10-K/A 1 steve.txt SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------------- FORM 10-K/A ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2000 Commission file number: 1-12162 --------------------- BorgWarner Inc. (Exact name of registrant as specified in its charter) Delaware 13-3404508 (State of Incorporation) (IRS Employer Identification No.) 200 South Michigan Avenue Chicago, Illinois 60604 (312) 322-8500 (Address and telephone number of principal executive offices) ---------------------------- Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Common Stock, par value $.01 per share New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None ----------------------------- Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes /X/ NO--- The aggregate market value of the voting stock of the registrant held by stockholders (not including voting stock held by directors and executive officers of the registrant) on June 1, 2001 was approximately $1.21 billion. As of June 1, 2001, the registrant had 26,308,619 shares of Common Stock outstanding. Indicate by check-mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. /x/ DOCUMENTS INCORPORATED BY REFERENCE Portions of the following documents are incorporated herein by reference into the Part of the Form 10-K indicated. DOCUMENT PART OF FORM 10-K INTO WHICH INCORPORATED BorgWarner Inc. 2000 Annual Report to Stockholders Parts II and IV BorgWarner Inc. Proxy Statement for the 2001 Annual Meeting of Stockholders Part III PART II Item 8. Financial Statements and Supplementary Data The consolidated financial statements (including the notes thereto) of the Company and the Independent Auditors' Report as set forth on pages 29 through 47 in the Company's Annual Report are incorporated herein by reference and made a part of this report. Supplementary financial information regarding quarterly results of operations (unaudited) for the years ended December 31, 2000 and 1999 is set forth on page 46 of the Company's Annual Report. For a list of financial statements filed as part of this report, see Item 14, "Exhibits, Financial Statement Schedules, and Reports on Form 8-K" on page 13. NSK-WARNER KABUSHIKI KAISHA AND A SUBSIDIARY Consolidated Financial Statements March 31, 2001, 2000 and 1999 (With Independent Auditors' Report Thereon) Independent Auditors' Report The Board of Directors and Stockholders NSK-Warner Kabushiki Kaisha: We have audited the accompanying consolidated balance sheets (expressed in yen) of NSK-Warner Kabushiki Kaisha and a subsidiary as of March 31, 2001 and 2000, and the related consolidated statements of earnings, stockholders' equity, and cash flows for each of the years in the three-year period ended March 31, 2001. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of NSK-Warner Kabushiki Kaisha and a subsidiary as of March 31, 2001 and 2000, and the results of their operations and their cash flows for each of the years in the three-year period ended March 31, 2001 in conformity with accounting standards generally accepted in the United States of America. The accompanying consolidated financial statements have been translated into United States dollars solely for the convenience of the reader. We have recomputed the translation and, in our opinion, the consolidated financial statements expressed in yen have been translated into United States dollars on the basis set forth in note 2 of the notes to consolidated financial statements. Tokyo, Japan April 27, 2001 NSK-WARNER KABUSHIKI KAISHA AND A SUBSIDIARY Consolidated Balance Sheets March 31, 2001 and 2000 Japanese yen U.S. dollars 132: (thousands)(thousands)(note 2)(thousands)(thousands)(note 2)

Japanese yen U.S. dollars -------------- -------------- (thousands) (thousands)(note 2) 2001 2000 2001 ------ -------- ------- Assets Current assets: Cash and cash equivalents (note 12)Y Y1,418,216 308,964 $11,446 Short-term investments (notes 3 and 12) 2,905,386 9,104,448 23,449 Receivables (notes 10 and 12): Trade accounts 10,021,804 8,290,782 80,886 Other 720,852 943,121 5,818 --------- ------- --------- Total receivables 10,742,656 9,223,903 86,704 ---------- --------- --------- Inventories (note 4) 2,197,911 1,901,917 17,740 Prepaid expenses and other current assets (note 6) 856,307 403,615 6,912 -------- --------- -------- Total current assets 18,120,476 20,952,847 146,251 ---------- ----------- ---------- Marketable investment securities (notes 5 and 12) 585,870 674,949 4,729 Investment in an affiliated company 759,417 833,077 6,129 Property, plant and equipment, at cost: Land 4,552,879 1,538,771 36,746 Buildings 11,717,494 11,581,814 94,572 Machinery and equipment 21,029,784 20,397,820 169,732 Vehicles 99,526 102,660 803 Tools, furniture and fixtures 5,477,757 5,072,950 44,211 Construction in progress 56,843 884,833 459 --------- -------- -------- 42,934,283 39,578,848 346,523 Less accumulated depreciation 26,189,406 24,716,843 211,375 ----------- ---------- --------- Net property, plant and equipment 16,744,877 14,862,005 135,148 ----------- ---------- --------- Other assets: 540,525 493,696 4,363 --------- -------- ---------- Total other assets 540,525 493,696 4,363 1 --------- -------- -------- Y 36,751,165 37,816,574 $296,620 ========== ========== ========= Current Liabilities: Trade payables (notes 10 and 12): Notes Y 2,969,565 1,952,572 $23,967 Accounts 4,187,145 4,134,675 33,795 ----------- --------- --------- Total trade payables 7,156,710 6,087,247 57,762 ----------- --------- ---------- Other payables (notes 10 and 12): Notes 638,459 632,085 5,153 Accounts 518,812 638,972 4,187 ------------ --------- ------------ Total other payables 1,157,217 1,271,057 9,340 ------------ --------- ----------- Income taxes payable 1,474,781 1,253,344 11,903 Accrued expenses (note 12) 1,746,490 1,640,462 14,096 Other current liabilities 40,625 33,406 328 --------- ----------- -------- Total current liabilities 11,575,877 10,285,516 93,429 ---------- --------- ---------- Noncurrent liabilities: Accrued pension and severance cost (note 7) 492,711 628,403 3,977 Deferred income taxes (note 6) 186,252 281,174 1,503 ------- ------- -------- Total noncurrent liabilities 678,963 909,577 5,480 ------- ----------- -------- Total liabilities 12,254,840 11,195,093 98,909 --------- ---------- --------- Stockholders' equity: Common stock of Y10,000 par value (note 10) Authorized 220,000 shares; issued 55,000 shares 550,000 550,000 4,439 Legal reserve (note 8) 137,500 137,500 1,110 Retained earnings 23,999,208 26,070,613 193,698 Accumulated other compre- hensive income (loss) (notes 6 and 9) (190,383) (136,632) (1,536) ----------- --------- -------- Total stockholders' equity 24,496,325 26,621,481 197,711 Commitments and contingent liability (note 11) Y 36,751,165 37,816,574 $296,620 ========== ========= =========

