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SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549


FORM 10-Q

QUARTERLY REPORT


Under Section 13 or 15(d) of the

Securities Exchange Act of 1934

For the Quarter ended June 30, 2002

Commission file number: 1-12162

BORGWARNER INC.
(Exact name of registrant as specified in its charter)


Delaware 13-3404508
State or other jurisdiction of (I.R.S. Employer
Incorporation or organization Identification No.)



200 South Michigan Avenue, Chicago, Illinois 60604
(Address of principal executive offices) (Zip Code)


Registrant's telephone number, including area code: (312) 322-8500


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES X NO

On June 30, 2002 the registrant had 26,680,164 shares of Common Stock
outstanding.





BORGWARNER INC.
FORM 10-Q
SIX MONTHS ENDED JUNE 30, 2002

INDEX
Page No.

PART I. Financial Information

Item 1. Financial Statements

Introduction 2

Condensed Consolidated Balance Sheets at
June 30, 2002 and December 31, 2001 3

Consolidated Statements of Operations for the three
months ended June 30, 2002 and 2001 4

Consolidated Statements of Operations for the six
months ended June 30, 2002 and 2001 5

Consolidated Statements of Cash Flows for the six
months ended June 30, 2002 and 2001 6

Notes to the Consolidated Financial Statements 7

Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 16

Item 3. Quantitative and Qualitative Disclosures
About Market Risks 22

PART II. Other Information

Item 1. Legal Proceedings 23

Item 4. Submission of Matters to a Vote of Security Holders 23

Item 6. Exhibits and Reports on Form 8-K 24

SIGNATURES 25


BORGWARNER INC.
FORM 10-Q
SIX MONTHS ENDED JUNE 30, 2002

PART I.

ITEM 1.

BorgWarner Inc. and Consolidated Subsidiaries'
Financial Statements

The financial statements of BorgWarner Inc. and Consolidated Subsidiaries (the
"Company") have been prepared in accordance with the instructions to Form 10-Q
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The
statements are unaudited but include all adjustments, consisting only of
recurring items, except as noted, which the Company considers necessary for a
fair presentation of the information set forth herein. The results of
operations for the three and six months ended June 30, 2002 are not necessarily
indicative of the results to be expected for the entire year. The following
financial statements and Management's Discussion and Analysis of Financial
Condition and Results of Operations should be read in conjunction with the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2001.




BORGWARNER INC. AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(millions of dollars except share data)



June 30, December 31,
2002 2001

ASSETS
Cash and cash equivalents $ 30.2 $ 32.9
Receivables 295.6 203.7
Inventories 156.0 143.8
Deferred income tax asset 23.6 23.6
Investments in businesses held
for sale 13.1 12.2
Prepayments and other current
assets 25.6 25.1
---- -----
Total current assets 544.1 441.3
Property, plant, and equipment
at cost 1,446.3 1,347.7
Less accumulated depreciation (588.0) (509.5)
------- -----
Net property, plant and equipment 858.3 838.2
Tooling, net of amortization 87.9 84.1
Investments and advances 142.3 137.4
Goodwill, net 822.4 1,160.6
Deferred income tax asset 54.9 5.7
Other non-current assets 105.9 103.6
------- -----
Total other assets 1,213.4 1,491.4
--------- --------
$2,615.8 $2,770.9
========= ============
LIABILITIES & STOCKHOLDERS' EQUITY
Notes payable $ 16.5 $ 35.6
Accounts payable and accrued
expenses 457.1 410.6
Income taxes payable 27.9 8.8
-------- ------
Total current liabilities 501.5 455.0
Long-term debt 651.1 701.4
Long-term retirement-related
liabilities 399.8 393.0
Other long-term liabilities 116.4 105.9
------- ---------
Total long-term liabilities 516.2 498.9

Minority Interest 10.8 11.4
Capital stock:
Preferred stock, $.01 par value; authorized
5,000,000 shares; none issued - -
Common stock, $.01 par value; authorized
50,000,000 shares; issued shares of
27,168,546 in 2002 and outstanding
shares of 26,680,164 in 2002 0.3 0.3
Non-voting common stock, $.01 par value;
authorized 25,000,000 shares; none issued
and outstanding in 2002 - -
Capital in excess of par value 724.7 715.7
Retained earnings 271.1 470.9
Management shareholder note (2.0) (2.0)
Accumulated other comprehensive income (loss)(37.9) (53.1)
Common stock held in treasury, at cost:
488,382 shares in 2002 (20.0) (27.6)
------ ------
Total stockholders' equity 936.2 1,104.2
------ --------
$2,615.8 $2,770.9
======== ========

See accompanying Notes to Consolidated Financial Statements
BORGWARNER INC. AND CONSOLIDATED SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(millions of dollars except share data)



Three Months Ended
June 30,
2002 2001

Net sales $ 712.4 $ 602.0
Cost of sales 530.8 452.5
Amortization of
tooling 7.2 5.9
----- -----
Total cost of sales 538.0 458.4
Gross profit 174.4 143.6

Depreciation 27.2 25.7
Selling, general and administrative
expenses 72.7 59.3
Minority interest 1.6 0.7
Goodwill amortization - 10.3
Equity in affiliate
earnings, net of tax and
other income (5.9) (4.6)
----- -------
Earnings before interest expense, finance
charges and income
taxes 78.8 52.2
Interest expense and
finance charges 9.5 12.4
Earnings before
income taxes 69.3 39.8
Provision for income
taxes 23.6 15.1
---- ------
Net earnings $45.7 $ 24.7
======== =======
Net earnings per share
- Basic $ 1.72 $ 0.94
======== ======
Net earnings per share
- Diluted $ 1.70 $ 0.93
====== =======

Average shares outstanding (thousands)
Basic 26,618 26,309
Diluted 26,918 26,457

Dividends declared per share $ 0.15 $ 0.15
======== ========



See accompanying Notes to Consolidated Financial Statements









BORGWARNER INC. AND CONSOLIDATED SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(millions of dollars except share data)



Six Months Ended
June 30,
2002 2001

Net sales $ 1,346.3 $ 1,208.8
Cost of sales 1,005.4 917.5
Amortization of tooling 13.7 12.1
----- -------
Total cost of sales 1,019.1 929.6
Gross profit 327.2 279.2

