,154.9
Drivetrain		401.9			368.0			1,598.8			1,461.4
Inter-segment eliminations		(6.9	)		(6.9	)		(31.5	)		(30.9	)
Operations	$	1,372.9		$	1,201.7		$	5,328.6		$	4,585.4
Segment Earnings Before Interest and Income Taxes (Unaudited)
(millions of dollars)
	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2007			2006			2007			2006
Engine	$	123.5		$	98.0		$	418.0		$	365.8
Drivetrain		30.3			26.1			118.1			90.6
Segment earnings before interest and income taxes
("Segment EBIT")		153.8			124.1			536.1			456.4
Restructuring expense		-			73.2			-			84.7
Corporate expenses, net of equity in affiliates' earnings		18.4			29.1			71.0			61.2
Consolidated earnings before interest and taxes ("EBIT")		135.4			21.8			465.1			310.5
Interest expense and finance charges		8.1			11.4			34.7			40.2
Earnings before income taxes and minority interest		127.3			10.4			430.4			270.3
Provision for income taxes		48.1			(37.8	)		113.9			32.4
Minority interest, net of tax		8.0			7.3			28.0			26.3
Net earnings	$	71.2		$	40.9		$	288.5		$	211.6

BorgWarner Inc.
Condensed Consolidated Balance Sheet (Unaudited)
(millions of dollars)	December 31, 2007		December 31, 2006
Assets
Cash	$	188.5	$	123.3
Marketable securities		14.6		59.1
Receivables, net		802.4		744.0
Inventories, net		447.6		386.9
Other current assets		127.4		124.2
Total current assets		1,580.5		1,437.5
Property, plant and equipment, net		1,605.9		1,460.7
Other non-current assets		1,769.0		1,685.8
Total assets	$	4,955.4	$	4,584.0
Liabilities and Stockholders' Equity
Notes payable and current portion of long-term debt	$	63.7	$	151.7
Accounts payable and accrued expenses		993.0		843.4
Income taxes payable		27.2		39.7
Total current liabilities		1,083.9		1,034.8
Long-term debt		572.6		569.4
Other non-current liabilities		858.6		942.3
Minority interest in consolidated subsidiaries		117.9		162.1
Stockholders' equity		2,322.4		1,875.4
Total liabilities and stockholders' equity	$	4,955.4	$	4,584.0

BorgWarner Inc.
Condensed Consolidated Statements of Cash Flow (Unaudited)
(millions of dollars)
	Twelve Months Ended
	December 31,
	2007			2006
Operating
Net earnings	$	288.5		$	211.6
Non-cash charges (credits) to operations:
Depreciation and amortization		264.6			256.6
Restructuring expense, net of cash paid		-			79.4
Deferred income tax benefit		(30.3	)		(46.4	)
Other non-cash items		32.3			47.9
Net earnings adjusted for non-cash charges (credits) to operations		555.1			549.1
Changes in assets and liabilities, net of effects of acquisition and divestitures		47.1			(107.0	)
Net cash provided by operating activities		602.2			442.1
Investing
Capital expenditures, including tooling outlays		(293.9	)		(268.3	)
Payments for business acquired, net of cash acquired		(138.8	)		(63.7	)
Net proceeds from asset disposals		17.3			3.6
Purchases of marketable securities		(13.0	)		(41.5	)
Proceeds from sale of marketable securities		60.4			28.8
Net cash used in investing activities		(368.0	)		(341.1	)
Financing
Net decrease in notes payable		(92.6	)		(27.7	)
Net change in long-term debt		(9.1	)		(7.5	)
Payment for purchase of treasury stock		(47.0	)		-
Proceeds from stock options exercised		47.6			27.1
Dividends paid to BorgWarner stockholders		(39.4	)		(36.7	)
Dividends paid to minority shareholders		(17.5	)		(15.1	)
Net cash used in financing activities		(158.0	)		(59.9	)
Effect of exchange rate changes on cash		(11.0	)		(7.5	)
Net increase in cash		65.2			33.6
Cash at beginning of year		123.3			89.7
Cash at end of year	$	188.5		$	123.3