See accompanying notes to consolidated financial statements. NSK-WARNER KABUSHIKI KAISHA AND A SUBSIDIARY Consolidated Statements of Earnings Years ended March 31, 2001, 2000 and 1999

Japanese yen(thousands) U.S. dollars(thousands)(note 2) 2001 2000 1999 2001 ----- ----- ---- ------ Sales (note 10)Yen 37,367,662 34,597,079 30,028,699 $301,595 Cost of sales (note 10)28,704,155 26,766,381 23,334,312 231,672 ------------ ----------- --------- ------- Gross profit 8,663,507 7,830,698 6,694,387 69,923 ------------- ---------- --------- ------- Selling, general and administrative expenses (note 10)3,193,397 2,953,437 2,861,270 25,774 --------- ---------- --------- ------- Operating profit 5,470,110 4,887,261 3,833,117 44,149 ---------- --------- --------- ------- Other income: Interest income 50,508 57,272 82,924 408 Exchange gains, net 29,378 4,077 25,765 237 Equity in income of an affiliated company 238,348 97,210 18,814 1,924 Other 210,508 193,195 87,510 1,699 ------- ------- -------- ----- 528,742 351,754 214,383 4,268 ------- ------- -------- ------ Other deductions: Interest expenses - - 37 - Losses on retirement of property, plant and equip- ment, net 128,946 14,210 191,150 1,041 Other 128,946 14,210 191,150 1,041 ------ -------- ------- ------ Earnings before income taxes 5,869,906 5,214,805 3,856,313 47,376 ---------- ------------ ------------ ------------- Current 2,600,000 2,250,000 1,994,700 20,984 Deferred (158,689) (183,644) (287,287) (1,280) -------- --------- -------- -------- 2,441,311 2,066,356 1,707,413 19,704 --------- --------- -------- -------- Net earnings Yen 3,428,595 3,148,449 2,148,900 $27,672 ====== ========== ======== ======== YEN U.S. dollars (note 2) Net income per share (note 1 (m))Y62,338 57,245 39,071 $503 ======== ======= ======= ====== Dividends per share Y60,000 60,000 20,000 $484 ======== ======== ======== ========

See accompanying notes to consolidated financial statements. NSK-WARNER KABUSHIKI KAISHA AND A SUBSIDIARY Consolidated Statements of Stockholders' Equity Years ended March 31, 2001, 2000 and 1999 Japanese yen (thousands) U.S. dollars(thousands)(note 2)

2001 2000 1999 2001 Common stock: ----- ---- ------- ------ Balance at beginning of year Yen 550,000 550,000 550,000 $4,439 -------- ------- ------- ------ Balance at end of year 550,000 550,000 550,000 4,439 -------- -------- -------- ------ Legal reserve: Balance at beginning of year 137,500 137,500 137,500 1,110 -------- -------- ------- ----- Balance at end of year 137,500 137,500 137,500 1,110 -------- -------- -------- ----- Retained earnings: Balance at beginn- ing of year 26,070,163 24,022,164 22,973,264 210,417 Net earnings 3,428,595 3,148,449 2,148,900 27,672 Cash dividends (5,500,000)(1,100,000)(1,100,000)(44,391) ----------- ---------- ---------- -------- Balance at end of year 23,999,208 26,070,613 24,022,164 193,698 ----------- --------- ---------- --------- Accumulated other comprehensive income (loss) (notes 6 and 9): Balance at beginning of year (136,632) (133,073) (110,172) (1,102) Adjustments for the year (53,751) (3,559) (22,901) (434) -------- ----------- ---------- -------- Balance at end of year (190,383) (136,632) (133,073) (1,536) --------- ---------- -------- --------- Total stockholders' equity Yen 24,496,325 26,621,481 24,576,591 $197,711 =========== ========== ========== ======== Disclosure of comprehensive income: Net earnings Yen 3,428,595 3,148,449 2,148,900 $27,672 Other comprehensive income (loss), net of tax (note 9) (53,751) (3,559) (22,901) (434) ----------- ---------- ---------- -------- Comprehensive income Yen 3,374,844 3,144,890 2,125,999 $27,238 ========= =========== ========== =========

See accompanying notes to consolidated financial statements. NSK-WARNER KABUSHIKI KAISHA AND A SUBSIDIARY Consolidated Statements of Cash Flows Years ended March 31, 2001, 2000 and 1999

Japanese yen (thousands) U.S. dollars(thousands)(note 2) 2001 2000 1999 2001 Cash flows from operating activities: Net earnings Yen 3,428,595 3,148,449 2,148,900 $27,672 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 2,422,927 2,373,900 2,340,937 19,556 Accrual for pension and severance costs, less payments (135,692) 142,968 71,436 (1,095) Losses on retirement of property, plant and equipment, net 136,842 69,010 47,605 1,104 Equity in income of an affiliated company (238,348) (97,210) (18,184) (1,924) Dividend received 238,348 28,729 - 1,924 Deferred income taxes (158,689) (183,644) (287,287) (1,280) Increase in receivables (1,493,860)(1,821,253)(147,581)(12,057) Increase in inventories (295,671) (143,450) (199,404) (2,386) Decrease (increase) in prepaid expenses and other current assets (347,597) (8,595) 35,415 (2,805) Increase (decrease) in trade payables 1,084,848 1,185,340 (181,063) 8,465 Increase (decrease) in other payables (113,786) 577,371 (221,485) (918) Increase in accrued expenses 105,795 6,289 162,383 854 Increase (decrease) in income taxes payable 221,437 113,456 (82,301) 1,787 Increase in other current liabilities 7,219 12,598 4,245 58 Other, net (29,337) 0 (10,446) (238) -------- --------- -------- --------- Total adjustments 1,368,436 2,255,509 1,514,270 11,045 --------- --------- --------- ------- Net cash provided by operating activities 4,797,031 5,403,958 3,663,170 38,717 --------- -------- --------- ------- Cash flows from investing activities: Decrease (increase) in short-term investments 6,199,061 (1,594,431) 965,296 50,033 Proceeds from sale of property, plant and equipment 10,064 1,962 43,745 81 Dividend received 67,253 - - 543 Payments for pur- chase of property, plant and equipment(4,313,555)(2,474,451)(2,923,493)(34,815) Payment for