Depreciation 54.2 52.8
Selling, general and
administrative expenses143.3 114.9
Minority interest 3.1 1.4
Goodwill amortization - 20.9
Equity in affiliate earnings, net of tax and
other income (9.8) (9.3)
----- --------
Earnings before interest expense, finance
charges and income taxes 136.4 98.5
Interest expense and finance charges 19.4 25.2
------ ------
Earnings before income taxes 117.0 73.3
Provision for income taxes 39.8 27.5
----- ------
Net earnings before cumulative
effect of accounting change 77.2 45.8
======= =======

Cumulative effect of change in accounting principle,
net of tax (269.0) -
--------- ---------
Net earnings/(loss) $(191.8) $ 45.8
======== ==========
Net earnings/(loss) per share - Basic

Net earnings per share before cumulative effect
of accounting change $ 2.91 $ 1.74
Cumulative effect of
accounting change (10.15) -
======= ========
Net earnings/(loss) per share $(7.24) $ 1.74
======= ========
Net earnings/(loss) per share - Diluted
Net earnings per share before cumulative effect
of accounting change $ 2.88 $ 1.73
Cumulative effect of accounting
change (10.04) -
--------- --------
Net earnings/(loss) per share $(7.16) $ 1.73
======== ========
Average shares outstanding (thousands)
Basic 26,525 26,279
Diluted 26,825 26,427

Dividends declared per share $ 0.30 $ 0.30
======= =======


See accompanying Notes to Consolidated Financial Statements


BORGWARNER INC. AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(millions of dollars)

Six Months Ended
June 30,
2002 2001



Operating
Net earnings $(191.8) $ 45.8
Non-cash charges to operations:
Depreciation 54.2 52.8
Amortization of tooling 13.7 12.1
Goodwill amortization - 20.9
Cumulative effect of change in accounting
principle, net of tax 269.0 -
Employee retirement benefits 7.8 -
Other, principally equity in affiliate earnings,
net of tax (8.3) (6.0)
----- ------
Net earnings adjusted for
non-cash charges 144.6 125.6
------- --------
Changes in assets and liabilities, net of effects of
acquisitions and divestitures:
Increase in receivables (78.1) (44.7)
(Increase) decrease in
inventories (8.3) 10.5
(Increase) decrease in
prepayments and other
current assets 0.7 (2.3)
Increase (decrease) in accounts payable
and accrued expenses 35.5 (8.0)
Increase in income taxes
payable 19.0 20.8
Net change in other long-term assets and liabilities
7.9 7.0
------ -------
Net cash provided by operating
activities 121.3 108.9
Investing
Capital expenditures (55.3) (50.6)
Tooling outlays, net of
customer reimbursements (16.1) (10.3)
Net proceeds from asset
disposals 8.3 1.0
Proceeds from sale of
businesses 0.5 12.8
Tax refunds related to
divestitures 20.5 -
------- -------
Net cash used in investing
activities (42.1) (47.1)
Financing
Net decrease in notes payable (20.1) (25.0)
Additions to long-term debt 0.4 15.2
Reductions in long-term debt (62.7) (42.1)
Proceeds from stock options
exercised 7.6 2.4
Dividends paid (8.0) (7.9)
------ --------
Net cash used in financing
activities (82.8) (57.4)
Effect of exchange rate
changes on cash and cash
equivalents 0.9 (2.2)
------- --------
Net increase (decrease) in
cash and cash equivalents (2.7) 2.2
Cash and cash equivalents
at beginning of period 32.9 21.4
------- -------
Cash and cash equivalents
at end of period $30.2 $23.6
====== =======
Supplemental Cash Flow Information
Net cash paid (received) during the period for:
Interest $21.1 $26.0
Income taxes (12.5) 13.1
Non-cash financing transactions:
Issuance of common stock for Executive Stock
Performance Plan 1.2 1.0


See accompanying Notes to Consolidated Financial Statements

BORGWARNER INC. AND CONSOLIDATED SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

(1) Research and development costs charged to expense for the three and six
months ended June 30, 2002 were $28.2 million and $57.7 million. Research and
development costs charged to expense for the three and six months ended June 30,
2001 were $29.7 million and $56.9 million.

(2) Inventories consisted of the following (millions of dollars):

June 30, December 31,
2002 2001
Raw materials $ 66.0 $ 69.7
Work in progress 65.4 44.5
Finished goods 24.6 29.6
--------- ---------
Total inventories $ 156.0 $ 143.8
========= =========

(3) The Company has a 50% interest in NSK-Warner K.K. (NSK-Warner), a joint
venture based in Japan that manufactures automatic transmission components and
systems. The Company's share of the earnings or losses reported by NSK-Warner
is accounted for using the equity method of accounting. NSK-Warner has a fiscal
year-end of March 31.

The Company's investment in NSK-Warner was $134.7 million at June 30, 2002 and
$128.8 million at December 31, 2001.

Following are summarized financial data for NSK-Warner. Balance sheet data is
presented as of June 30, 2002 and March 31, 2002 and statement of income data is
presented for the three months ended June 30, 2002 and 2001. The Company's
results include its share of NSK-Warner's results for the three and six months
ended May 31, 2002 and May 31, 2001.

June 30, March 31,
2002 2002
(in millions)
Balance Sheet
Current assets $ 161.5 $ 147.2
Non-current assets 149.9 133.8
Current liabilities 90.0 83.1
Non-current liabilities 4.9 4.4

The equity as of June 30, 2002 and March 31, 2002 was $214.2 million and $191.4
million, respectively. There was no debt as of June 30, 2002 and March 31,
2002.

Three Months Ended
June 30, 2002 2001
(in millions)
Net sales $ 74.1 $ 69.9
Gross profit 16.4 14.4
Net income 6.9 5.8


(4) The Company's provision for income taxes is based upon estimated annual tax
rates for the year applied to federal, state and foreign income. The effective
rate for 2002 differed from the U.S. statutory rate primarily due to a)state
income taxes, b)foreign rates which differ from those in the U.S. and
c)realization of certain business tax credits, including foreign tax credits and
research and development credits. In 2002, the Company completed a change in the
ownership structure of its foreign operations for strategic business purposes.
An indirect result of this change was lower tax rates on the income of certain
of the Company's foreign operations. The Company expects its effective tax rate
for 2002 to be 34%.

