7 BorgWarner’s boosting systems  for gasoline engines, including  new direct injected systems,  provide power, pickup and real  driver enjoyment with fuel  economy improvement up to 15%. Our chain timing systems prolong  engine life, increase fuel efficiency  and reduce emissions in today’s  demanding new diesel applications. Our patented variable cam timing  system uses camshaft oscillation to  achieve twice the emissions reduction  and three times the fuel efficiency  improvement in the federal EPA cycle  than competitive technologies. BorgWarner’s air pump technology  reduces hydrocarbon emissions by  as much as 41%. Our air pumps are  available in a full range of flow capa- bilities, are compact in size, and can  be engine or vehicle mounted. Our boosting systems for diesel  engines are key enabling technolo- gies for modern, high-performing  clean diesel engines. Advances  include new variable geometry  turbine designs and regulated  two-stage devices. BorgWarner provides exhaust gas  recirculation technology to support  the most stringent emissions  reductions. Our EGR valve offers a  wide range of integration and high  temperature solutions. We bring increased power and  durability, noise reduction and  more compact packaging to the  growing market for both single  and double overhead cam timing  in gasoline engines. Visctronic thermal management technology for engine cooling  is a patented, revolutionary  system which utilizes precision  electronic controls to improve  engine cooling and fuel economy  in light, medium, heavy-duty and  off-highway vehicles. Asheville, North Carolina  ✦ ✴  Auburn Hills, Michigan  ✴  Cadillac, Michigan  ✦  Campinas, Brazil  ✦ Civac-Jiutepec, Mexico  ✦  GLYPH<127> Cortland, New York  ✦  Dixon, Illinois  ✦ Fletcher, North Carolina  ✦ Guadalajara, Mexico  ✦ Ithaca, New York  ✦ Marshall, Michigan  ✴  Sallisaw, Oklahoma  ✦ Simcoe, Ontario, Canada  ✦  Water Valley, Mississippi  ✦ Aoyama, Japan  ✦ Changwon, South Korea  ✦ Chennai, India  ✦ Chennai, India (JV)  ✦  Chungju-City, South Korea (JV)  ✦  GLYPH<127> Hitachinaka City, Japan (JV)  ✦ Kakkalur, India (JV)  ✦ Nabari City, Japan ✦ ✴  Ningbo, China (JV)  ✦ Pune, India (JV)  ✦  GLYPH<127> Pyongtaek, South Korea  ✦ Shihung-City, South Korea  ✦  GLYPH<127> Tainan Shien, Taiwan  ✦  Arcore, Italy  ✦ ✴  Biassono, Italy  ✦  GLYPH<127> Bretten, Germany  ✦  GLYPH<127> Bradford, England  ✦ Chazelles, France  ✦  GLYPH<127> Diss, England  ✦  GLYPH<127> Kandel, Germany (JV)  ✦  GLYPH<127> Kirchheimbolanden, Germany  ✦ ✴ La Ferté-Macé, France  ✦  GLYPH<127> Ludwigsburg, Germany  ✦ ✴  GLYPH<127>  Markdorf, Germany  ✦ ✴ Muggendorf, Germany  ✦  GLYPH<127> Neuhaus, Germany  ✦  GLYPH<127> Oroszlany, Hungary  ✦  Rijswijk, Netherlands (JV)  ✦  GLYPH<127> Tiszakécske, Hungary  ✦  GLYPH<127> Tralee, Ireland  ✦  GLYPH<127> Vitoria, Spain  ✦  GLYPH<127> Europe Asia Americas Production Plants and  Technical Centers • Stricter emission regulations for Europe, North America and Asia  • Continued growth of diesel engines in European passenger cars • Tighter emission regulations related to commercial diesels • Engine downsizing for improved fue l consumption and em issions in gasoline engines • Electronic controls and growth of “smart systems” • Engine timing systems moving from belts to chains  • Development of variable cam timing systems • Growth of overhead cam engines • Systems integration; alternative technologies Strong demand boosted Engine Group sales 19% with an 18% increase in earnings before interest  and taxes. The group continues to benefit from European and Asian automaker demand for  turbochargers, timing systems and emission products, and from stronger commercial vehicle  production in both Europe and North America. During the year, the group expanded its presence  in Korea to manufacture engine timing systems for Hyundai’s high-volume gasoline engines and  formed a joint venture for the manufacture and sale of turbochargers. New business awards from  Asian and European automakers expanded the group’s customer base. The acquisition of  a major stake in Beru in January 2005 further enhances the group. The Engine Group develops strategies and products to manage engines for fuel efficiency, reduced  emissions and enhanced performance. BorgWarner’s expertise in engine timing systems, boosting  systems, air and noise management, cooling and controls is the foundation for this collaboration. 6 business profile engine group 2004 Highlights  Growth Drivers and Opportunities  Key Technologies Chain Products Global leader in the design and manufacture of automotive chain systems  for engine timing, automatic transmission and torque transfer including four- and all-wheel  drive applications. Fully integrated timing chain system supplier including chains, sprockets,  tensioners, control arms and guides, and variable cam timing phasers. Boosting Systems Leading designer and manufacturer of turbochargers and boosting  systems for the passenger car and commercial vehicle markets. Emissions and Thermal Systems Leading designer and supplier of components and  systems for engine air and thermal management designed to control emissions and  reduce fuel consumption.  Beru Technologies World’s leading supplier of diesel cold-start technology and a leading  European supplier of ignition technology for gasoline vehicles. Electronics and sensing technology  is focused on creating intelligent sensor products for various engine and vehicle functions. Direct tire pressure monitoring  systems measure temperature  and pressure inside the tire and  transmit the data to the driver.  Legislation is mandating their use  in North America for enhanced  vehicle stability. Glow plugs are a standard feature  in modern passenger car diesels.  With the Beru Instant Start System  (ISS), diesel engines start more  quickly and safely than ever before  thanks to optimized glow plugs  and an electronic controller which  individually regulates each plug. millions of dollars 01 $1,426.6 $1,648.2 $2,217.0 $1,568.3 00 02 03 04 $1,869.7 SALES  Beru Diesel  Cold-Start Technology Gasoline Engine Timing  Diesel Turbochargers Exhaust Gas Recirculation Gasoline Turbochargers Diesel Engine Timing  Variable Cam Timing Secondary Air Pump Beru Tire Pressure  Monitoring Systems Air Flow Systems PRODUCTION PLANTS TECHNICAL CENTERS BERU LOCATIONS ✦ ✴  GLYPH<127> 