purchase of investment in an affiliated company - - (463,899) - Increase in all other assets (142,896) (191,745) (126,308)(1,153) Other, net (22,496) 2,302 (20,872) (182) -------- ------- --------- ----- Net cash used in investing activities 1,797,431(4,256,363)(2,525,531) 14,507 ----------- ---------- --------- -------- Cash flows from financing activities: Dividends paid (5,500,000)(1,100,000)(1,100,000)(44,391) ----------- - --------- --------- --------- Net cash used in financing activities(5,500,000)(1,100,000)(1,010,000) (44,391) ------------ ---------- ----------- ------- Effect of exchange rate changes on cash and cash equivalents 14,790 (15,962) (4,415) 119 --------- ------- ------ ------- Net change in cash and cash equivalents 1,109,252 31,633 33,224 8,952 -------- ------ --------- ----- Cash and cash equi- valents at beginning of year 308,964 277,331 244,107 2,494 -------- -------- ------- ------- Cash and cash equivalents at end of year Yen 1,418,216 308,964 277,331 $11,446 ======= ======= ======= ====== Supplemental information of cash flows: Cash paid during the year for: Interest Yen - - 37 $ - Income taxes 2,378,591 2,136,543 2,077,001 19,198 ========= ======== ========= =========

See accompanying notes to consolidated financial statements. (1) Summary of Significant Accounting Policies (a) Description of Business NSK-Warner Kabushiki Kaisha (the "Company") operates a plant in Fukuroi City in Shizuoka Prefecture in Japan engaged in the production of one-way clutches and related parts, and friction plates and related parts. These products mainly relate to the automatic mission system of passenger cars. The Company sells most of its products to NSK Ltd., a 50% stockholder of the Company. The products are eventually sold to the automotive industry. The Companys sales for the year ended March 31, 2001 were distributed as follows: one-way clutches and related parts - 56%, friction plates and related parts - 44%. (b) Principles of Consolidation NSK-Warner USA Inc., a wholly-owned subsidiary of the Company, was established in the United Stated of America in January 1997. The consolidated financial statements include financial statements of the Company and the subsidiary. All significant intercompany balances and transactions have been eliminated in consolidation. (c) Basis of Presentation of Financial Statements The Company maintains its books of account in conformity with financial accounting standards of Japan. However, the accompanying consolidated financial statements have been prepared in a manner and reflect the adjustments which management believes are necessary to conform with auditing standards generally accepted in the United States of America. Such adjustments are summarized in note 13 of the notes to consolidated financial statements. (d) Cash Equivalents For purposes of the consolidated statements of cash flows, the Company considers all deposits with an original maturity of three months or less to be cash equivalents. (e) Inventories Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out method for raw materials and the average method for work in process and supplies. 2 NSK-WARNER KABUSHIKI KAISHA AND A SUBSIDIARY Notes to Consolidated Financial Statements (f) Marketable Investment Securities Marketable investment securities at March 31, 2001 and 2000 consist of debt and equity securities that have readily determinable fair values and are classified as "available-for-sale". The Company's available-for-sale securities are reported at fair value with unrealized gains or losses net of deferred income taxes, and are reported as a separate component of accumulated other comprehensive income (loss) included in stockholders' equity. A decline in the market value of any available-for-sale securities below cost that is deemed other than temporary results is charged to earnings resulting in the establishment of a new cost basis for the security. Realized gains and losses for securities classified as available-for-sale securities are included in earnings and are derived using the average method for determining the cost of securities sold. (g) Investment in an Affiliated Company Investment in the common stock of an affiliated company is accounted for by the equity method. (h) Depreciation Depreciation of property, plant and equipment is computed principally by the declining-balance method over the estimated useful lives of assets. (i) Research and Development Research and development costs are expensed as incurred. Research and development costs charged to earnings for the years ended March 31, 2001, 2000 and 1999 amounted to Y1,150,866 thousand ($9,289 thousand), Y1,094,118 thousand and Y1,218,158 thousand, respectively. (j) Income Taxes The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes". Under the asset and liability method of SFAS No. 109, deferred income tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under SFAS No. 109, the effect on deferred income tax assets and liabilities of a change in tax rates is recognized in earnings in the period that includes the enactment date. 3 NSK-WARNER KABUSHIKI KAISHA AND A SUBSIDIARY Notes to Consolidated Financial Statements (k) Retirement and Severance Benefits The Company accounts for its defined benefit pension plans and retirement plans in accordance with Statement of Financial Accounting Standards No. 87, "Employers' Accounting for Pensions". (l) Net Earnings per Share Net earnings per share has been computed by dividing net earnings available to common stockholders by the weighted-average number of common shares outstanding during each year. (m) Use of Estimates Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these consolidated financial statements in conformity with accounting standards generally accepted in the United States of America. Actual results could differ from those estimates. (n) Long-Lived Assets and Long-Lived Assets to Be Disposed Of The Company's long-lived assets and certain identifiable intangibles are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceed the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. (o) Revenue Recognition The Company recognizes revenue when persuasive evidence of an arrangement including, delivery has occurred, the sales price is fixed or determinable, and collectibility is probable. These criteria are met due to the mass-merchandising products in nature at the time when the product is received by the customer. In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial Statements". SAB 101, as amended, summarizes certain of the SEC's views in applying generally accepted accounting principles to revenue recognition in financial statements and provides guidance on revenue recognition issues in the absence of authoritative literature addressing a specific arrangement or a specific industry. The Company adopted SAB 101 in the year ended March 31, 2001. Adoption of this guidance did not have a material effect on the Company's consolidated financial position or results of operations. (p) Reclassifications Certain reclassifications of previously reported amounts have been made to conform with current classifications. 