(5) Following is a summary of notes payable and long-term debt:



June 30, 2002 December 31,2001
Current Long-Term Current Long-Term
DEBT (millions of dollars)

Bank borrowings $ 10.9 $ 58.5 $30.6 $69.4
Term loans due through 2011
(at an average rate of 3.0% at
June, 2002 and 3.0% at
December, 2001) 5.6 32.2 5.0 31.2
7% Senior Notes due 2006,
net of unamortized discount
($100 million converted to floating
rate of 2.9% by interest rate swap)- 139.3 - 141.8
6.5% Senior Notes due 2009,
net of unamortized discount
($25 million converted to floating
rate of 2.4% by interest rate swap)- 164.8 - 164.7
8% Senior Notes due 2019,
net of unamortized discount - 134.2 - 134.2
7.125% Senior Notes due 2029,
net of unamortized discount - 122.0 - 159.9

Capital lease liability - 0.1 - 0.2
----- ----- --- -----
Total notes payable and
long-term debt $ 16.5 $651.1 $35.6 701.4
======== ======= ======== ======



The Company has a revolving credit facility that provides for borrowings up to
$350 million through July, 2005. At June 30, 2002, there were no borrowings
outstanding under the facility and the Company had $7.3 million of obligations
under standby letters of credit. At December 31, 2001, $20.0 million of
borrowings under the facility were outstanding in addition to $6.5 million of
obligations under standby letters of credit.

The credit agreement contains numerous financial and operating covenants
including, among others, covenants requiring the Company to maintain certain
financial ratios and restricting its ability to incur additional indebtedness.

The Company has entered into interest rate and currency swaps to manage interest
rate and foreign currency risk. A summary of these instruments outstanding at
June 30, 2002 follows (currency in millions):

Notional Interest rates(b) Floating interest
Hedge Type Amount Receive Pay rate basis

Interest Rate Swaps(a) (Millions)
Fixed to floating
Fair value $100 7.0% 2.9% 6 month LIBOR+.98%
Fixed to floating
Fair value $ 25 6.5% 2.4% 6 month LIBOR+.45%

Cross Currency Swap (matures in 2006)
Floating $ Net
to floating Yen investment Yen6,430 1.3% 6 mo.
JPY LIBOR+1.18%
$50 2.9% - 6 mo. USD LIBOR+.98%

a) The maturity of the swaps corresponds with the maturity of the hedged item as
noted in the debt summary, unless otherwise indicated.
b) Interest rates are as of June 30, 2002.

The ineffective portion of the swap was not material. There is no income
statement impact due to changes in the fair value of these swaps.

(6) 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 (PRPs) at
various hazardous waste disposal sites under the Comprehensive Environmental
Response, Compensation and Liability Act (Superfund) and equivalent state laws
and, as such, may presently be liable for the cost of clean-up and other
remedial activities at 43 such sites. Responsibility for clean-up and other
remedial activities at a Superfund site is typically shared among PRPs based on
an allocation formula.

Based on the 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 costs; remediation alternatives; estimated legal fees;
and other factors, the Company has established a reserve for indicated
environmental liabilities with a balance at June 30, 2002 of approximately $23.2
million. The Company expects this amount to be expended over the next three to
five years.

BorgWarner believes that none of these matters, individually or in the
aggregate, will have a material adverse effect on its financial condition or
future operating results, generally either because estimates of the maximum
potential liability at a site are not large or because liability will be shared
with other PRPs, although no assurance can be given with respect to the ultimate
outcome of any such matter.

In connection with the sale of Kuhlman Electric Corporation, the Company agreed
to indemnify the buyer and Kuhlman Electric for certain environmental
liabilities relating to the past operations of Kuhlman Electric. During 2000,
Kuhlman Electric notified the Company that it discovered potential environmental
contamination at its Crystals Springs, Mississippi plant while undertaking an
expansion of the plant.

The Company has been working with the Mississippi Department of Environmental
Quality and Kuhlman Electric to investigate the extent of the contamination. The
investigation has revealed the presence of PCBs in portions of the soil at the
plant and neighboring areas. Kuhlman Electric and others, including the
Company, have been sued in several related lawsuits, which claim personal and
property damage. The Company has moved to be dismissed from some of these
lawsuits.

The Company's lawsuit against Kuhlman Electric seeking declaration of the scope
of the Company's contractual indemnity has been
amicably resolved and dismissed.
The Company believes that its reserve for environmental liabilities is
sufficient to cover any potential liability associated with these matters.

Patent infringement actions have been filed against the Company's turbocharger
unit in Europe in late 2001 and in 2002 by Honeywell International. The
Dusseldorf District Court in Germany entered a preliminary injunction against
the Company on July 9 limiting the Company's ability to manufacture and sell a
certain variable turbine geometry turbocharger in Germany until a patent hearing
currently scheduled for December 18, 2002.

In order to continue the uninterrupted service to its customer, the Company paid
Honeywell $25 million in July so that it could continue to make and ship
disputed car turbochargers through June of 2003. The agreement with Honeywell
partially settles litigation, suspends the July preliminary injunction and
provides for a license to ship until June 2003. As part of the agreement,
Honeywell agreed to not seek damages for shipments occurring before June 30,
2003. The Company is appealing the July preliminary injunction. The Company
continues to believe that its current production designs do not violate the
Honeywell patents and are not covered by their lawsuit. A hearing on the
turbocharger model currently in dispute is still scheduled for December.

The Company has and will recognize expense of the $25 million license payment as
it ships the affected products from January 2002 to June 2003.

In support of a new product that will be launched in 2002, a third party has
purchased $29.7 million of fixed assets. Upon release of the new product, the
Company intends to lease these assets under an operating lease.

