Contracts
- In January 2007, the Company announced that the BorgWarner Engine Group's turbocharging and cold- start technology is used on Hyundai's first- ever V6 diesel, the S-engine which powers the new Veracruz luxury utility vehicle (LUV).

- In March 2007, the Company announced that it is providing its secondary air pump systems to a variety of Toyota light truck models in North America and Japan. Total volume is expected to exceed 500,000 annually.

- In April 2007, the Company announced that BorgWarner Transmission Systems and NSK-Warner, a BorgWarner joint venture based in Japan is supplyig Toyota Tundra's six-speed transmission with friction clutch technology.

- In August 2007, the Company announced that its variable turbine geometry (VTG(TM)) turbocharger is supplied to the Hyundai Grand Starex, newly launched for the business van market.

- In October 2007, BorgWarner TorqTransfer Systems has been selected by Chery Automobile Company as the driveline system integrator for a new all-wheel drive SUV, which will also feature BorgWarner's patented NexTrac(TM) technology along with BorgWarner control systems.

- In October 2007, the Company announced that BorgWarner Morse TEC's latest HY-VOR four-wheel drive chain technology debuts on the 2007 Toyota Tundra and a new luxury SUV scheduled for release in early 2008.

- In October 2007, the Company announced that its dual-clutch transmission technology, "DualTronicR technology" is used on Nissan GT-R. This is the first time for its DualTronicR technology to be used in a Japanese transmission. The transmission is standard equipment on all GT-Rs.

New Business 2008 thru 2010
Americas: 20%
Net new business with GM, Ford and Chrysler in the U.S. is 11% of total net new business
International: Turbochargers
Chrysler: DualTronic, AWD systems and Engine timing
GM: Transmission components, Engine timing, AWD systems, Thermal systems
Ford: Transmission modules and components
Daimler: Turbochargers
John Deere: Turbochargers

Europe: 50%
VW/Audi: Turbochargers, DualTronic, Engine timing, Diesel cold start
Ford: Turbochargers, DualTronic
Daimler: Turbochargers, Diesel cold start, Engine Timing
BMW: Turbochargers

Asia: 30%
Net new business in China and Korea is ~15% and ~10% of total net new business, respectively
Hyundai: Engine timing, AWD systems, Transmission components, Turbochargers
VW/Audi: Turbochargers
GM: Emission products, Engine timing
SAIC/Ssangyong: DualTronic, Transfer cases
Renault/Nissan: Turbochargers, DualTronic
Tata Motors: AWD systems, Engine timing
Mahindra & Mahindra: AWD systems, Engine timing

Acquisitions
Acquisition of Beru AG
In December 2007, BorgWarner Germany GmbH informed the Executive Board of BERU AG that it has crossed the threshold of 75% voting rights in BERU AG on December 10, 2007, and that it is intended to start preparation for the conclusion of a domination and profit transfer agreement between BorgWarner Germany GmbH as controlling party and BERU AG as controlled party. The Executive Board of BERU AG welcomes this intention and will start with the preparations. The terms and conditions of the domination and profit transfer agreement, will be determined and agreed upon within the next months.

Outlook for 2008
Overall
Sales Growth: 8% - 10%

Segment
(1) The Engine segment expects to deliver continued growth from further penetration of diesel engines in Europe, which will continue to boost demand for turbochargers and BERU technologies, and increased sales of its turbocharger and emissions products into the commercial vehicle market in North America. Investments in South Korea and China are expected to continue to contribute to sales and EBIT. This growth is expected to help offset anticipated weakness in North American light vehicle production.

(2) The Drivetrain segment is expected to grow slightly as stagnant demand for its rear-wheel-drive based four-wheel-drive systems in North America is expected to be offset by content growth with its traditional transmission products and controls in automatic transmissions in North America, increased penetration of automatic transmissions in Europe and Asia, including increased sales of dual-clutch transmission products, and the continued ramp-up of rear-wheel-drive based four-wheel-drive programs outside of North America.

R&D Expenditure

Each of the Company's operating segments has its own research and development ("R&D") organization. The Company has approximately 800 employees, including engineers, mechanics and technicians, engaged in R&D activities at facilities worldwide. The Company also operates testing facilities such as prototype, measurement and calibration, life testing and dynamometer laboratories.

Product Development
Diesel exhaust gas recirculation (DEGR) valve:
The new diesel exhaust gas recirculation (DEGR) valve with patented technology features higher force, lower cost, improved durability, flexible packaging and smaller size. Its DEGR technology effectively limits NOx formation by lowering the peak combustion temperature in the engine. The DEGR valve features a DC motor actuator combined with a unique drive system to provide fast response within a smaller package. Suitable for many packaging configurations, the DEGR valve can be used in both hot-side and cold-side applications, as well as in single or dual poppet systems. It can also be easily combined with an EGR cooler and cooler bypass valve.

NexTrac(TM) technology
NexTrac(TM) is an active on-demand all- wheel drive system that produces outstanding stability and traction while promoting better fuel economy as a result of technologies optimizing weight and higher efficiency compared with competitive products. The system is partnered with BorgWarner's controls software, which is custom designed to work in cooperation with other vehicle systems.

Regulated two-stage (R2SR) turbocharger technology:
Regulated two-stage (R2SR) turbocharger technology is combined with variable turbine geometry (VTG(TM)) to help International Engine Group's PowerStroke 6.4-liter V8 diesel engine meet stringent North American emission requirements without compromising increased horsepower and torque. The regulated two-stage (R2SR) turbocharger system consists of two turbochargers of different sizes arranged in series. The smaller, high-pressure turbocharger responds spontaneously and harmoniously at low engine speeds while the larger, low-pressure unit provides an added boost at higher engine speeds. A turbocharger with variable turbine geometry(VTG) is used in the high-pressure stage. Fast and precise adjustment of the VTG guide vanes is ensured by an electric actuator motor, which the Company specially developed for this turbocharger.

"Micro DCT Architecture":
The Company has reached its final stage in development of a core unit for the next-generation automatic transmission (AT) model which is to be used for small cars targeted at emerging markets including those in Asia. This unit is expected to realize gear changes as smooth as those of AT and fuel efficiency performance equivalent to manual transmissions (MT) at the same time. It is designed based on the DCT (Dual Clutch Transmission) which is mainly mounted on high-performance sporty cars, with modifications for low-priced cars. The company will start to manufacture the new product in a few years to reinforce its operations in the emerging countries. The product, named "Micro DCT Architecture", is under development jointly with several automakers in Asia including those of China and India. Development of its basic mechanical unit and control software is expected to complete in the very near future.