4 NSK-WARNER KABUSHIKI KAISHA AND A SUBSIDIARY Notes to Consolidated Financial Statements (2) Financial Statement Translation The accompanying consolidated financial statements are expressed in Japanese yen as of and for the year ended March 31, 2001, the currency of the country in which the Company operates. The translation of Japanese yen amounts into United States dollar amounts is included solely for the convenience of the reader and has been made at the rate of Y123.9 to US $1, the approximate rate of exchange reported by the Tokyo Foreign Exchange Market on March 31, 2001. Such translation should not be construed as a representation that the amounts shown could be converted into United States dollars at the above rate. (3) Short-term Investments Short-term investments, at cost, which approximate market, at March 31, 2001 and 2000 consisted of the following: Japanese yen U.S. dollars (thousands) (thousands) 2001 2000 2001 Time deposits with a maturity of more than three months Y255,429 106,768 $2,061 Certificates of deposit purchased under resale agreements 2,649,957 8,997,680 21,388 --------- ------------ -------- Y2,905,386 9,104,448 $23,449 ========= ======== ========= (4) Inventories Inventories at March 31, 2001 and 2000 are summarized as follows: Japanese yen(thousands) U.S. dollars(thousands) 2001 2000 2001 Work in process Y 1,490,212 1,296,839 $ 12,028 Raw materials 378,203 270,914 3,052 Supplies 262,120 237,387 2,116 Goods in transit 67,376 96,777 544 ----------- -------- -------- Y2,197,911 1,901,917 $17,740 ======= ========== ======== 5 NSK-WARNER KABUSHIKI KAISHA AND A SUBSIDIARY Notes to Consolidated Financial Statements (5) Marketable Investment Securities The cost, gross unrealized holding gains, gross unrealized holding losses and fair value for available-for-sale securities by major security type at March 31, 672: 2001 and 2000 were as follows: Japanese yen (thousands) Gross Gross unrealized unrealized holding holding Cost gains losses Fair value --------- -------- ------- ------------ At March 31, 2001: Available-for-sale: Debt security Y 100,000 - - 100,000 Equity securities 544,325 11,535 69,990 485,870 --------- ------ ------- -------- Y 644,325 11,535 69,990 585,870 ======= ======= ==== ======== At March 31, 2000: Available-for-sale: Debt security Y 100,000 - - 100,000 Equity securities 521,352 96,832 43,235 574,949 --------- --------- ------- ------- Y 621,352 96,832 43,235 674,949 ========= ====== ======== ========= U.S. dollars (thousands) Gross Gross unrealized unrealized holding holding Cost gains losses Fair value Fair value At March 31, 2001: Available-for-sale: Debt security $ 807 - - 807 Equity securities 4,393 93 564 3,922 ------ ------- ------ ------- $5,200 93 564 4,729 ==== ====== ==== ==== The debt security at March 31, 2001 is due in 2001. Net realized gains or losses during the years ended March 31, 2001, 2000 and 1999 were nil or insignificant. 6 NSK-WARNER KABUSHIKI KAISHA AND A SUBSIDIARY Notes to Consolidated Financial Statements (6) Income Taxes The Company is subject to a number of taxes based on income, which in the aggregate result in a normal income tax rate of approximately 41%, 41% and 47% for the years ended March 31, 2001, 2000 and 1999. The Company's subsidiary in the United States of America was not liable to pay income taxes in the years ended December 31, 2000, 1999 and 1998. Amendments to Japanese tax regulations were enacted into law on March 24, 1999. As a result of these amendments, the normal income tax rate was reduced from approximately 47% to 41% effective from April 1, 1999. Current income taxes were calculated at the tax rate of 47% in effect for the year ended March 31, 1999. Deferred income taxes at March 31, 1999 were measured at the rate of 41%. The effect of the income tax rate reduction on deferred income tax balances at March 31, 1999 were insignificant. The effective income tax rates of the Company for the years ended March 31, 2001, 2000 and 1999 differ from the normal income tax rate for the following reasons: 2001 2000 1999 Computed normal income tax rate 41.0%41.0%47.0% Other 0.6 (1.4)(2.7) ----- --- ------ Effective income tax rate41.6% 39.6% 44.3% ====== ==== ===== Net deferred income tax assets and liabilities are reflected on the accompanying consolidated balance sheets under the following captions: Japanese yen(thousands) U.S. dollars (thousands) 2001 2000 2001 Prepaid expenses and other current assets Y 499,689 394,688 $4,033 Noncurrent liabilities (186,252)(281,174)(1,503) --------- --------- ------ Y 313,437 113,514 $2,530 ======== ======== ======== 7 NSK-WARNER KABUSHIKI KAISHA AND A SUBSIDIARY Notes to Consolidated Financial Statements Change in net deferred income tax assets and liabilities is allocated as follows: Japanese yen(thousands) U.S. dollars (thousands) 2001 2000 1999 2001 Earnings (158,689)(183,644)(287,287) $(1,280) Stockholders' equity - accumulated other comprehensive loss: Foreign currency translation ad- justments 4,707 3,293 56,596 37 Net unrealized gains (losses) on marketable investment securities (45,941) 45,177 11,968 (371) -------- -------- ------ ------ Y(199,923)(135,174)(218,723)$(1,614) ========= ======== ======== ======== The tax effects of temporary differences that give rise to significant portions of the deferred income tax