AUBURN HILLS, MI — BorgWarner second quarter sales and income showed strong growth over last year, driven by the demand for fuel-efficient engine and drivetrain technology around the world.

Earnings of $1.21 per diluted share, which included (4 cents) per diluted share related to the implementation of FAS 123( R ). Record sales of $1,169 million, up 5 percent versus second quarter 2005. Sales outside of the U.S. grew 12 percent over second quarter 2005. Operating income margin of 9.2 percent. On a comparable non-U.S. GAAP basis, earnings increased 11 percent in the quarter. The company revised its 2006 full year guidance range to $4.35 to $4.60 per diluted share.

The company revised its 2006 full year guidance range to $4.35 to $4.60 per diluted share, at the high end of the previous range of $4.22 to $4.57 per diluted share.

For second quarter 2006, sales were $1,168.7 million, up 5 percent from $1,111.4 million in second quarter 2005. Net income in the quarter was $70.2 million, or $1.21 per diluted share, compared with $35.9 million, or 63 cents per diluted share in second quarter 2005. Second quarter 2006 included $(2.9) million of pre-tax expense related to the implementation of FAS 123 (R), or (4 cents) per diluted share. Second quarter 2005 net income included a $(28.7) million charge, or (50 cents) per diluted share, related to special items.

For the first six months of 2006, sales were $2,323.9 million, up 6 percent from $2,194.9 million in the first six months of 2005. For the first six months, net income was $131.5 million, or $2.27 per diluted share, compared with $113.5 million, or $1.99 per diluted share in the first six months of 2005. The first six months included $(5.9) million of pre-tax expense related to the implementation of FAS 123(R), or (7 cents) per diluted share. The first six months of 2005 net income included a net $(6.6) million in charges related to special items, or (12 cents) per diluted share.

Operating income was $107.5 million or 9.2 percent of sales in second quarter 2006 versus $58.7 million or 5.3 percent of sales in the second quarter 2005. Excluding the impact of FAS 123(R) from second quarter 2006 and special items from second quarter 2005, second quarter 2006 operating income margin was 9.5 percent, up slightly from 9.4 percent a year ago. Research and development spending was $47.8 million in the quarter versus $40 million in 2005.

Net cash provided by operating activities was $233.2 million in the first six months of 2006 versus $186.1 million in the first six months of 2005. Investments in capital expenditures of $113.2 million, together with net tooling outlays of $32.3 million, totaled $145.5 million for the first six months of 2006, compared with $113.4 million for the same period in 2005.

Balance sheet debt decreased by $54.7 million, cash and cash equivalents decreased by $22.5 million, and marketable securities increased by $20.8 million at the end of second quarter 2006 compared with the end of 2005.

Engine Group Results: Strong global demand for its products boosted Engine Group second quarter 2006 sales 8 percent versus second quarter 2005 to $792 million with a 6 percent increase in earnings before interest and taxes to $95.4 million. The group continued to benefit from Asian automaker demand for turbochargers and timing systems, European automaker demand for turbochargers, timing systems, exhaust gas recirculation (EGR) valves and diesel engine ignition systems, the continued roll-out of its variable cam timing systems with General Motors high-value V6 engines, stronger EGR valve sales in North America and higher turbocharger and thermal products sales due to stronger global commercial vehicle production.

Drivetrain Group Results: Second quarter 2006 sales were down 1 percent versus second quarter 2005 to $386.3 million with a 6 percent decrease in segment earnings before interest and income taxes to $28.6 million. The group continued to benefit from growth outside of North America including the continued ramp up of dual-clutch transmission and torque transfer product sales in Europe. In the U.S., the group was negatively impacted by lower production of light trucks and sport-utility vehicles equipped with its torque transfer products.

For more information about BorgWarner, go to: www.borgwarner.com .

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