<SUBMISSION>
<ACCESSION-NUMBER>0000950137-09-003432
<TYPE>10-Q
<PUBLIC-DOCUMENT-COUNT>5
<PERIOD>20090331
<FILING-DATE>20090430
<DATE-OF-FILING-DATE-CHANGE>20090430
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>BORGWARNER INC
<CIK>0000908255
<ASSIGNED-SIC>3714
<IRS-NUMBER>133404508
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>10-Q
<ACT>34
<FILE-NUMBER>001-12162
<FILM-NUMBER>09782928
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>3850 HAMLIN RD.
<CITY>AUBURN HILLS
<STATE>MI
<ZIP>48326
<PHONE>2487549200
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>3850 HAMLIN RD.
<CITY>AUBURN HILLS
<STATE>MI
<ZIP>48326
</MAIL-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>BORG WARNER AUTOMOTIVE INC
<DATE-CHANGED>19930628
</FORMER-COMPANY>
</FILER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>c50890e10vq.htm
<DESCRIPTION>FORM 10-Q
<TEXT>
<HTML>
<HEAD>
<TITLE>e10vq</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>


<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 1pt solid black; font-size: 1pt">&nbsp;</DIV>




<DIV align="center" style="font-size: 14pt; margin-top: 12pt"><B>UNITED STATES SECURITIES AND EXCHANGE COMMISSION</B>
</DIV>

<DIV align="center" style="font-size: 12pt"><B>Washington D.C. 20549</B>
</DIV>

<DIV align="center" style="font-size: 18pt; margin-top: 12pt"><B>FORM 10-Q</B>
</DIV>


<DIV align="center" style="font-size: 12pt; margin-top: 12pt"><B><U>QUARTERLY REPORT</U></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">(Mark One)
</DIV>

<DIV align="center">
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%" style="font-size: 12pt">
<TR style="font-size: 6pt">
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD align="center"><FONT face="Wingdings">&#254;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><B>Quarterly Report Pursuant to Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 12%"><B>For the quarterly period ended <U>March&nbsp;31, 2009</U>
</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>OR</B></DIV>

<DIV align="center">
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%" style="font-size: 12pt">
<TR style="font-size: 6pt">
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD align="center"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><B>Transition Report Pursuant to Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 12%"><B>For the transition period from <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> to <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>Commission file number: <U>1-12162</U></B></DIV>

<DIV align="center" style="font-size: 24pt; margin-top: 12pt"><B>BORGWARNER INC.</B>
</DIV>

<DIV align="center" style="font-size: 10pt"><DIV style="width: 100%; border-bottom: 1px solid #000000; font-size: 1px">&nbsp;</DIV></DIV>


<DIV align="center" style="font-size: 10pt">(Exact name of registrant as specified in its charter)</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="47%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="47%">&nbsp;</TD>
</TR>
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<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top">Delaware
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">13-3404508</TD>
</TR>
<TR style="font-size: 1px">
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">State or other jurisdiction of <BR>
Incorporation or organization
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(I.R.S. Employer<BR>
Identification No.)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="47%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="47%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top">3850 Hamlin Road, Auburn Hills, Michigan
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">48326</TD>
</TR>
<TR style="font-size: 1px">
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">(Address of principal executive offices)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(Zip Code)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt">Registrant&#146;s telephone number, including area code: <u>(248)&nbsp;754-9200</u></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Indicate by check mark whether the registrant (1)&nbsp;has filed all reports required to be filed by
Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12&nbsp;months (or for
such shorter period that the registrant was required to file such reports), and (2)&nbsp;has been
subject to such filing requirements for the past 90&nbsp;days.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt">YES <FONT face="Wingdings">&#254;</FONT> NO <FONT face="Wingdings">&#111;</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule&nbsp;405 of Regulation&nbsp;S-T during the preceding 12&nbsp;months (or for such shorter period
that the registrant was required to submit and post such files).
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt">YES
<FONT face="Wingdings">&#254;</FONT> NO <FONT face="Wingdings">&#111;</FONT></DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer,
a non-accelerated filer, or a smaller reporting company.
See the definitions of &#147;large
accelerated filer,&#148; &#147;accelerated filer&#148; and &#147;smaller reporting company&#148; in Rule 12b-2 of the Exchange Act. (Check one):</DIV>



<DIV align="center">
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%" style="font-size: 10pt">
<TR style="font-size: 6pt">
    <TD width="10%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD nowrap align="left" valign="top">Large accelerated filer <FONT face="Wingdings">&#254;</FONT>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" valign="top">Accelerated filer <FONT face="Wingdings">&#111;</FONT>&nbsp;</TD>
    <TD align="center">&nbsp;</TD>
    <TD nowrap align="center">Non-accelerated filer &nbsp; <FONT face="Wingdings">&#111;</FONT></TD>
    <TD align="center">&nbsp;</TD>
    <TD nowrap align="center" valign="top">Smaller reporting company <FONT face="Wingdings">&#111;</FONT>&nbsp;</TD>
</TR>
</TABLE>
</DIV>






<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Indicate by check mark whether the registrant is a shell company (as defined in Rule&nbsp;12b-2 of the
Exchange Act).
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt">YES <FONT face="Wingdings">&#111;</FONT> NO <FONT face="Wingdings">&#254;</FONT></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">On March&nbsp;31, 2009, the registrant had 116,527,045 shares of Common Stock outstanding.<BR>
</DIV>


<DIV style="width: 100%; border-bottom: 1pt solid black; margin-top: 10pt; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>





<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left">
<!-- TOC -->
</DIV>
<DIV align="left">
<A name="tocpage"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>BORGWARNER INC.<BR>
FORM 10-Q<BR>
THREE MONTHS ENDED MARCH 31, 2009</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>INDEX</B>

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Page No.</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#101">PART I. Financial Information</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Item&nbsp;1. Financial Statements</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><A href="#102">Condensed Consolidated Balance Sheets as of
March&nbsp;31, 2009 (Unaudited) and December&nbsp;31, 2008</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><A href="#103">Condensed Consolidated Statements of Operations (Unaudited)
for the three months ended March&nbsp;31, 2009 and 2008 </A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><A href="#104">Condensed Consolidated Statements of Cash Flows (Unaudited)
for the three months ended March&nbsp;31, 2009 and 2008 </A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><A href="#105">Notes to Condensed Consolidated Financial Statements (Unaudited)</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#106">Item&nbsp;2. Management&#146;s Discussion and Analysis of Financial Condition
and Results of Operations</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#107">Item&nbsp;3. Quantitative and Qualitative Disclosures About Market Risk</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#108">Item&nbsp;4. Controls and Procedures</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#109">PART II. Other Information</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#110">Item&nbsp;1. Legal Proceedings</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#111">Item&nbsp;5. Other Information</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#112">Item&nbsp;6. Exhibits</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#113">SIGNATURES</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c50890exv10w1.htm">EX-10.1</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c50890exv31w1.htm">EX-31.1</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c50890exv31w2.htm">EX-31.2</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c50890exv32w1.htm">EX-32.1</A></FONT></TD></TR>
</TABLE>
</DIV>

<DIV align="left">
<!-- /TOC -->
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left">
<A name="101"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><U><B>PART I. FINANCIAL INFORMATION</B></U>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>BORGWARNER INC. AND CONSOLIDATED SUBSIDIARIES</B>

</DIV>
<DIV align="left">
<A name="102"></A>
</DIV>
<DIV align="center" style="font-size: 10pt"><B>CONDENSED CONSOLIDATED BALANCE SHEETS</B></DIV>


<DIV align="center" style="font-size: 10pt"><B>(millions of dollars)</B></DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>March 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" colspan="2">(Unaudited)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>ASSETS</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">90.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">103.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Receivables, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">622.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">607.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Inventories, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">352.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">451.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">67.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Prepayments and other current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">79.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,188.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,308.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Property,
plant and equipment, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,510.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,586.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Investments
and advances</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">243.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">266.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Goodwill</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,038.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,052.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other non-current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">374.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">430.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,353.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,644.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>LIABILITIES AND STOCKHOLDERS&#146; EQUITY</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Notes payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">250.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">183.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current portion of long-term debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">136.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accounts payable and accrued expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">851.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">923.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income taxes payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,111.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,250.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long-term debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">466.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">459.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other non-current liabilities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Retirement-related liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">467.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">543.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">321.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">353.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total other non-current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">789.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">896.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Common stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Capital in excess of par value</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">984.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">977.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Retained earnings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,179.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,200.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accumulated other comprehensive loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(117.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(85.9</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Treasury stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(87.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(87.4</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Total BorgWarner Inc. stockholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,961.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,006.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Noncontrolling interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Total stockholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,986.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,037.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total liabilities and stockholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,353.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,644.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>See accompanying Notes to Condensed Consolidated Financial Statements</B>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->2<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>


<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>BORGWARNER INC. AND CONSOLIDATED SUBSIDIARIES</B>
</DIV>

<DIV align="left">
<A name="103"></A>
</DIV>
<DIV align="center" style="font-size: 10pt"><B>CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)</B></DIV>


<DIV align="center" style="font-size: 10pt"><B>(millions of dollars, except share and per share data)</B></DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>Three Months Ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 0px solid #000000"><B>March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net sales</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">819.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,498.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cost of sales</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">739.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,215.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Gross profit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">79.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">283.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Selling, general and administrative expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">155.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Operating income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">124.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equity in affiliates&#146; earnings, net of tax</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9.1</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.9</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest expense and finance charges</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Earnings (loss)&nbsp;before income taxes and noncontrolling interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(12.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">129.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Provision (benefit)&nbsp;for income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net earnings (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">95.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net earnings attributable to the noncontrolling interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net earnings (loss)&nbsp;attributable to BorgWarner Inc.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(7.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">88.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Earnings (loss)&nbsp;per share &#151; basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.06 </TD>
    <TD nowrap>)<B>*</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.76</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Earnings (loss) per share &#151; diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.06 </TD>
    <TD nowrap>)<B>*</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.75</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Weighted average shares outstanding (thousands):</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">116,029</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">116,247</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">116,029 </TD>
    <TD nowrap><B>*</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">118,466</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Dividends declared per share</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.12</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.11</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>The Company had a loss for the quarter ended March&nbsp;31, 2009. As a result, diluted loss per
share is the same as basic in the period, as any dilutive securities would reduce the loss per
share. Therefore, diluted
shares are equal to basic shares outstanding for the three months ended March&nbsp;31, 2009.</TD>
</TR>

</TABLE>



<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>See accompanying Notes to Condensed Consolidated Financial Statements</B>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->3<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="104"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>BORGWARNER INC. AND CONSOLIDATED SUBSIDIARIES CONDENSED CONSOLIDATED<BR>
STATEMENTS OF CASH FLOWS (UNAUDITED)<BR>
(millions of dollars)</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>Three Months Ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 0px solid #000000"><B>March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>OPERATING</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net earnings (loss)&nbsp;attributable to BorgWarner Inc.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(7.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">88.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Adjustments to reconcile net earnings (loss)&nbsp;to net cash flows from operations:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Non-cash charges (credits)&nbsp;to operations:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Depreciation and tooling amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">57.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">66.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Amortization of intangible assets and other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock based compensation expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Deferred income tax loss (benefit)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(12.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Equity in affiliates&#146; earnings, net of dividends received, noncontrolling
interest and other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Net earnings adjusted for non-cash charges to operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">94.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">174.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Changes in assets and liabilities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Receivables</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(37.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(111.2</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Inventories</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">83.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5.3</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Prepayments and other current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accounts payable and accrued expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(54.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Income taxes payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11.4</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other non-current assets and liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(36.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.6</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Net cash provided by operating activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">68.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>INVESTING</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Capital expenditures, including tooling outlays</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(38.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(75.4</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net proceeds from asset disposals</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Payments for business acquired, net of cash acquired</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(12.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Proceeds from sales of marketable securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Net cash used in investing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(45.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(71.4</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>FINANCING</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Increase in notes payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">79.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Additions to long-term debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Repayments of long-term debt, including current portion</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(136.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5.1</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Payment for purchase of treasury stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(13.5</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Proceeds from interest rate swap termination</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Proceeds from stock options exercised, including the tax benefit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Dividends paid to BorgWarner stockholders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(13.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(12.8</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Dividends paid to noncontrolling stockholders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8.2</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Net cash provided by (used in) financing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(34.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Effect of exchange rate changes on cash</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(30.3</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net increase (decrease)&nbsp;in cash</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(12.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash at beginning of year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">103.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">188.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash at end of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">90.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">203.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>SUPPLEMENTAL CASH FLOW INFORMATION</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash paid (refunded)&nbsp;during the period for:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">11.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">11.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Non-cash financing transactions:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Stock Performance Plans</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.5</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>See accompanying Notes to Condensed Consolidated Financial Statements</B>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->4<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>


<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>BORGWARNER INC. AND CONSOLIDATED SUBSIDIARIES</B>

</DIV>
<DIV align="left">
<A name="105"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 0pt"><B>NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS<BR>
(UNAUDITED)</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>(1)&nbsp;Basis of Presentation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The accompanying unaudited consolidated financial statements of BorgWarner Inc. and Consolidated
Subsidiaries (the &#147;Company&#148;) have been prepared in accordance with accounting principles generally
accepted in the United States of America (&#147;GAAP&#148;) for interim financial information and with the
instructions to Form 10-Q and Rule&nbsp;10-01 of Regulation&nbsp;S-X. Accordingly, they do not include all
of the information and footnotes necessary for a comprehensive presentation of financial position,
results of operations and cash flow activity required by GAAP for complete financial statements.
In the opinion of management, all normal recurring adjustments necessary for a fair presentation of
results have been included. Operating results for the three months ended March&nbsp;31, 2009 are not
necessarily indicative of the results that may be expected for the year ending December&nbsp;31, 2009.
The balance sheet as of December&nbsp;31, 2008 was derived from the audited financial statements as of
that date. For further information, refer to the consolidated financial statements and footnotes
thereto included in the Company&#146;s Annual Report on Form 10-K for the year ended December&nbsp;31, 2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We have reclassified certain 2008 amounts to conform to the presentation of our 2009 Condensed
Consolidated Statement of Operations. The financial statements and Management&#146;s Discussion and
Analysis of Financial Condition and Results of Operations should be read in conjunction with the
Company&#146;s Annual Report on Form 10-K for the fiscal year ended December&nbsp;31, 2008. The Company&#146;s
presentation of the Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of
Operations, Reporting Segments Note and Comprehensive Income (Loss) Note have been adjusted to
conform with the requirements of Statement of Financial Accounting Standard No.&nbsp;160,
Non-controlling Interest in Consolidated Financial Statements, (&#147;FAS 160&#148;). See Note 18 to the
Condensed Consolidated Financial Statements for more information regarding the Company&#146;s first
quarter 2009 adoption of FAS 160.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Management makes estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities as of the date of the financial
statements and accompanying notes, as well as the amounts of revenues and expenses reported during
the periods covered by those financial statements and accompanying notes. Actual results could
differ from these estimates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>(2)&nbsp;Research and Development</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table presents the Company&#146;s gross and net expenditures on research and development
(&#147;R&#038;D&#148;) activities:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD align="left">(millions)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"> <div style="border-bottom: 1px solid #000000; width=0%">Three months ended March 31,</div></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gross R&#038;D expenditures</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">48.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">67.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Customer reimbursements</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(16.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9.5</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net R&#038;D expenditures</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">32.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">57.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company&#146;s net R&#038;D expenditures are included in the selling, general and administrative expenses
of the
Condensed Consolidated Statements of Operations. Customer reimbursements are netted against gross
R&#038;D expenditures upon billing of services performed. The Company has contracts with several
customers at the Company&#146;s various R&#038;D locations. No such contract exceeded $6&nbsp;million in any of
the periods presented.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->5<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>(3)&nbsp;Income Taxes</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company&#146;s provision for income taxes is normally based on an estimated tax rate for the year
applied to the year-to-date federal, state and foreign income. However, due to unprecedented
depressed global economic conditions there is a significant amount of uncertainty regarding
industry production volumes for the remainder of the year. This precludes us from making a
reliable estimate of the annual effective tax rate for the year. Accordingly, we have made our
income tax provision in the first quarter pursuant to Financial Accounting Standards Board (&#147;FASB&#148;)
Interpretation No.&nbsp;18, Accounting for Income Taxes in interim Periods, which provides that tax (or
benefit) in each foreign jurisdiction that is not subject to a valuation allowance be separately
computed as ordinary income/(loss) occurs within the jurisdiction for the quarter. The actual
global effective tax rate for the quarter is calculated to be a benefit of (51.3%). This
represents an income tax benefit of ($6.6) million on the loss of ($12.9) million for the first
quarter of 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As of March&nbsp;31, 2009, the balance of gross unrecognized tax benefits is $61.1&nbsp;million. Included in
the balance at March&nbsp;31, 2009 are <font style="white-space: nowrap">$50.9</font>&nbsp;million of tax positions that are permanent in nature and,
if recognized, would reduce the global effective tax rate.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">During the first quarter of 2008, the
Company made a $6.6&nbsp;million cash payment to the Internal Revenue Service (&#147;IRS&#148;) to resolve agreed
upon issues of the ongoing IRS examination of the Company&#146;s 2002-2004 tax years. Also, there was a
reduction in the first quarter of 2008 of $6.7&nbsp;million related to the Company&#146;s unrecognized tax
benefits balance due to settlement of the agreed upon issues primarily related to the
Extraterritorial Income Exclusion for the 2002-2004 tax years. The Company is currently in the
appeals process on disputed issues related to the 2002-2004 IRS audit, which is not expected to be
resolved by December&nbsp;31, 2009. Other possible changes in the unrecognized tax benefits balance
related to other examinations cannot be reasonably estimated within the next 12&nbsp;months.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company recognizes interest and penalties related to unrecognized tax benefits in income tax
expense. The Company had approximately $11.4&nbsp;million for the payment of interest and penalties
accrued at December&nbsp;31, 2008. The Company had approximately $11.9&nbsp;million for the payment of
interest and penalties accrued at March&nbsp;31, 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction,
and various states and foreign jurisdictions. The Company is no longer subject to income tax
examinations by tax authorities in its major tax jurisdictions as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="43%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">Years No Longer</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"> <div style="border-bottom: 1px solid #000000; width=0%">Tax Jurisdiction</div></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"> <div style="border-bottom: 1px solid #000000; width=0%">Subject to Audit</div></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">U.S. Federal
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">2001 and prior</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Brazil
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">2002 and prior</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">France
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">2006 and prior</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Germany
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">2003 and prior</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Hungary
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">2004 and prior</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Italy
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">2002 and prior</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Japan
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">2006 and prior</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">South Korea
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">2004 and prior</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">United Kingdom
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">2006 and prior</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In certain tax jurisdictions the Company may have more than one taxpayer. The table above reflects
the status of the major taxpayer in each major tax jurisdiction.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->6<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>(4)&nbsp;Sales of Receivables</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company securitizes and sells certain receivables through third party financial institutions
without recourse. The amount sold can vary each month based on the amount of underlying
receivables. The Company continues to administer the collection of these receivables on behalf of
the third party. The maximum size of the facility has been set at $50&nbsp;million since fourth quarter
of 2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">At both March&nbsp;31, 2009 and December&nbsp;31, 2008, the Company had sold $50&nbsp;million of receivables under
a Receivables Transfer Agreement for face value without recourse. During both of the three-month
periods ended March&nbsp;31, 2009 and 2008, total cash proceeds from sales of accounts receivable were
$150&nbsp;million. The Company paid servicing fees related to these receivables for the three months
ended March&nbsp;31, 2009 and 2008 of $0.3&nbsp;million and $0.6&nbsp;million, respectively. These amounts are
recorded in interest expense and finance charges in the Condensed Consolidated Statements of
Operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On April&nbsp;24, 2009 the $50&nbsp;million receivables securitization matured and was not renewed. The
impact of this maturity will be an increase in receivables of $50&nbsp;million and a decrease in cash of
$50&nbsp;million in the second quarter of 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>(5)&nbsp;Inventories</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Inventories are valued at the lower of cost or market. The cost of U.S. inventories is determined
by the last-in, first-out (&#147;LIFO&#148;) method, while the operations outside the U.S. use the first-in,
first-out (&#147;FIFO&#148;) or average-cost methods. Inventories consisted of the following:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>March 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 0px solid #000000">(millions)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Raw material and supplies</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">212.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">260.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Work in progress</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">72.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">95.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Finished goods</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">82.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">111.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">FIFO inventories</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">368.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">467.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">LIFO reserve</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(15.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(16.6</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Inventories, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">352.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">451.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>(6)&nbsp;Property,
Plant and Equipment</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>March 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 0px solid #000000">(millions)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Land and buildings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">608.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">619.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Machinery and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,705.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,756.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Capital leases</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Construction in progress</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">148.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">160.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total
property, plant and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,464.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,537.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Less accumulated depreciation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,046.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,047.4</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,417.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,489.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tooling, net of amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">92.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">96.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Property,
plant and equipment, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,510.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,586.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->7<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Interest costs capitalized during the three-month periods ended March&nbsp;31, 2009 and March&nbsp;31, 2008
were $2.7&nbsp;million and $1.8&nbsp;million, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As of March&nbsp;31, 2009 and December&nbsp;31, 2008, accounts payable of $42.3&nbsp;million and $43.2&nbsp;million,
respectively, were related to property, plant and equipment purchases.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As of March&nbsp;31, 2009 and December&nbsp;31, 2008, specific assets of $7.0&nbsp;million and $7.4&nbsp;million,
respectively, were pledged as collateral under certain of the Company&#146;s long-term debt agreements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">During the first quarter of 2009, based on current market conditions and asset utilization rates,
the Company elected to extend the useful lives of certain machinery and equipment. As a result of
this change in estimate, depreciation expense was reduced by approximately $4&nbsp;million. As a result
of the impairment charges recorded in the third and fourth quarters of 2008, depreciation expense
was further reduced by approximately $3&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>(7)&nbsp;Product Warranty</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company provides warranties on some of its products. The warranty terms are typically from one
to three years. Provisions for estimated expenses related to product warranty are made at the time
products are sold. These estimates are established using historical information about the nature,
frequency, and average cost of warranty claims. Management actively studies trends of warranty
claims and takes action to improve product quality and minimize warranty claims. While management
believes that the warranty accrual is appropriate, actual claims incurred could differ from the
original estimates, requiring adjustments to the accrual. The accrual is recorded in both
long-term and short-term liabilities on the balance sheet. The following table summarizes the
activity in the warranty accrual accounts:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>Three months ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 0px solid #000000"><B>March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 0px solid #000000">(millions)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Beginning balance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">82.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">70.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Provision</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Payments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(15.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6.7</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Currency translation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Ending balance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">64.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">76.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->8<!-- /Folio -->
</DIV>



<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>(8)&nbsp;Notes Payable and Long-Term Debt</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Following is a summary of notes payable and long-term debt, including the current portion. The
weighted average interest rate on all borrowings outstanding as of March&nbsp;31, 2009 and December&nbsp;31,
2008 was 4.3% and 5.0%, respectively.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>March 31, 2009</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>December 31, 2008</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 0px solid #000000">(millions)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Current</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Long-Term</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Current</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Long-Term</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Bank borrowings and other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">197.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">130.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Term loans due through 2015 (at an average rate of
5.9% in 2009 and 4.9% in 2008)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">6.50% Senior Notes due 02/17/09, net of unamortized discount (a)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">136.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">5.75% Senior Notes due 11/01/16, net of unamortized discount (a)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">149.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">149.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">8.00% Senior Notes due 10/01/19, net of unamortized discount (a)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">133.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">133.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">7.125% Senior Notes due 02/15/29, net of unamortized discount</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">119.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">119.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Carrying amount of notes payable and long-term debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">250.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">432.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">320.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">416.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Impact of derivatives on debt (a)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total notes payable and long-term debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">250.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">466.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">320.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">459.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(a)</TD>
    <TD>&nbsp;</TD>
    <TD>In 2006, the Company entered into several interest rate swaps that had the effect of converting
$325.0&nbsp;million of fixed rate notes to variable rates. The weighted average effective interest rate
of these borrowings, including the effects of outstanding swaps as noted in Note 10 was 5.3% as of
December&nbsp;31, 2008. In the first quarter of 2009, $100&nbsp;million in interest rate swaps related to the
Company&#146;s 2009 fixed rate debt matured and the Company terminated $150&nbsp;million in interest rate
swap agreements related to the Company&#146;s 2016 fixed rate debt and $75&nbsp;million of interest rate swap
agreements related to the Company&#146;s 2019 fixed rate debt. As a result of the first quarter 2009
swap terminations, a $34.5&nbsp;million gain remained in debt to be amortized over the remaining lives
of the respective 2016 and 2019 debt. As of March&nbsp;31, 2009, the unamortized portion was $34.1
million.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company has a multi-currency revolving credit facility, which provides for borrowings up to
$600&nbsp;million through July&nbsp;22, 2009. Subsequent to the end of the first quarter of 2009, the
Company extended its revolving credit facility for eighteen months, maturing January&nbsp;22, 2011. The
facility will be reduced to $250&nbsp;million beginning July&nbsp;23, 2009. At March&nbsp;31, 2009 and December
31, 2008 there were no outstanding borrowings under the facility. The credit agreement is subject
to the usual terms and conditions applied by banks to an investment
grade company. The three key
covenants of the credit agreement are a net worth test,  a debt compared to EBITDA (&#147;Earnings
Before Interest, Taxes, Depreciation and Amortization&#148;) test,
and an interest coverage test. The Company was in compliance with
all covenants at March&nbsp;31, 2009 and expects to remain compliant in future periods. The Company&#146;s
6.5% Senior Notes of $136.7&nbsp;million matured on February&nbsp;17, 2009. The Company had outstanding
letters of credit at March&nbsp;31, 2009 and December&nbsp;31, 2008 of $16.8&nbsp;million and $21.4&nbsp;million,
respectively. The letters of credit typically act as a guarantee of payment to certain third
parties in accordance with specified terms and conditions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As of March&nbsp;31, 2009 and December&nbsp;31, 2008, the estimated fair values of the Company&#146;s senior
unsecured notes totaled $270.5&nbsp;million and $532.3&nbsp;million, respectively. The estimated fair values
were $131.8&nbsp;million lower at March&nbsp;31, 2009 and $6.7&nbsp;million higher at December&nbsp;31, 2008 than their
respective carrying values. Fair market values are developed by the use of estimates obtained from
brokers and other appropriate valuation techniques based on information available as of quarter-end
and year-end. The fair value estimates do not necessarily reflect the values the Company could
realize in the current markets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>(9)&nbsp;Fair Value Measurements</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On January&nbsp;1, 2009, the Company fully adopted as required, Statement of Financial Accounting
Standards No.&nbsp;157 &#150; &#147;Fair Value Measurements&#148; (&#147;SFAS 157&#148;) which expands the disclosure of fair
value measurements and its impact on the Company&#146;s financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Statement No.&nbsp;157 emphasizes that fair value is a market-based measurement, not an entity specific
measurement. Therefore, a fair value measurement should be determined based on assumptions that
market
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->9<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>