assets and liabilities at March 31, 2001 and 2000 are presented below: Japanese yen(thousands) U.S. dollars(thousands) 2001 2000 2001 Deferred income tax assets: Business tax Y 138,986 116,670 $ 1,121 Employee bonus 117,933 76,661 952 Accrued expenses 203,773 203,781 1,645 Accrued pension and severance cost 124,978 142,285 1,009 Marketable invest- ment securities 14,546 - 117 Other 75,761 32,337 612 ------- -------- ---------- 675,977 571,734 5,456 -------- --------- -------- Deferred income tax liabilities: Allowance for doubtful receivables - 28,113 - Capital gain deferred in connection with the acquisition of new property (see note 10) 289,168 307,266 2,334 Special depreciation 15,390 19,709 124 Losses for investment 41,827 57,458 338 Investment in an affiliated company 16,155 23,699 130 Marketable investment securities - 21,975 - -------- ---------- --------- Total deferred income tax liabilities 362,540 458,220 2,926 Net deferred income tax assets Y313,437 113,514 $ 2,530 ========= =========== ======= 8 NSK-WARNER KABUSHIKI KAISHA AND A SUBSIDIARY Notes to Consolidated Financial Statements There was no valuation allowance on deferred income tax assets at March 31, 2001 and 2000. In assessing the realizability of deferred income tax assets, management considers whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred income tax liabilities and projected future taxable income in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods which the deferred income tax assets are deductible, management believes it is more likely than not the Company will realize the benefits of these deductible differences at March 31, 2001. The Company's income tax returns through March 31, 1999 have been examined by the Japanese tax authorities. (7) Retirement and Severance Benefits Employees of the Company are covered by the following defined pension and severance benefit plans. The Company has an unfunded lump-sum payment retirement plan covering substantially all employees. Under the plan, employees are entitled to lump-sum payments based on current rate of pay, length of service and certain other factors upon retirement or termination of employment for reasons other than dismissal for cause. The Company also has a funded pension plan covering substantially all employees who meet age and service plan requirements. Net periodic benefit costs of the plans were calculated using the unit credit actuarial cost method. Directors and statutory auditors are covered by a separate plan. It was not the policy of the Company to fund the retirement and severance benefits described above. Net periodic benefit costs for the Company's retirement and severance defined benefits plans for the years ended March 31, 2001, 2000 and 1999 consisted of the following components: Japanese yen (thousands) U.S. dollars(thousands) 2001 2000 1999 2001 Service cost benefits earned during the yearY197,864 151,032 125,878 $1,597 Interest cost on projected benefit obligation 89,515 74,617 65,874 722 Expected return on plan assets (37,206) (32,988) (32,104) (300) Net amortization 45,384 27,607 17,579 366 ------- ------- ------- ----- Y295,557 220,268 177,227 $ 2,385 ======= ======== ======== ======= 9 NSK-WARNER KABUSHIKI KAISHA AND A SUBSIDIARY Notes to Consolidated Financial Statements Benefit obligations, fair value of plan assets, funded status of the plans as of March 31, 2001 and 2000 and related information are as follows: Japanese yen (thousands) U.S. dollars(thousands) 2001 2000 2001 Change in benefit obligations: Benefit obligations at beginning of year Y 2,584,659 1,893,040 $20,861 Service cost 197,864 151,032 1,597 Interest cost 89,515 74,617 722 Actuarial loss (gain) (459,662) 509,403(3,710) Benefits paid (51,714) (43,433) (417) --------- ---------- ------- Benefit obligations at end of year 2,360,662 2,584,659 19,053 Change in plan assets: Fair value of plan assets at beginning of year 904,555 758,224 7,301 Actual return on plan assets (76,550) 56,439 (618) Employer contribution 325,013 116,684 2,623 Benefits paid (33,403) (26,792) (270) ---------- -------- ------- Fair value of plan assets at end of year 1,119,615 904,555 9,036 ---------- -------- ------ Funded status 1,241,047 1,680,104 10,017 Unrecognized actuarial loss (634,112) (1,012,900) (5,118) Unrecognized prior service cost (109,070) (120,298) (881) Unrecognized net transition obligation (5,094) (6,368) (41) -------- ------- ------- Net amount recognized 492,771 540,538 3,977 Adjustments to recognize minimum liability: Intangible assets - 87,865 - -------- ------- -------- Accrued pension and severance cost recognized in the consolidated balance sheets Y492,771 628,403 $3,977 ------------ -------- --------- Actuarial present value of accumulated benefit obligations at end of yearY1,612,386 1,532,958 $13,013 ---------- -------- -------- Actuarial assumptions: Discount rate 3.00% 3.50% Assumed rate of salary increase 4.69% 4.69% Expected long-term rate of return on plan assets 3.50% 4.00% 10 NSK-WARNER KABUSHIKI KAISHA AND A SUBSIDIARY Notes to Consolidated Financial Statements (8) Legal Reserve and Cash Dividends The Japanese Commercial Code provides that at least 10% of any cash payments out of retained earnings be appropriated as a legal reserve until such reserve equals 25% of stated capital. This reserve is not available for dividends, but may be used to reduce a deficit or be transferred to stated capital. Presently, the legal reserve is equal to the maximum requirement of 25% of stated capital. Cash dividends charged to retained earnings during the three years ended March 31, 2001, 2000 and 1999 represent dividends paid out during those years. The accompanying consolidated financial statements do not include any provision for a dividend to be proposed by the Board of Directors of Y20,000 ($161) per share aggregating Y1,100,000 thousand ($8,878 thousand) in respect of the year ended March 31, 2001. (9) Other Comprehensive Loss Change in accumulated other comprehensive loss is as follows: Japanese yen U.S. dollars (thousands) (thousands) 2001 2000 2001 Foreign currency translation adjustments: Balance at beginning of yearY (168,255) (99,823)$(1,358) Adjustments for the year 12,360 (68,432) 100 --------- -------- ------ Balance at end of year (155,895) (168,255)(1,258) --------- -------- -------- Net unrealized gains (losses) on marketable investment securities: Balance at beginning of year 31,623 (33,250) 255 Net change during the year (66,111) 64,873 (533) -------- -------- ------- Balance at end of year (34,488) 31,623 (278) ------- -------- -------- Total accumulated other comprehensive loss: Balance at beginning of year (136,632)(133,073)(1,103) Other comprehensive loss for the year, net of tax (53,751) (3,559) (433) -------- -------- -------- Balance at end of year Y (190,383)(136,632)$(1,536) ===== ======= ===== 11 NSK-WARNER KABUSHIKI KAISHA AND A SUBSIDIARY Notes to Consolidated Financial Statements Tax effects allocated to each component of other comprehensive income (loss) are as follows: Japanese yen (thousands) Before-tax Tax Net-of-tax amount (expense) amount or benefit --------- ---------- ------------- 2001: Foreign currency translation adjustments Y17,067 (4,707) 12,360 Net unrealized gains (losses) on marketable investment securities (112,052) 45,941 (66,111) -------- ------- ---------- Other comprehensive income (loss) Y (94,985) 41,234 (53,751) ====== ======= ======== 2000: Foreign currency translation adjustmentsY(65,139) (3,293) (68,432) Net unrealized gains (losses) on marketable investment securities 110,050 (45,177) 64,873 ---------- --------- -------- Other comprehensive income (loss) Y44,911 (48,470) (3,559) ====== ====== ====== 1999: Foreign currency translation adjustments Y 26,642 (56,596) (29,954) Net unrealized gains (losses) on marketable investment securities 19,021 (11,968) 7,053 ------- ------- --------- Other comprehensive income (loss) Y45,663 (68,564)(22,901) ======== ======= ======== U.S. dollars (thousands) Before-tax Tax Net-of-tax amount (expense) amount or benefit ------------ ------------ ----------- 2001: Foreign currency translation adjustments $ 137 (37) 100 Net unrealized gains (losses) on marketable investment securities (904) 371 (533) ------ ---- ------ Other comprehensive income (loss) $(767) 334 (433) 12 NSK-WARNER KABUSHIKI KAISHA AND A SUBSIDIARY Notes to Consolidated Financial Statements (10) Balances and Transactions with Affiliated Companies The Company is a joint-venture corporation and its capital stock is held in equal amounts by NSK Ltd. and BorgWarner NW Inc., a wholly-owned subsidiary of BorgWarner Inc. Balances with the affiliated companies at March 31, 2001 and 2000 were as follows: Japanese yen (thousands) U.S. dollars (thousands) NSK Ltd. BorgWarner Inc. NSK Ltd. BorgWarner Inc. At March 31, 2001: Trade accounts receivableY 9,471,089 289,528 $76,441 2,337 Other receivable 2,116 220,088 17 1,776 ---------- ------- -------- ------ Trade accounts payable 1,068,205 - 8,621 - Other accounts payable 222,285 - 1,794 - ---------- --------- --------- ------ Net receivable Y8,182,715 509,616 $66,043 4,113 ====== ======== ===== ====== At March 31, 2000: Trade accounts receivableY 7,813,337 181,752 Other receivable - 470,068 --------- -------- Trade accounts payable 986,112 - Other accounts payable 359,112 - --------- -------- Net receivable Y6,468,113 651,820 ========== ========= 13 NSK-WARNER KABUSHIKI KAISHA AND A SUBSIDIARY Notes to Consolidated Financial Statements During the years ended March 31, 2001, 2000 and 1999, significant transactions with the affiliated companies were as follows: Japanese yen (thousands) U.S. dollars (thousands) NSK Ltd. BorgWarner Inc. NSK Ltd. BorgWarner Inc. 2001: Sales Y 35,027,976 506,056 $ 282,712 4,084 Cost of sales: Purchase 6,940,665 4,581 56,018 37 Pension cost 3,130 25 Selling, general and administrative expenses: Rent 2,387 - 19 - Pension cost 4,461 - 36 - Purchase of property, plant and equipment 235,640 1,902 Commission - 62,347 - 503 2000: Sales Y32,565,998 366,161 Cost of sales: Purchase 6,720,886 2,448 Pension cost 4,141 - Selling, general and administrative expenses: Rent 2,573 - Pension cost 1,395 - Purchase of property, plant and equipment 83,668 - 1999: Sales Y29,299,019 76,778 Cost of sales: Purchase 5,522,641 119,207 Pension cost 4,060 - Selling, general and administrative expenses: Rent 1,612 - Pension cost 1,375 - Purchase of property, plant and equipment 44,778 113,584 Sale of property, plant and equipment 7,714 - 14 NSK-WARNER KABUSHIKI KAISHA AND A SUBSIDIARY Notes to Consolidated Financial Statements On June 30, 1988, the Company sold land and a part of factory buildings of the Fujisawa plant to NSK Ltd. in connection with the relocation of its manufacturing facilities to the new factory in Shizuoka Prefecture. The capital gain resulting therefrom was recognized as income for the year ended March 31, 1989. However, as permitted under the Special Taxation Measures Law, capital gain has been deferred for tax purposes as reserve for replacement of property as an appropriation of retained earnings. The related deferred income tax liability at March 31, 2001 and 2000 in the amount of Y289,168 thousand ($2,334 thousand) and Y307,266 thousand, respectively, has been provided in the accompanying consolidated balance sheets (see note 6). (11)Commitments and Contingent Liabilities At March 31, 2001, the Company had commitments for the purchase of property, plant and equipment of approximately Y280,789 thousand ($2,266 thousand). The Company utilizes certain facilities, including warehouses and employee dormitories, under cancellable lease agreements with third parties. Rent expenses for the years ended March 31, 2001, 2000 and 1999 under the foregoing lease agreements amounted to Y319,041 thousand ($2,575 thousand), Y301,324 thousand and Y281,764 thousand, respectively. The Company had no noncancellable lease commitments at March 31, 2001. In April 2001, the Company has recognized existence of inferior one-way clutches which had been manufactured in the Company's factory. Since the Company had sold approximately 300 sets of the subject product, the Company decided to voluntarily collect the one-way clutches from April 18, 2001. As the situation will not be resolved for some time under uncertainties status, it is not feasible for the Company to predict the final outcome with certainty. However, the Company is of the opinion that the issue will not have a significant adverse effect on the consolidated financial statements. (12)Disclosure About the Fair Value of Financial Instruments Cash and cash equivalents, Short-term investments, Receivables, Trade payables, Other payables and Accrued expenses: The carrying amounts approximate fair values because of the short maturity of these instruments. Marketable investment securities: The fair values of the Company's investments in securities are based on market related prices (see note 5). 15 NSK-WARNER KABUSHIKI KAISHA AND A SUBSIDIARY Notes to Consolidates Financial Statements (13)Adjustments to Conform with United States Generally Accepted Accounting Principles Japanese yen (thousands) 2001 2000 1999 Japanese yen (thousands) 2001 2000 1999 Net Retained Net Retained Net Retained earnings earnings at earnings earnings at earnings earnings at for year end of year for year end of year for year end of year

