36 37 Consolidated Statements of Operations Consolidated Balance Sheets BorgWarner Inc.  and Consolidated Subsidiaries See Accompanying Notes to Consolidated Financial Statements. millions of dollars, except per share amounts For the Year Ended December 31, 2004 2003 2002 Net sales  $3,525.3 $3,069.2 $2,731.1  Cost of sales  2,874.2 2,482.5 2,176.5  Gross profit 651.1 586.7 554.6  Selling, general and administrative expenses  339.0 316.9 303.5  Other, net  3.0  (0.1) (0.9) Operating income 309.1  269.9  252.0 Equity in affiliates earnings, net of tax  (29.2) (20.1) (19.5) Interest expense and finance charges  29.7 33.3 37.7  Earnings before income taxes  308.6  256.7  233.8 Provision for income taxes  81.2  73.2  77.2 Minority interest, net of tax  9.1 8.6 6.7  Net earnings before cumulative effect of accounting change  218.3  174.9  149.9 Cumulative effect of change in accounting principle, net of tax  —  —  (269.0) Net earnings/(loss) $ 218.3 $ 174.9 $ (119.1) Earnings/(loss) per share – basic:  Earnings per share before cumulative effect of accounting change $ 3.91 $ 3.23 $ 2.82  Cumulative effect of change in accounting principle  — — (5.05) Earnings/(loss) per share – basic  $ 3.91 $ 3.23 $ (2.23) Earnings/(loss) per share – diluted:  Earnings per share before cumulative effect of accounting change $ 3.86  $ 3.20 $ 2.79  Cumulative effect of change in accounting principle  — —  (5.01) Earnings/(loss) per share – diluted  $ 3.86 $ 3.20 $ (2.22) Average shares outstanding (thousands):  Basic 55,872 54,116 53,250 Diluted 56,537 54,604 53,708 millions of dollars December 31, 2004 2003 ASSETS Cash and cash equivalents  $ 229.7 $ 113.1  Receivables  499.1  414.9 Inventories  223.4 201.3  Deferred income taxes  22.6  32.8 Investment in business held for sale  44.2  32.0 Prepayments and other current assets  55.3  44.2 Total current assets 1,074.3  838.3 Land  45.0 42.3  Buildings  358.2 327.4  Machinery and equipment  1,352.3  1,216.0 Capital leases  1.1  2.8 Construction in progress  103.0  77.2 1,859.6 1,665.7  Less accumulated depreciation  782.4  680.4 Net property, plant and equipment  1,077.2 985.3  Tooling, net of amortization  102.1 90.5  Investments and advances  193.7 177.3  Goodwill  860.8  852.0 Other noncurrent assets  221.0  197.1 Total other assets 1,377.6  1,316.9 Total assets  $3,529.1  $3,140.5 LIABILITIES AND STOCKHOLDERS’ EQUITY Notes payable and current portion of long-term debt  $ 16.5  $ 10.0 Accounts payable and accrued expenses  608.0  474.0 Income taxes payable  39.3  — Total current liabilities 663.8 484.0  Long-term debt  568.0  645.5 Long-term liabilities:  Retirement-related liabilities  498.0  503.0 Other  242.9  230.4 Total long-term liabilities 740.9  733.4 Minority interest in consolidated subsidiaries  22.2  17.2 Capital stock:  Preferred stock, $0.01 par value; authorized shares: 5,000,000; none issued  — — Common stock, $0.01 par value; authorized shares: 150,000,000;  issued shares: 2004, 56,361,167 and 2003, 55,229,854;  outstanding shares: 2004, 56,357,183; 2003, 55,157,190  0.6 0.3  Non-voting common stock, $0.01 par value; authorized shares: 25,000,000;  none issued and outstanding  — — Capital in excess of par value  797.1 756.3  Retained earnings  681.4  491.3 Accumulated other comprehensive income  55.2  14.0 Common stock held in treasury, at cost: 2004, 3,984 shares; 2003, 72,664 shares (0.1) (1.5) Total stockholders’ equity 1,534.2  1,260.4 Total liabilities and stockholders’ equity  $3,529.1  $3,140.5 See Accompanying Notes to Consolidated Financial Statements.