<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">participants would use in pricing an asset or liability. As a basis for considering market
participant assumptions in fair value measurements, SFAS 157 establishes a fair value hierarchy,
which prioritizes the inputs used in measuring fair values as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Level 1:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Observable inputs such as quoted prices in active markets;</TD>
</TR>
<TR style="font-size: 10pt">
<td>&nbsp;</td>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Level 2:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Inputs, other than quoted prices in active markets, that are
observable either directly or indirectly; and</TD>
</TR>
<TR style="font-size: 10pt">
<td>&nbsp;</td>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Level 3:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Unobservable inputs in which there is little or no market data,
which require the reporting entity to develop its own
assumptions.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Assets and liabilities measured at fair value are based on one or more of the following three
valuation
techniques noted in SFAS 157:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">A.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Market approach: Prices and other relevant information generated
by market transactions involving identical or comparable assets or liabilities.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">B.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Cost approach: Amount that would be required to replace the service
capacity of an asset (replacement cost).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">C.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Income approach: Techniques to convert future amounts to a single
present amount based upon market expectations (including present value
techniques, option-pricing and excess earnings models).</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table classifies the assets and liabilities measured at fair value during the period
ended March&nbsp;31, 2009:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>Basis of Fair Value Measurements</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Quoted</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Prices in</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Significant</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Active</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Other</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Significant</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Balance at</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Markets for</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Observable</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Unobservable</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>March 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Identical Items</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 0px solid #000000"><B>Inputs</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 0px solid #000000"><B>Inputs</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Valuation</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 0px solid #000000">(millions)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>(Level 1)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>(Level 2)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>(Level 3)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Technique</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Assets:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Commodity contracts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center">A</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Foreign exchange contracts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center">A</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">10.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">10.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt">
<td>&nbsp;</td>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Liabilities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Commodity contracts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">10.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">10.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center">A</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Foreign exchange contracts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center">A</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net investment hedge contracts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center">A</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">101.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">101.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>(10)&nbsp;Financial Instruments</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On January&nbsp;1, 2009, the Company adopted as required, Statement of Financial Accounting Standards
No.&nbsp;161, &#147;Disclosures about Derivative Instruments and Hedging Activities&#148; (&#147;SFAS 161&#148;) which
expands the disclosure of financial instruments.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company&#146;s financial instruments include cash, marketable securities, trade receivables, trade
payables, and notes payable. Due to the short-term nature of these instruments, their book value
approximates their fair value.
The Company&#146;s financial instruments also include long-term debt, interest rate and currency swaps,
commodity
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->10<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">forward contracts, and foreign currency forward contracts. All derivative contracts are
placed with counterparties that have an S&#038;P, or equivalent, investment grade credit rating at the
time of the contracts&#146; placement. At March&nbsp;31, 2009 the Company had no derivative contracts that
contained credit risk related contingent features.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company selectively uses cross-currency swaps to hedge the foreign currency exposure associated
with our net investment in certain foreign operations (net investment hedges). Fair values of
cross currency swaps are based on observable inputs, such as interest rate, yield curves, credit
risks, currency exchange rates and other external valuation methodology (Level 2 inputs under SFAS
157).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company uses certain commodity derivative instruments to protect against commodity price
changes related to forecasted raw material and supplies purchases. The primary purpose of our
commodity price hedging activities is to manage the volatility associated with these forecasted
purchases. The Company primarily utilizes forward and option contracts, which are designated as
cash flow hedges. The fair values for certain commodity derivative instruments are based on
Level 2 evidence (for example, future prices reported on commodity exchanges) under SFAS 157.
To the extent that derivative instruments are deemed to be effective as defined by FAS 133,
gains and losses arising from these contracts are deferred in other
comprehensive income or loss. Such
gains and losses will be reclassified into income as the underlying operating transactions are
realized. Gains and losses not qualifying for deferral treatment have been credited/charged to
income as they are recognized.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company uses foreign exchange forward and option contracts to protect against exchange rate
movements for forecasted cash flows for purchases, operating expenses or sales transactions
designated in currencies other than the functional currency of the operating unit. Most
contracts mature in less than one year, however, certain long-term commitments are covered by
forward currency arrangements to protect against currency risk through 2011. Foreign currency
contracts require the Company, at a future date, to either buy or sell foreign currency in
exchange for the operating units&#146; local currency. To the extent that derivative instruments are
deemed to be effective as defined by FAS 133, gains and losses arising from these contracts are
deferred in other comprehensive income or loss. Such gains and losses will be reclassified into income
as the underlying operating transactions are realized. Gains and losses not qualifying for
deferral treatment have been credited/charged to income as they are recognized. The fair values
of foreign exchange forward and option contracts are based on Level 2 inputs under SFAS 157,
such as quoted exchange rates by various exchanges.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In 2006, the Company entered into a series of interest rate swap agreements to effectively convert
a portion of its senior notes from fixed to variable interest rates and were designated as fair
value hedges for the senior notes. In the first quarter of 2009, $100&nbsp;million of interest rate
swap agreements relating to the 2009 fixed-rate debt matured. Also, in the first quarter of 2009,
the Company terminated $150&nbsp;million of interest rate swap agreements relating to the 2016 fixed
rate debt and $75&nbsp;million of interest rate swap agreements relating to the 2019 fixed rate debt.
The early termination of the 2016 and 2019 interest rate swap agreements resulted in a gain of
$34.5&nbsp;million that will be amortized as a reduction of interest expense over the remaining life of
the respective 2016 and 2019 debt. The Company recognized $5.7&nbsp;million in interest expense in the
first quarter of 2009 as a result of the early termination. This early termination also resulted
in the Company receiving net cash proceeds of $30.0&nbsp;million. As of March&nbsp;31, 2009, there were no
outstanding interest rate swap agreements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Effectiveness for cash flow, fair value and net investment hedges is assessed at the inception of
the hedging relationship and quarterly, thereafter. Ineffectiveness is measured quarterly and
results are recognized in earnings.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->11<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>





<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company selectively uses cross-currency swaps to hedge the foreign currency exposure associated
with our net investment in certain foreign operations (net investment hedges). At March&nbsp;31, 2009
the following cross-currency swaps were outstanding:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>

    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>

    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>

</TR>

<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>Cross-Currency Swaps</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Notional</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Notional</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 0px solid #000000"><B>in millions</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>in USD</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>in Local Currency</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Duration</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Floating $ to Floating <FONT face="'Times New Roman',times,serif">&#128;</FONT></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">75.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><FONT face="'Times New Roman',times,serif">&#128;</FONT></TD>
    <TD align="right">58.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center">Nov - 16</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Floating $ to Floating &#165;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">150.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#165;</TD>
    <TD align="right">17,581.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center">Oct - 19</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">At March&nbsp;31, 2009 the following commodity derivative contracts were outstanding:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="50%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>Commodity Hedges</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Volume</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Units of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Commodity</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Hedged</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Measure</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Duration</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Nickel
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1,658</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="CENTER" valign="top">Metric Tons
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" NOWRAP>Dec - 10</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Copper
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1,782</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="CENTER" valign="top">Metric Tons
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" NOWRAP>Dec - 10</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Aluminum
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">58</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="CENTER" valign="top">Metric Tons
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" NOWRAP>Jun - 09</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Platinum
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">765</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="CENTER" valign="top"><DIV style="margin-right:19px; text-indent:-0px">Troy Oz.</div>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" nowrap>Dec - 09</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Natural Gas
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">482,984</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="CENTER" valign="top"><DIV style="margin-right:21px; text-indent:-0px">MMBtu</div>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" NOWRAP>Dec - 10</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">At March&nbsp;31, 2009 the following foreign exchange derivative contracts were outstanding:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>

    <TD width="8%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" colspan="8" style="border-bottom: 1px solid #000000"><B>Currency Hedges</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="1"><B>Notional in</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Functional</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>Traded</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="1"><B>Traded Currency</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Currency</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Currency</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="1" style="border-bottom: 1px solid #000000"><B>(Millions)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Duration</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Brazilian Real</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">US Dollars</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" NOWRAP>7.3</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" NOWRAP>Dec - 09</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">British Pound</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Euro</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" NOWRAP>147.6</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" NOWRAP>Dec - 11</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Euro</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Hungarian Forint</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" NOWRAP>5,787.4</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" NOWRAP>Dec - 10</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Euro</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">British Pound</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" NOWRAP>3.5</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" NOWRAP>Dec - 09</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Euro</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">US Dollars</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" NOWRAP>20.5</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" NOWRAP>Dec - 09</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Euro</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Japanese Yen</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" NOWRAP>2,024.2</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" NOWRAP>Dec - 09</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Indian Rupee</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">US Dollar</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" NOWRAP>11.9</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" NOWRAP>Dec - 11</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Korean Won</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Euro</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" NOWRAP>44.3</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" nowrap>Apr - 10</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Korean Won</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Japanese Yen</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" NOWRAP>329.5</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" NOWRAP>Apr - 09</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Mexican Peso</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">US Dollars</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" NOWRAP>3.3</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" NOWRAP>Dec - 09</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">US Dollar</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Indian Rupee</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" NOWRAP>586.9</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" NOWRAP>Dec - 11</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">US Dollar</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Euro</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" NOWRAP>93.9</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" NOWRAP>Apr - 09</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">US Dollar</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Japanese Yen</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" NOWRAP>2,380.0</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" NOWRAP>Apr - 09</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">US Dollar</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Korean Won</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" NOWRAP>500.0</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" NOWRAP>May - 09</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->12<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>



<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">At March&nbsp;31, 2009 the following amounts were recorded in the Company&#146;s balance sheet as being
payable to or receivable from counterparties.
</DIV>
<DIV align="left" style="font-size: 8pt; margin-top: 6pt"></div>

<DIV align="center">
<TABLE style="font-size: 8pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="22%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="26%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="26%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>(in
millions)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Derivatives designated as</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>hedging instruments under</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Assets</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Liabilities</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Statement 133</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Location</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Location</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Foreign Exchange Contracts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Prepayments and Other Current Assets</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">$9.4</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Accounts Payable and Accrued Expenses</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">$32.4</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Other Non-Current Assets</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">0.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Other Non-Current Liabilities</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">18.2</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Commodity Contracts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Prepayments and Other Current Assets</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">0.5</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Accounts Payable and Accrued Expenses</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">9.3</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Other Non-Current Assets</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">0.5</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Other Non-Current Liabilities</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">0.7</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net Investment Hedges</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Prepayments and Other Current Assets</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Accounts Payable and Accrued Expenses</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Other Non-Current Assets</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Other Non-Current Liabilities</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">40.8</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The table below shows deferred losses&nbsp;at the end of the period reported in other
comprehensive income (loss) (OCI)&nbsp;and amounts expected to be reclassified to income or loss within the next
twelve months. The  loss expected to be reclassified to income or loss in one year or less assumes
no change in the current relationship of the hedged item and March&nbsp;31, 2009 market rates.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 0px solid #000000"><B>(in millions)</B></TD>

    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Loss expected to</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Balance in OCI at</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>be reclassified to income</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Contract Type</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>March 31, 2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>in one year or less</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Foreign Exchange</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"></TD>
    <TD align="right">$(39.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"></TD>
    <TD align="right">$(21.2</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Commodity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7.2</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net Investment Hedges</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(30.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">$(76.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$(28.4</TD>
    <TD>)&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following tables represent gains (losses)&nbsp;related to hedge transactions for the quarter ended
March&nbsp;31, 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Fair value derivative contracts are designated to offset losses and gains arising on the
revaluation of monetary assets and liabilities recorded on the Company&#146;s balance sheet. Gains and
losses on derivatives are matched to the losses and gains on the underlying balances and are
recorded on the same line in the income statement.
</DIV>
<DIV align="center">
<TABLE style="font-size: pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 0px solid #000000"><u><B>Derivatives Designated as Fair Value Hedging Instruments under Statement 133</B></u></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 8pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 0px solid #000000"><B>(in millions)</B></TD>

    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Hedged items in</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>Gain recorded in</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>statement 133</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left"><B>Loss recorded in</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Contract Type</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Location</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>income on derivative</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>(Fair Value)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>income on hedged item</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Foreign Exchange</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">SG&amp;A Expense</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">$2.5</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">SG&amp;A Expense</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">$(2.5)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Cash Flow hedges held during the period resulted in the following gains and losses recorded in
income. The effective portion of gains or losses exactly offset losses or gains in the underlying
transaction that they were designated to hedge, and are recorded on the same line in the income
statement. Ineffectiveness resulting from imperfect matches between changes in value of hedge
contracts and changes in value of the underlying transaction are immediately recognized in income.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->13<!-- /Folio -->
</DIV>




<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>



<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Derivatives Designated as Cash Flow Hedging Instruments under Statement 133</B></U>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD><B>(in millions)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Gain (Loss) reclassified</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Gain (Loss)</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>from OCI to income</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>recognized in income</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Contract Type</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Location</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(effective portion)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Location</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(ineffective portion)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Foreign Exchange</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Sales</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(6.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" valign="top">SG&#038;A Expense</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">$</TD>
    <TD align="right" valign="top">0.6</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Foreign Exchange</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" valign="top">Cost of Goods Sold</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" valign="top">SG&#038;A Expense</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">0.3</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Foreign Exchange</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" valign="top">SG&#038;A Expense</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">SG&#038;A Expense</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="toP">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Commodity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Cost of Goods Sold</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD NOWRAP align="left" valign="top">Cost of Goods Sold</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">(2.9</TD>
    <TD valign="top">)&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Net investment hedges are derivative contracts entered into to hedge against changes in exchange
rates that affect the overall value of net investments in foreign entities. Gains and losses on net
investment hedges are recorded in other comprehensive income or loss and are used to offset equivalent
losses or gains in the value of net investments that are recorded in translation gains and losses
which is also a component of other comprehensive income or loss.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Derivatives Designated as Net Investment Hedges under Statement 133</B></U>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD><B>(in millions)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Gain (Loss) reclassified</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Loss</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>from OCI to income</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>recognized in income</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Contract Type</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Location</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(effective portion)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Location</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(ineffective portion)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cross-Currency Swap</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" valign="top">Interest Expense</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" valign="top">Interest Expense</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">$</TD>
    <TD align="right" valign="top">(5.7</TD>
    <TD nowrap valign="top">)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">At March&nbsp;31, 2009 derivative instruments that are not designated as hedging instruments as defined
by FAS 133 were immaterial.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>(11)&nbsp;Retirement Benefit Plans</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The Company has a number of defined benefit pension plans and other post employment benefit plans
covering eligible salaried and hourly employees and their dependents. The other post employment
benefit plans, which provide medical and life insurance benefits, are unfunded plans. The estimated
contributions to the Company&#146;s defined benefit pension plans for 2009 range from $10 to $20
million, of which $2.8&nbsp;million has been contributed through the first three months of the year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">On February&nbsp;26, 2009, the Company&#146;s subsidiary, BorgWarner Diversified Transmission Products Inc.
(&#147;DTP&#148;), entered into a Plant Shutdown Agreement with the United Auto Workers (&#147;UAW&#148;) for its
Muncie, Indiana automotive component plant (the &#147;Muncie Plant&#148;). Management subsequently wound-down production activity at the plant, with operations effectively ceased as of March
31, 2009. As a result of the closure of the Muncie Plant, the Company recorded a curtailment gain
of $41.9&nbsp;million in the first quarter of 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The Plant Shutdown Agreement with the UAW for the Muncie Plant also included a settlement of a
portion of the UAW retiree health care obligation, resulting in the remeasurement of the retiree
medical plan. The financial impact of this settlement resulted in expense recognition of $14.0
million, a $47.2&nbsp;million reduction to retirement-related liabilities, a $27.2&nbsp;million increase in
accumulated other comprehensive income and a $34&nbsp;million increase in accounts payable and accrued
expenses in the first quarter of 2009. The $34&nbsp;million in accounts payable and accrued expenses is
expected to be paid in monthly installments between May&nbsp;2009 and
April&nbsp;2010. With the plant closing announcement, the Company has entered into discussions with the Pension Benefit Guaranty Corporation regarding potential funding of the Muncie Plant&#146;s defined benefit pension plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The combined pre-tax impact of these actions was a net gain of $27.9&nbsp;million, comprised by a $41.9
million curtailment gain and $14.0&nbsp;million settlement loss on the Company&#146;s Condensed Consolidated
Statements of Operations as of March&nbsp;31, 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The weighted average discount rate used to determine the benefit obligation of the Company&#146;s
retiree medical plan as of March&nbsp;31, 2009 was 8.00%. This represents a 100 basis point increase
from the 7.00% weighted average discount rate used at year-end 2008.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->14<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The components of net periodic benefit cost recorded in the Company&#146;s Condensed Consolidated
Statements of Operations, are as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Other post</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="15" style="border-bottom: 1px solid #000000"><B>Pension benefits</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>employment</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left">(millions)</TD>


    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>benefits</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Three months ended March 31,</TD>

    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">US</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Non-US</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">US</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Non-US</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2008</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD nowrap><DIV style="margin-left:15px; text-indent:-15px"><B>Components of net periodic benefit
cost:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Service cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">2.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">2.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expected return on plan assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(7.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Settlements, curtailments and other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(61.9 </TD>
    <TD nowrap>)*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amortization of unrecognized
prior service benefit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(8.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(5.3</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amortization of unrecognized loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net periodic benefit cost (benefit)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(1.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(61.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left"><B>*</B></TD>
    <TD>&nbsp;</TD>
    <TD>Note: In the table above, the first quarter net settlements, curtailments and other gain of $61.9
million was offset by the $34.0&nbsp;million cost to settle, resulting in a net pre-tax gain of $27.9
million.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>(12)&nbsp;Stock-Based Compensation</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Under the Company&#146;s 1993 Stock Incentive Plan (&#147;1993 Plan&#148;), the Company granted options to
purchase shares of the Company&#146;s common stock at the fair market value on the date of grant. The
options vest over periods up to three years and have a term of ten years from date of grant. As of
December&nbsp;31, 2003, there were no options available for future grants under the 1993 Plan. The 1993
Plan expired at the end of 2003 and was replaced by the Company&#146;s 2004 Stock Incentive Plan, which
was amended at the Company&#146;s 2006 Annual Stockholders Meeting, among other things, to increase the
number of shares available for issuance under the Plan. Under the BorgWarner Inc. Amended and
Restated 2004 Stock Incentive Plan (&#147;2004 Stock Incentive Plan&#148;), the number of shares authorized
for grant was 10,000,000, of which approximately 219,000 shares are available for future issuance.
As of March&nbsp;31, 2009, there were a total of 5,593,175 outstanding options under the 1993 and 2004
Stock Incentive Plans.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Stock option compensation expense reduced income before income taxes and net earnings by $1.7
million and $1.3&nbsp;million ($0.01 per basic and diluted share) and by $3.6&nbsp;million and $2.6&nbsp;million
($0.02 per basic and diluted share) for the three months ended March&nbsp;31, 2009 and 2008,
respectively. Stock option compensation expense affected both operating activities ($1.7&nbsp;million
and $3.6&nbsp;million non-cash charge backs) and financing activities ($0.4&nbsp;million and $1.0&nbsp;million tax
benefits) of the Condensed Consolidated Statements of Cash Flows for the three months ended March
31, 2009 and 2008, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Total unrecognized compensation cost related to nonvested stock options at March&nbsp;31, 2009 is
approximately $6.0&nbsp;million. This cost is expected to be recognized over the next 0.8&nbsp;years. On a
weighted average basis, this cost is expected to be recognized over 0.4&nbsp;years.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->15<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">A summary of the plans&#146; shares under option as of and for the three months ended March&nbsp;31, 2009 is
as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Weighted</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Average</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Aggregate</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Under</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Remaining</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Intrinsic</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Option</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Weighted-average</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Contractual</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Value</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>(thousands)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>exercise price</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Life (in years)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>(in millions)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Outstanding at December&nbsp;31, 2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,798</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">27.86</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Granted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercised</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Forfeited</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(195</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29.63</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Outstanding at March&nbsp;31, 2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,593</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">27.82</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Options exercisable at March
31, 2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,170</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">26.33</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">At its November&nbsp;2007 meeting, our Compensation Committee decided that restricted common stock would
be awarded in place of stock options for long-term incentive award grants to employees. These
restricted shares for employees vest fifty percent after two years and the remainder after three
years from the date of grant. The Company also grants restricted common stock to its non-employee
directors. For non-employee directors restricted shares vest ratably on the anniversary of the
date of the grant over a period of three years. The market value of the Company&#146;s restricted
common stock at the date of grant determines the value of the restricted common stock. In February
2009, 1,000,643 restricted shares were granted to employees under the 2004 Stock Incentive Plan.
The value of the awards is recorded as unearned compensation within capital in excess of par value
in stockholders&#146; equity, and is amortized as compensation expense over the restriction periods.
The Company recognized compensation expense related to restricted common stock of $3.7&nbsp;million and
$2.0&nbsp;million at March&nbsp;31, 2009 and 2008, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">A summary of the status of the Company&#146;s nonvested restricted stock as of and for the three months
ended March&nbsp;31, 2009 is as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Subject to</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Weighted</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Restriction</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Average</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>(thousands)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Price</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Nonvested at December&nbsp;31, 2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">661.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">45.29</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Granted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,000.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20.30</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Forfeited</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(23.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37.73</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Nonvested at March&nbsp;31, 2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,638.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">30.14</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">In calculating earnings or loss per share, earnings or loss are the same for the basic and diluted
calculations. Shares increased for diluted earnings per share for the three months ended March&nbsp;31,
2008 by 2,219,000 due to the effects of stock options and restricted shares issued and issuable
under the 1993 Plan and 2004 Stock Incentive Plan. There was no dilutive impact to the weighted
average shares outstanding for the three months ended March&nbsp;31, 2009 due to the Company&#146;s net loss
in the first quarter.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->16<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>(13)&nbsp;Comprehensive Income (Loss)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The amounts presented as changes in accumulated other comprehensive income (loss), net of related
taxes, are added to (deducted from) net earnings (loss)&nbsp;resulting in comprehensive income (loss).
The following table summarizes the components of comprehensive income (loss)&nbsp;on an after-tax basis
for the three-month periods ended March&nbsp;31, 2009 and 2008.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>Three months ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 0px solid #000000"><B>March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 0px solid #000000">(millions)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Foreign currency translation adjustments, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(58.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">113.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Market value change in hedge instruments, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(32.8</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Defined benefit post employment plans, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Unrealized gain on available-for-sale securities, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Change in accumulated other comprehensive income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(30.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">81.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net earnings (loss)&nbsp;as reported</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">88.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Comprehensive income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(37.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">169.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Comprehensive income (loss)&nbsp;attributable to the
noncontrolling interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Comprehensive income (loss)&nbsp;attributable to BorgWarner Inc.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(38.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">174.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>(14)&nbsp;Contingencies</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">In the normal course of business the Company and its subsidiaries are parties to various commercial
and legal claims, actions and complaints, including matters involving warranty claims, intellectual
property claims, general liability and various other risks. It is not possible to predict with
certainty whether or not the Company and its subsidiaries will ultimately be successful in any of
these commercial and legal matters or, if not, what the impact might be. The Company&#146;s
environmental and product liability contingencies are discussed separately below. The Company&#146;s
management does not expect that the results in any of these commercial and legal claims, actions
and complaints will have a material adverse effect on the Company&#146;s results of operations,
financial position or cash flows.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Litigation</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">In January&nbsp;2006, DTP, a subsidiary of the Company, filed a declaratory judgment action in United
States District Court, Southern District of Indiana (Indianapolis Division) against the United
Automobile, Aerospace, and Agricultural Implements Workers of America (&#147;UAW&#148;) Local No.&nbsp;287 and
Gerald Poor, individually and as the representative of a defendant class. DTP sought the Court&#146;s
affirmation that DTP did not violate the Labor-Management Relations Act or the Employee Retirement
Income Security Act by unilaterally amending certain medical plans effective April&nbsp;1, 2006 and
October&nbsp;1, 2006, prior to the expiration of the current collective bargaining agreements. On
September&nbsp;10, 2008, the Court found that DTP&#146;s reservation of the right to make such amendments
reducing the level of benefits provided to retirees was limited by its collectively bargained
health insurance agreement with the UAW, which does not expire until April&nbsp;24, 2009. Thus, the
amendments were untimely. In 2008 the Company recorded a charge of $4.0&nbsp;million as a result of the
Court&#146;s decision.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">DTP filed a declaratory judgment action in the United States District Court, Southern District of
Indiana (Indianapolis Division) against the UAW Local No.&nbsp;287 and Jim Barrett and others
individually, and as representatives of a defendant class, on February&nbsp;26, 2009 again seeking the
Court&#146;s affirmation that DTP will not violate the Labor &#151; Management Relations Act or the
Employment Retirement Income Security Act (ERISA)&nbsp;by modifying the level of benefits provided
retirees to make them comparable to other Company retiree benefit
plans after April&nbsp;24, 2009.
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->17<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The Company has communicated its plan to modify the level of benefits provided to the retirees to
make them comparable to other Company retiree benefit plans. The change will be effective
following expiration of the current health insurance agreement on April&nbsp;24, 2009.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Environmental</B></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The Company and certain of its current and former direct and indirect corporate predecessors,
subsidiaries and divisions have been identified by the United States Environmental Protection
Agency and certain state environmental agencies and private parties as potentially responsible
parties (&#147;PRPs&#148;) at various hazardous waste disposal sites under the Comprehensive Environmental
Response, Compensation and Liability Act (&#147;Superfund&#148;) and equivalent state laws and, as such, may
presently be liable for the cost of clean-up and other remedial activities at 36 such sites.
Responsibility for clean-up and other remedial activities at a Superfund site is typically shared
among PRPs based on an allocation formula.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The Company believes that none of these matters, individually or in the aggregate, will have a
material adverse effect on its results of operations, financial position, or cash flows.
Generally, this is because either the estimates of the maximum potential liability at a site are
not large or the liability will be shared with other PRPs, although no assurance can be given with
respect to the ultimate outcome of any such matter.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Based on information available to the Company (which in most cases includes: an estimate of
allocation of liability among PRPs; the probability that other PRPs, many of whom are large,
solvent public companies, will fully pay the cost apportioned to them; currently available
information from PRPs and/or federal or state environmental agencies concerning the scope of
contamination and estimated remediation and consulting costs; remediation alternatives; and
estimated legal fees), the Company has established an accrual for indicated environmental
liabilities with a balance at March&nbsp;31, 2009 of $11.8&nbsp;million. The Company has accrued amounts that
do not exceed $3.5&nbsp;million related to any individual site and we do not believe that the costs
related to any of these sites will have a material adverse effect on the Company&#146;s results of
operations, cash flows or financial condition. The Company expects to pay out substantially all of
the amounts accrued for environmental liability over the next three to five years.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">In connection with the sale of Kuhlman Electric Corporation, the Company agreed to indemnify the
buyer and Kuhlman Electric for certain environmental liabilities, then unknown to the Company,
relating to certain operations of Kuhlman Electric that pre-date the Company&#146;s 1999 acquisition of
Kuhlman Electric. During 2000, Kuhlman Electric notified the Company that it discovered potential
environmental contamination at its Crystal Springs, Mississippi plant while undertaking an
expansion of the plant. The Company is continuing to work with the Mississippi Department of
Environmental Quality and Kuhlman Electric to investigate and remediate to the extent necessary,
historical contamination at the plant and surrounding area. Kuhlman Electric and others, including
the Company, were sued in numerous related lawsuits, in which multiple claimants alleged personal
injury and property damage. In 2005, the Company and other defendants entered into settlements
that resolved approximately 99% of the then known personal injury and property damage claims
relating to the alleged environmental contamination. Those settlements involved payments by the
Company of $28.5&nbsp;million in the second half of 2005 and $15.7&nbsp;million in the first quarter of 2006,
in exchange for, among other things, dismissal with prejudice of these lawsuits.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Four additional lawsuits were filed against Kuhlman Electric and others, including the Company, in
2007 and 2008 on behalf of approximately 340 plaintiffs, alleging personal injury relating to the
alleged environmental contamination. Given the early stage of the litigation, the Company cannot
make any predictions as to the outcome, but its current intent is to vigorously defend against the
suits.
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->18<!-- /Folio -->
</DIV>