Per legal books Y3,280,913 23,399,520 3,095,898 25,637,552 2,046,306 23,101,202 Adjustments: Bonus to officers (19,640)(19,640)(18,944)(18,944)(18,008)(18,008) Allowance for doubtful recei- vables (69,000) - 5,000 69,000(44,000)64,000 Special depre- ciation (10,535)37,536 (9,985) 48,071(15,402)58,056 Accrued pension and severance cost 354,592 400,422(90,429) 45,829(72,703)136,258 Deferred income taxes (115,331)(147,033)165,320(31,702)222,587 361,438 Losses for investment - 102,018 28 102,018 269 101,990 Investment in an affiliated company(66,648)447,146 44,994 513,794 18,184 468,800 Marketable invest- ment securities 22,975 22,975 - - - - Accrued expenses 51,269 (243,736)(43,433)(295,005)11,667(251,572) ------ - -------- ------ ------ ---- ------ 147,683 599,688 52,551 433,061 102,594 920,962 ------- -------- ------ -------- ------ ------- Per accompanying consolidated financial statements Y3,428,595 23,999,208 3,148,449 26,070,613 2,148,900 24,022,164 ========== ========== ========= ========== ============== U.S. dollars (thousands) 2001 Net Retained earnings earnings at for year end of year Per legal books$26,480 188,858 Adjustments: Bonus to officers (159) (159) Allowance for doubtful receivables (557) - Special depreciation (85) 303 Accrued pension and severance cost 2,862 3,232 Deferred income taxes(931) (1,187) Losses for investment - 823 Investment in an affiliated company (538) 3,609 Marketable investment securities 186 186 Accrued expenses 414 (1,967) ----- ------ 1,192 4,840 ------ ------ Per accompanying consolidated financial statements $ 27,672 193,698 ========= ======== PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K (a) 1. The following consolidated financial statements of the Company on pages 29 through 47 of the Company's Annual Report are incorporated herein by reference: Independent Auditors' Report Consolidated Statements of Operations - three years ended December 31, 2000, 1999 and 1998 Consolidated Balance Sheets - December 31, 2000 and 1999 Consolidated Statements of Cash Flows - years ended December 31, 2000, 1999 and 1998 Consolidated Statements of Stockholders' Equity - years ended December 31, 2000, 1999 and 1998 Notes to Consolidated Financial Statements Financial Statements of NSK-Warner Kabushiki Kaisha (including the notes thereto) 2. Certain schedules for which provisions are made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted. 3. The exhibits filed in response to Item 601 of Regulation S-K are listed in the Exhibit Index on page A-1. (b) Reports on Form 8-K. (1) None. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. BORGWARNER INC. By: /s/ William C. Cline ------------------------------------------- William C. Cline Vice President and Controller (Principal Accounting Officer) Date: June 27, 2001 EXHIBIT INDEX Exhibit Number Document Description *3.1 Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit No. 3.1 of the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1993). *3.2 By-laws of the Company (incorporated by reference to Exhibit No. 3.2 of the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1993). *3.3 Certificate of Designation, Preferences and Rights of Series A Junior Participating Preferred Stock. *3.4 Certificate of Ownership and Merger Merging BorgWarner Inc. into Borg- Warner Automotive, Inc. (incorporated by reference to Exhibit 99.1 of the Company's Quarterly Report on Form 10-Q for the ended March 31, 2000.) *4.1 Indenture, dated as of November 1, 1996, between Borg-Warner Automotive, Inc. and The First National Bank of Chicago (incorporated by reference to Exhibit No. 4.1 to Registration Statement No. 333-14717). *4.2 Indenture, dated as of February 15, 1999, between Borg-Warner Automotive, Inc. and The First National Bank of Chicago (incorporated by reference to Exhibit No. 4.1 to Amendment No. 1 to Registration Statement No. 333-66879). *4.3 Rights Agreement, dated as of July 22, 1998, between Borg-Warner Automotive, Inc. and ChaseMellon Shareholder Services, L.L.C. (incorporated by reference to Exhibit 4.1 to the Registration Statement on Form 8-A filed on July 24, 1998). *10.1 Credit Agreement dated as of July 21, 2000 among BorgWarner Inc., as Borrower, the Lenders Party Hereto, The Chase Manhattan Bank, as Administrative Agent, Bank America, N.A., as Syndication Agent and Bank One, N.A. as Documentation Agent (incorporated by reference to Exhibit No. 