(7) Comprehensive income (loss) is a measurement of all changes in
stockholders' equity that result from transactions and other economic events
other than transactions with stockholders. For the Company, this includes
foreign currency translation adjustments, changes in the minimum pension
liability adjustment and net earnings. The amounts presented as other
comprehensive income (loss), net of related taxes, are added to net income
resulting in comprehensive income (loss).

The following summarizes the components of other comprehensive income (loss) on
a pretax and after-tax basis for the periods ended June 30,



(in millions) Three Months Ended
2002 2001
Income Income
Tax After- Tax After-
Pretax Effect tax Pretax Effect tax

Foreign currency
translation
adjustments $ 50.0 $(12.7)$ 37.3 $(20.6) $7.8 $(12.8)
Net income as reported 45.7 24.7
----- -------
Total comprehensive income (loss)$ 83.0 $11.9
====== =======
(in millions) Six Months Ended
2002 2001
Income Income
Tax After- Tax After-
Pretax Effect tax Pretax Effect tax
Foreign currency
translation
adjustments $ 20.4 $ (5.2) $15.2 $(23.7)$8.9 $(14.8)
Net income as reported (191.8) 45.8
------- -----
Total comprehensive income (loss)$(176.6) $31.0
====== ======


The components of accumulated other comprehensive income
(loss),net of tax, in the Consolidated Balance Sheets
are as follows:

(in millions) June 30, December 31,
2002 2001
Foreign currency translation adjustments $(19.0) $(34.2)
Minimum pension liability adjustment (18.9) (18.9)
Total comprehensive income (loss) $ (37.9) $(53.1)
======== ========
The following tables show sales, earnings before interest
and taxes and total assets for each of the Company's
five reportable business segments (in millions of dollars).

Sales
Three Months Ended June 30, 2002 2001

Inter- Inter-
Customer segment Net Customer segment Net
------- --------- ----- --------- ------- ------



Air/Fluid Systems $ 102.1 $3.2 $105.3 $92.6 $2.0 $94.6
Cooling Systems 62.5 - 62.5 58.0 0.1 58.1
Morse TEC 264.1 7.0 271.1 215.4 5.8 221.2
TorqTransfer Systems159.9 0.8 160.7 129.1 0.2 129.3
Transmissions Systems123.8 5.1 128.9 106.9 2.9 109.8
Divested Operations - - - - - -
Inter-segment
eliminations - (16.1) (16.1) - (11.0) (11.0)
------ ------ ------- ------ -------- -------
Consolidated $712.4 $ - $712.4 $602.0 $ - $602.0
====== ======= ======= ========= ====== ========
Sales
Six Months Ended June 30, 2002 2001
Inter- Inter-
Customer segment Net Customer segment Net
Air/Fluid Systems $199.2 $6.2 $205.4 $181.6 $3.9 $185.5
Cooling Systems 115.8 - 115.8 116.3 0.1 116.4
Morse TEC 499.0 13.2 512.2 430.6 11.3 441.9
TorqTransfer Systems296.1 1.4 297.5 254.1 10.6 254.7
Transmissions Systems236.2 8.4 244.6 208.2 5.6 213.8
Divested Operations - - - 18.0 - 18.0
Inter-segment
eliminations - (29.2) (29.2) - (21.5)(21.5)
---- ------- ------- ------- ------ --------
Consolidated $ 1,346.3 $- $1,346.3 $ 1,208.8 $ - $1,208.8
======= ======= ======= ======== ======= =======

Earnings Before Earnings Before
Interest & Taxes Interest & Taxes
Three Months Ended Six Months Ended
June 30, June 30,
2001 2001
2002 2001 As Adjusted 2002 2001 As Adjusted
Air/Fluid Systems $10.0 $6.1 $7.7 $17.5 $9.0 $12.3
Cooling Systems 8.0 2.1 6.5 13.4 4.0 13.0
Morse TEC 40.4 30.9 33.8 75.3 58.9 64.9
TorqTransfer Systems10.8 6.2 6.2 17.7 10.2 10.2
Transmission Systems19.9 11.9 13.3 33.8 23.9 26.7
Divested operations - - - - (0.2) (0.2)
----- ------ ------ ------ ----- ------
Total 89.1 57.2 67.5 157.7 105.8 126.9
Corporate, including
equity in affiliates (10.3) (5.0) (5.0) (21.3) (7.3) (7.5)
-------- ------- ------- -------- ------- ------
EBIT $78.8 $ 52.2 $ 62.5 $136.4 $98.5 $119.4
======= ======= ======= ======= ====== ======


The 2001 as adjusted columns show the 2001 reported EBIT by segment, excluding
goodwill amortization. This is to be comparable to the 2002 presentation, which
requires that goodwill not be amortized.

Total Assets
June 30, December 31,
2002 2001
Air/Fluid Systems $ 318.8 $ 382.1
Cooling Systems 245.4 510.1
Morse TEC 1,160.1 1,066.4
TorqTransfer Systems 280.8 266.6
Transmission Systems 381.1 359.6
-------- ----------
Total 2,386.2 2,584.8
Corporate, including equity in
affiliates 229.6 186.1
-------- ---------
Consolidated $2,615.8 $2,770.9
======== =========
(9) Other non-recurring charges of $28.4 million were incurred in the fourth
quarter of 2001. These charges primarily include adjustments to the carrying
value of certain assets and liabilities related to businesses acquired and
disposed of over the past three years. These charges are primarily non-employee
related exit costs for certain non-production facilities the Company has
previously sold or no longer needs and non-recurring product quality related
charges. The 2001 non-recurring charges include $8.4 million of environmental
remediation costs related to sold businesses and $12 million of product quality
costs for issues with products that were sold by acquired businesses prior to
acquisition, all of which have been fixed in the currently produced products.
Of the $28.4 million of pretax charges, $5.0 million represents non-cash
charges. Approximately $3.3 million was spent in 2001, $8.4 million was
transferred to environmental reserves in 2001, $3.0 million was spent in the six
months ended June 30, 2002, and the remaining $8.7 million is expected to be
spent over the next eighteen months. The Company expects to fund the total cash
outlay of these actions with cash flow from operations.

The roll-forward for the balance of the other exit costs and non-recurring
charges are detailed in the following table.