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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Conditional Asset Retirement Obligations</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In March&nbsp;2005, the FASB issued Interpretation No.&nbsp;47, Accounting for Conditional Asset Retirement
Obligations &#151; an interpretation of FASB Statement No.&nbsp;143 (&#147;FIN 47&#148;), which requires the Company to
recognize legal obligations to perform asset retirements in which the timing and/or method of
settlement are conditional on a future event that may or may not be within the control of the
entity. Certain government regulations require the removal and disposal of asbestos from an
existing facility at the time the facility undergoes major renovations or is demolished. The
liability exists because the facility will not last forever, but it is conditional on future
renovations (even if there are no immediate plans to remove the materials, which pose no health or
safety hazard in their current condition). Similarly, government regulations require the removal
or closure of underground storage tanks (&#147;USTs&#148;) and above ground storage tanks (&#147;ASTs&#148;) when their
use ceases, the disposal of polychlorinated biphenyl (&#147;PCB&#148;) transformers and capacitors when their
use ceases, and the disposal of used furnace bricks and liners, and lead-based paint in conjunction
with facility renovations or demolition. The Company currently has 32 manufacturing locations that
have been identified as containing these items. The fair value to remove and dispose of this
material has been estimated and recorded at $1.4&nbsp;million as of March&nbsp;31, 2009 and December&nbsp;31,
2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Product Liability</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Like many other industrial companies who have historically operated in the U.S., the Company (or
parties the Company is obligated to indemnify) continues to be named as one of many defendants in
asbestos-related personal injury actions. We believe that the Company&#146;s involvement is limited
because, in general, these claims relate to a few types of automotive friction products that were
manufactured many years ago and contained encapsulated asbestos. The nature of the fibers, the
encapsulation and the manner of use lead the Company to believe that these products are highly
unlikely to cause harm. As of March&nbsp;31, 2009 and December&nbsp;31, 2008 the Company had approximately
24,000 and 27,000 pending asbestos-related product liability claims, respectively. Of the 24,000
outstanding claims at March&nbsp;31, 2009, approximately 13,000 are pending in just three jurisdictions,
where significant tort and judicial reform activities are underway.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company&#146;s policy is to aggressively defend against these lawsuits and the Company has been
successful in obtaining dismissal of many claims without any payment. The Company expects that the
vast majority of the pending asbestos-related product liability claims where it is a defendant (or
has an obligation to indemnify a defendant) will result in no payment being made by the Company or
its insurers. In the first three months of 2009, of the approximately 3,000 claims resolved, only
43 (1.5%) resulted in any payment being made to a claimant by or on behalf of the Company. In
2008, of the approximately 17,500 claims resolved, only 210 (1.2%) resulted in any payment being
made to a claimant by or on behalf of the Company. <BR><br style="font-size: 6pt">Prior to June&nbsp;2004, the settlement and defense costs associated with all claims were covered by the
Company&#146;s primary layer insurance coverage, and these carriers administered, defended, settled and
paid all claims under a funding arrangement. In June&nbsp;2004, primary layer insurance carriers
notified the Company of the alleged exhaustion of their policy limits. This led the Company to
access the next available layer of insurance coverage. Since June&nbsp;2004, secondary layer insurers
have paid asbestos-related litigation defense and settlement expenses pursuant to a funding
arrangement. To date, the Company has paid $52.1&nbsp;million in defense and indemnity in advance of
insurers&#146; reimbursement and has received $14.8&nbsp;million in cash from insurers. The outstanding
balance of $37.3&nbsp;million is expected to be fully recovered. Timing of the recovery is dependent on
final resolution of the declaratory judgment action referred to below. At December&nbsp;31, 2008,
insurers owed $35.9&nbsp;million in association with these claims.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">At March&nbsp;31, 2009, the Company has an estimated liability of $36.5&nbsp;million for future claims
resolutions, with a related asset of $36.5&nbsp;million to recognize the insurance proceeds receivable
by the Company for
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->19<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">estimated losses related to claims that have yet to be resolved. Insurance carrier reimbursement of
100% is expected based on the Company&#146;s experience, its insurance contracts and decisions received
to date in the declaratory judgment action referred to below. At December&nbsp;31, 2008, the comparable
value of the insurance receivable and accrued liability was $34.7&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The amounts recorded in the Consolidated Balance Sheets related to the estimated future settlement
of existing claims are as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;&nbsp;&nbsp;<B>March 31,</B>&nbsp;&nbsp;&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 0px solid #000000">(millions)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Assets:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Prepayments and other current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">22.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">22.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other non-current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total insurance receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">36.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">34.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Liabilities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accounts payable and accrued expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">22.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">22.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other non-current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total accrued liability</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">36.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">34.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company cannot reasonably estimate possible losses, if any, in excess of those for which it has
accrued, because it cannot predict how many additional claims may be brought against the Company
(or parties the Company has an obligation to indemnify) in the future, the allegations in such
claims, the possible outcomes, or the impact of tort reform legislation that may be enacted at the
State or Federal levels.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">A declaratory judgment action was filed in January&nbsp;2004 in the Circuit Court of Cook County,
Illinois by Continental Casualty Company and related companies (&#147;CNA&#148;) against the Company and
certain of its other historical general liability insurers. CNA provided the Company with both
primary and additional layer insurance, and, in conjunction with other insurers, is currently
defending and indemnifying the Company in its pending asbestos-related product liability claims.
The lawsuit seeks to determine the extent of insurance coverage available to the Company including
whether the available limits exhaust on a &#147;per occurrence&#148; or an &#147;aggregate&#148; basis, and to
determine how the applicable coverage responsibilities should be apportioned. On August&nbsp;15, 2005,
the Court issued an interim order regarding the apportionment matter. The interim order has the
effect of making insurers responsible for all defense and settlement costs pro rata to
time-on-the-risk, with the pro-ration method to hold the insured harmless for periods of bankrupt
or unavailable coverage. Appeals of the interim order were denied. However, the issue is reserved
for appellate review at the end of the action. In addition to the primary insurance available for
asbestos-related claims, the Company has substantial additional layers of insurance available for
potential future asbestos-related product claims. As such, the Company continues to believe that
its coverage is sufficient to meet foreseeable liabilities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Although it is impossible to predict the outcome of pending or future claims or the impact of tort
reform legislation that may be enacted at the State or Federal levels, due to the encapsulated
nature of the products, the Company&#146;s experiences in aggressively defending and resolving claims in
the past, and the Company&#146;s significant insurance coverage with solvent carriers as of the date of
this filing, management does not believe that asbestos-related product liability claims are likely
to have a material adverse effect on the Company&#146;s results of operations, cash flows or financial
condition.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->20<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>(15)&nbsp;Leases and Commitments</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company has guaranteed the residual values of certain leased machinery and equipment at one of
its facilities. The guarantees extend through the maturity of the underlying lease, which is in
September&nbsp;2010. In the event the Company exercises its option not to purchase the machinery and
equipment, the Company has guaranteed a residual value of $7.7&nbsp;million. The Company has accrued
$4.1&nbsp;million as a loss on this guarantee, which is expected to be paid in 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>(16)&nbsp;Restructuring</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On July&nbsp;31, 2008, the Company announced a restructuring of its operations to align ongoing
operations with a continuing, fundamental market shift in the auto industry. As a continuation of
the Company&#146;s third quarter restructuring, on December&nbsp;11, 2008, the Company announced plans for
additional restructuring actions. As a result of these third and fourth quarter 2008 restructuring
actions, the Company has reduced its North American workforce by approximately 2,400 people, or
33%; its European workforce by approximately 1,600 people, or 18%; and its Asian workforce by
approximately 400 people, or 17%. The restructuring expense recognized in 2008 for employee
termination benefits is $54.6&nbsp;million, of which $24.2&nbsp;million has been paid out. The remaining
liability will be paid out by the middle of 2010. In addition to employee termination costs, the
Company recorded $72.9&nbsp;million of asset impairment charges in 2008 related to the North American
and European restructuring. The combined 2008 restructuring expenses of $127.5&nbsp;million are broken
out by segment as follows: Engine $85.3&nbsp;million, Drivetrain $40.9&nbsp;million and Corporate $1.3
million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Estimates of restructuring expense are based on information available at the time such charges are
recorded. Due to the inherent uncertainty involved in estimating restructuring expenses, actual
amounts paid for such activities may differ from amounts initially recorded. Accordingly, the
Company may record revisions of previous estimates by adjusting previously established reserves.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table displays a rollforward of the employee related restructuring accruals recorded
within the Company&#146;s Consolidated Balance Sheet and the related cash flow activity for the quarter
ended March&nbsp;31, 2009:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="14" style="border-bottom: 1px solid #000000"><B>Employee Related Costs</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Drivetrain</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Engine</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Corporate</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Total</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at December&nbsp;31,
2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">21.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">29.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">51.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash payments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(13.9</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Translation adjustment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.3</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at March&nbsp;31, 2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">15.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">20.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">35.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Future cash payments for these restructuring activities are expected to be complete by the middle
of 2010.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>(17)&nbsp;Reporting Segments</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company&#146;s business is comprised of two reporting segments: Engine and Drivetrain. These
reporting segments are strategic business groups, which are managed separately as each represents a
specific grouping of related automotive components and systems.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company allocates resources to each segment based upon the projected after-tax return on
invested capital (&#147;ROIC&#148;) of its business initiatives. The ROIC is comprised of projected earnings
before interest and income taxes (&#147;EBIT&#148;) adjusted for income taxes compared to the projected
average capital investment required.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->21<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">EBIT is considered a &#147;non-GAAP financial measure.&#148; Generally, a non-GAAP financial measure is a
numerical measure of a company&#146;s financial performance, financial position or cash flows that
excludes (or includes) amounts that are included in (or excluded from) the most directly comparable
measure calculated and presented in accordance with GAAP. EBIT is defined as earnings before
interest, income taxes and noncontrolling interest. &#147;Earnings&#148; is intended to mean net earnings as
presented in the Consolidated Statements of Operations under GAAP.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company believes that EBIT is useful to demonstrate the operational profitability of our
segments by excluding interest and income taxes, which are generally accounted for across the
entire Company on a consolidated basis. EBIT is also one of the measures used by the Company to
determine resource allocation within the Company. Although the Company believes that EBIT enhances
understanding of our business and performance, it should not be considered an alternative to, or
more meaningful than, net earnings or cash flows from operations as determined in accordance with
GAAP.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following tables present net sales, segment EBIT and total assets for the Company&#146;s reporting
segments.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->22<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><B>Net Sales by Reporting Segment</B></U><BR>
(millions)

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>Three months ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 0px solid #000000"><B>March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Engine</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">624.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,098.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Drivetrain</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">198.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">409.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Inter-segment eliminations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9.0</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net sales</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">819.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,498.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><B>Segment Earnings (Loss) Before Interest and Income Taxes</B></U><BR>
(millions)

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>Three months ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 0px solid #000000"><B>March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Engine</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">35.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">137.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Drivetrain</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(32.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Segment earnings before interest and income taxes (&#147;Segment EBIT&#148;)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">156.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Muncie closure retiree obligation net gain</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Corporate, including equity in affiliates&#146; earnings and stock-based compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(25.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(22.3</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Consolidated earnings before interest and taxes (&#147;EBIT&#148;)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">133.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.9</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest expense and finance charges</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Earnings (loss)&nbsp;before income taxes and noncontrolling interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(12.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">129.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Provision (benefit)&nbsp;for income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net earnings (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">95.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net earnings attributable to the noncontrolling interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net earnings (loss)&nbsp;attributable to BorgWarner Inc.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(7.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">88.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><B>Total Assets</B></U><BR>
(millions)

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>March 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Engine</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,900.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,065.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Drivetrain</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,112.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,211.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,012.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,277.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Corporate, including equity in affiliates <SUP style="font-size: 85%; vertical-align: text-top">(a)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">341.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">366.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,353.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,644.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">(a)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Corporate assets, including equity in affiliates, are net of trade receivables securitized and sold to third
parties, and include cash, deferred income taxes and investments &#038; advances.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->23<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>(18)&nbsp;New Accounting Pronouncements</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In September&nbsp;2006, the Financial Accounting Standards Board (&#147;FASB&#148;) issued Statement of
Financial Accounting Standards No.&nbsp;157, Fair Value Measurements (&#147;FAS 157&#148;). FAS 157 defines
fair value, establishes a framework for measuring fair value in GAAP and expands disclosures
about fair value measurements. On January&nbsp;1, 2009, the Company fully adopted as required, FAS
157. See Note 9 to the Consolidated Financial Statements for more information regarding the
implementation of FAS 157.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In December&nbsp;2007, the FASB issued Statement of Financial Accounting Standards No.&nbsp;141 (Revised
2007), Business Combinations (&#147;FAS 141(R)&#148;). FAS 141(R) establishes principles and requirements
for recognizing identifiable assets acquired, liabilities assumed, noncontrolling interest in the
acquiree, goodwill acquired in the combination or the gain from a bargain purchase, and disclosure
requirements. Under this revised statement, all costs incurred to effect an acquisition will be
recognized separately from the acquisition. Also, restructuring costs that are expected but the
acquirer is not obligated to incur will be recognized separately from the acquisition. On January
1, 2009, the Company adopted FAS 141(R). The Company has expensed $4.8&nbsp;million related to on-going
acquisition related activity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In December&nbsp;2007, the FASB issued Statement of Financial Accounting Standards No.&nbsp;160,
Noncontrolling Interests in Consolidated Financial Statements (&#147;FAS 160&#148;). FAS 160 requires that
ownership interests in subsidiaries held by parties other than the parent are clearly identified.
In addition, it requires that the amount of consolidated net income attributable to the parent and
to the noncontrolling interest be clearly identified and presented on the face of the income
statement. On January&nbsp;1, 2009, the Company adopted FAS 160.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In March&nbsp;2008, the FASB issued Statement of Financial Accounting Standards No.&nbsp;161, Disclosures
about Derivative Instruments and Hedging Activities (&#147;FAS 161&#148;). FAS 161 requires entities to
provide enhanced disclosures about how and why an entity uses derivative instruments, how
derivative instruments and related hedged items are accounted for under Statement 133 and its
related interpretations, and how derivative instruments and related hedged items affect an entity&#146;s
financial position, financial performance, and cash flows. On January&nbsp;1, 2009, the Company adopted
FAS 161. See Note 10 to the Consolidated Financial Statements for more information regarding the
implementation of FAS 161.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In May&nbsp;2008, the FASB issued FASB Staff Position No.&nbsp;APB 14-1, Accounting for Convertible Debt
Instruments That May be Settled in Cash Upon Conversion (Including Partial Cash Settlement) (&#147;FSP
APB 14-1&#148;). Under FSP APB 14-1, an entity must separately account for the liability and equity
components of the convertible debt instruments that may be settled entirely or partially in cash
upon conversion in a manner that reflects the issuer&#146;s interest cost. FSP APB 14-1 is effective
for fiscal years beginning after December&nbsp;15, 2008, and for interim periods within those fiscal
years, with retrospective application required. As a result of our adoption of FSP APB 14-1 for
fiscal 2009 and the Company&#146;s April&nbsp;9, 2009 issuance of $373.8&nbsp;million convertible senior notes due
April&nbsp;15, 2012, we will be required in the second quarter of 2009 to record the equity and
liability components of the notes on our Condensed Consolidated Balance Sheet. Additionally, FSP
APB 14-1 requires us to amortize, as interest expense, the discounted carrying value of the
convertible notes to their face value over the term of the notes. The impact to the Company&#146;s
Consolidated Statement of Operations for the second quarter and full year of 2009 will be
approximately $7.4&nbsp;million and $22.5&nbsp;million, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">See Note 20 to the Condensed Consolidated Financial Statements for more information regarding this
issuance.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->24<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In December&nbsp;2008, the FASB issued Staff Position 132(R)-1, Employers&#146; Disclosures about
Postretirement Benefit Plan Assets (&#147;FAS 132(R)-1&#148;). FAS 132(R)-1 requires entities to provide
enhanced disclosures about how investment allocation decisions are made, the major categories of
plan assets, the inputs and valuation techniques used to measure fair value of plan assets, the
effect of fair value measurements using significant unobservable inputs on changes in plan assets
for the period, and significant concentrations of risk within plan assets. FAS 132(R)-1 is
effective for the Company beginning with its year ending December&nbsp;31, 2009. The Company is
currently assessing the potential impacts, if any, on its consolidated financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>(19)&nbsp;Recent Transactions</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><B>BERU AG &#151; Domination and Profit Transfer Agreement</B></U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In the second quarter of 2008, the Company and BERU AG (&#147;BERU&#148;) completed a Domination and Profit
Transfer Agreement (&#147;DPTA&#148;), giving BorgWarner full control of BERU. Under this agreement BERU is
obligated to transfer 100% of its profits or losses to the Company. Upon request of BERU minority
shareholders, the Company is obligated to purchase their shares for a cash payment of <FONT face="'Times New Roman',times,serif">&#128;</FONT>71.32 per
share. Those BERU minority shareholders who do not sell their shares are entitled to receive an
annual compensatory payment (perpetual dividend) of <FONT face="'Times New Roman',times,serif">&#128;</FONT>4.73 (gross)&nbsp;per share, less certain taxes,
from the Company. The total obligation associated with the DPTA as of March&nbsp;31, 2009 was
approximately <FONT face="'Times New Roman',times,serif">&#128;</FONT>22.4 ($29.7) million, based upon the present value of the perpetual dividend and
approximates the cost if all remaining shares were purchased by the Company at <FONT face="'Times New Roman',times,serif">&#128;</FONT>71.32 per share.
As of March&nbsp;31, 2009, the DPTA obligation is presented in the Condensed Consolidated Balance Sheet
as $29.7&nbsp;million in current liabilities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The table below summarizes activity related to the Company&#146;s DPTA obligation as of March&nbsp;31, 2009
as follows (in millions):
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Domination and Profit Transfer Agreement Obligation at December&nbsp;31,
2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">44.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Shares Purchased During the Three Months Ended March&nbsp;31, 2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(12.2</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Translation Adjustment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2.1</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Domination and Profit Transfer Agreement Obligation at March&nbsp;31, 2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">29.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As of March&nbsp;31, 2009, the portion of the acquisition related to the DPTA represents a non-cash
transaction of <FONT face="'Times New Roman',times,serif">&#128;</FONT>22.4 ($29.7) million. For the three months ended March&nbsp;31, 2009, the costs related
to the annual perpetual dividend arrangement are reflected as expense in the Consolidated Statement
of Operations. $0.5&nbsp;million in interest expense has been recorded in the first quarter of 2009.
The tendering of approximately 1.3% of BERU shares, at a cost of $12.2&nbsp;million, has been reflected
as an investing activity in the Consolidated Statement of Cash Flows for the three months ended
March&nbsp;31, 2009. The annual payment of the perpetual dividend will be reflected as a financing
activity. The payment of the annual perpetual dividend is expected to occur in the second quarter
of each year, beginning in 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The DPTA is a binding agreement. However, minority shareholders of BERU initiated an appraisal
proceeding in the German court system that challenges the <FONT face="'Times New Roman',times,serif">&#128;</FONT>71.32 purchase price and <FONT face="'Times New Roman',times,serif">&#128;</FONT>4.73 annual
compensatory payment (perpetual dividend). If a higher price is determined, the excess purchase
price would be recorded as additional goodwill with a corresponding increase to the Company&#146;s total
DPTA obligation. Any additional goodwill would be subject to impairment testing.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On January&nbsp;7, 2009 the Company informed BERU of its intention to
purchase the remaining outstanding shares of approximately 4%, using the required German legal
process referred to as a &#147;squeeze-out&#148; to complete the 100% ownership. This process will include
an affirmative vote of BERU shareholders at its May&nbsp;20, 2009 annual shareholder meeting and will be
completed by the registration of the squeeze-out with the commercial
register court. As a result of the tendering of shares, the Company owns approximately 97% of all BERU&#146;s
outstanding
shares at March&nbsp;31, 2009.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->25<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">For a description of our earlier acquisition of 100% of BERU, see Note 20 to the Notes to
Consolidated Financial Statements in our most recently filed Annual Report on Form 10-K.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>(20)&nbsp;Subsequent Events</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On April&nbsp;9, 2009, the Company issued $373.8&nbsp;million in convertible senior notes due April&nbsp;15, 2012.
The notes will pay interest semi-annually at a coupon rate of 3.50% per year. Holders of the
notes may convert their notes at their option at any time prior to the close of business on the
second scheduled trading day immediately preceding the maturity date of the notes, in multiples of
$1,000 principal amount. The initial conversion rate for the notes is 30.4706 shares of the
Company&#146;s common stock per $1,000 principal amount of notes (representing an initial conversion
price of approximately $32.82 per share of common stock). The conversion price represents a
conversion premium of 27.5% over the last reported sale price of the Company&#146;s common stock on the
New York Stock Exchange on April&nbsp;6, 2009, of $25.74 per share. In conjunction with the note
offering, the Company entered into a bond hedge overlay at a net
pre-tax cost of $25.2 million, effectively raising the conversion premium
to 50%. Upon conversion, the Company will pay or deliver, cash, shares of our common stock or a
combination thereof at our election.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">See Note 18 to the Condensed Consolidated Financial Statements for more information regarding the
impact APB 14-1 will have on the Company&#146;s Consolidated Statement of Operations in the second
quarter and full year of 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Subsequent to the end of the first quarter of 2009, the Company extended its revolving credit
facility for eighteen months, maturing January&nbsp;22, 2011. The
facility will be reduced to $250
million beginning July&nbsp;23, 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On April&nbsp;24, 2009 the $50&nbsp;million receivables securitization matured and was not renewed. The
impact of this maturity will be an increase in receivables of $50&nbsp;million and a decrease in cash of
$50&nbsp;million in the second quarter of 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On April 30, 2009, the
Obama Administration announced that Chrysler LLC will file for bankruptcy protection under
Title 11 of the United States Code.  The impact of this bankruptcy is under review by
management at this time.  The Company&#146;s sales to Chrysler for the three months ended
March 31, 2009 were $29.4 million or approximately 3.6% of consolidated sales.
Accounts receivable from Chrysler as of March 31, 2009 were $22.9 million.
The Company will cease shipments to Chrysler as a result of the announcement
until such time that an agreement can be reached to ensure payments within
guidelines established by the Uniform Commercial Code and Title 11 of the
United States Code and other applicable statutes.

