drivetrain group business profile 8 The Drivetrain Group harnesses our 100-year legacy as an industry innovator in transmission and four- wheel drive technology. The group is leveraging this understanding of powertrain clutching technology  to develop interactive control systems and strategies for all types of torque management. Sales were up 9% and earnings before interest and taxes improved 9% driven by demand for  transmission and all-wheel drive systems, especially among Asian and European automakers.  Productivity efforts helped to offset the impact of higher commodity pricing. Important new  all-wheel drive business for both rear-wheel and front-wheel drive systems was won with two  automakers in North America. In Europe, fuel-efficient DualTronic transmission technology was  made available on five additional Volkswagen/Audi vehicles. 2004 Highlights  Growth Drivers and Opportunities  • Emerging market for new generation Pre-emptive Torque Management (PTM) • Growing focus on improved shiftability within manual transmissions • Increased global penetration of all-wheel drive • Expanded customer base in rear-wheel drive based all-wheel drive segment • Application of electronically controlled torque management devices in  all-wheel drive vehicles • Growing popularity of all-wheel drive passenger cars and crossover vehicles • Substitution of modular wet starting clutches for torque converters  • Subsystems for continuously variable transmissions (CVT) • Increased consumer demand for automatic transmissions – Europe, Korea, China  • Evolution from component to modular sourcing • Introduction of new generation five-, six- and seven-speed automatic transmissions  • Introduction of new automated (dual clutch) transmission systems for Europe and Asia Key Technologies Transmission Products  “Shift quality” components and systems including one-way clutches,  transmission bands, friction plates and clutch pack assemblies; controls including transmission  solenoids, control modules and integrated mechatronic control systems. BorgWarner is a trusted  supplier to virtually every automatic transmission manufacturer in the world. Torque Management Leading global designer and producer of torque distribution and manage- ment systems including rear-wheel four-wheel drive transfer cases, front-wheel all-wheel drive  InterActive Torque Management (ITM) devices, electronic control units (ECU) and synchronizer  systems. These systems enhance vehicle stability, drivability, shift quality and handling. Production Plants and  Technical Centers Americas Auburn Hills, Michigan  ✴  Bellwood, Illinois  ✦  Frankfort, Illinois  ✦ Livonia, Michigan  ✦ Addison, Illinois  ✦ Longview, Texas  ✦  Muncie, Indiana  ✦ Seneca, South Carolina  ✦ Asia Beijing, China (JV)  ✦ Eumsung, South Korea  ✦ Eumsung, South Korea (JV)  ✦ Fukuroi City, Japan (JV)  ✦ ✴  Pune, India (JV)  ✦ Sirsi, India (JV)  ✦  Arnstadt, Germany ✦ Heidelberg, Germany  ✦  Ketsch, Germany  ✦ ✴  Margam, Wales  ✦  Tulle, France  ✦  Europe PRODUCTION PLANTS ✦ TECHNICAL CENTERS ✴  9 SALES  $937.2 $1,122.1 $1,358.6 $980.0 00 02 03 04 $1,245.6 01 millions of dollars Our broad line of clutch products  assures smooth and efficient  shifting, especially when combined  with our friction elements. New  clutch designs are especially critical  in today’s compact, six-speed  automatic transmissions. The system enables practical  and efficient launch and shifting  solutions for hybrid powertrains,  new six-speed planetary transmis- sions, dual clutch transmissions  and continuously variable trans- missions. BorgWarner transfer cases reflect  the trend toward smarter, more  sophisticated algorithms and  controls. Increasingly, automak- ers are leveraging 4x4 systems  to augment vehicle handling and  stability programs. Advanced electrohydraulic control  modules, transmission solenoids  and mechatronic control systems  help improve fuel economy and  emissions and provide responsive,  fun-to-drive vehicle performance. Our synchronizers meet the  demanding requirements of the  modern transmission, whether  manual, automated or dual clutch. These compact, high-performance  systems generate much higher  torque levels than conventional  synchronizers. Our patented Pre-emptive Torque  Management technology for pre- mium all-wheel drive applications  enhances vehicle traction, handling  and stability, and provides high- torque accuracy using advanced,  BorgWarner-developed controls. Pre-emptive Torque  Management Transfer Case DualTronic Clutch Module Clutch Products Controls Modules Synchronizers InterActive Torque Management  Friction Products Added automatic transmission  speeds, the shift from compo- nents to subsystems and clutch  packs for all-wheel drive systems  create demand for friction  products. We supply “shift quality”  components and systems to every  automatic transmission maker. Patented ITM technology electroni- cally senses when a vehicle’s front  wheels slip, and transfers power  to the rear wheels for better han- dling, stability and flexibility than  that provided by passive, mechani- cal all-wheel drive systems.