Other Exit Costs and
Non-Recurring
Charges
(in millions of dollars)
Balance, December 31, 2001 $ 11.7
Incurred 3.0
Balance, June 30, 2002 $ 8.7


(10) In April 2001, the Company completed the sale of its fuel systems business
to an investor group led by TMB Industries, a private equity group. The
transaction did not have a significant impact on the Company's results of
operations, financial condition or cash flows.

(11) 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, up to a maximum of $120 million.
During the six months ended June 30, 2002, the amount of receivables sold ranged
from $119 million to $120 million. There are no gains or losses booked as a
result of these transactions. At June 30, 2002, the Company had sold $120
million of receivables under a $122.4 million Receivables Transfer Agreement for
face value without recourse.

(12) In July 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 142, "Goodwill and Other Intangible
Assets," SFAS No. 142, effective January 1, 2002, which specifies that goodwill
and certain intangible assets will no longer be amortized but instead will be
subject to periodic impairment testing. SFAS No. 142 also requires that, upon
adoption, goodwill be allocated to the Company's reporting units and a two-step
impairment analysis be performed.

The Company adopted SFAS No. 142 effective January 1, 2002. Under the
transitional provisions of the SFAS, the Company allocated goodwill to its
reporting units and performed the two-step impairment analysis. The fair value
of the Company's businesses used in determination of the goodwill impairment was
computed using the expected present value of associated future cash flows. As a
result of this analysis, the Company determined that goodwill associated with
its Cooling Systems and Air/Fluid Systems operating businesses was impaired due
to fundamental changes in their served markets, particularly the medium and
heavy truck markets, and weakness at a major customer. As a result a charge of
$269 million, net of taxes of $76 million, was recorded. The impairment loss
was recorded in the first quarter of 2002 as a cumulative effect of change in
accounting principle. The changes in the carrying amount of goodwill (in
millions of dollars) for the six months ended June 30, 2002, are as follows:





Torq-
Air/Fluid Cooling Morse Transmission Transfer
Systems Systems TEC Systems Systems Total


Balance at 12/31/2001 $228.9 $417.3 $385.4 $129.0 $0.0 $1,160.6
Translation adjustments 0.3 1.3 5.2 6.8
Change in accounting
principle (73.5) (271.5) - - - (345.0)
------- -------- -------- ------- ------ ------
Balance at 6/30/2002 $155.7 $147.1 $390.6 $129.0 $0.0 $822.4
======= ======== ======= ======== ==== =======


Also as a result of the adoption of SFAS 142, the Company did not amortize
goodwill in 2002. The following table provides adjusted net income and
earnings per share data for the quarters ended June 20, 2002 and 2001
as if goodwill had not been amortized during these periods:

For the Quarter Ended June 30, 2002 2001
(in millions of dollars)
Reported net earnings $45.7 $24.7
Goodwill amortization, net of tax - 6.5
------- ----------
Adjusted net earnings (loss) $45.7 $31.2
======= ==========
Basic earnings (loss) per share:
Reported net earnings $1.72 $0.94
Goodwill amortization - 0.25
-------- ---------
Adjusted net earnings (loss) $1.72 $1.19
========= ==========

Diluted earnings (loss) per share:
Reported net earnings $1.70 $0.93
Goodwill amortization - 0.25
-------- ---------
Adjusted net earnings (loss) $1.70 $1.18
======== =========
For the Six Months Ended June 30, 2002 2001
(in millions of dollars)
Reported net earnings before cumulative
effect of change in accounting
principle $77.2 $45.8
Goodwill amortization, net of tax - 13.2
------- --------
Adjusted net earnings before cumulative
effect of change in accounting
principle $77.2 $59.0
======== =========
Cumulative effect of change in accounting
principle, net of tax (269.0) -
------- -----------
Adjusted net earnings (loss) ($191.8) $59.0
========= =========

Basic earnings (loss) per share:
Reported net earnings before cumulative
effect of change in accounting
principle $2.91 $1.74
======== ==========
Goodwill amortization - 0.50
Adjusted net earnings before cumulative
effect of change in accounting p
principle $2.91 $2.24
======== ==========
Cumulative effect of change in accounting
principle, net of tax ($10.15) -
--------- ---------
Adjusted net earnings (loss) ($7.24) $2.24
========= ========
Diluted earnings (loss) per share:
Reported net earnings before cumulative
effect of change in accounting
principle $2.88 $1.73
Goodwill amortization - 0.50
------- ----------
Adjusted net earnings before cumulative
effect of accounting change $2.88 $2.23
======== ==========
Cumulative effect of change in accounting
principle, net of tax ($10.04) -
-------- --------
Adjusted net earnings (loss) ($7.16) $2.23
======== =======
(13)In August 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," which addresses financial
accounting and reporting for the impairment or disposal of long-lived assets.
The Company adopted SFAS No. 144 effective January 1, 2002. The adoption of
SFAS No. 144 had no impact on the Company's results of operations, financial
position or cash flows.

In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No.
4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections."
This statement eliminates the automatic classification of gain or loss on
extinguishment of debt as an extraordinary component of income and requires that
such gain or loss be evaluated for extraordinary classification under the
guidelines of Accounting Principles Board No. 30 "Reporting Results of
Operations." This statement also requires sales-leaseback accounting for certain
lease modifications that have economic effects that are similar to
sales-leaseback transactions and makes
various other technical corrections to the
existing pronouncements mentioned above. The adoption of SFAS No. 145 had no
impact on the Company's results of operations, financial position or cash flows.

In June 2002, the FASB issued Statement No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." The standard requires companies
to recognize costs associated with exit or disposal activities when they are
incurred rather than at the date of a commitment to an exit or disposal plan.
Examples of costs covered by the standard include lease termination costs and
certain employee severance costs that are associated with a restructuring,
discontinued operation, plant closing, or other exit or disposal activity. SFAS
No. 146 is to be applied prospectively to exit or disposal activities initiated
after December 31, 2002. The Company does not expect that the adoption of SFAS
No. 146 will have a material impact on the Company's results of operations,
financial position or cash flows.


MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

INTRODUCTION

BorgWarner Inc. and Consolidated Subsidiaries (the "Company") is a leading
global supplier of highly engineered systems and components for powertrain
applications. Its products help improve vehicle performance, fuel efficiency,
handling and air quality. Its products are manufactured and sold worldwide,
primarily to original equipment manufacturers (OEMs) of passenger cars, sport
utility vehicles, trucks, and commercial transportation products. The Company
operates manufacturing facilities serving customers in the Americas, Europe and
Asia, and is an original equipment supplier to every major OEM in the world.

RESULTS OF OPERATIONS

The Company's products fall into five reportable operating segments: Air/Fluid
Systems, Cooling Systems, Morse TEC, TorqTransfer Systems and Transmission
Systems. The following tables present net sales and earnings before interest and
taxes (EBIT) by segment for the three and six months ended June 30, 2002 and
2001 in millions of dollars.




Three Months Six Months
Net Sales June 30, June 30,
2002 2001 2002 2001

Air/Fluid Systems $ 105.3 $ 94.6 205.4 185.5
Cooling Systems 62.5 58.1 115.8 116.4
Morse TEC 271.1 221.2 512.2 441.9
TorqTransfer Systems 160.7 129.3 297.5 254.7
Transmission Systems 128.9 109.8 244.6 213.8
Divested operations - - - 18.0
---------- -------- --------- ----------
728.5 613.0 1,375.5 1,230.3
Inter-segment eliminations(16.1) (11.0) (29.2) (21.5)
---------- ------- --------- --------
Net sales $ 712.4 $ 602.0 $1,346.3 $1,208.8
========= ======== ========= ========
Three Months Six Months
EBIT June 30, June 30,
2001 2001
2002 2001 As Adjusted 2002 2001 As Adjusted
Air/Fluid Systems $ 10.0 $ 6.1 $ 7.7 $ 17.5 $ 9.0 $ 12.3
Cooling Systems 8.0 2.1 6.5 13.4 4.0 13.0
Morse TEC 40.4 30.9 33.8 75.3 58.9 64.9
TorqTransfer Systems 10.8 6.2 6.2 17.7 10.2 10.2
Transmission Systems 19.9 11.9 13.3 33.8 23.9 26.7
Divested operations - - - - (0.2) (0.2)
------- ------- --------- -------- -------- ---------
EBIT $ 89.1 $ 57.2 $ 67.5 $ 157.7 $ 105.8 $ 126.9
======== ====== ======== ========= ======== ===========


The 2001 as adjusted columns show the 2001 reported EBIT by segment, excluding
goodwill amortization. This is to be comparable to the 2002 presentation, which
required that goodwill not be amortized.

Consolidated sales for the second quarter ended June 30, 2002 totaled $712.4
million, an 18% increase over the second quarter of 2001. This increase was
favorable compared to the total North American automotive market, which
experienced production increases of 7%. Geographically, the Company's sales
increase was most significant in North America and Europe with lesser amounts
coming from Asia. Sales would have increased an additional $2.2 million except
for weaker currencies, primarily in Japan and the Americas. Appreciation of
European and other currencies did not have a significant impact on the Company's
results as the average rates for the first six months of 2002 were generally
slightly lower than for the same time period in 2001. The Morse TEC and
Transmission Systems' businesses are the most affected by currency fluctuations
in Europe, Asia, and the Americas.

Second quarter net income increased from $24.7 million, to $45.7 million, an 85%
increase. The increase in operating income was positively impacted by the
elimination of goodwill amortization in accordance with SFAS 142, which the
Company adopted January 1, 2002. If goodwill amortization were removed from the
2001 results, the increase in income would have been 46%. Moreover, the
increase in income was due to higher revenue, better gross margins, lower
interest expense and a lower tax rate, and was partially offset by higher
selling, general and administrative (SG&A) expenses.

For better comparability, all segment EBIT discussions will use adjusted 2001
figures as if they did not contain goodwill amortization.

The Air/Fluid Systems business' revenue increased 11% and EBIT increased $2.3
million, or 30% from 2001. The increase in revenue was due to higher sales to
the major OEM customer of this business as well as the ramp-up in production
volume of a European customer.

The Cooling Systems business' second quarter 2002 sales and EBIT increased 8%
and 23% from second quarter 2001, respectively as a result of the stabilization
of the medium and heavy truck market, especially in North America, and
penetration into Asian markets. EBIT improved due to volume increases and cost
controls.

The Morse TEC business had a sales increase of 23%. Contributing to the sales
increase were strong sales of engine timing chains, increased usage of
turbochargers, and continued strength in sales of sport utility vehicles, many
of which utilize the Company's chain products for their four-wheel drive
systems. EBIT increased 20% due to the increased volumes. The increase would
have been greater except for the prorated portion of costs related to the
Honeywell settlement disclosed more fully in Note 6.

The TorqTransfer Systems' business experienced a 24% sales increase and a 74%
EBIT increase. This business has a relatively high fixed cost structure, which
causes larger swings in earnings when production volume changes. This benefited
the group during the second quarter of 2002 where revenue increased due to
volume gains in four-wheel drive transfer case programs with Ford and Korean
OEMs, and increased sales of the Company's new InterActive Torque Management
(ITM) all-wheel drive system to Honda.

Transmission Systems had a 17% sales increase and 50% increase in EBIT. Sales
growth was strong in all regions for this business. The EBIT increase was
driven by a combination of increased volume and cost controls.

Consolidated gross margin for the first quarter of 2002 was 24.5%, up 0.6
percentage points from the 2001 margin of 23.9%. The gross margin increase
resulted from increased volumes as well as the benefit of productivity gains and
cost control efforts. SG&A expenses increased $13.4 million and also increased
as a percentage of sales from 9.9% to 10.2% of sales. This is due to higher
health care and retiree costs, and higher risk management costs. Additionally,
the SG&A category includes substantially all the Company's spending on R&D. For
the second quarter of 2002, R&D spending totaled $28.2 million, or 4.0% of sales
versus $29.7 million, or 4.9% of sales for the second quarter of 2001.