</div>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">There is uncertainty surrounding General Motors&#146;
future structure and potential filing for bankruptcy protection.  The impact of any potential filing is under
review by management, but would be influenced by the nature, timing and form of such filing.  Company sales to
General Motors and its global subsidiaries for the three months ended March 31, 2009 were $42.2 million
or approximately 5.1% of consolidated sales.  Accounts receivable from General Motors and its global subsidiaries
as of March 31, 2009 were $34.6 million.  In the event of a bankruptcy filing, the Company will consider ceasing
all shipments to the impacted locations within General Motors until such time that an agreement can be reached to
ensure payments within guidelines established by the Uniform Commercial Code and Title 11 of the United States
Code and other applicable statutes.
</div>
<P align="center" style="font-size: 10pt"><!-- Folio -->26<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="106"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;2. Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>INTRODUCTION</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">BorgWarner Inc. and Consolidated Subsidiaries (the &#147;Company&#148;) is a leading global supplier of
highly engineered systems and components primarily for powertrain applications. Our products help
improve vehicle performance, fuel efficiency, air quality and vehicle stability. They are
manufactured and sold worldwide, primarily to original equipment manufacturers (&#147;OEMs&#148;) of light
vehicles (i.e., passenger cars, sport-utility vehicles (&#147;SUVs&#148;), cross-over vehicles, vans and
light-trucks). Our products are also manufactured and sold to OEMs of commercial trucks, buses and
agricultural and off-highway vehicles. We also manufacture and sell our products into the
aftermarket for light and commercial vehicles. We operate manufacturing facilities serving
customers in the Americas, Europe and Asia, and are an original equipment supplier to every major
automaker in the world.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company&#146;s products fall into two reporting segments: Engine and Drivetrain. The Engine
segment&#146;s products include turbochargers, timing chain systems, air management, emissions systems,
thermal systems, as well as diesel and gas ignition systems. The Drivetrain segment&#146;s products are
all-wheel drive transfer cases, torque management systems, and components and systems for automated
transmissions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>RESULTS OF OPERATIONS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Three Months Ended March&nbsp;31, 2009 vs. Three Months Ended March&nbsp;31, 2008</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Consolidated net sales for the first quarter ended March&nbsp;31, 2009 totaled $819.5&nbsp;million, a 45.3%
decrease over the first quarter of 2008, driven by lower global vehicle production. The net
sales decrease included the effect of weaker foreign currencies, primarily the Euro, of
approximately $82&nbsp;million. Currency fluctuations impacted all of the Company&#146;s product lines.
Excluding currency, our sales declined 39.9% compared with the estimated worldwide light-vehicle
production decrease of 37%.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Gross profit and gross margin were $79.6&nbsp;million and 9.7% for first quarter 2009 as compared to
$283.5&nbsp;million and 18.9% for first quarter 2008. The gross margin percentage decrease is due to
sales volume declining faster than our ability to reduce our cost structure. Cost reduction
actions taken in the first quarter of 2009 to reduce our cost structure included global pay cuts,
selected plant shutdowns and reduced work weeks outside of the U.S..
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On February&nbsp;26, 2009, the Company&#146;s subsidiary, BorgWarner Diversified Transmission Products Inc.
(&#147;DTP&#148;), entered into a Plant Shutdown Agreement with the United Auto Workers (&#147;UAW&#148;) for its
Muncie, Indiana automotive component plant (the &#147;Muncie Plant&#148;). Management subsequently wound-down production activity at the plant, with operations effectively ceased as of March
31, 2009. As a result of the closure of the Muncie Plant, the Company recorded a curtailment gain
of $41.9&nbsp;million in the first quarter of 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Plant Shutdown Agreement with the UAW for the Muncie Plant also included a settlement of a
portion of the UAW retiree health care obligation, resulting in the remeasurement of the retiree
medical plan. The financial impact of this settlement resulted in expense recognition of $14.0
million, a $47.2&nbsp;million reduction to retirement-related liabilities, a $27.2&nbsp;million increase in
accumulated other comprehensive income and a $34&nbsp;million increase in accounts payable and accrued
expenses in the first quarter of 2009. The $34&nbsp;million in accounts payable and accrued expenses is
expected to be paid in monthly installments between May&nbsp;2009 and
April&nbsp;2010. With the plant closing announcement, the Company has entered into discussions with the Pension Benefit Guaranty Corporation regarding potential funding of the Muncie Plant&#146;s defined benefit pension plan.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->27<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The combined pre-tax impact of these actions was a net gain of $27.9&nbsp;million, comprised by a $41.9
million curtailment gain and $14.0&nbsp;million settlement loss on the Company&#146;s Condensed Consolidated
Statements of Operations as of March&nbsp;31, 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">First quarter selling, general and administrative (&#147;SG&#038;A&#148;) costs decreased $81.6&nbsp;million to $74.1
million from $155.7&nbsp;million, and decreased as a percentage of net sales to 9.0% from 10.4%. The
first quarter 2009 decrease in SG&#038;A was impacted by a $27.9&nbsp;million afore mentioned net gain
related to the Company&#146;s Plant Shutdown Agreement with the UAW and subsequent closure of the Muncie
Plant. This gain was partially offset by a $4.8&nbsp;million expense associated with the adoption of
FAS 141(R). Without these non-comparable items, SG&#038;A as a percentage of net sales was 11.9%. R&#038;D
costs, which are included in SG&#038;A expenses, decreased $25.0&nbsp;million to $32.5&nbsp;million from $57.5
million as compared to the first quarter of 2008. As a percentage of sales, R&#038;D costs increased to
4.0% from 3.8% in the first quarter of 2008. Our continued investment in a number of cross-business
R&#038;D programs, as well as other key programs, is necessary for the Company&#146;s short and long-term
growth.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Equity in affiliates&#146; earnings of $0.2&nbsp;million decreased $8.9&nbsp;million as compared with the first
quarter of 2008 primarily due to lower vehicle production in Asia.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">First quarter interest expense and finance charges of $19.1&nbsp;million increased $12.6&nbsp;million as
compared with first quarter 2008. This increase is primarily due to the termination of $225
million in interest rate swap agreements related to our 2016 and 2019 fixed rate debt, resulting in
a noncash charge of $5.7&nbsp;million, an unfavorable measurement of the noncash ineffectiveness of a
cross currency interest rate swap of $5.7&nbsp;million and costs related to BERU&#146;s DPTA perpetual
dividend arrangement. The combined noncash impact of the termination of our interest rate swap
agreements and the ineffectiveness of a cross currency interest rate swap in the first quarter of
2009 was $11.4&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company&#146;s provision for income taxes is normally based on an estimated tax rate for the year
applied to the year-to-date federal, state and foreign income. However, due to unprecedented
depressed global economic conditions there is a significant amount of uncertainty regarding
industry production volumes for the remainder of the year. This precludes us from making a
reliable estimate of the annual effective tax rate for the year. Accordingly, we have made our
income tax provision in the first quarter pursuant to Financial Accounting Standards Board (&#147;FASB&#148;)
Interpretation No.&nbsp;18, Accounting for Income Taxes in interim Periods, which provides that tax (or
benefit) in each foreign jurisdiction that is not subject to a valuation allowance be separately
computed as ordinary income/(loss) occurs within the jurisdiction for the quarter. The actual
global effective tax rate for the quarter is calculated to be a benefit of (51.3%). This
represents an income tax benefit of ($6.6) million on the loss of ($12.9) million for the first
quarter of 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company&#146;s net loss was $7.0&nbsp;million for the first quarter, or $0.06 loss per diluted share, a
decrease of $0.81 per diluted share over the previous year&#146;s first quarter. Excluding the $0.15
per diluted share net gain related to retiree obligations resulting from the closure of the Muncie,
Indiana, Drivetrain facility, $0.06 per diluted share loss from interest rate derivative agreements
and $0.03 per diluted share loss upon adoption of FAS 141(R) for treatment of on-going
acquisition-related activity, the net loss was $0.12 per diluted share, a decrease of $0.87 per
diluted share over the previous year&#146;s first quarter.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->28<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>Three Months Ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 0px solid #000000"><B>March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">GAAP earnings or (loss)&nbsp;per share &#151; diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.06</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.75</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Non-recurring or non-comparable items:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Adoption of
FAS 141 R &#151; Acquisition Activity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.03</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Muncie Closure Retiree Obligation Net Gain</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Interest Rate Derivative Agreements</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.06</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total impact of non-recurring or non-comparable items per share &#151; diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.06</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Reporting Segments</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company&#146;s business is comprised of two reporting segments: Engine and Drivetrain. These
reporting segments are strategic business groups, which are managed separately as each represents a
specific grouping of related automotive components and systems.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company allocates resources to each segment based upon the projected after-tax return on
invested capital (&#147;ROIC&#148;) of its business initiatives. The ROIC is comprised of projected earnings
before interest and income taxes (&#147;EBIT&#148;) adjusted for income taxes compared to the projected
average capital investment required.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">EBIT is considered a &#147;non-GAAP financial measure.&#148; Generally, a non-GAAP financial measure is a
numerical measure of a company&#146;s financial performance, financial position or cash flows that
excludes (or includes) amounts that are included in (or excluded from) the most directly comparable
measure calculated and presented in accordance with GAAP. EBIT is defined as earnings before
interest, income taxes and noncontrolling interest. &#147;Earnings&#148; is intended to mean net earnings as
presented in the Consolidated Statements of Operations under GAAP.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company believes that EBIT is useful to demonstrate the operational profitability of our
segments by excluding interest and income taxes, which are generally accounted for across the
entire Company on a consolidated basis. EBIT is also one of the measures used by the Company to
determine resource allocation within the Company. Although the Company believes that EBIT enhances
understanding of our business and performance, it should not be considered an alternative to, or
more meaningful than, net earnings (loss)&nbsp;or cash flows from operations as determined in accordance
with GAAP.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following tables present net sales and segment EBIT by reporting segment for the three months
ended March&nbsp;31, 2009 and 2008.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->29<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><u>Net
Sales by Reporting Segment</u></B>
<BR>
(millions)
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>Three months ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 0px solid #000000"><B>March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Engine</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">624.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,098.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Drivetrain</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">198.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">409.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Inter-segment eliminations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9.0</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net sales</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">819.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,498.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><u>Segment
Earnings (Loss) Before Interest and Income Taxes</u></B><BR>
(millions)

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>Three months ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 0px solid #000000"><B>March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Engine</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">35.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">137.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Drivetrain</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(32.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Segment earnings before interest and income taxes (&#147;Segment EBIT&#148;)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">156.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Muncie closure retiree obligation net gain</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Corporate, including equity in affiliates&#146; earnings and stock-based compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(25.4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(22.3</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Consolidated earnings before interest and taxes (&#147;EBIT&#148;)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">133.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.9</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest expense and finance charges</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Earnings (loss)&nbsp;before income taxes and noncontrolling interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(12.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">129.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Provision (benefit)&nbsp;for income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net earnings (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6.3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">95.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net earnings attributable to the noncontrolling interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net earnings (loss)&nbsp;attributable to BorgWarner Inc.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(7.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">88.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Three Months Ended March&nbsp;31, 2009 vs. Three Months Ended March&nbsp;31, 2008</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Engine segment net sales decreased $473.6&nbsp;million, or 43.1%, and segment EBIT decreased $102.0
million, or 74.0%, from first quarter 2008. Excluding the impact of weaker foreign currencies,
primarily the Euro, sales decreased 37.2%. The sales and EBIT margin decrease was primarily driven
by reduced global vehicle production that depressed demand for engine products, especially in
Europe.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Drivetrain segment net sales decreased $211.6&nbsp;million, or 51.6%, and segment EBIT decreased
$51.0&nbsp;million, or 278.7%, from first quarter 2008. Excluding the impact of weaker foreign
currencies, primarily the Euro, sales decreased 47.5%. The sales decrease was driven by lower
global production primarily in North America, Europe and Japan. The Drivetrain segment&#146;s EBIT
decreased due to continued production declines in North America and very weak demand in Europe.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Outlook for the Remainder of 2009</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company is very cautious about 2009. The crisis in the financial sector and deteriorating
global economic conditions have increased uncertainty about automotive vehicle sales in every
geographic region of the world. The Company expects the unprecedented current global economic
environment to continue to affect near-term results and to create difficult conditions through
2009. The impact of non-U.S. currencies is currently expected to decline in 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company maintains a positive long-term outlook for its global business and is committed to new
product development and strategic capital investments to enhance its product leadership strategy.
The trends that are driving our long-term growth are expected to continue, including the growth of
direct injection
</DIV>