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2001). *10.2 First Amendment, dated as of August 3, 2000 to the Credit Agreement, dated as of July 21, 2000 among BorgWarner Inc., as Borrower, the Several Lenders From Time to Time Party Thereto, The Chase Manhattan Bank, as Administrative Agent for the Lenders, Chase Securities Inc. and Bank of America Securities LLC, as Co-Arranger, Bank of America, N.A., as Syndication Agent and Bank One, N.A. as Documentation Agent (incorporated by reference to Exhibit 10.2 of the Company's Annual Report on Form 10-K for the year ended December 31, 2000). *10.3 Distribution and Indemnity Agreement dated January 27, 1993 between Borg-Warner Automotive, Inc. and Borg-Warner Security Corporation (incorporated by reference to Exhibit No. 10.2 to Registration Statement No. 33-64934). *10.4 Tax Sharing Agreement dated January 27, 1993 between Borg-Warner Automotive, Inc. and Borg-Warner Security Corporation (incorporated by reference to Exhibit No. 10.3 to Registration Statement No. 33-64934). +*10.5 Borg-Warner Automotive, Inc. Management Stock Option Plan, as amended (incorporated by reference to Exhibit No. 10.6 to Registration Statement No. 33-64934). Exhibit Number Document Description +*10.6 Borg-Warner Automotive, Inc. 1993 Stock Incentive Plan as amended effective November 8, 1995 (incorporated by reference to Appendix A of the Company's Proxy Statement dated March 21, 1997). *10.7 Receivables Transfer Agreement dated as of January 28, 1994 among BWA Receivables Corporation, ABN AMRO Bank N.V. as Agent and the Program LOC Provider and Windmill Funding Corporation (incorporated by reference to Exhibit No. 10.12 to the Company's Annual Report on Form 10-K for the year ended December 31, 1993). *10.8 Amended and Restated Receivables Loan Agreement dated as of December 23, 1998 among BWA Receivables Corporation, as Borrower, Borg-Warner Automotive, Inc., as Collection Agent, ABN AMRO Bank N.V., as Agent, the Banks from time to time party hereto, ABN AMRO Bank N.V., as the Program LOC Provider and the Program LOC Provider and Windmill Funding Corporation. 10.9 First Amendment dated as of March 25, 1999 to Amended and Restated Receivables Loan Agreement dated as of December 23, 1998 (incorporated by reference to Exhibit No. 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1999). 10.10 Second Amendment dated as of December 22, 1999 to Amended and Restated Receivables Loan Agreement dated as of December 23, 1998 (incorporated by reference to Exhibit No. 10.13 to the Company's Annual Report on Form 10-K for the year ended December 31, 1999). 10.11 Third Amendment dated as of December 20, 2000 to Amended and Restated Receivables Loan Agreement dated as of December 23, 1998 (incorporated by reference to Exhibit No. 10.11 to the Company's Annual Report on Form 10-K for the year ended December 31, 2000). +*10.12 Borg-Warner Automotive, Inc. Transitional Income Guidelines for Executive Officers amended as of May 1, 1989 (incorporated by reference to Exhibit 10.16 to the Company's Annual Report on Form 10-K for the year ended December 31, 1993). +*10.13 Borg-Warner Automotive, Inc. Management Incentive Bonus Plan dated January 1, 1994 (incorporated by reference to Exhibit No. 10.18 to the Company's Annual Report on Form 10-K for the year ended December 31, 1993). +*10.14 Borg-Warner Automotive, Inc. Retirement Savings Excess Benefit Plan dated January 27, 1993 (incorporated by reference to Exhibit No. 10.20 of the Company's Annual Report on Form 10-K for the year ended December 31, 1993). +*10.15 Borg-Warner Automotive, Inc. Retirement Savings Plan dated January 27, 1993 as further amended and restated effective as of April 1, 1994 (incorporated by reference to Exhibit 10.18 to the Company's Annual Report on Form 10-K for the year ended December 31, 1995). +*10.16 Borg-Warner Automotive, Inc. Deferred Compensation Plan dated January 1, 1994 (incorporated by reference to Exhibit No. 10.24 of the Company's Annual Report on Form 10-K for the year ended December 31, 1993). +*10.17 Form of Employment Agreement for John F. Fiedler (incorporated by reference to Exhibit No. 10.0 of the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1994). Exhibit Number Document Description +*10.18 Amended Form of Employment Agreement for John F. Fiedler dated January 27, 1998 (incorporated by reference to Exhibit 10.21 of the Company's Annual Report on Form 10-K for the year ended December 31, 1997). +*10.19 Addendum to Employment Agreement between BorgWarner Inc. and John F. Fiedler dated November 8, 2000 (incorporated by reference to Exhibit 10.19 of the Company's Annual Report on Form 10-K for the year ended December 31, 2000). +*10.20 Form of Change of Control Employment Agreement for Executive Officers (incorporated by reference to Exhibit No. 10.1 to the Company's Quarterly Report on Form 10-Q for the Quarter ended September 30, 1997). +*10.21 Amendment to the Change of Control Employment Agreement between the Company and John F. Fiedler dated effective January 30, 1998 (incorporated by reference to Exhibit 10.23 of the Company's Annual Report on Form 10-K for the year ended December 31, 1997). *10.22 Assignment of Trademarks and License Agreement (incorporated by reference to Exhibit No. 10.0 of the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1994) *10.23 Amendment to Assignment of Trademarks and License Agreement (incorporated by reference to Exhibit No. 10.23 of the Company's Form 10-K for the year ended December 31, 1998). +*10.24 Borg-Warner Automotive, Inc. Executive Stock Performance Plan (incorporated by reference to Exhibit No. 10.23 of the Company's Annual Report on Form 10-K for the year ended December 31, 1995). *10.25 Agreement of Purchase and Sale dated as of May 31, 1996 by and among Coltec Industries Inc., Holley Automotive Group, Ltd., Holley Automotive Inc., Coltec Automotive Inc., and Holley Automotive Systems GmbH and Borg-Warner Automotive, Inc., Borg-Warner Automotive Air/Fluid Systems Corporation and Borg-Warner Automotive Air/Fluid Systems Corporation of Michigan (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K dated as of June 17,1996). *10.26 Agreement and Plan of Merger dated as of December 17, 1998 by and between Borg-Warner Automotive, Inc., BWA Merger Corp. and Kuhlman Corporation (incorporated by reference to Exhibit 2 of the Company's Current Report on Form 8-K dated as of December 21, 1998). 10.27 Asset Purchase Agreement dated as of August 2, 1999 among Eaton Corporation, the Seller Subsidiaries, Borg-Warner Automotive, Inc. and the Buyer Subsidiaries. 13.1 Annual Report to Stockholders for the year ended December 31, 1999 with manually signed Independent Auditors' Report. (The Annual Report, except for those portions which are expressly incorporated by reference in the Form 10-K, is furnished for the information of the Commission and is not deemed filed as part of the Form 10-K). 23.1 Independent Auditors' Consent. 23.2 Independent Auditors' Consent. * Incorporated by reference. + Indicates a management contract or compensatory plan or arrangement required to be filed pursuant to Item 14(c).