There was no goodwill amortization in 2002, compared to $20.9
million
year-to-date in 2001, due to the change in accounting
standards where goodwill is no
longer amortized, but rather is periodically reviewed for impairment. The
Company began breaking-out tooling
amortization as a component of cost of sales.
This was due to increases in the amount of tooling outlays as a result of lower
customer reimbursements and increases in new customer projects. Tooling
amortization has always been a part of the Company's cost of sales.

Second quarter interest expense decreased $2.9 million from second quarter 2001
as a result of debt reductions throughout 2001 and 2002 as well as lower
interest rates. At June 30, 2002, the amount of debt with fixed interest rates
was 60% of total debt. Affiliate earnings, which consist primarily of the
Company's 50% share of NSK-Warner in Japan, were up $1.3 million due to a
strengthening in their business.

The Company's provision for income taxes is based on estimated annual tax rates
for the year applied to federal, state and foreign income. The effective rate
for 2002 differed from the U.S. statutory rate primarily due to a) state income
taxes, b) foreign rates which differ from those in the U.S. and c) realization
of certain business tax credits, including foreign tax credits and research and
development credits. In 2002, the Company completed a change in the ownership
structure of its foreign operations for strategic business purposes. An
indirect result of this change was lower tax rates on the income of certain of
the Company's foreign operations. The Company expects its effective tax rate
for 2002 to be 34%.

Net income was $45.7 million for the second quarter, or $1.70 per diluted share,
an increase of 85% over the previous year's second quarter. If last year's
goodwill amortization were not included, the percentage of net income to sales
would have been 5.2% for the second quarter of 2001 and the increase in income
for the 2002 second quarter would have been 46%. Shares outstanding increased
due to the exercise of options and contributions to benefit plans.

For the remainder of 2002, the Company remains concerned about production rates,
particularly in North America. While it appears that short-term production
rates in 2002 will be higher than 2001, there is uncertainty regarding the
second half of the year. This holds true for both the light vehicle market and
the heavy truck market. As a result, the Company is continuing to be cautious
in its capital investment plans and other spending. Despite these issues, the
Company maintains a positive long-term outlook for its business and is committed
to ongoing strategic investments in capital and new product development to
enhance its product leadership strategy.

FINANCIAL CONDITION AND LIQUIDITY

As of June 30, 2002, debt declined from year-end 2001 by $69.4 million, while
cash and cash equivalents decreased by $2.7 million. Cash from operations
contributed to the majority of the debt reduction. Capital spending for the
three months was $29.2 million compared with $33.4 million last year. Careful
capital spending remains an area of focus for the Company. The Company expects
to spend less than $130 million on capital in 2002, but this expectation is
subject to ongoing review based on market conditions. The Company expects that
approximately 67% of its capital spending will be for new and expanded product
programs, and the Company's new Powertrain Technical Center. The remaining
spending is expected to be directed at cost reduction and productivity
enhancement programs in order to maintain the Company's operating margins.

As of June 30, 2002 and December 31, 2001, the Company had sold $120 million of
receivables under a Receivables Transfer Agreement for face value without
recourse.

Since December 31, 2001, goodwill declined $338 million primarily due to the
implementation of Statement of Financial Accounting Standards (SFAS) No. 142,
"Goodwill and Other Intangible Assets." This SFAS requires goodwill to be
periodically reviewed for impairment at a level of detail at or below the
reporting segment level. The Company had a goodwill write down of $345 million
($269 million after tax) as a result of the implementation of SFAS No. 142.

The Company believes that the combination of cash from operations and available
credit facilities will be sufficient to satisfy its cash needs for the current
level of operations and planned operations for the remainder of 2002.

OTHER MATTERS

Sale of fuel systems
In April 2001, the Company sold its fuel systems business. This business was
acquired as part of the acquisition of Kuhlman Corporation in March 1999. After
evaluating its business, metal fuel tanks and related components for the heavy
and medium truck markets, the Company determined this business to be non-core.
The proceeds were used for general corporate purposes, including the repayment
of indebtedness. This business has been included in the divested operations
category for business segment reporting since acquisition. The transaction did
not have a significant impact on the Company's results of operations, financial
condition or cash flows.

Litigation
As discussed more fully in Note 6 to the Consolidated Financial Statements,
various claims and suits seeking money damages arising in the ordinary course of
business and involving environmental liabilities have been filed against the
Company. In each of these cases, the Company believes it has a defendable
position and has made adequate provisions to protect the Company from material
losses. The Company believes that it has established adequate provisions for
litigation liabilities in its financial statements in accordance with generally
accepted accounting principles in the United States of America.

In connection with the sale of Kuhlman Electric Corporation, the Company agreed
to indemnify the buyer and Kuhlman Electric for certain environmental
liabilities relating to the past operations 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 has been working with the Mississippi Department of Environmental
Quality and Kuhlman Electric to investigate the extent of the contamination. The
investigation has revealed the presence of PCBs in portions of the soil at the
plant and neighboring areas. Kuhlman Electric and others, including the
Company, have been sued in several related lawsuits, which claim personal and
property damage. The Company has moved to be dismissed from some of these
lawsuits.

The Company's lawsuit against Kuhlman Electric seeking declaration of the scope
of the Company's contractual indemnity has been
amicably resolved and dismissed.
The Company believes that the reserve for environmental liabilities is
sufficient to cover any potential liability associated with these matters.

Patent infringement actions have been filed against the Company's turbocharger
unit in Europe in late 2001 and in 2002 by Honeywell International. The
Dusseldorf District Court in Germany entered a preliminary injunction against
the Company on July 9 limiting the Company's ability to manufacture and sell a
certain variable turbine geometry turbocharger in Germany until a patent hearing
currently scheduled for December 18, 2002.

In order to continue the uninterrupted service to its customer, the Company paid
Honeywell $25 million in July so that it could continue to make and ship
disputed car turbochargers through June of 2003. The agreement with Honeywell
partially settles litigation, suspends the July preliminary injunction and
provides for a license to ship until June 2003. As part of the agreement,
Honeywell agreed to not seek damages for shipments occurring before June 30,
2003. The Company is appealing the July preliminary injunction. The Company
continues to believe that its current production designs do not violate the
Honeywell patents and are not covered by their lawsuit. A hearing on the
turbocharger model currently in dispute is still scheduled for December.