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</DIV>



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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">diesel and gasoline engines worldwide, the increased adoption of automated transmissions in Europe
and Asia-Pacific, and the move to variable cam and chain engine timing systems in both Europe and
Asia-Pacific. When the recovery from current global economic conditions occur, we expect long-term
sales and net earnings growth to resume to historical rates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>FINANCIAL CONDITION AND LIQUIDITY</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company had $90.8&nbsp;million of cash on hand at March&nbsp;31, 2009. The Company has a multi-currency
revolving credit facility, which provides for borrowings up to $600&nbsp;million through July&nbsp;22, 2009.
Subsequent to the end of the first quarter of 2009, we extended our existing multi-currency credit
facility for eighteen months, maturing January&nbsp;22, 2011. The
facility will be reduced to $250
million beginning July&nbsp;23, 2009. At March&nbsp;31, 2009 and December&nbsp;31, 2008 there were no outstanding
borrowings under the facility. The credit agreement is subject to the usual terms and conditions
applied by banks to an investment grade company. The three key covenants of the credit agreement are
a net worth test,  a debt compared to EBITDA (&#147;Earnings Before Interest, Taxes, Depreciation and
Amortization&#148;) test, and an interest coverage test. The Company was in compliance with all covenants at March&nbsp;31, 2009 and
expects to be compliant in future periods. In addition to the credit facility, as of March&nbsp;31,
2009, the Company had $750&nbsp;million available under a universal shelf registration statement on file
with the Securities and Exchange Commission under which a variety of debt and equity instruments
could be issued. The Company had access to the commercial paper market through a $50&nbsp;million
accounts receivable securitization facility, which matured on April&nbsp;24, 2009. From a credit
quality perspective, the Company has a credit rating of BBB from Standard &#038; Poor&#146;s and Ba1 from
Moody&#146;s. On March&nbsp;18, 2009, Moody&#146;s downgraded the Company&#146;s credit rating from Baa3 to Ba1. The
current outlook from Standard &#038; Poor&#146;s and Moody&#146;s is negative. None of the Company&#146;s debt
agreements require accelerated repayment in the event of a decrease in credit ratings.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">At both March&nbsp;31, 2009 and December&nbsp;31, 2008, the Company had sold $50&nbsp;million of receivables under
a Receivables Transfer Agreement for face value without recourse. During both of the three-month
periods ended March&nbsp;31, 2009 and 2008, total cash proceeds from sales of accounts receivable were
$150&nbsp;million. The Company paid servicing fees related to these receivables for the three months
ended March&nbsp;31, 2009 and 2008 of $0.3&nbsp;million and $0.6&nbsp;million, respectively. These amounts are
recorded in interest expense and finance charges in the Condensed Consolidated Statements of
Operations. On April&nbsp;24, 2009 the $50&nbsp;million receivables securitization matured and was not
renewed. The impact of this maturity will be an increase in receivables of $50&nbsp;million and a
decrease in cash of $50&nbsp;million in the second quarter of 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In 2006, the Company entered into a series of interest rate swap agreements to effectively convert
a portion of its senior notes from fixed to variable interest rates and were designated as fair
value hedges for the senior notes. In the first quarter of 2009, $100&nbsp;million of interest rate
swap agreements relating to the 2009 fixed-rate debt matured. Also, in the first quarter of 2009,
the Company terminated $150&nbsp;million of interest rate swap agreements relating to the 2016 fixed
rate debt and $75&nbsp;million of interest rate swap agreements relating to the 2019 fixed rate debt.
The early termination of the 2016 and 2019 interest rate swap agreements resulted in a gain of
$34.5&nbsp;million that will be amortized as a reduction of interest expense over the remaining life of
the respective 2016 and 2019 debt. The Company recognized $5.7&nbsp;million in interest expense in the
first quarter of 2009 as a result of the early termination. This early termination also resulted
in the Company receiving net cash proceeds of $30.0&nbsp;million. As of March&nbsp;31, 2009, there were no
outstanding interest rate swap agreements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Net cash provided by operating activities decreased $6.5&nbsp;million to $68.0&nbsp;million for the first
three months of 2009 from $74.5&nbsp;million in the first three months of 2008. The decrease reflects
lower earnings, offset by lower working capital needs in the first
three months of 2009 as compared
to the first three months of 2008. Capital spending, including tooling outlays, was $38.6&nbsp;million
in the first three months of 2009, compared with $75.4&nbsp;million in 2008. Selective capital spending
remains an area of focus for the Company, both in order to support our book of new business and for
cost reductions and productivity improvements.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company expects to continue to spend capital to
support the launch of our new applications and for cost reductions and productivity improvement projects, but at levels considerably lower than 2008. The
Company expects that net cash provided by operating activities, and after capital expenditures,
including tooling outlays to be positive in 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As of March&nbsp;31, 2009, debt decreased from year-end 2008 by $63.4&nbsp;million and cash decreased by
$12.6. Our debt to capital ratio was 26.5% at the end of the first quarter versus 27.7% at the end
of 2008. The debt and debt to capital ratio decrease between March&nbsp;31, 2009 and December&nbsp;31, 2008
is primarily due to the February&nbsp;16, 2009 maturity and settlement of the Company&#146;s $136.7&nbsp;million
6.5% Senior Notes partially funded by cash from operations. The Company paid dividends to
BorgWarner stockholders of $13.8&nbsp;million and $12.8&nbsp;million in the first three months of 2009 and
2008, respectively. The Company repurchased 316,800 shares of its common stock for $13.5&nbsp;million
in the first three months of 2008, while no common shares were repurchased in the first three
months of 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On March&nbsp;5, 2009, the Company announced the temporary suspension of the Company&#146;s quarterly
dividend of $0.12 per share until global economic conditions improve. This action is expected to
save the Company approximately $42&nbsp;million in 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On April&nbsp;9, 2009, the Company issued $373.8&nbsp;million in convertible senior notes due April&nbsp;15, 2012.
The notes will pay interest semi-annually at a coupon rate of 3.50% per year. Holders of the
notes may convert their notes at their option at any time prior to the close of business on the
second scheduled trading day immediately preceding the maturity date of the notes, in multiples of
$1,000 principal amount. The initial conversion rate for the notes is 30.4706 shares of the
Company&#146;s common stock per $1,000 principal amount of notes (representing an initial conversion
price of approximately $32.82 per share of common stock). The conversion price represents a
conversion premium of 27.5% over the last reported sale price of the Company&#146;s common stock on the
New York Stock Exchange on April&nbsp;6, 2009, of $25.74 per share. In conjunction with the note
offering, the Company entered into a bond hedge overlay at a net
pre-tax cost of $25.2 million, effectively raising the conversion premium
to 50%. Upon conversion, the Company will pay or deliver, cash, shares of our common stock or a
combination thereof at our election. The convertible senior notes were issued under the Company&#146;s
$750&nbsp;million universal shelf registration filed with the Securities and Exchange Commission,
leaving $376&nbsp;million available as April&nbsp;10, 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We believe that the combination of cash from operations, cash balances, available credit
facilities, the April issuance of the convertible senior notes described above, and the remaining
shelf registration capacity will be sufficient to satisfy our cash needs for our current level of
operations and our planned operations for the foreseeable future. We will continue to balance our
needs for internal growth, external growth, debt reduction and cash conservation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>OTHER MATTERS</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In the normal course of business the Company and its subsidiaries are parties to various commercial
and legal claims, actions and complaints, including matters involving warranty claims, intellectual
property claims, general liability and various other risks. It is not possible to predict with
certainty whether or not the Company and its subsidiaries will ultimately be successful in any of
these commercial and legal matters or, if not, what the impact might be. The Company&#146;s
environmental and product liability contingencies are discussed separately below. The Company&#146;s
management does not expect that the results in any of these commercial and legal claims, actions
and complaints will have a material adverse effect on the Company&#146;s results of operations,
financial position or cash flows.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Litigation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In January&nbsp;2006, DTP, a subsidiary of the Company, filed a declaratory judgment action in United
States District Court, Southern District of Indiana (Indianapolis Division) against the United
Automobile, Aerospace, and Agricultural Implements Workers of America (&#147;UAW&#148;) Local No.&nbsp;287 and Gerald Poor, individually and
as the representative of a defendant class. DTP sought the Court&#146;s affirmation that DTP did not
violate the Labor-Management Relations Act or the Employee Retirement Income Security Act by
unilaterally amending certain medical plans effective April&nbsp;1, 2006 and October&nbsp;1, 2006, prior to
the expiration of the current collective bargaining agreements. On September&nbsp;10, 2008, the Court
found that DTP&#146;s reservation of the right to make such amendments reducing the level of benefits
provided to retirees was limited by its collectively bargained health insurance agreement with the
UAW, which does not expire until April&nbsp;24, 2009. Thus, the amendments were untimely. In 2008 the
Company recorded a charge of $4.0&nbsp;million as a result of the Court&#146;s decision.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">DTP filed a declaratory judgment action in the United States District Court, Southern District of
Indiana (Indianapolis Division) against the UAW Local No.&nbsp;287 and Jim Barrett and others
individually, and as representatives of a defendant class, on February&nbsp;26, 2009 again seeking the
Court&#146;s affirmation that DTP will not violate the Labor &#151; Management Relations Act or the
Employment Retirement Income Security Act (ERISA)&nbsp;by modifying the level of benefits provided
retirees to make them comparable to other Company retiree benefit plans after April&nbsp;24, 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company has communicated its plan to modify the level of benefits provided to the retirees to
make them comparable to other Company retiree benefit plans. The change will be effective
following expiration of the current health insurance agreement on April&nbsp;24, 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><B>Environmental</B></U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company and certain of its current and former direct and indirect corporate predecessors,
subsidiaries and divisions have been identified by the United States Environmental Protection
Agency and certain state environmental agencies and private parties as potentially responsible
parties (&#147;PRPs&#148;) at various hazardous waste disposal sites under the Comprehensive Environmental
Response, Compensation and Liability Act (&#147;Superfund&#148;) and equivalent state laws and, as such, may
presently be liable for the cost of clean-up and other remedial activities at 36 such sites.
Responsibility for clean-up and other remedial activities at a Superfund site is typically shared
among PRPs based on an allocation formula.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company believes that none of these matters, individually or in the aggregate, will have a
material adverse effect on its results of operations, financial position, or cash flows.
Generally, this is because either the estimates of the maximum potential liability at a site are
not large or the liability will be shared with other PRPs, although no assurance can be given with
respect to the ultimate outcome of any such matter.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Based on information available to the Company (which in most cases includes: an estimate of
allocation of liability among PRPs; the probability that other PRPs, many of whom are large,
solvent public companies, will fully pay the cost apportioned to them; currently available
information from PRPs and/or federal or state environmental agencies concerning the scope of
contamination and estimated remediation and consulting costs; remediation alternatives; and
estimated legal fees), the Company has established an accrual for indicated environmental
liabilities with a balance at March&nbsp;31, 2009 of $11.8&nbsp;million. The Company has accrued amounts that
do not exceed $3.5&nbsp;million related to any individual site and we do not believe that the costs
related to any of these sites will have a material adverse effect on the Company&#146;s results of
operations, cash flows or financial condition. The Company expects to pay out substantially all of
the amounts accrued for environmental liability over the next three to five years.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In connection with the sale of Kuhlman Electric Corporation, the Company agreed to indemnify the
buyer and Kuhlman Electric for certain environmental liabilities, then unknown to the Company,
relating to certain operations of Kuhlman Electric that pre-date the Company&#146;s 1999 acquisition of
Kuhlman Electric.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">During 2000, Kuhlman Electric notified the Company that it discovered potential
environmental contamination at its Crystal Springs, Mississippi plant while undertaking an
expansion of the plant. The Company is continuing to work with the Mississippi Department of
Environmental Quality and Kuhlman Electric to investigate and remediate to the extent necessary, historical contamination at the plant and surrounding area.
Kuhlman Electric and others, including the Company, were sued in numerous related lawsuits, in
which multiple claimants alleged personal injury and property damage. In 2005, the Company and
other defendants entered into settlements that resolved approximately 99% of the then known
personal injury and property damage claims relating to the alleged environmental contamination.
Those settlements involved payments by the Company of $28.5&nbsp;million in the second half of 2005 and
$15.7&nbsp;million in the first quarter of 2006, in exchange for, among other things, dismissal with
prejudice of these lawsuits.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Four additional lawsuits were filed against Kuhlman Electric and others, including the Company, in
2007 and 2008 on behalf of approximately 340 plaintiffs, alleging personal injury relating to the
alleged environmental contamination. Given the early stage of the litigation, the Company cannot
make any predictions as to the outcome, but its current intent is to vigorously defend against the
suits.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><B>Conditional Asset Retirement Obligations</B></U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In March&nbsp;2005, the FASB issued Interpretation No.&nbsp;47, Accounting for Conditional Asset Retirement
Obligations &#151; an interpretation of FASB Statement No.&nbsp;143 (&#147;FIN 47&#148;), which requires the Company to
recognize legal obligations to perform asset retirements in which the timing and/or method of
settlement are conditional on a future event that may or may not be within the control of the
entity. Certain government regulations require the removal and disposal of asbestos from an
existing facility at the time the facility undergoes major renovations or is demolished. The
liability exists because the facility will not last forever, but it is conditional on future
renovations (even if there are no immediate plans to remove the materials, which pose no health or
safety hazard in their current condition). Similarly, government regulations require the removal
or closure of underground storage tanks (&#147;USTs&#148;) and above ground storage tanks (&#147;ASTs&#148;) when their
use ceases, the disposal of polychlorinated biphenyl (&#147;PCB&#148;) transformers and capacitors when their
use ceases, and the disposal of used furnace bricks and liners, and lead-based paint in conjunction
with facility renovations or demolition. The Company currently has 32 manufacturing locations that
have been identified as containing these items. The fair value to remove and dispose of this
material has been estimated and recorded at $1.4&nbsp;million as of March&nbsp;31, 2009 and December&nbsp;31,
2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><B>Product Liability</B></U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Like many other industrial companies who have historically operated in the U.S., the Company (or
parties the Company is obligated to indemnify) continues to be named as one of many defendants in
asbestos-related personal injury actions. We believe that the Company&#146;s involvement is limited
because, in general, these claims relate to a few types of automotive friction products that were
manufactured many years ago and contained encapsulated asbestos. The nature of the fibers, the
encapsulation and the manner of use lead the Company to believe that the products are highly
unlikely to cause harm. As of March&nbsp;31, 2009 and December&nbsp;31, 2008 the Company had approximately
24,000 and 27,000 pending asbestos-related product liability claims, respectively. Of the 24,000
outstanding claims at March&nbsp;31, 2009, approximately 13,000 are pending in just three jurisdictions,
where significant tort and judicial reform activities are underway.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company&#146;s policy is to aggressively defend against these lawsuits and the Company has been
successful in obtaining dismissal of many claims without any payment. The Company expects that the
vast majority of the pending asbestos-related product liability claims where it is a defendant (or
has an obligation to indemnify a defendant) will result in no payment being made by the Company or
its insurers. In the first three months of 2009, of the approximately 3,000 claims resolved, only
43 (1.5%) resulted in any payment being made to a claimant by or on behalf of the Company. In
2008, of the approximately 17,500 claims resolved, only 210 (1.2%) resulted in any payment being
made to a claimant by or on behalf of the Company.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Prior to June&nbsp;2004, the settlement and defense costs associated with all claims were covered by the
Company&#146;s primary layer insurance coverage, and these carriers administered, defended, settled and
paid all claims under a funding arrangement. In June&nbsp;2004, primary layer insurance carriers
notified the Company of the alleged exhaustion of their policy limits. This led the Company to access the next available
layer of insurance coverage. Since June&nbsp;2004, secondary layer insurers have paid asbestos-related
litigation defense and settlement expenses pursuant to a funding arrangement. To date, the Company
has paid $52.1&nbsp;million in defense and indemnity in advance of insurers&#146; reimbursement and has
received $14.8&nbsp;million in cash from insurers. The outstanding balance of $37.3&nbsp;million is expected
to be fully recovered. Timing of the recovery is dependent on final resolution of the declaratory
judgment action referred to below. At December&nbsp;31, 2008, insurers owed $35.9&nbsp;million in association
with these claims.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">At March&nbsp;31, 2009, the Company has an estimated liability of $36.5&nbsp;million for future claims
resolutions, with a related asset of $36.5&nbsp;million to recognize the insurance proceeds receivable
by the Company for estimated losses related to claims that have yet to be resolved. Insurance
carrier reimbursement of 100% is expected based on the Company&#146;s experience, its insurance
contracts and decisions received to date in the declaratory judgment action referred to below. At
December&nbsp;31, 2008, the comparable value of the insurance receivable and accrued liability was $34.7
million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The amounts recorded in the Consolidated Balance Sheets related to the estimated future settlement
of existing claims are as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;&nbsp;&nbsp;<B>March 31,</B>&nbsp;&nbsp;&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 0px solid #000000">(millions)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Assets:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Prepayments and other current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">22.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">22.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other non-current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total insurance receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">36.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">34.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Liabilities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accounts payable and accrued expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">22.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">22.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other non-current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total accrued liability</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">36.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">34.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company cannot reasonably estimate possible losses, if any, in excess of those for which it has
accrued, because it cannot predict how many additional claims may be brought against the Company
(or parties the Company has an obligation to indemnify) in the future, the allegations in such
claims, the possible outcomes, or the impact of tort reform legislation that may be enacted at the
State or Federal levels.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">A declaratory judgment action was filed in January&nbsp;2004 in the Circuit Court of Cook County,
Illinois by Continental Casualty Company and related companies (&#147;CNA&#148;) against the Company and
certain of its other historical general liability insurers. CNA provided the Company with both
primary and additional layer insurance, and, in conjunction with other insurers, is currently
defending and indemnifying the Company in its pending asbestos-related product liability claims.
The lawsuit seeks to determine the extent of insurance coverage available to the Company including
whether the available limits exhaust on a &#147;per occurrence&#148; or an &#147;aggregate&#148; basis, and to
determine how the applicable coverage responsibilities should be apportioned. On August&nbsp;15, 2005,
the Court issued an interim order regarding the apportionment matter. The interim order has the
effect of making insurers responsible for all defense and settlement costs pro rata to
time-on-the-risk, with the pro-ration method to hold the insured harmless for periods of bankrupt
or unavailable coverage. Appeals of the interim order were denied. However, the issue is reserved
for appellate review at the end of the action. In addition to the primary insurance available for
asbestos-related claims, the
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Company has substantial additional layers of insurance available for
potential future asbestos-related product claims. As such, the Company continues to believe that its coverage is sufficient to meet
foreseeable liabilities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Although it is impossible to predict the outcome of pending or future claims or the impact of tort
reform legislation that may be enacted at the State or Federal levels, due to the encapsulated
nature of the products, the Company&#146;s experiences in aggressively defending and resolving claims in
the past, and the Company&#146;s significant insurance coverage with solvent carriers as of the date of
this filing, management does not believe that asbestos-related product liability claims are likely
to have a material adverse effect on the Company&#146;s results of operations, cash flows or financial
condition.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>New Accounting Pronouncements</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In September&nbsp;2006, the Financial Accounting Standards Board (&#147;FASB&#148;) issued Statement of
Financial Accounting Standards No.&nbsp;157, Fair Value Measurements (&#147;FAS 157&#148;). FAS 157 defines
fair value, establishes a framework for measuring fair value in GAAP and expands disclosures
about fair value measurements. On January&nbsp;1, 2009, the Company fully adopted as required, FAS
157. See Note 9 to the Condensed Consolidated Financial Statements for more information
regarding the implementation of FAS 157.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In December&nbsp;2007, the FASB issued Statement of Financial Accounting Standards No.&nbsp;141 (Revised
2007), <I>Business Combinations </I><BR>(&#147;FAS 141(R)&#148;).
FAS 141(R) establishes principles and requirements
for recognizing identifiable assets acquired, liabilities assumed, noncontrolling interest in the
acquiree, goodwill acquired in the combination or the gain from a bargain purchase, and disclosure
requirements. Under this revised statement, all costs incurred to effect an acquisition will be
recognized separately from the acquisition. Also, restructuring costs that are expected but the
acquirer is not obligated to incur will be recognized separately from the acquisition. On January
1, 2009, the Company adopted FAS 141(R). The Company has expensed $4.8&nbsp;million realted to on-going
acquisition related activity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In December&nbsp;2007, the FASB issued Statement of Financial Accounting Standards No.&nbsp;160,
Noncontrolling Interests in Consolidated Financial Statements (&#147;FAS 160&#148;). FAS 160 requires that
ownership interests in subsidiaries held by parties other than the parent are clearly identified.
In addition, it requires that the amount of consolidated net income attributable to the parent and
to the noncontrolling interest be clearly identified and presented on the face of the income
statement. On January&nbsp;1, 2009, the Company adopted FAS 160.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In March&nbsp;2008, the FASB issued Statement of Financial Accounting Standards No.&nbsp;161, Disclosures
about Derivative Instruments and Hedging Activities (&#147;FAS 161&#148;). FAS 161 requires entities to
provide enhanced disclosures about how and why an entity uses derivative instruments, how
derivative instruments and related hedged items are accounted for under Statement 133 and its
related interpretations, and how derivative instruments and related hedged items affect an entity&#146;s
financial position, financial performance, and cash flows. On January&nbsp;1, 2009, the Company adopted
FAS 161.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In May&nbsp;2008, the Financial FASB issued FASB Staff Position No.&nbsp;APB 14-1, Accounting for Convertible
Debt Instruments That May be Settled in Cash Upon Conversion (Including Partial Cash Settlement)
(&#147;FSP APB 14-1&#148;). Under FSP APB 14-1, an entity must separately account for the liability and
equity components of the convertible debt instruments that may be settled entirely or partially in
cash upon conversion in a manner that reflects the issuer&#146;s interest cost. FSP APB 14-1 is
effective for fiscal years beginning after December&nbsp;15, 2008, and for interim periods within those
fiscal years, with retrospective application required. As a result of our adoption of FSP APB 14-1
for fiscal 2009 and the Company&#146;s April&nbsp;9, 2009 issuance of $373.8&nbsp;million convertible senior notes
due April&nbsp;15, 2012, we will be required in the second quarter of 2009
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">to record the equity and liability components of the notes on our Condensed Consolidated Balance Sheet. Additionally, FSP
APB 14-1 requires us to amortize, as interest expense, the discounted carrying value of the convertible notes to their face value over the term of the notes. The impact to the Company&#146;s
Consolidated Statement of Operations for the second quarter and full year of 2009 will be
approximately $7.4&nbsp;million and $22.5&nbsp;million, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">See Note 20 to the Condensed Consolidated Financial Statements for more information regarding this
issuance.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In December&nbsp;2008, the FASB issued Staff Position 132(R)-1, Employers&#146; Disclosures about
Postretirement Benefit Plan Assets <BR>(&#147;FAS 132(R)-1&#148;).
FAS 132(R)-1 requires entities to provide
enhanced disclosures about how investment allocation decisions are made, the major categories of
plan assets, the inputs and valuation techniques used to measure fair value of plan assets, the
effect of fair value measurements using significant unobservable inputs on changes in plan assets
for the period, and significant concentrations of risk within plan assets. FAS 132(R)-1 is
effective for the Company beginning with its year ending December&nbsp;31, 2009. The Company is
currently assessing the potential impacts, if any, on its consolidated financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Recent Development</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On April&nbsp;9, 2009, the Company issued $373.8&nbsp;million in convertible senior notes due April&nbsp;15, 2012.
The notes will pay interest semi-annually at a coupon rate of 3.50% per year. Holders of the
notes may convert their notes at their option at any time prior to the close of business on the
second scheduled trading day immediately preceding the maturity date of the notes, in multiples of
$1,000 principal amount. The initial conversion rate for the notes is 30.4706 shares of the
Company&#146;s common stock per $1,000 principal amount of notes (representing an initial conversion
price of approximately $32.82 per share of common stock). The conversion price represents a
conversion premium of 27.5% over the last reported sale price of the Company&#146;s common stock on the
New York Stock Exchange on April&nbsp;6, 2009, of $25.74 per share. In conjunction with the note
offering, the Company entered into a bond hedge overlay at a net
pre-tax cost of $25.2 million, effectively raising the conversion premium
to 50%. Upon conversion, the Company will pay or deliver, cash, shares of our common stock or a
combination thereof at our election.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Statements contained in this Form 10-Q (including Management&#146;s Discussion and Analysis of Financial
Condition and Results of Operations) may contain forward-looking statements as contemplated by the
1995 Private Securities Litigation Reform Act that are based on management&#146;s current outlook,
expectations, estimates and projections. Words such as &#147;outlook&#148;, &#147;expects,&#148; &#147;anticipates,&#148;
&#147;intends,&#148; &#147;plans,&#148; &#147;believes,&#148; &#147;estimates,&#148; 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, as well as the
other risks detailed in our filings with the Securities and Exchange Commission, including the Risk
Factors, identified in the Form 10-K for the fiscal year ended December&nbsp;31, 2008. We do not
undertake any obligation to update any forward-looking statements.
</DIV>
<DIV align="left">
<A name="107"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Item&nbsp;3. Quantitative and Qualitative Disclosure About Market Risk</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">There have been no material changes to the information concerning our exposures to market risk as
stated in the Company&#146;s Annual Report on Form 10-K for the year ended December&nbsp;31, 2008.
</DIV>

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<DIV align="left">
<A name="108"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Item&nbsp;4. Controls and Procedures</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company maintains disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) that are designed to provide reasonable assurance that the information
required to be disclosed in the reports it files with the Securities and Exchange Commission is
collected and then processed, summarized and disclosed within the time periods specified in the
rules of the Securities and Exchange Commission. Under the supervision and with the participation
of the Company&#146;s management, including the Company&#146;s Chief Executive Officer and Chief Financial
Officer, the Company has evaluated the effectiveness of the design and operation of its disclosure
controls and procedures as of the end of the period covered by this report. Based on such
evaluation, the Company&#146;s Chief Executive Officer and Chief Financial Officer have concluded that
these procedures are effective. There have been no changes in internal control over financial
reporting that occurred during the period covered by this report that have materially affected, or
are reasonably likely to materially affect, the Company&#146;s internal control over financial
reporting.
</DIV>
<DIV align="left">
<A name="109"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><U><B>PART II. OTHER INFORMATION</B></U>
</DIV>

<DIV align="left">
<A name="110"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Item&nbsp;1. Legal Proceedings</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company is subject to a number of claims and judicial and administrative proceedings (some of
which involve substantial amounts) arising out of the Company&#146;s business or relating to matters for
which the Company may have a contractual indemnity obligation. See Note 14 &#151; Contingencies to the
condensed consolidated financial statements for a discussion of environmental, product liability
and other litigation, which is incorporated herein by reference.
</DIV>
<DIV align="left">
<A name="111"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Item&nbsp;5. Other Information</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">At the Annual Meeting of Stockholders held April&nbsp;29, 2009, non-employee Directors Bonanno, Michas,
Schaum and Stallkamp were elected to new three year terms as Class&nbsp;I Directors on the Company&#146;s
Board of Directors, and each was granted 9,289 shares of restricted stock as equity compensation.
Restrictions on the shares of stock will expire over the three year term, one third in each year.
Director Cuneo was elected to a two year term as a Class&nbsp;III Director on the Company&#146;s Board of
Directors, and was granted 6,193 shares of restricted stock as equity compensation, with restrictions
expiring half after one year from the date of grant and the remainder expiring two years from the
date of grant. Non-employee director compensation is more fully described in the Company&#146;s proxy
statement filed for its 2009 Annual Meeting of Stockholders.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="112"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;6. Exhibits</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="83%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:30px; text-indent:-0px">Exhibit&nbsp;10.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">BorgWaner Inc. Amended and Restated 2004 Stock Incentive Plan</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:30px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:30px; text-indent:-0px">Exhibit&nbsp;31.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Rule&nbsp;13a-14(a)/15d-14(a) Certification of the
Principal Executive Officer</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:30px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:30px; text-indent:-0px">Exhibit&nbsp;31.2
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Rule&nbsp;13a-14(a)/15d-14(a) Certification of the
Principal Financial Officer</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:30px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:30px; text-indent:-0px">Exhibit&nbsp;32.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Section&nbsp;1350 Certifications</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="113"></A>
</DIV>

<DIV align="CENTER" style="font-size: 10pt; margin-top: 6pt"><U><B>SIGNATURES</B></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="45%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>    <TD>&nbsp;</TD>    <TD>&nbsp;</TD>
    <TD colspan="1" valign="top" align="left"><B>BorgWarner Inc.</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="1" valign="top" align="left">&nbsp;(Registrant)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Jeffrey L. Obermayer</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;(Signature)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Jeffrey L. Obermayer</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" colspan="0">Vice President and Controller</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" colspan="0">(Principal Accounting Officer)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><br>Date: April&nbsp;30, 2009

</DIV>


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<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>c50890exv10w1.htm
<DESCRIPTION>EX-10.1
<TEXT>
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<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><b>Exhibit&nbsp;10.1</b>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>BORGWARNER INC.<BR>
AMENDED AND RESTATED<BR>
2004 STOCK INCENTIVE PLAN</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><FONT style="font-variant: SMALL-CAPS">Section&nbsp;1. </FONT><I>Purpose.</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The purpose of the Plan is to give the Company a significant advantage in attracting,
retaining and motivating officers, employees and directors and to provide the Company and its
subsidiaries with the ability to provide incentives more directly linked to the profitability of
the Company&#146;s businesses and increases in stockholder value.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><FONT style="font-variant: SMALL-CAPS">Section&nbsp;2. </FONT><I>Definitions.</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For purposes of the Plan, the following terms are defined as set forth below:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&#147;Affiliate&#148; means a corporation or other entity controlled by the Company and designated
by the Committee as such.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&#147;Award&#148; means a Stock Appreciation Right, Stock Option, Restricted Stock, Stock Unit,
Performance Unit, or Performance Share.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&#147;Award Agreement&#148; means a written agreement or notice memorializing the terms and
conditions of an Award granted pursuant to the Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&#147;Board&#148; means the Board of Directors of the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&#147;Breach of Conduct&#148; means, for purposes of the Plan, any of the following: (i)&nbsp;actions by
the participant resulting in the termination of the participant&#146;s employment with the Company or
any Affiliate for Cause, (ii)&nbsp;the participant&#146;s violation of the Company&#146;s Code of Ethical Conduct
where such business standards have been distributed or made available to the participant, (iii)&nbsp;the
participant&#146;s unauthorized disclosure to a third party of confidential information, intellectual
property, or proprietary business practices, processes, or methods of the Company; or willful
failure to protect the Company&#146;s confidential information, intellectual property, proprietary
business practices, processes, or methods from unauthorized disclosure, or (iv)&nbsp;the participant&#146;s
soliciting, inducing, or attempting to induce employees of the Company and its Affiliates to
terminate their employment with the Company or an Affiliate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&#147;Cause&#148; has the meaning set forth in Section&nbsp;6(i).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&#147;CEO&#148; means the chief executive officer of the Company or any successor corporation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;&#147;Change in Control&#148; and &#147;Change in Control Price&#148; have the meanings set forth in Sections
12(b) and (c), respectively.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&#147;Code&#148; means the Internal Revenue Code of 1986, as amended from time to time, and any
successor thereto.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j)&nbsp;&#147;Commission&#148; means the Securities and Exchange Commission or any successor agency.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k)&nbsp;&#147;Committee&#148; means the Committee referred to in Section&nbsp;3.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l)&nbsp;&#147;Company&#148; means BorgWarner Inc., a Delaware corporation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m)&nbsp;&#147;Disability&#148; means, with respect to any Award recipient, that the recipient (i)&nbsp;is unable
to engage in any substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or can be expected to last for a
continuous period of not less than 12&nbsp;months, (ii)&nbsp;is, by reason of any medically determinable
physical or mental impairment which can be expected to last for a continuous period of not less
than 12&nbsp;months, receiving income replacement benefits for a period of not less that 3&nbsp;months under
an accident or health plan covering the Company&#146;s employees, or (iii)&nbsp;is determined to be
permanently disabled by the Social Security Administration. &#147;Disability&#148; shall be determined by the
plan administrator of the RSP under the disability claims procedures of the RSP but applying the
foregoing definition of &#147;Disability&#148; and subject to final review and approval by the Committee in
the case of a participant who is a &#147;covered employee&#148; within the meaning of Section&nbsp;162(m)(3) of
the Code.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n)&nbsp;&#147;Exchange Act&#148; means the Securities Exchange Act of 1934, as amended from time to time,
and any successor thereto.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o)&nbsp;&#147;Fair Market Value&#148; means, as of any given date, the mean between the highest and lowest
reported sales prices of the Stock on the New York Stock Exchange Composite Tape or, if not listed
on such exchange, on any other national securities exchange on which the Stock is listed or on
NASDAQ. If there is no regular public trading market for such Stock, the Fair Market Value of the
Stock shall be determined by the Committee in good faith.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p)&nbsp;&#147;Freestanding Stock Appreciation Right&#148; means a Stock Appreciation Right granted under
Section&nbsp;7 without relationship to a Stock Option.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q)&nbsp;&#147;Incentive Stock Option&#148; means any Stock Option intended to be and designated as an
&#147;incentive stock option&#148; within the meaning of Section&nbsp;422 of the Code.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r)&nbsp;&#147;Non-Qualified Stock Option&#148; means any Stock Option that is not an Incentive Stock Option.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s)&nbsp;&#147;Performance Goals&#148; means a target or targets of objective performance established by the
Committee in its sole discretion. A Performance Goal shall be based on one or more of the following
criteria: earnings before or after taxes (including earnings before interest, taxes, depreciation
and amortization); net or operating income; earnings per share; expense reductions; return on
investment; combined net worth; debt to equity ratio; operating cash flow; return on total capital,
equity, or assets; total shareholder return; economic value; changes in the market price of the
Common Stock; or relative profitability &#151; change in operating income over change in sales. The
criteria selected by the Committee may relate to the Company, one or more of its Affiliates or one
or more of its business
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">units, or any combination thereof. The Performance Goals so selected by the Committee may be
based solely on the performance of the Company, its Affiliates, or business units, or any
combination thereof, or may be relative to the performance of one or more peer group companies,
indices, or combination thereof. A Performance Goal may include a threshold level of performance
below which no payout or vesting will occur, target levels of performance at which a full payout or
full vesting will occur, and/or a maximum level of performance at which a specified additional
payout or vesting will occur. Each of the foregoing Performance Goals shall be subject to
certification by the Committee; provided that the Committee shall have the authority, to the extent
consistent with the &#147;qualified performance-based compensation&#148; exception of Section 162(m) of the
Code and Section&nbsp;1.162-27(e) of the Income Tax Regulations, to make equitable adjustments to the
Performance Goals in recognition of unusual or nonrecurring events affecting the Company or any
Affiliate or the financial statements of the Company or any Affiliate in response to changes in
applicable laws or regulations, or to account for items of gain, loss or expense determined to be
extraordinary or unusual in nature or infrequent in occurrence or related to the disposal of a
segment of a business or related to a change in accounting principles. Once a Performance Goal is
established, the Committee shall have no discretion to increase the amount of compensation that
would otherwise be payable to a recipient upon attainment of a Performance Goal.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(t)&nbsp;&#147;Performance Period&#148; means the period of one year or longer established by the Committee
in connection with the grant of an Award for which the Committee has established Performance Goals.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(u)&nbsp;&#147;Performance Unit&#148; means an Award granted under Section&nbsp;10, the value of which is
expressed in terms of cash or in property other than Stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;&#147;Performance Share&#148; means an Award granted under Section&nbsp;11, the value of which is
expressed in terms of, or valued by reference to, a share of Stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(w)&nbsp;&#147;Plan&#148; means the BorgWarner Inc. 2004 Stock Incentive Plan, as set forth herein and as
hereinafter amended from time to time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x)&nbsp;&#147;Restricted Stock&#148; means an award granted under Section&nbsp;8.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(y)&nbsp;&#147;Restricted Stock Agreement&#148; means an Award Agreement memorializing the terms and
conditions of a grant of Restricted Stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(z)&nbsp;&#147;Retirement&#148; means, in the case of Section&nbsp;8 (Restricted Stock), Section&nbsp;9 (Stock Units),
Section&nbsp;10 (Performance Units), and Section&nbsp;11 (Performance Shares), the participant&#146;s Termination
of Employment with the Company and all Affiliates (i)&nbsp;on or after the last day of the calendar
month coincident with or immediately following the day on which the participant attains age 65, or
age 60 if the participant has been credited with at
least 15&nbsp;years of service as determined under the RSP, or (ii)&nbsp;with the written consent of the
Company that such Termination of Employment shall constitute retirement. In the case of Section&nbsp;6
(Stock Options) and Section&nbsp;7 (Stock Appreciation Rights), &#147;Retirement&#148; means the participant&#146;s
Termination of Employment with the Company and all Affiliates on or after the last day of the
calendar month coincident with or immediately following the day on which the participant attains
(i)&nbsp;age 65, or (ii)&nbsp;age 60 if the participant has been credited with at least 15&nbsp;years of service
as determined under the RSP.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(aa)&nbsp;&#147;RSP&#148; means the BorgWarner Inc. Retirement Savings Plan.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(bb)&nbsp;&#147;Rule&nbsp;16b-3&#148; means Rule&nbsp;16b-3, as promulgated by the Commission under Section 16(b) of
the Exchange Act, as amended from time to time or any successor definition adopted by the
Commission.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(cc)&nbsp;&#147;Specified Employee&#148; means a &#147;specified employee&#148; within the meaning of Section
409A(a)(2)(B) of the Code and using the methodology selected by the Company from time to time
(including any permitted alternate means selected by the Company to identify specified employees),
or if none, the default methodology provided by applicable Income Tax Regulations).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(dd)&nbsp;&#147;Stock&#148; means common stock, par value $.01 per share, of the Company that as of the date
of grant of an Award, has the highest aggregate value of any class of common stock of the Company
outstanding or a class of common stock substantially similar to such class of stock (ignoring
differences in voting rights). In addition, Stock does not include any stock of the Company that
provides a preference as to dividends or liquidation rights.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ee)&nbsp;&#147;Stock Appreciation Right&#148; means a right granted under Section&nbsp;7.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ff)&nbsp;&#147;Stock Option&#148; means an option granted under Section&nbsp;6 to purchase one or more shares of
Stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(gg)&nbsp;&#147;Stock Unit&#148; means a right granted under Section&nbsp;9.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(hh)&nbsp;&#147;Tandem Stock Appreciation Right&#148; means a Stock Appreciation Right granted under Section
7 in conjunction with a Stock Option.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&#147;Termination of Employment&#148; means the termination of the participant&#146;s employment with
the Company and any subsidiary or Affiliate. A participant employed by a subsidiary or an Affiliate
shall also be deemed to incur a Termination of Employment if the subsidiary or Affiliate ceases to
be such a subsidiary or Affiliate, as the case may be, and the participant does not immediately
thereafter become an employee of the Company or another subsidiary or Affiliate. In the case of a
participant who is a director but not an employee of the Company or any subsidiary or Affiliate,
&#147;Termination of Employment&#148; means the termination of the participant&#146;s services as a member of the
Board. For purposes of Section&nbsp;12(a)(iv) hereof, a Termination of Employment&#148; must constitute a
&#147;Separation from Service&#148; for purposes of Section&nbsp;409A of the Code.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 10pt">In addition, certain other terms used herein have definitions given to them in the first place in
which they are used.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><FONT style="font-variant: SMALL-CAPS">Section&nbsp;3. </FONT><I>Administration.</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Plan shall be administered by the Compensation Committee of the Board or such other
committee of the Board, composed of not less than three (3)&nbsp;members of the Board, each of whom
shall be appointed by and serve at the pleasure of the Board and who shall also be &#147;non-employee
directors&#148; within the meaning of Rule&nbsp;16b-3, &#147;independent directors&#148; within the meaning of any
applicable stock exchange rule, and to the extent that the Committee has resolved to take actions
necessary to enable compensation arising with respect to Awards under the Plan to constitute
performance-based compensation for purposes of Section 162(m) of the Code, &#147;outside directors&#148;
within the meaning of Section 162(m) of the Code.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;With respect to Awards granted to members of the Board who are not officers or employees of
the Company, a subsidiary, or an Affiliate, the Plan shall be administered by the Committee subject
to the approval of a majority of all members of the Board (including members of the Committee) who
are &#147;non-employee directors&#148; within the meaning of Rule&nbsp;16b-3, and &#147;independent directors&#148; with the
meaning of any applicable stock exchange rule. With respect to such Awards, all references to the
&#147;Committee&#148; contained in the Plan shall be deemed and construed to mean the Committee, the
decisions of which shall be subject to the approval of a majority of such members of the Board who
are both &#147;non-employee directors within the meaning of Rule&nbsp;16b-3 and &#147;independent directors&#148;
within the meaning of any applicable stock exchange rule.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Committee shall have full authority to grant Awards pursuant to the terms of the Plan to
officers, employees and directors of the Company and its subsidiaries and Affiliates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Among other things, the Committee shall have the authority, subject to the terms of the Plan:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;to select the officers, employees and directors to whom Awards may from time to time be
granted;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;to determine whether and to what extent Awards are to be granted hereunder and the type or
types of Awards to be granted;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;to determine the number of shares of Stock to be covered by each Award granted hereunder;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;to determine the terms and conditions of any Award granted hereunder (including, but not
limited to, the option price (subject to Section&nbsp;6(a)), any vesting restriction or limitation and
any vesting acceleration or forfeiture waiver regarding any Award and the shares of Stock relating
thereto, based on such factors as the Committee shall determine);
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;to modify, amend or adjust the terms and conditions of any Award, at any time or from time
to time;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;to determine to what extent and under what circumstances Stock and other amounts payable
with respect to an Award shall be deferred; and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;to determine under what circumstances a Stock Option may be settled in cash or Stock under
Section&nbsp;6(j).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Committee may authorize the CEO to grant Awards pursuant to the terms of the Plan covering
up to ten thousand (10,000) shares of Stock per individual, per year, to officers and employees of
the Company and its subsidiaries and Affiliates who are not (i)&nbsp;subject to Section&nbsp;16 of the
Exchange Act, nor (ii) &#147;covered employees&#148; within the meaning of Section&nbsp;162(m)(3) of the Code. Any
such authorization so made shall be consistent with recommendations made by the Board&#146;s
Compensation Committee to the Board regarding non-CEO compensation, incentive-compensation plans
and equity-based plans. When such authorization is so made by the Committee, the CEO shall have the
authority of the Committee described in Sections&nbsp;3(a), 3(b), 3(c), and 3(d) of the Plan with
respect to the granting of such Awards; provided, however, that the Committee may limit or qualify
such authorization in any manner it deems appropriate.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Committee may also authorize the CEO to grant Awards pursuant to the terms of the Plan
covering up to ten thousand (10,000) shares of Stock per individual, as an inducement to an
individual to accept an offer of employment, including Awards to individuals who may become, upon
accepting an offer of employment, (i)&nbsp;officers of the Company and its subsidiaries and Affiliates
who are subject to Section&nbsp;16 of the Exchange Act, or (ii) &#147;covered employees&#148; within the meaning
of Section&nbsp;162(m)(3) of the Code. Any such authorization so made shall be consistent with
recommendations made by the Board&#146;s Compensation Committee to the Board regarding non-CEO
compensation, incentive-compensation plans and equity-based plans. When such authorization is so
made by the Committee, the CEO shall have the authority of the Committee described in Sections
3(a), 3(b), 3(c), and 3(d) of the Plan with respect to the granting of such Awards; provided,
however, that the Committee may limit or qualify such authorization in any manner it deems
appropriate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Committee shall have the authority to adopt, alter and repeal such administrative rules,
guidelines and practices governing the Plan as it shall, from time to time, deem advisable, to
interpret the terms and provisions of the Plan and any Award issued under the Plan (and any
agreement relating thereto) and to otherwise supervise the administration of the Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Committee may act only by a majority of its members then in office, except that the
members thereof may (i)&nbsp;delegate all or a portion of the administration of the Plan to one or more
officers of the Company, provided that no such delegation may be made that would cause Awards or
other transactions under the Plan to cease to be exempt from Section 16(b) of the Exchange Act or
to cease to constitute &#147;qualified performance-based compensation within the meaning of Section
1.162-27(e) of the Income Tax Regulations in instances where the Committee has intended that an
Award so qualify, and (ii)&nbsp;authorize any one or more of its members or any officer of the Company
to execute and deliver documents on behalf of the Committee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any determination made by the Committee or pursuant to delegated authority pursuant to the
provisions of the Plan with respect to any Award shall be made in the sole discretion of the
Committee or such delegate at the time of the grant of the Award or, unless in contravention of any
express term of the Plan, at any time thereafter. All decisions made by the Committee or any
appropriately delegated officer pursuant to the provisions of the Plan shall be final and binding
on all persons, including the Company and Plan participants.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to such other rights of indemnification from the Company as they may have, the
members of the Committee shall be indemnified by the Company against reasonable expenses, including
attorneys&#146; fees, actually and necessarily incurred in connection with the defense of any action,
suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a
party by reason of any action taken or failure to act under or in connection with the Plan or any
Award granted thereunder, and against all amounts paid by them in settlement thereof (provided such
settlement is approved by legal counsel selected by the Company) or paid by them in satisfaction of
a judgment in any such action, suit or proceeding, except that such member is liable for negligence
or misconduct in the performance of his duties; provided that within sixty days after institution
of any such action, suit or proceeding, the member shall in writing offer the Company the
opportunity, at its own expense, to handle and defend the same.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><FONT style="font-variant: SMALL-CAPS">Section&nbsp;4. </FONT><I>Stock Subject To Plan; Individual Limitations.</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Subject to adjustment as provided herein, the total number of shares of Stock of the
Company available for Awards under the Plan, including with respect to Incentive Stock Options,
shall be twelve million, five hundred thousand (12,500,000) shares.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;No &#147;covered employee,&#148; as such term is defined in Section 162(m) of the Code, shall in any
fiscal year of the Company be granted Stock Options, Stock Appreciation Rights, Restricted Stock,
Stock Units, or Performance Shares covering more than three hundred thousand (300,000) shares of
Stock (including grants of Stock Options, Stock Appreciation Rights, Stock Units, or Performance
Shares that are paid or payable in cash), but excluding from this limitation (i)&nbsp;any additional
shares of Stock credited to the participant as dividend equivalents on Awards, (ii)&nbsp;cash or stock
dividends on Restricted Stock that are paid or credited to a participant as additional Restricted
Stock, and (iii)&nbsp;dividend equivalents that are paid or credited to a participant on Stock Units. No
&#147;covered employee,&#148; as such term is defined in Section 162(m) of the Code, shall in any fiscal year
of the Company be granted Performance Units of a value exceeding when paid six million dollars
($6,000,000) in cash or in property other than Stock, but excluding from this limitation including
any additional amounts credited to the participant as interest or dividend equivalents.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;The Stock to be delivered under the Plan may be made available from authorized but
unissued shares of Stock, treasury stock, or shares of Stock purchased on the open market.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;With respect to Awards under the Plan,
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) If any shares of Restricted Stock are forfeited, any Stock Option or Stock
Appreciation Right is forfeited, cancelled or otherwise terminated without being exercised, or
if any Stock Option or Stock Appreciation Right (whether granted alone or in conjunction with
a Stock Option) is exercised for or paid in cash, shares subject to such Awards that are
forfeited, cancelled, terminated without being exercised, or paid in cash shall again be
available for distribution in connection with Awards under the Plan;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) If any Stock Unit, Performance Unit, or Performance Share is cancelled, forfeited,
terminates in whole or in part without the delivery of Stock or is paid in cash, shares
subject to such Awards that are so cancelled, forfeited, terminated or paid in cash shall
again be available for distribution in connection with Awards under the Plan;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) If an Award recipient tenders shares of previously-acquired Stock in satisfaction
of applicable withholding tax obligations, or if any shares of Stock covered by an Award are
not delivered to the Award recipient because such shares are withheld to satisfy applicable
withholding tax obligations, such shares shall again be available for further Award grants
under the Plan; and
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) If an Award recipient tenders shares of previously-acquired Stock in payment of the
option price upon exercise of a Stock Option or if shares of Stock are withheld in payment of
the option price, the number of shares represented thereby shall again be available for
further Award grants under the Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;Subject to Sections 6(l) and 7(f), below, in the event of any merger, reorganization,
consolidation, recapitalization, stock dividend, stock split, extraordinary distribution with
respect to the Stock or other change in corporate structure affecting the Stock, the Committee or
Board may make such substitution or adjustments in the aggregate number and kind of shares reserved
for issuance under the Plan, in the number, kind and option price of shares subject to outstanding
Stock Options and Stock Appreciation Rights, in the number and kind of shares subject to other
outstanding Awards granted under the Plan and/or such other substitution or adjustments in the
consideration receivable upon exercise as it may determine to be appropriate in its sole
discretion; provided, however, that the number of shares subject to any Award shall always be a
whole number. Such adjusted option price shall also be used to determine the amount payable by the
Company upon the exercise of any Stock Appreciation Right associated with any Stock Option.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><FONT style="font-variant: SMALL-CAPS">Section&nbsp;5. </FONT><I>Eligibility.</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Officers, employees and directors of the Company, its subsidiaries and Affiliates who are
responsible for or contribute to the management, growth and profitability of the business of the
Company, its subsidiaries and Affiliates, as determined by the Committee, are eligible to be
granted Awards under the Plan. However, no grant of Incentive Stock Options, Performance Units, or
Performance Shares shall be made to a director who is not an officer or a salaried employee of the
Company, a subsidiary, or an Affiliate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><FONT style="font-variant: SMALL-CAPS">Section&nbsp;6. </FONT><I>Stock Options.</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock Options may be granted alone or in addition to other Awards granted under the Plan and
may be of two types: Incentive Stock Options and Non-Qualified Stock Options. Any Stock Option
granted under the Plan shall be in such form as the Committee may from time to time approve.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A Stock Option shall entitle the optionee to purchase one or more shares of Stock, pursuant to
the terms and provisions of the Plan and the applicable Award Agreement. The Committee shall have
the authority to grant participants Incentive Stock Options, Non-Qualified Stock Options or both
types of Stock Options (in each case with or without Stock Appreciation Rights), provided however,
that Incentive Stock Options may be granted only to employees of the Company and its subsidiaries
(within the meaning of Section 424(f) of the Code). To the extent that any Stock Option is not
designated as an Incentive Stock Option or even if so designated does not qualify as an Incentive
Stock Option, it shall constitute a Non-Qualified Stock Option.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock Options shall be evidenced by Award Agreements, the terms and provisions of which may
differ. An Award Agreement providing for the grant of Stock Options shall indicate on its face
whether it is intended to be an agreement for an Incentive Stock Option or a Non-Qualified Stock
Option. The grant of a Stock Option shall occur on the date the Committee by resolution selects an
individual to be a participant in any grant of a Stock Option, determines the number of shares of
Stock to be subject to such Stock Option to be granted to such individual and specifies the terms
and provisions of the Stock Option. The Company shall notify a participant of any grant of a Stock
Option, and a written Award Agreement or Award Agreements shall be duly executed and delivered by
the Company to the participant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Anything in the Plan to the contrary notwithstanding, no term of the Plan relating to
Incentive Stock Options shall be interpreted, amended or altered nor shall any discretion or
authority granted under the Plan be exercised so as to disqualify the Plan under Section&nbsp;422 of the
Code or, without the consent of the optionee affected, to disqualify any Incentive Stock Option
under such Section&nbsp;422.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock Options granted under the Plan shall be subject to the following terms and conditions
and shall contain such additional terms and conditions as the Committee shall deem desirable:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U><I>Option Price.</I></U> The option price per share of Stock purchasable under a Stock
Option shall be determined by the Committee and set forth in the Award Agreement, and shall
not be and shall never become less than the Fair Market Value of the Stock subject to the
Stock Option on the date of grant.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U><I>Option Term.</I></U> The term of each Stock Option shall be fixed by the Committee,
but no Stock Option shall be exercisable more than ten years after the date the Stock Option
is granted.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <U><I>Exercisability.</I></U> Except as otherwise provided herein, Stock Options shall be
exercisable at such time or times and subject to such terms and conditions as shall be
determined by the Committee. If the Committee provides that any Stock Option is exercisable
only in installments, the Committee may at any time waive such installment exercise
provisions, in whole or in part, based on such factors as the Committee may determine. In
addition, the Committee may at any time, in whole or in part, accelerate the exercisability of
any Stock Option.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <U><I>Method of Exercise.</I></U> Subject to the provisions of this Section&nbsp;6, Stock
Options may be exercised, in whole or in part, at any time during the option term by giving
written notice of exercise to the Company specifying the number of shares of Stock subject to
the Stock Option to be purchased.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The option price of Stock to be purchased upon exercise of any Option shall be paid in full in
cash (by certified or bank check or such other instrument as the Company may accept) or, if and to
the extent set forth in the Award Agreement, may also be paid by one or more of the following: (i)
in the form of unrestricted Stock already owned by the optionee (and, in the case of the exercise
of a Non-Qualified Stock Option, Restricted Stock subject to an Award hereunder) based in any such
instance on the Fair Market Value of the Stock on the date the Stock Option is exercised; provided,
however, that, in the case of an Incentive Stock Option, the right to make a payment in the form of
already owned shares of Stock may be authorized only at the time the Stock Option is granted; (ii)
by requesting the Company to withhold from the number of shares of Stock otherwise issuable upon
exercise of the Stock Option that number of shares having an aggregate Fair Market Value on the
date of exercise equal to the exercise price for all of the shares of Stock subject to such
exercise; or (iii)&nbsp;by a combination thereof, in each case in the manner provided in the Award
Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the discretion of the Committee and if not prohibited by law, payment for any shares
subject to a Stock Option may also be made by delivering a properly executed exercise notice to the
Company or its agent, together with a copy of irrevocable instructions to a broker to deliver
promptly to the Company the amount of sale or loan proceeds to pay the purchase price. To
facilitate the foregoing, the Company may enter into agreements for coordinated procedures with one
or more brokerage firms.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If payment of the option exercise price of a Non-Qualified Stock Option is made in whole or in