The Company will recognize expense of the $25 million license payments as it
ships the affected products from January 2002 to June 2003.

Other Commitments and Contingencies

In support of a new product that will be launched in 2002, a third party has
purchased $29.7 million of fixed assets. Upon release of the new product, the
Company intends to lease these assets under an operating lease.

Dividends
On July 18, 2002, the Company declared a $0.15 per share dividend to be paid on
August 15, 2002 to shareholders of record as of August 1, 2002.

New Accounting Pronouncements

In July 2001, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 142 "Goodwill and Other Intangible
Assets." SFAS No. 142, effective January 1, 2002, specifies that goodwill and
certain intangible assets will no longer be amortized but instead will be
subject to periodic impairment testing. SFAS No. 142 also requires that, upon
adoption, goodwill be allocated to the Company's reporting units and a two-step
impairment analysis be performed.

The Company adopted SFAS No. 142 effective January 1, 2002. Under the
transitional provisions of the SFAS, the Company allocated goodwill to its
reporting units and performed the two-step impairment analysis. The fair value
of the Company's businesses used to determine the goodwill impairment was
computed using the expected present value of associated future cash flows. As a
result of this analysis, the Company determined that goodwill associated with
its Cooling Systems and Air/Fluid Systems operating businesses was impaired due
to fundamental changes in their served markets, particularly the medium and
heavy truck markets, and weakness at a major customer. As a result a charge of
$269 million, net of taxes of $76 million, was recorded. The impairment loss
was recorded in the first quarter of 2002 as a cumulative effect of change in
accounting principle.

In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets," which addresses financial accounting and
reporting for the impairment or disposal of long-lived assets. The Company
adopted SFAS No. 144 effective January 1, 2002. The adoption of SFAS No. 144
had no impact on the Company's results of operations, financial position or cash
flows.

In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No.
4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections."
This statement eliminates the automatic classification of gain or loss on
extinguishment of debt as an extraordinary component of income and requires that
such gain or loss be evaluated for extraordinary classification under the
guidelines of Accounting Principles Board No. 30 "Reporting Results of
Operations". This statement also requires sales-leaseback accounting for certain
lease modifications that have economic effects that are similar
to sales-leaseback transactions and makes various
other technical corrections to the
existing pronouncements mentioned above. The adoption of SFAS No. 145 had no
impact on the Company's results of operations, financial position or cash flows.

In June 2002, the FASB issued Statement No. 146, Accounting for Costs Associated
with Exit or Disposal Activities. The standard requires companies to recognize
costs associated with exit or disposal activities when they are incurred rather
than at the date of a commitment to an exit or disposal plan. Examples of costs
covered by the standard include lease termination costs and certain employee
severance costs that are associated with a restructuring, discontinued
operation, plant closing, or other exit or disposal activity. SFAS No. 146 is
to be applied prospectively to exit or disposal activities initiated after
December 31, 2002. The Company does not expect that the adoption of SFAS No.
146 will have a material impact on the Company's results of operations,
financial position or cash flows.


DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

Statements contained in this Management'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's current expectations, estimates and projections. Words such as
"expects," "anticipates," "intends," "plans," "believes," "estimates,"
variations of such words and similar expressions are intended to identify such
forward-looking statements. Forward-looking statements are subject to risks and
uncertainties, which could cause actual results to differ materially from those
projected or implied in 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 the Company's products, general economic conditions, as well as other
risks detailed in the Company's filings with the Securities and Exchange
Commission, including the Cautionary Statements filed as Exhibit 99.1 to the
Form 10-K for the fiscal year ended December 31, 2001.

Item 3. Quantitative and Qualitative Disclosure about Market Risks

There have been no material changes to our exposures to market risk since
December 31, 2001.

PART II


Item 1. Legal Proceedings

There have been no significant developments in the legal proceedings disclosed
in the Company's Form 10-Q for the quarter ended March 31, 2001.


With respect to the patent infringement lawsuit filed by Honeywell International
and previously disclosed in the Company's form 10-Q for the quarter ended March
31, 2002, the Dusseldorf District Court in Germany entered a preliminary
injunction against the Company on July 9 limiting the Company's ability to
manufacture and sell a certain variable turbine geometry turbocharger in Germany
until a patent hearing currently scheduled for December 18, 2002.

In order to continue the uninterrupted service to its customer, the Company paid
Honeywell $25 million in July so that it could continue to make and ship
disputed car turbochargers through June of 2003. The agreement with Honeywell
partially settles litigation, suspends the July preliminary injunction and
provides for a license to ship until June 2003. The Company is appealing the
July preliminary injunction. The Company continues to believe that its current
production designs do not violate the Honeywell patents and are not covered by
their lawsuit. A hearing on the turbocharger model currently in dispute is
still scheduled for December.

Item 4. Submission of Matters to a Vote of Security Holders

On April 24, 2002, the Company held its annual meeting of stockholders. At such
meeting, William E. Butler, Paul E. Glaske and John Rau were elected as
directors to serve for a term expiring in 2005. Each of Phyllis O. Bonanno,
Andrew F. Brimmer, Jere A. Drummond, John F. Fiedler, Ivan W. Gorr, Timothy M.
Manganello and Alexis P. Michas continued to serve as directors following the
meeting. At such meeting, the following votes were cast in the election of
directors:

For Withheld
------- ------
William E. Butler 22,489,647 278,441
Paul E. Glaske 17,121,580 277,116
John Rau 17,142,248 267,968

At such meeting, the selection of Deloitte & Touche LLP as independent auditors
was approved by the following votes:

For Against Abstain Not-Voted
---------- ------- --------- ---------
22,080,662 677,440 9,985 0

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

Exhibit 10.1 Employment and Retirement Agreement dated July 1, 2002
between BorgWarner Inc. and Ronald M. Ruzic.

Exhibit 99.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.

Exhibit 99.2 Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.

(b) Reports on Form 8-K

None



SIGNATURES

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.



BorgWarner Inc.
(Registrant)

By /s/ William C. Cline
(Signature)
William C. Cline
Vice President and Controller
(Principal Accounting Officer)



Date: August 14, 2002