part in the form of Restricted Stock, the number of shares of Stock to be received upon such
exercise equal to the number of shares of Restricted Stock used for payment of the option exercise
price shall be subject to the same forfeiture restrictions to which such Restricted Stock was
subject, unless otherwise determined by the Committee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No shares of Stock shall be issued until full payment of the option exercise price has been
made. Subject to any forfeiture restrictions that may apply if a Stock Option is exercised using
Restricted Stock, an optionee shall have all of the rights of a stockholder of the Company holding
the Stock that is subject to such Stock Option (including, if applicable, the right to vote the
shares and the right to receive dividends) when the optionee has given written notice of exercise,
has paid in full for such shares and, if requested, has given the representation described in
Section&nbsp;16(a), but shall have no rights of a stockholder of the Company prior to such notice of
exercise, full payment, and if requested providing the representation described in Section&nbsp;16(a).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <U><I>Transferability of Stock Options.</I></U> No Stock Option shall be transferable by
the optionee other than (i)&nbsp;by will or by the laws of descent and distribution, or, in the
Committee&#146;s discretion, pursuant to a written beneficiary designation, (ii)&nbsp;pursuant to a
qualified domestic relations order (as defined in the Code or Title I of the Employee
Retirement Income Security Act of 1974, as amended, or the rules thereunder), or (iii)&nbsp;in the
Committee&#146;s discretion, pursuant to a gift to such optionee&#146;s &#147;immediate family&#148; members
directly, or indirectly by means of a trust, partnership, or limited liability company.
Subject to the terms of this Plan and the relevant Award Agreement, all Stock Options shall be
exercisable only by the optionee, guardian, legal
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">representative or beneficiary of the optionee or permitted transferee, it being
understood that the terms &#147;holder&#148; and &#147;optionee&#148; include any such guardian, legal
representative or beneficiary or transferee. For purposes of this Section&nbsp;6(e), &#147;immediate
family&#148; shall mean, except as otherwise defined by the Committee, the optionee&#146;s spouse,
children, siblings, stepchildren, grandchildren, parents, stepparents, grandparents, in-laws
and persons related by legal adoption. Such transferees may transfer a Stock Option only by
will or by the laws of descent and distribution. In no event may a participant transfer an
Incentive Stock Option other than by will or the laws of descent and distribution. The
transfer of Stock Options to a third party for value is prohibited.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <U><I>Termination by Death.</I></U> If an optionee&#146;s employment terminates by reason of
death, any Stock Option held by such optionee may thereafter be exercised, to the extent then
exercisable, or on such accelerated basis as the Committee may determine, for a period of one
year (or such other period as the Committee may specify in the Award Agreement) from the date
of such death or until the expiration of the stated term of such Stock Option, whichever
period is the shorter. In the event of Termination of Employment due to death, if an Incentive
Stock Option is exercised after the expiration of the exercise periods that apply for purposes
of Section&nbsp;422 of the Code, such Stock Option will thereafter be treated as a Non-Qualified
Stock Option.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <U><I>Termination by Reason of Disability.</I></U> If an optionee&#146;s employment terminates
by reason of Disability, any Stock Option held by such optionee may thereafter be exercised by
the optionee, to the extent it was exercisable at the time of termination, or on such
accelerated basis as the Committee may determine, for a period of three years (or such shorter
period as the Committee may specify in the Award Agreement) from the date of such Termination
of Employment or until the expiration of the stated term of such Stock Option, whichever
period is the shorter; provided, however, that if the optionee dies within such three-year
period (or such shorter period), any unexercised Stock Option held by such optionee shall,
notwithstanding the expiration of such three-year (or such shorter) period, continue to be
exercisable to the extent to which it was exercisable at the time of death for a period of
twelve months from the date of such death or until the expiration of the stated term of such
Stock Option, whichever period is the shorter. In the event of Termination of Employment by
reason of Disability, if an Incentive Stock Option is exercised after the expiration of the
exercise periods that apply for purposes of Section&nbsp;422 of the Code, such Stock Option will
thereafter be treated as a Non-Qualified Stock Option.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) <U><I>Termination by Reason of Retirement.</I></U> If an optionee&#146;s employment terminates
by reason of Retirement, any Stock Option held by such optionee may thereafter be exercised by
the optionee, to the extent it was exercisable at the time of such Retirement or on such
accelerated basis as the Committee may determine, for a period of three years (or such shorter
period as the Committee may specify in the Award Agreement) from the date of such Termination
of Employment or until the expiration of the stated term of such Stock Option, whichever
period is the shorter; provided, however, that if the optionee dies within such three-year (or
such shorter) period, any unexercised Stock Option held by such optionee shall,
notwithstanding the expiration of such three-year (or such shorter) period, continue to be
exercisable to the extent to which it was exercisable at the time of death for a period of
twelve months from the date of such death or until the expiration of the stated term of such
Stock Option, whichever period is the shorter. In the event of Termination of Employment by
reason of Retirement, if an Incentive Stock Option is exercised after the expiration of the
exercise periods that apply for purposes of Section&nbsp;422 of the Code, such Stock Option will
thereafter be treated as a NonQualified Stock Option.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <U><I>Other Termination.</I></U> Unless otherwise determined by the Committee, if an optionee incurs
a Termination of Employment for any reason other than death, Disability or Retirement, any Stock
Option held by such Optionee shall thereupon terminate, except that such Stock Option, to the
extent then exercisable, or on such accelerated basis as the Committee may determine, may be
exercised for the lesser of one year from the date of such Termination of Employment or the balance
of such Stock Option&#146;s term if such Termination of Employment of the optionee is involuntary and
without Cause; provided, however, that if the optionee dies within such one-year period, any
unexercised Stock Option held by such optionee shall notwithstanding the
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">expiration of such one-year period, continue to be exercisable to the extent to which it
was exercisable at the time of death for a period of twelve months from the date of such death
or until the expiration of the stated term of such Stock Option, whichever period is the
shorter. In the event of Termination of Employment for any reason other than death, Disability
or Retirement, if an Incentive Stock Option is exercised after the expiration of the exercise
periods that apply for purposes of Section&nbsp;422 of the Code, such Stock Option will thereafter
be treated as a Non-Qualified Stock Option. Unless otherwise determined by the Committee, for
the purposes of the Plan &#147;Cause&#148; shall mean (i)&nbsp;the participant&#146;s conviction of, or entering a
guilty plea, no contest plea or nolo contendre plea to any felony or to any crime involving
dishonesty or moral turpitude under Federal law or the law of the state in which such action
occurred, (ii)&nbsp;dishonesty in the course of fulfilling the participant&#146;s employment duties or
(iii)&nbsp;willful and deliberate failure on the part of the participant to perform his employment
duties in any material respect.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) <U><I>Cashing Out of Stock Option.</I></U> On receipt of written notice of exercise, the
Committee may elect to cash out all or part of the portion of the shares of Stock for which a
Stock Option is being exercised by paying the optionee an amount, in cash or Stock, equal to
the excess of the Fair Market Value of the Stock over the option price times the number of shares of Stock for which to the Option is being exercised on the effective date of such cash
out.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) <U><I>Change in Control Cash Out.</I></U> During the sixty-day period from and after a
Change in Control (the &#147;Exercise Period&#148;), the Committee may, but shall not be required to,
permit an Optionee with respect to any outstanding Stock Option, whether or not the Stock
Option is fully exercisable, and in lieu of the payment of the exercise price for the shares
of Stock being purchased under the Stock Option and by giving notice to the Company, to elect
(within the Exercise Period) to surrender all or part of the Stock Option to the Company and
to receive cash, within thirty days of such notice, in an amount equal to the amount by which
the Change in Control Price per share of Stock on the date of such election shall exceed the
exercise price per share of Stock under the Stock Option (the &#147;Spread&#148;) multiplied by the
number of shares of Stock granted under the Stock Option as to which the right granted under
this Section 6(k) shall have been exercised; provided, however, that if the Change in Control
is within six months of the date of grant of a particular Stock Option held by an optionee who
is an officer or director of the Company and is subject to Section 16(b) of the Exchange Act,
no such election shall be made by such optionee with respect to such Stock Option prior to six
months from the date of grant. Notwithstanding any other provision hereof, if the end of such
sixty-day period from and after a Change in Control is within six months of the date of grant
of a Stock Option held by an optionee who is an officer or director of the Company and is
subject to Section 16(b) of the Exchange Act, such Stock Option shall be cancelled in exchange
for a cash payment to the optionee, effected on the day which is six months and one day after
the date of grant of such Option, equal to the Spread multiplied by the number of shares of
Stock granted under the Stock Option.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) <U><I>Modification.</I></U> Notwithstanding any provision of this Plan or any Award
Agreement to the contrary, no Modification shall be made in respect to any Stock Option if
such Modification would result in the Stock Option constituting a deferral of compensation or
having an additional deferral feature.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) Subject to Subsection (n)&nbsp;below, a &#147;Modification&#148; for purposes of Subsection (l),
above, shall mean any change in the terms of a Stock Option (or change in the terms of the
Plan or applicable Award Agreement) that may provide the holder of the Stock Option with a
direct or indirect reduction in the exercise price of the Stock Option or an additional
deferral feature, or an extension or renewal of the Stock Option, regardless of whether the
holder in fact benefits from the change in terms. An extension of a Stock Option refers to the
granting to the holder of an additional period of time within which to exercise the Stock
Option beyond the time originally prescribed. A renewal of a Stock Option is the granting by
the Company of the same rights or privileges contained in the original Award Agreement for the
Stock Option on the same terms and conditions.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) Notwithstanding Subsection (m)&nbsp;above, it shall not be a Modification to change the
terms of a Stock Option in any of the ways or for any of the purposes specifically described
in published guidance of the Internal Revenue Service as not resulting in a modification,
extension or renewal of a stock right or the granting of a new stock right.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) Subsequent to its grant, the exercise period of a Stock Option shall not be extended
to a date that is later than the earlier of (i)&nbsp;the date on which the Option would expire by
its original terms, or (ii)&nbsp;the 10<SUP style="font-size: 85%; vertical-align: text-top">th</SUP> anniversary of the original date of grant.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) Except for adjustments as permitted by Section&nbsp;4(e), once granted hereunder, the
option price of a Stock Option shall not be adjusted. The substitutions and adjustments
permitted by Section 4(e) shall be limited to those substitutions and adjustments which will
not result in the Stock Option, as substituted or adjusted, constituting a &#147;deferral of
compensation&#148; within the meaning of Section&nbsp;409A of the Code.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q) Notwithstanding any provision herein to the contrary, the repricing of a Stock Option
is prohibited without prior approval of the Company&#146;s stockholders. For this purpose, a
&#147;repricing&#148; means any of the following (or any other action that has the same effect as any of
the following): (i)&nbsp;changing the terms of a Stock Option to lower its exercise price; (ii)&nbsp;any
other action that is treated as a &#147;repricing&#148; under generally accepted accounting principles;
and (iii)&nbsp;repurchasing for cash or canceling a Stock Option at a time when its exercise price
is greater than the Fair Market Value of the underlying shares of Stock in exchange for
another Award, unless the cancellation and exchange occurs in connection with a change in
capitalization or similar change permitted under Section 4(e) above. Such cancellation and
exchange would be considered a &#147;repricing&#148; regardless of whether it is treated as a
&#147;repricing&#148; under generally accepted accounting principles and regardless of whether it is
voluntary on the part of the Participant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><FONT style="font-variant: SMALL-CAPS">Section&nbsp;7. </FONT><I>Stock Appreciation Rights.</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;<U><I>Grant and Exercise.</I></U> Stock Appreciation Rights may be granted as Awards under the
Plan as either Freestanding Stock Appreciation Rights or Tandem Stock Appreciation Rights.
Freestanding Stock Appreciation Rights may be granted alone or in addition to other Awards under
the Plan. Tandem Stock Appreciation Rights may be granted in conjunction with all or part of any
Stock Option granted under the Plan. Tandem Stock Appreciation Rights may be granted only at the
time of grant of the related Stock Option. Each grant of a Stock Appreciation Right shall be
confirmed by, and be subject to the terms of, an Award Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;<U><I>Freestanding Stock Appreciation Rights.</I></U> A Freestanding Stock Appreciation Right
granted pursuant to Section&nbsp;7(a), shall be exercisable as determined by the Committee, but in no
event after ten years from the date of grant. The base price of a Freestanding Stock Appreciation
Right shall not be and shall never become less than the Fair Market Value of a share of Stock on
date of grant. A Freestanding Stock Appreciation Right shall entitle the holder, upon receipt of
such right, to a cash payment determined by multiplying (i)&nbsp;the difference between the base price
of the Stock Appreciation Right and the Fair Market Value of a share of Stock on the date of
exercise of the Freestanding Stock Appreciation Right, by (ii)&nbsp;the number of shares of Stock as to
which such Freestanding Stock Appreciation Right shall have been exercised. A Freestanding Stock
Appreciation Right may be exercised by giving written notice of exercise to the Company or its
designated agent specifying the number of shares of Stock as to which Freestanding Stock
Appreciation Right is being exercised.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;<U><I>Tandem Stock Appreciation Rights.</I></U> A Tandem Stock Appreciation Right may be
exercised by an optionee in accordance with Section 7(d) by surrendering the applicable portion of
the related Stock Option in accordance with procedures established by the Committee. Upon exercise
and surrender, the optionee shall be entitled to receive an amount determined in the manner
prescribed in Section&nbsp;7(d). Stock Options which have been so surrendered shall no longer be
exercisable to the extent the related Tandem Stock Appreciation Right have been exercised.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;<U><I>Tandem Stock Appreciation Rights Terms and Conditions.</I></U> Tandem Stock Appreciation
Rights shall be subject to such terms and conditions as shall be determined by the Committee,
including the following:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The base price of a Tandem Stock Appreciation Right shall not be and shall never
become less than the exercise price of the related Stock Option on date of grant. Tandem Stock
Appreciation Rights shall be exercisable only at such time or times and to the extent that the
Stock Options to which they relate are exercisable in accordance with the provisions of
Section&nbsp;6 and this Section&nbsp;7. A Tandem Stock Appreciation Right shall terminate and no longer
be exercisable upon the forfeiture, termination, or exercise of the related Stock Option.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Upon the exercise of a Tandem Stock Appreciation Right, an optionee shall be
entitled to receive an amount in cash, shares of Stock or both equal in value to the excess of
the Fair Market Value of one share of Stock over the option price per share specified in the
related Stock Option multiplied by the number of shares in respect of which the Tandem Stock
Appreciation Right shall have been exercised, with the Committee having the right to determine
the form of payment.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Tandem Stock Appreciation Rights shall be transferable only to permitted
transferees of the underlying Stock Option in accordance with Section&nbsp;6(e).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Upon the exercise of a Tandem Stock Appreciation Right, the Stock Option or part
thereof to which such Tandem Stock Appreciation Right is related shall be deemed to have been
exercised for the purpose of the limitation set forth in Section&nbsp;4 on the number of shares of
Common Stock to be issued under the Plan, but only to the extent of the number of shares
covered by the Tandem Stock Appreciation Right at the time of exercise based on the value of
the Tandem Stock Appreciation Right at such time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;In the case of any Stock Appreciation Right providing for, or in which the Committee has
determined to make payment in whole or in part in Stock, the holder thereof shall have no rights of
a stockholder of the Company prior to the proper exercise of such Stock Appreciation Right, and if
requested, prior to providing the representation described in Section&nbsp;16(a), and the issuance of
Stock in respect thereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;<U><I>Modification.</I></U> Notwithstanding any provision of this Plan or any Award Agreement
to the contrary, no Modification shall be made in respect to any Stock Appreciation Right if such
Modification would result in the Stock Appreciation Right constituting a deferral of compensation
or having an additional deferral feature.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;Subject to Subjection (h)&nbsp;below, a &#147;Modification&#148; for purposes of Subsection (f), above,
shall mean any change in the terms of an Stock Appreciation Right (or change in the terms of the
Plan or applicable Award Agreement) that may provide the holder of the Stock Appreciation Right
with a direct or indirect reduction in the base price of the Stock Appreciation Right, or an
additional deferral feature, or an extension or renewal of the Stock Appreciation Right, regardless
of whether the holder in fact benefits from the change in terms. An extension of a Stock
Appreciation Right refers to the granting to the holder of an additional period of time within
which to exercise the Stock Appreciation Right beyond the time originally prescribed. A renewal of
a Stock Appreciation Right is the granting by the Company of the same rights or privileges
contained in the original Award Agreement for the Stock Appreciation Right on the same terms and
conditions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;Notwithstanding Subsection (g)&nbsp;above, it shall not be a Modification to change the terms
of a Stock Appreciation Right in any of the ways or for any of the purposes specifically described
in published guidance of the
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Internal Revenue Service as not resulting in a modification, extension or renewal of a stock
right or the granting of a new stock right.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;Subsequent to its grant, no Stock Appreciation Right shall be extended to a date that is
later than the earlier of (i)&nbsp;the date on which the Stock Appreciation Right would expire by its
original terms, or (ii)&nbsp;the 10<SUP style="font-size: 85%; vertical-align: text-top">th</SUP> anniversary of the original date of grant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j)&nbsp;Except for adjustments as permitted by Section&nbsp;4(e), once granted hereunder, the base
price of a Stock Appreciation Right shall not be adjusted. The substitutions and adjustments
permitted by Section 4(e) shall be limited to those substitutions and adjustments which will not
result in the Stock Appreciation Right, as substituted or adjusted, constituting a &#147;deferral of
compensation&#148; within the meaning of Section&nbsp;409A of the Code.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k)&nbsp;Notwithstanding any provision herein to the contrary, the repricing of a Stock
Appreciation Right is prohibited without prior approval of the Company&#146;s stockholders. For this
purpose, a &#147;repricing&#148; means any of the following (or any other action that has the same effect as
any of the following): (i)&nbsp;changing the terms of a Stock Appreciation Right to lower its base
price; (ii)&nbsp;any other action that is treated as a &#147;repricing&#148; under generally accepted accounting
principles; and (iii)&nbsp;repurchasing for cash or canceling a Stock Appreciation Right at a time when
its base price, is greater than the Fair Market Value of the underlying shares of Stock in exchange
for another Award, unless the cancellation and exchange occurs in connection with a change in
capitalization or similar change permitted under Section 4(e) above. Such cancellation and
exchange would be considered a &#147;repricing&#148; regardless of whether it is treated as a &#147;repricing&#148;
under generally accepted accounting principles and regardless of whether it is voluntary on the
part of the Participant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><FONT style="font-variant: SMALL-CAPS">Section&nbsp;8. </FONT><I>Restricted Stock.</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;<U><I>Administration.</I></U> Shares of Restricted Stock may be granted either alone or in
addition to other Awards granted under the Plan. The Committee shall determine the officers,
employees, and directors to whom and the time or times at which grants of Restricted Stock will be
awarded, the number of shares to be awarded to any participant, the time or times within which such
Awards may be subject to forfeiture and any other terms and conditions of the Awards, in addition
to those contained in Section&nbsp;8(c). Each grant of Restricted Stock shall be confirmed by, and be
subject to the terms of a Restricted Stock Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Committee may condition the grant or vesting of Restricted Stock upon the attainment of
specified performance measures of the participant or of the Company or subsidiary, division or
department of the Company for or within which the participant is primarily employed or upon such
other factors or criteria as the Committee shall determine. Where the grant or vesting of
Restricted Stock is subject to the attainment of one or more Performance Goals, such shares of
Restricted Stock shall be released from such restrictions only after the attainment of such
Performance Goals has been certified by the Committee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The provisions of Restricted Stock Awards need not be the same with respect to each recipient.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;<U><I>Awards and Certificates.</I></U> Shares of Restricted Stock shall be evidenced in such
manner as the Committee may deem appropriate, including book-entry registration or issuance of one
or more stock certificates. Any certificate issued in respect of shares of Restricted Stock shall
be registered in the name of such participant and shall bear an appropriate legend referring to the
terms, conditions, and restrictions applicable to such Award, substantially in the following form:
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 10pt">&#147;The transferability of this certificate and the shares of stock represented hereby are subject to
the terms and conditions (including forfeiture) of the 2004 Stock Incentive Plan and a Restricted
Stock Agreement. Copies of such Plan and Restricted Stock Agreement are on file at the headquarters
offices of BorgWarner Inc.&#148;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Committee may require that the certificates evidencing such shares be held in custody by
the Company until the restrictions thereon shall have lapsed and that, as a condition of any Award
of Restricted Stock, the participant shall have delivered a stock power, endorsed in blank,
relating to the Stock covered by such Award.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;<U><I>Terms and Conditions.</I></U> Shares of Restricted Stock shall be subject to the
following terms and conditions:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Subject to the provisions of the Plan and the applicable Restricted Stock Agreement,
during a period set by the Committee, commencing with the date of such Award (the &#147;Restriction
Period&#148;), the participant shall not be permitted to sell, assign, transfer, pledge or
otherwise encumber shares of Restricted Stock. The Committee may provide for the lapse of such
restrictions in installments or otherwise and may accelerate or waive such restrictions, in
whole or in part, in each case based on period of service, performance of the participant or
of the Company or the subsidiary, division or department for which the participant is employed
or such other factors or criteria as the Committee may determine.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Except as provided in this paragraph (ii)&nbsp;and Section&nbsp;8(c)(i) and the applicable
Restricted Stock Agreement, the participant shall have, with respect to the shares of
Restricted Stock, all of the rights of a stockholder of the Company holding the class or
series of Stock that is the subject of the Restricted Stock, including, if applicable, the
right to vote the shares and the right to receive any cash dividends. If so determined by the
Committee and set forth in the applicable Restricted Stock Agreement, and subject to Section
16(g) of the Plan, (1)&nbsp;cash dividends on the shares of Stock that are the subject of the
Restricted Stock Award shall be automatically deferred and reinvested in additional Restricted
Stock based upon the Fair Market Value per share of Stock on the dividend payment date (or in
the event no trading is reported for the dividend payment date, based upon the Fair Market
Value per share of Stock for the most recent prior date for which trading for Stock was
reported on the New York Stock Exchange Composite Tape), and (2)&nbsp;dividends payable in Stock
shall be paid in the form of Restricted Stock. Any cash dividend so reinvested or share
dividend so payable shall vest at the same time as the Restricted Stock to which it relates.
Absent such a provision regarding dividends in the applicable Restricted Stock Agreement, any
dividend payable with respect to Restricted Stock shall be paid to the Participant no later
than the end of the calendar year in which the same dividends on Stock are paid to
stockholders of Stock, or if later, the 15th day of the third month following the date on
which the same dividends on Stock are paid to the Stock&#146;s stockholders.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Except to the extent otherwise provided in the applicable Restricted Stock
Agreement and Sections&nbsp;8(c)(i), 8(c)(iv) and 12(a)(ii), upon a participant&#146;s Termination of
Employment for any reason during the Restriction Period, all shares still subject to
restriction shall be forfeited by the participant.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Except to the extent otherwise provided in Section&nbsp;12(a)(ii), in the event that a
participant&#146;s employment is involuntarily terminated (other than for Cause), or in the event
of a participant&#146;s Retirement, the Committee shall have the discretion to waive in whole or in
part any or all remaining restrictions with respect to any or all of such participant&#146;s shares
of Restricted Stock; provided however, that in the case of Restricted Stock granted to a
&#147;covered employee&#148; within the meaning of Section&nbsp;162(m)(3) of the Code that is intended to
constitute &#147;qualified performance-based compensation,&#148; the Committee shall have no discretion
to waive the requirement that the applicable Performance Goals be achieved in accordance with
the original terms of the Award.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) If and when the Restriction Period expires without a prior forfeiture of the
Restricted Stock subject to such Restriction Period, unlegended certificates for such shares
shall be delivered to the participant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><FONT style="font-variant: SMALL-CAPS">Section&nbsp;9. </FONT><I>Stock Units.</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;<U><I>Administration.</I></U> A Stock Unit is the grant of a right to receive a share of Stock
or the Fair Market Value in cash of a share of Stock, in the future, at such time and upon such
terms as the Committee shall establish. Stock Units may be granted either alone or in addition to
other Awards granted under the Plan. The Committee shall determine the officers, employees, and
directors to whom and the time or times at which grants of Stock Units will be awarded, the number
of Stock Units to be awarded to any participant, the time or times within which such Awards may be
subject to forfeiture, and any other terms and conditions of the Awards in addition to those
contained in Section&nbsp;9(b). The provisions of Stock Units Awards need not be the same with respect
to each recipient. Each grant of Stock Units shall be confirmed by, and be subject to, the terms of
an Award Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;<U><I>Terms and Conditions.</I></U> Stock Units shall be subject to the following terms and
conditions.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Subject to the provisions of the Plan and the applicable Award Agreement, Stock Units
may not be sold, assigned, transferred, pledged or otherwise encumbered.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Except to the extent otherwise provided in the applicable Award Agreement and
Sections&nbsp;9(b)(iii) and 12(a)(iii), upon a participant&#146;s Termination of Employment for any
reason prior to the date on which Stock Units awarded to the participant shall have vested,
all rights to receive cash or Stock in payment of such Stock Units shall be forfeited by the
participant.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Except to the extent otherwise provided in Section&nbsp;12(a)(iii), in the event that a
participant&#146;s employment is involuntarily terminated (other than for Cause), or in the event
of a participant&#146;s Retirement, the Committee shall have the discretion to waive, in whole or
in part, any or all remaining payment limitations with respect to any or all of such
participant&#146;s Stock Units.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) In any case in which the Committee has waived, in whole or in part, any or all
remaining payment limitations with respect to any or all of a participant&#146;s Stock Units,
payment of such participant&#146;s Stock Units shall occur on the time(s) or event(s) otherwise
specified pursuant to Subsection (vii)&nbsp;below, in such participant&#146;s Award Agreement
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) With respect to any grant of Stock Units, the recipient of such grant shall acquire
no rights of a shareholder of Stock unless and until the recipient becomes the holder of shares of Stock delivered to such recipient with respect to such Stock Units.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) The Committee may in its discretion provide that a participant shall be entitled to
receive dividend equivalents on outstanding Stock Units. Such dividend equivalents may, as
determined by the Committee at the time the Award is granted, be (i)&nbsp;paid in cash, (ii)
credited to the participant as additional Stock Units, or (iii)&nbsp;any combination of cash and
additional Stock Units. If dividend equivalents are credited to the participant as additional
Stock Units, the number of additional Stock Units that shall be credited to the participant
with respect to any dividend on Stock shall not exceed the amount that is the result of
multiplying the number of Stock Units credited to the participant on the dividend record date
by the dividend paid on each share of
</DIV>


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</DIV>




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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">Stock, and then dividing this amount by the price per share of Stock on the dividend
payment date. For this purpose, the price per share of Stock shall be its Fair Market Value
for the dividend payment date. In the event no trading is reported for the dividend payment
date, the price per share of Stock shall be the Fair Market Value for the most recent prior
date for which trading for Stock was reported on the New York Stock Exchange Composite Tape. A
Stock Unit credited to a recipient as a dividend equivalent shall vest at the same time as the
Stock Unit to which it relates. Any credit of dividend equivalents shall be subject to Section
16(g) of the Plan. Any dividend payable with respect to Stock Units that the Committee has
determined shall be paid in cash shall be paid to the Participant no later than the end of the
calendar year in which the same dividends on Stock are paid to stockholders of Stock, or if
later, the 15th day of the third month following the date on which the same dividends on Stock
are paid to the Stock&#146;s stockholders.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) The Award Agreement for each award of Stock Units shall specify the time(s) or
event(s) of payment of vested Stock Units, which time(s) or event(s) shall be limited to one
or more of the following: (1)&nbsp;the date on which the Stock Units shall have vested, (2)&nbsp;the
date of the Award recipient&#146;s Termination of Employment, or (3)&nbsp;a specified date. In the case
of an Award of Stock Units providing for payment upon the vesting of the Stock Units, payment
shall be made as soon as administratively practicable thereafter, but in no event later than
March&nbsp;15 of the year following the year in which the vesting of the Stock Units occurs. In the
case of an Award of Stock Units providing for payment upon Termination of Employment, payment
shall be made on or after the Termination of Employment in the year in which the Termination
of Employment occurs, except that in the case of a Specified Employee, payment shall be made
on the first day of the seventh month following the month in which such Termination of
Employment occurs, or, if earlier, the date of the Award recipient&#146;s death. In the case of an
Award of Stock Units providing for a specified date for payment, payment shall be made as soon
as practicable on or after the specified date, but in no event no later than December&nbsp;31 of
the year in which the specified date occurs.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) On the time(s) or event(s) specified in the applicable Award Agreement for the
payment of cash or Stock with respect to vested Stock Units, the Committee shall cause to be
delivered to the participant, (A)&nbsp;a number of shares of Stock equal to the number of vested
Stock Units, or (B)&nbsp;cash equal to the Fair Market Value of such number of shares of Stock, the
form of payment determined by the Committee in its discretion or as provided by in the
applicable Award Agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) Notwithstanding any other provision of this Plan to the contrary, the time(s) or
event(s) for payment of Stock Units specified pursuant to Subsection (viii), above, shall not
be accelerated for any reason, other than as specifically provided in Section&nbsp;409A of the Code
and the guidance issued thereunder.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><FONT style="font-variant: SMALL-CAPS">Section&nbsp;10. </FONT><I>Performance Units.</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;<U><I>Administration.</I></U> Performance Units may be awarded to officers and employees of the
Company, its subsidiaries and Affiliates, either alone or in addition to other Awards under the
Plan. The Committee shall determine the officers and employees to whom, and the time or times at
which, Performance Units shall be awarded, the number of Performance Units to be awarded to any
participant, the duration of the Performance Period and any other terms and conditions of the
Award, in addition to those contained in Section&nbsp;10(b). Each grant of Performance Units shall be
confirmed by, and be subject to, the terms of an Award Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;<U><I>Terms and Conditions.</I></U> Performance Units shall be subject to the following terms
and conditions.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The Committee may, prior to or at the time of the grant, designate Performance Units,
in which event it shall condition payment with respect thereto to the attainment of
Performance Goals. The Committee may also condition Performance Unit payments upon the
continued service of the participant. The provisions of
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">such Awards (including without limitation any applicable Performance Goals) need not be
the same with respect to each recipient. Subject to the provisions of the Plan and the
applicable Award Agreement, Performance Units may not be sold, assigned, transferred, pledged
or otherwise encumbered during the Performance Period.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Except to the extent otherwise provided in the applicable Award Agreement and
Sections&nbsp;10(b)(iii) and 12(a)(iv), upon a participant&#146;s Termination of Employment for any
reason during the Performance Period or before any applicable Performance Goals are satisfied,
all rights to receive cash or Stock in payment of the Performance Units shall be forfeited by
the participant.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Except to the extent otherwise provided in Section&nbsp;12(a)(iv), in the event that a
participant&#146;s employment is involuntarily terminated (other than for Cause), or in the event
of a participant&#146;s Retirement, the Committee shall have the discretion to waive, in whole or
in part, any or all remaining payment limitations with respect to any or all of such
participant&#146;s Performance Units; provided however, that in the case of Performance Units
granted to a &#147;covered employee&#148; within the meaning of Section&nbsp;162(m)(3) of the Code, the
Committee shall have no discretion to waive the requirement that the applicable Performance
Goals be achieved in accordance with the original terms of the Award.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) In any case in which the Committee has, prior to the expiration of the Performance
Period, waived, in whole or in part, any or all payment limitations with respect to a
participant&#146;s Performance Units, such participant shall receive payment with respect to his or
her Performance Units in the year following the year in which the Performance Period ends or
would have ended, at the same time as the Committee has provided for payment to all other
Award recipients.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) At the expiration of the Performance Period, the Committee shall evaluate the extent
to which the Performance Goals for the Award have been achieved and shall determine the number
of Performance Units granted to the participant which shall have been earned, and the cash
value thereof. The Committee shall then cause to be delivered to the participant (A)&nbsp;a cash
payment equal in amount to the cash value of the Performance Units, or (B)&nbsp;shares of Stock
equal in value to the cash value of the Performance Units, the form of payment determined by
the Committee in its discretion or as provided in the applicable Award Agreement. If
Performance Units may, or are to be paid in Stock, the Committee shall designate in the
applicable Award Agreement a method of converting the Performance Units into Stock based on
the Fair Market Value of the Stock. Payment shall occur as soon as administratively
practicable thereafter, but in no event later than March&nbsp;15 of the year following the year in
which the Performance Period ends.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><FONT style="font-variant: SMALL-CAPS">Section&nbsp;11. </FONT><I>Performance Shares.</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;<U><I>Administration.</I></U> Performance Shares may be awarded to officers and employees of
the Company, its subsidiaries and Affiliates, either alone or in addition to other Awards under the
Plan. The Committee shall determine the officers and employees to whom, and the time or times at
which, Performance Shares shall be awarded, the number of Performance Shares to be awarded to any
participant, the duration of the Performance Period and any other terms and conditions of the
Award, in addition to those contained in Section&nbsp;11(b). Each grant of Performance Shares shall be
confirmed by, and be subject to, the terms of an Award Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;<U><I>Terms and Conditions.</I></U> Performance Shares shall be subject to the following terms
and conditions.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The Committee may, prior to or at the time of the grant, designate Performance
Shares, in which event it shall condition payment with respect thereto to the attainment of
Performance Goals. The Committee may also condition Performance Share payments upon the
continued service of the participant. The provisions of such Awards (including without
limitation any applicable Performance Goals) need not be the same with respect to each
recipient. Subject to the provisions of the Plan and the applicable Award Agreement,
Performance Shares may not be sold, assigned, transferred, pledged or otherwise encumbered
during the Performance Period.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Except to the extent otherwise provided in the applicable Award Agreement and
Sections&nbsp;11(b)(iii) and 12(a)(iv), upon a participant&#146;s Termination of Employment for any
reason during the Performance Period or before any applicable Performance Goals are satisfied,
all rights to receive cash or Stock in payment of the Performance Shares shall be forfeited by
the participant.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Except to the extent otherwise provided in Section&nbsp;12(a)(iv), in the event that a
participant&#146;s employment is involuntarily terminated (other than for Cause), or in the event
of a participant&#146;s Retirement, the Committee shall have the discretion to waive, in whole or
in part, any or all remaining payment limitations with respect to any or all such
participant&#146;s Performance Shares; provided however, that in the case of Performance Shares
granted to a &#147;covered employee&#148; within the meaning of Section&nbsp;162(m)(3) of the Code, the
Committee shall have no discretion to waive the requirement that the applicable Performance
Goals be achieved in accordance with the original terms of the Award.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) In any case in which the Committee has waived, in whole or in part, prior to the
expiration of the Performance Period, any or all payment limitations with respect to a
participant&#146;s Performance Shares, such participant shall receive payment with respect to his
or her Performance Shares in the year following the year in which Performance Period ends, at
the same time as the Committee has provided for payment to all other Award recipients.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) At the expiration of the Performance Period, the Committee shall evaluate the extent
to which the Performance Goals for the Award have been achieved and shall determine the number
of Performance Shares granted to the participant which shall have been earned, and the cash
value thereof. The Committee shall then cause to be delivered to the participant (A)&nbsp;a number
of shares of Stock equal to the number of Performance Shares determined by the Committee to
have been earned, or (B)&nbsp;cash equal to the Fair Market Value of such number of shares of
Stock, the form of payment determined by the Committee in its discretion or as provided in the
applicable Award Agreement. Payment shall occur as soon as administratively practicable
thereafter, but in no event later than March&nbsp;15 of the year following the year in which the
Performance Period ends.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><FONT style="font-variant: SMALL-CAPS">Section&nbsp;12. </FONT><I>Change in Control Provisions.</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;<U><I>Impact of Event.</I></U> Notwithstanding any other provision of the Plan to the contrary,
in the event of a Change in Control:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Any Stock Options and Stock Appreciation Rights outstanding as of the date such
Change in Control is determined to have occurred and not then exercisable and vested shall
become fully exercisable and vested to the full extent of the original grant.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The restrictions applicable to any outstanding Restricted Stock shall lapse, and
such Restricted Stock shall become free of all restrictions and become fully vested and
transferable to the full extent of the original grant.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) The restrictions applicable to any outstanding Stock Units shall lapse, and such
Stock Units shall become free of all restrictions and become fully vested. Payment for Stock
Units that have vested as a result of this Section&nbsp;12(a)(iii) shall occur on the time(s) or
event(s) otherwise specified in the Award recipient&#146;s Award Agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) The restrictions applicable to any outstanding Performance Units and Performance
Shares shall lapse, the Performance Goals of all such outstanding Performance Units and
Performance Shares shall be deemed to have been achieved at target levels, the relevant
Performance Period shall be deemed to have ended on the effective date of the Change of
Control, and all other terms and conditions thereto shall be deemed to have been satisfied. If
due to a Change in Control, a Performance Period is shortened, the target Performance Award
initially established for such Performance Period shall be prorated by multiplying the initial
target Performance Award by a fraction, the numerator of which is the actual number of whole
months in the shortened Performance Period and the denominator of which is the number of whole
months in the original Performance Period. Payment for such Performance Units and Performance
Shares that vest as a result of the Change in Control shall be made in cash or Stock (as
determined by the Committee) as promptly as is practicable upon such vesting, but in no event
later than March&nbsp;15 of the year following the year in which the Performance Units and
Performance Shares shall have vested pursuant to this Section&nbsp;12. Payment for Performance
Units and Performance Shares that have vested prior to the Change in Control as a result of
the Committee&#146;s waiver of payment limitations prior to the date of the Change in Control shall
be made in cash or Stock (as determined by the Committee) in the year following the year in
which the Performance Period would have otherwise ended absent a Change in Control, or if
earlier (ii)&nbsp;as soon as practicable in the year in which the Award recipient&#146;s Termination of
Employment occurs; provided however, that in the case of a &#147;Specified Employee&#148; who becomes
entitled to payment of Performance Units or Performance Shares under this Section&nbsp;12 by reason
of his or her Termination of Employment, payment shall be made on the first day of the seventh
month following the month in which such Termination of Employment occurs, or, if earlier, the
date of the Specified Employee&#146;s death.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;<U><I>Definition of Change in Control.</I></U> For purposes of the Plan, a &#147;Change in Control&#148;
shall mean the happening of any of the following events:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The acquisition by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act )(a &#147;Person &#145;&#148;) of beneficial ownership (within the
meaning of Rule&nbsp;13d-3 promulgated under the Exchange Act) of 20% or more of either (A)&nbsp;the
then outstanding shares of common stock of the Company (the &#147;Outstanding Company Common
Stock&#148;) or (B)&nbsp;the combined voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors (the &#147;Outstanding Company
Voting Securities&#148;); provided, however, that for purposes of this subsection (b), the
following acquisitions shall not constitute a Change in Control: (W)&nbsp;any acquisition directly
from the Company, (X)&nbsp;any acquisition by the Company, (Y)&nbsp;any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any corporation
controlled by the Company, or (Z)&nbsp;any acquisition by any corporation pursuant to a transaction
which complies with clauses (A), (B)&nbsp;and (C)&nbsp;of subsection (iii)&nbsp;of this Section&nbsp;12(b); or
(ii)&nbsp;Individuals who, as of the date hereof, constitute the Board (the &#147;Incumbent Board&#148;) and
cease for any reason to constitute at least a majority of the Board; provided, however, that
any individual becoming a director subsequent to the date hereof whose election, or nomination
for election by the Company&#146;s stockholders, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other than the
Board; or
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Consummation by the Company of a reorganization, statutory share exchange merger or
consolidation or similar transaction involving the Company or any of its Subsidiaries or sale
or other disposition of all or substantially all of the assets of the Company or the
acquisition of assets of another entity by the Company or any of its Subsidiaries (each of the
foregoing, a &#147;Business Combination&#148;), in each case, unless, following such Business
Combination, (A)&nbsp;all or substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 60% of, respectively, the then outstanding shares of common
stock (or, for a non-corporate entity, equivalent securities) and the combined voting power of
the then outstanding voting securities entitled to vote generally in the election of directors
(or, for a non-corporate entity, equivalent securities), as the case may be, of the entity
resulting from such Business Combination (including, without limitation, a entity which as a
result of such transaction owns the Company or all or substantially all of the Company&#146;s
assets either directly or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may
be, (B)&nbsp;no Person (excluding any employee corporation resulting from such Business Combination
or any plan (or related trust) of the Company or such corporation resulting from such
Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively,
the then outstanding shares of common stock (or, for a non corporate entity, equivalent
securities) of the entity resulting from such Business Combination or the combined voting
power of the then outstanding voting securities of such entity except to the extent that such
ownership existed prior to the Business Combination and (C)&nbsp;at least a majority of the members
of the board of directors (or, for a non-corporate entity, equivalent governing body) of the
entity resulting from such Business Combination were members of the Incumbent Board at the
time of the execution of the initial agreement, or of the action of the Board, providing for
such Business Combination; or
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Approval by the stockholders of the Company of a complete liquidation or dissolution
of the Company.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;<U><I>Change in Control Price.</I></U> For purposes of the Plan, &#147;Change in Control Price&#148;
means the higher of (i)&nbsp;the highest reported sales price, regular way, of a share of Stock in any
transaction reported on the New York Stock Exchange Composite Tape or other national exchange on
which such shares are listed or on NASDAQ during the sixty-day period prior to and including the
date of a Change in Control or (ii)&nbsp;if the Change in Control is the result of a tender or exchange
offer or a Business Combination, the highest price per share of Stock paid in such tender or
exchange offer or Business Combination; provided, however, that (X)&nbsp;in the case of a Stock Option
which (I)&nbsp;is held by an optionee who is an officer or director of the Company and is subject to
Section 16(b) of the Exchange Act and (II)&nbsp;was granted within 240&nbsp;days of the Change in Control,
then the Change in Control Price for such Stock Option shall be the Fair Market Value of the Stock
on the date such Stock Option is exercised or cancelled and (Y)&nbsp;in the case of Incentive Stock
Options and Stock Appreciation Rights relating to Incentive Stock Options, the Change in Control
Price shall be in all cases the Fair Market Value of the Stock on the date such Incentive Stock
Option or Stock Appreciation Right is exercised. To the extent that the consideration paid in any
such transaction described above consists all or in part of securities or other non-cash
consideration, the value of such securities or other non-cash consideration shall be determined in
the sole discretion of the Board.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><FONT style="font-variant: SMALL-CAPS">Section&nbsp;13. </FONT><I>Term, Amendment and Termination.</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unless terminated sooner by the Board, the Plan will terminate on the date that immediately
precedes the tenth (10th) anniversary of the Plan&#146;s effective date. Awards outstanding as of the
date on which the Plan terminates shall not be affected or impaired by the termination of the Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board may amend, alter, or discontinue the Plan at any time, but no amendment, alteration
or discontinuation shall be made which would (i)&nbsp;impair the rights of a participant under an Award
theretofore granted without the participant&#146;s consent, except such an amendment made to cause the
Plan to qualify for the exemption provided by Rule&nbsp;16b-3 or for Awards to qualify for the
&#147;qualified performance-based compensation&#148; exception provided by Section&nbsp;1.162-27(e) of the Income
Tax Regulations (where the Committee has intended that such Awards qualify for the exception), (ii)
disqualify the Plan from the exemption provided by Rule&nbsp;16b-3, or (iii)&nbsp;extend the term of the
Plan. In addition, no such amendment shall be made without the approval of the Company&#146;s
stockholders to the extent such approval is required by law or agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Committee may amend the terms of any Award theretofore granted, prospectively or
retroactively, but no such amendment shall impair the rights of any holder without the holder&#146;s
consent except such an amendment made to cause the Plan or Award to qualify for the exemption
provided by Rule&nbsp;16b-3 or for the Award to qualify for the &#147;qualified performance-based
compensation&#148; exception provided by Section&nbsp;1.162-27(e) of the Income Tax Regulations (where the
Committee has intended that such Award qualify for the exception).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to the above provisions, the Board shall have the authority to amend the Plan and the
terms of any Award theretofore granted to take into account changes in law and tax and accounting
rules.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><FONT style="font-variant: SMALL-CAPS">Section&nbsp;14. </FONT><I>Unfunded Status of Plan.</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;It is presently intended that the Plan constitute an &#147;unfunded&#148; plan for incentive and
deferred compensation. The Committee may authorize the creation of trusts or other arrangements to
meet the obligations created under the Plan to deliver Stock or make payments; provided, however,
that, unless the Committee otherwise determines, the existence of such trusts or other arrangements
is consistent with the &#147;unfunded&#148; status of the Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><FONT style="font-variant: SMALL-CAPS">Section&nbsp;15. </FONT><I>Cancellation and Rescission of Awards.</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Committee may cancel, declare forfeited, or rescind any unexercised, undelivered, or
unpaid Award upon its determining that (i)&nbsp;a participant has violated the terms of the Plan or the
Award Agreement under which such Award has been made, or (ii)&nbsp;the participant has committed a
Breach of Conduct. In addition, for a period of one year following the exercise, payment or
delivery of an Award, the Committee may rescind any such exercise, payment or delivery of an Award
upon its determining that the participant committed a Breach of Conduct prior to the exercise,
payment or delivery of the Award, or within six months thereafter.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the case of an Award&#146;s cancellation, forfeiture, or rescission due to a Breach of Conduct
by reason of the participant&#146;s conviction of, or entering a guilty plea, no contest plea or nolo
contendre plea to any felony or to any crime involving dishonesty or moral turpitude, the
Committee&#146;s determination that a participant has committed a Breach of Conduct, and its decision to
require rescission of an Award&#146;s exercise, payment or delivery shall be conclusive, binding, and
final on all parties. In all other cases, the Committee&#146;s determination that a participant has
violated the terms of the Plan or the Award, or has committed a Breach of Conduct, and the
Committee&#146;s decision to
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">cancel, declare forfeited or rescind an Award or to require rescission of an Award&#146;s exercise,
payment or delivery shall be conclusive, binding, and final on all parties unless the participant
makes a written request to the Committee to review such determination and decision within thirty
days of the Committee&#146;s written notice of such actions to the participant. In the event of such a
written request, the members of the Board who are &#147;independent directors&#148; within the meaning of the
applicable stock exchange rule (including members of the Committee) shall review the Committee&#146;s
determination no later than the next regularly scheduled meeting of the Board. If, following its
review, such directors approve, by a majority vote, (i)&nbsp;the Committee&#146;s determination that the
participant violated the terms of the Plan or the Award or committed a Breach of Conduct, and (ii)
the Committee&#146;s decision to cancel, declare forfeited, or rescind the Award, such determination and
decision shall thereupon be conclusive, binding, and final on all parties.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the event an Award is rescinded, the affected participant shall repay or return to the
Company any cash amount, Stock, or other property received from the Company upon the exercise,
payment or delivery of such Award (or, if the participant has disposed of the Stock or other
property received and cannot return it, its cash value at the time of exercise, payment or
delivery), and, in the case of Stock or other property delivered to the participant, any gain or
profit realized by the participant in a subsequent sale or other disposition of such Stock or other
property. Such repayment and (or)&nbsp;delivery shall be on such terms and conditions as the Committee
shall prescribe.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><FONT style="font-variant: SMALL-CAPS">Section&nbsp;16. </FONT><I>General Provisions.</I>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Committee may require each person purchasing or receiving shares pursuant to an
Award to represent to and agree with the Company in writing that such person is acquiring the
shares without a view to the distribution thereof. The certificates for such shares may
include any legend which the Committee deems appropriate to reflect any restrictions on
transfer.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All certificates for shares of Stock or other securities delivered under the Plan shall
be subject to such stock transfer orders and other restrictions as the Committee may deem
advisable under the rules, regulations and other requirements of the Commission, any stock
exchange upon which the Stock is then listed and any applicable Federal or state securities
law, and the Committee may cause a legend or legends to be put on any such certificates to
make appropriate reference to such restrictions. The Company shall have no obligation to issue
or deliver certificates for shares of Stock under the Plan prior to (i)&nbsp;obtaining approval
from any governmental agency which the Company determines is necessary or advisable, (ii)
admission of such shares to listing on the stock exchange on which the Stock may be listed,
and (iii)&nbsp;completion of any registration or other qualification of such shares under any state
or federal law or ruling of any governmental body which the Company determines to be necessary
or advisable.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Notwithstanding any other provisions of this Plan, the following shall apply to any
person subject to Section&nbsp;16 of the Exchange Act, except in the case of death or disability or
unless Section&nbsp;16 shall be amended to provide otherwise than as described below, in which
event this Plan shall be amended to conform to Section&nbsp;16, as amended:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Restricted stock or other equity securities (within the meaning used in Rule&nbsp;16b-3)
offered pursuant to this Plan must be held by the person for at least six months from the date
of grant; and
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) At least six months must elapse from the date of acquisition of any Stock Option,
Stock Appreciation Right, Stock Unit, Performance Share, Performance Unit or other derivative
security (within the meaning used in Rule&nbsp;16b-3) issued pursuant to the Plan to the date of
disposition of such derivative security (other than upon exercise or conversion) or its
underlying security.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->24<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Nothing contained in the Plan shall prevent the Company or any subsidiary or
Affiliate from adopting other or additional compensation arrangements for its employees.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The adoption of the Plan shall not confer upon any employee any right to continued
employment nor shall it interfere in any way with the right of the Company or any subsidiary
or Affiliate to terminate the employment of any employee at any time.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) No later than the date as of which an amount first becomes includible in the gross
income of the participant for Federal income tax purposes with respect to any Award under the
Plan, the participant shall pay to the Company, or make arrangements satisfactory to the
Company regarding the payment of, any Federal, state, local or foreign taxes of any kind
required by law to be withheld with respect to such amount. Unless otherwise determined by the
Committee, withholding obligations may be settled with Stock, including Stock that is part of
the Award that gives rise to the withholding requirement. The obligations of the Company under
the Plan shall be conditional on such payment or arrangements, and the Company, its
subsidiaries and its Affiliates shall, to the extent permitted by law, have the right to
deduct any such taxes from any payment otherwise due to the participant. The Committee may
establish such procedures as it deems appropriate, including the making of irrevocable
elections, for the settlement of withholding obligations with Stock.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) At the time of grant, the Committee may provide in connection with any grant made
under the Plan that the shares of Stock received as a result of such grant shall be subject to
a right of first refusal pursuant to which the participant shall be required to offer to the
Company any shares that the participant wishes to sell at the then Fair Market Value of the
Stock, subject to such other terms and conditions as the Committee may specify at the time of
grant.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) The reinvestment of cash dividends in additional shares of Restricted Stock, and the
crediting of dividend equivalents or interest equivalents (if such interest equivalents are
payable in Stock when distributed) on Stock Units or on the deferred payment of Stock Units,
Performance Units or Performance Shares shall only be permissible if sufficient shares of
Stock are available under Section&nbsp;4 (taking into account then outstanding Awards).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) The Committee shall establish such procedures as it deems appropriate for a
participant to designate a beneficiary to whom any amounts payable in the event of the
participant&#146;s death are to be paid.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) It is intended that payments under the Stock Options, Stock Appreciation Rights,
Performance Units, and Performance Shares provisions of the Plan to recipients who are
&#147;covered employees&#148; within the meaning of Section&nbsp;162(m)(3) of the Code constitute &#147;qualified
performance-based compensation&#148; within the meaning of Section&nbsp;1.162-27(e) of the Income Tax
Regulations. Awards of Restricted Stock may be designated by the Committee as intended to
constitute &#147;qualified performance-based compensation&#148; in the relevant Award Agreement. To the
maximum extent possible, the Plan and the terms of any Stock Options, Stock Appreciation
Rights, Performance Units, Performance Shares, and, where applicable, Restricted Stock, shall
be so interpreted and construed.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) It is intended that Stock Options awarded pursuant to Section&nbsp;6, Stock Appreciation
Rights awarded pursuant to Section&nbsp;7, and Restricted Stock awarded pursuant to Section&nbsp;8 not
constitute a &#147;deferral of compensation within the meaning of Section&nbsp;409A of the Code. It is
further intended that Performance Shares and Performance Units granted pursuant to Sections&nbsp;10
and 11 not constitute a &#147;deferral of compensation&#148; within the meaning of Section&nbsp;409A of the
Code excepting, however, Performance Shares and Performance Units that become vested as a
result of the Committee&#146;s waiver of payment limitations prior to the end of the
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->25<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">applicable Performance Period. Finally, it is intended that Stock Units awarded pursuant
to Section&nbsp;9, and Performance Units and Performance Shares that are or become vested as a
result of the Committee&#146;s waiver of payment limitations prior to the end of the applicable
Performance Period satisfy the requirements of Sections&nbsp;409A(2) through (a)(4) of the Code in
all material respects. This Plan shall be interpreted for all purposes and operated to the
extent necessary in order to comply with the intent expressed in this paragraph.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) If any provision of this Plan is or becomes invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions contained
herein shall not be impaired or affected thereby.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) The Plan and all Awards made and actions taken thereunder shall be governed by and
construed in accordance with the laws of the State of Delaware without taking into account its
conflict of laws provisions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><FONT style="font-variant: SMALL-CAPS">Section&nbsp;17. </FONT><I>Effective Date of Amendment and Restatement.</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Plan was originally effective April&nbsp;21, 2004, the date on which it was approved by
stockholders of the Company. The Plan was then amended and restated effective April&nbsp;26, 2006, the
date on which it was approved by stockholders of the Company, which amendment and restatement
applies to any Awards granted prior to the effective date of such amendment and restatement that
remained outstanding as of such date and to Awards granted thereafter. The Plan was again amended
and restated effective January&nbsp;1, 2009 for amendments required by Section&nbsp;409A of the Code, which
amendment and restatement applies to any Awards granted prior to the effective date of such
amendment and restatement that remain outstanding as of such date and to Awards granted thereafter.
The amendment and restatement of the Plan approved by the Board of Directors on February&nbsp;11, 2009
shall be effective on the date the amended and restated Plan is approved by the stockholders of the
Company and shall apply to any Awards granted prior to the effective date of the amendment and
restatement that remain outstanding as of such date and to Awards granted thereafter. The Plan&#146;s
original effective date of April&nbsp;21, 2004 shall remain its effective date for purposes of Section
13.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->26<!-- /Folio -->
</DIV>




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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>3
<FILENAME>c50890exv31w1.htm
<DESCRIPTION>EX-31.1
<TEXT>
<HTML>
<HEAD>
<TITLE>exv31w1</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 10pt">Exhibit&nbsp;31.1
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>Certification of the Principal Executive Officer<BR>
Pursuant to 15 U.S.C. 78m(a) or 78o(d)<BR>
(Section&nbsp;302 of the Sarbanes-Oxley Act of 2002)</B>

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 10pt">I, Timothy M. Manganello, certify that:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>I have reviewed this quarterly report on Form 10-Q of BorgWarner Inc.;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Based on my knowledge, this report does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period
covered by this report;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Based on my knowledge, the financial statements, and other financial information included in
this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this
report;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The registrant&#146;s other certifying officer(s) and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules&nbsp;13a-15(e) and
15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a) Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating
to the registrant, including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which this report is being prepared;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>b) Designed such internal control over financial reporting, or caused such internal control
over financial reporting to be designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>c) Evaluated the effectiveness of the registrant&#146;s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this report based on such evaluation;
and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>d) Disclosed in this report any change in the registrant&#146;s internal control over
financial reporting that occurred during the registrant&#146;s most recent fiscal quarter (the
registrant&#146;s fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant&#146;s internal control
over financial reporting;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The registrant&#146;s other certifying officer(s) and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the registrant&#146;s auditors and the
audit committee of the registrant&#146;s board of directors (or persons performing the equivalent
functions):</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a) All significant deficiencies and material weaknesses in the design or operation of
internal controls over financial reporting which are reasonably likely to adversely affect
the registrant&#146;s ability to record, process, summarize and report financial information; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>b) Any fraud, whether or not material, that involves management or other employees who have
a significant role in the registrant&#146;s internal controls over financial reporting.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Date: April&nbsp;30, 2009
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="50%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="18%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Timothy M. Manganello</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
Timothy M. Manganello
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chief Executive Officer</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.2
<SEQUENCE>4
<FILENAME>c50890exv31w2.htm
<DESCRIPTION>EX-31.2
<TEXT>
<HTML>
<HEAD>
<TITLE>exv31w2</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 10pt">Exhibit&nbsp;31.2
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>Certification of the Principal Financial Officer<BR>
Pursuant to 15 U.S.C. 78m(a) or 78o(d)<BR>
(Section&nbsp;302 of the Sarbanes-Oxley Act of 2002)</B>

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 10pt">I, Robin J. Adams, certify that:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>I have reviewed this quarterly report on Form 10-Q of BorgWarner Inc.;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Based on my knowledge, this report does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period
covered by this report;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Based on my knowledge, the financial statements, and other financial information included in
this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this
report;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The registrant&#146;s other certifying officer(s) and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules&nbsp;13a-15(e) and
15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a) Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating
to the registrant, including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which this report is being prepared;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>b) Designed such internal control over financial reporting, or caused such internal control
over financial reporting to be designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>c) Evaluated the effectiveness of the registrant&#146;s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this report based on such evaluation;
and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>d) Disclosed in this report any change in the registrant&#146;s internal control over
financial reporting that occurred during the registrant&#146;s most recent fiscal quarter (the
registrant&#146;s fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant&#146;s internal control
over financial reporting;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The registrant&#146;s other certifying officer(s) and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the registrant&#146;s auditors and the
audit committee of the registrant&#146;s board of directors (or persons performing the equivalent
functions):</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a) All significant deficiencies and material weaknesses in the design or operation of
internal controls over financial reporting which are reasonably likely to adversely affect
the registrant&#146;s ability to record, process, summarize and report financial information; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>b) Any fraud, whether or not material, that involves management or other employees who have
a significant role in the registrant&#146;s internal controls over financial reporting.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="50%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="18%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Date: April&nbsp;30, 2009
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Robin J. Adams</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
Robin J. Adams
</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Executive Vice President, Chief Financial</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Officer &#038; Chief Administrative Officer</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
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<DOCUMENT>
<TYPE>EX-32.1
<SEQUENCE>5
<FILENAME>c50890exv32w1.htm
<DESCRIPTION>EX-32.1
<TEXT>
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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>Exhibit&nbsp;32.1</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER<BR>
AND CHIEF FINANCIAL OFFICER<BR>
PURSUANT TO 18 U.S.C. SECTION 1350</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">In connection with the Quarterly Report of BorgWarner Inc. (the &#147;Company&#148;) on Form 10-Q for the
period ended March&nbsp;31, 2009 (the &#147;Report&#148;), each of the undersigned officers of the Company
certifies, pursuant to Section&nbsp;906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section&nbsp;1350, that
to the best of such officer&#146;s knowledge:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">(1)&nbsp;the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934; and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">(2)&nbsp;the information contained in the Report fairly presents, in all material respects, the
financial condition and results of operations of the Company.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="45%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Dated: April&nbsp;30, 2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ Timothy M. Manganello</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
Timothy M. Manganello
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Chief Executive Officer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ Robin J. Adams</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
Robin J. Adams
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Executive Vice President, Chief Financial Officer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&#038; Chief Administrative Officer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">A signed original of this written statement required by Section&nbsp;906 has been provided to BorgWarner
Inc. and will be retained by BorgWarner Inc. and furnished to the Securities and Exchange
Commission or its staff upon request.
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
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