Dana Corporation Announces Stronger First-Quarter Results
Restructuring Continues to Drive Improvement
TOLEDO, Ohio, April 24 -- Dana Corporation today announced first-quarter sales of $2.4 billion and net income of $41 million, or 28 cents per share. In the first quarter of 2002, Dana reported sales of $2.3 billion and a net loss of $229 million, or $1.54 per share.
The increase in sales of approximately 5 percent benefited from currency translation; however, internal growth contributed approximately two-thirds of the amount. Net income for 2003 included one-time, after-tax gains of $10 million, or 7 cents per share, associated with the sale of assets of Dana Credit Corporation (DCC). The net loss reported in the first quarter of 2002 reflected the impact of the required adoption of new accounting standard FAS 142 ($220 million or $1.48 cents per share) and certain net charges associated with the restructuring program announced in October 2001 ($37 million or 24 cents per share).
Dana Chairman and CEO Joe Magliochetti said, "Our 2003 first-quarter performance again validates the success and importance of our restructuring program. We expect that our performance will be further enhanced as we conclude the final actions in this program and begin to realize the full run- rate of the restructuring benefits later this year.
"We improved upon last year's results despite a large number of new program launches in our Structural Solutions Group. We expect to have most of these launch costs behind us by the end of the third quarter," he said. "Additionally, we should benefit from the forecasted ramp-up in heavy-vehicle production as we move through the year.
"As a result of these factors, we expect our earnings to improve during the balance of the year. At the same time, we remain very comfortable with our expectation of a light-vehicle build of 15.8 to 16.2 million units in North America," he said. "Considering these factors and the $10 million in gains we have already received from the sale of DCC assets, we are revising our outlook for full-year net income to a range of $195 million to $215 million."
Dana Chief Financial Officer Bob Richter added, "During the quarter, we continued to make solid progress on the sale of DCC assets, realizing proceeds of approximately $80 million in transactions that resulted in the after-tax gains that were included in our net income. Proceeds from these transactions were used by DCC to reduce its indebtedness.
"At the parent company level, we continue to manage for cash, and despite a seasonal, first-quarter increase in working capital, the percentage of working capital to sales is improved and we remain committed to a year-on-year reduction in working capital of $200 million," Mr. Richter said. "This will enable us to realize our goal of reducing net debt in 2003 by $330 million to $380 million."
Mr. Magliochetti concluded, "We believe these positive developments, in combination with the anticipated stronger second-half earnings, will provide a solid platform for transitioning Dana from a restructuring mode to a renewed focus on innovation, technology, and other strategic growth opportunities."
Dana will discuss its first-quarter results in a conference call at 1 p.m. (EDT) today. The call may be accessed via Dana's web site ( www.dana.com ), where it will be accompanied by a slide presentation, or by dialing (800) 275-3210. Please dial into the conference five minutes prior to the call. An audio recording of this conference call will be available after 5 p.m. today. To access this recording, please dial (800) 537-8823. A webcast replay of the call will be available at 6 p.m. today and is also accessible via the Dana web site.
Dana Corporation is a global leader in the design, engineering, and manufacture of value-added products and systems for automotive, commercial, and off-highway vehicle manufacturers and their related aftermarkets. The company employs more than 60,000 people worldwide. Founded in 1904 and based in Toledo, Ohio, Dana operates hundreds of technology, manufacturing, and customer service facilities in 30 countries. The company reported 2002 sales of $9.5 billion.
Certain statements contained herein (including our forecasts, beliefs, and expectations) constitute "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve assumptions, uncertainties, and risks, and Dana's actual results, performance, or achievements may differ materially from those expressed or implied in these statements. Among the factors that could affect Dana's actual results are the impact of national and international economic conditions (including additional adverse effects from terrorism or hostilities) on production and sales by the company and its vehicular customers, and the company's ability to complete activities related to the October 2001 restructuring program and the divestiture of the Engine Management aftermarket operations. Additional factors are contained in Dana's public filings with the Securities and Exchange Commission. Dana does not undertake to update any forward-looking statements contained herein.
Dana Corporation
Condensed Statement of Income (Unaudited)
(in millions, except per share amounts)
Three Months Ended March 31
2003 2002
Net sales $2,442 $2,321
Revenue from lease financing
and other income 30 53
2,472 2,374
Costs and expenses
Cost of sales 2,183 2,054
Selling, general and
administrative expenses 201 221
Restructuring charges 37
Interest expense 59 67
2,443 2,379
Income (loss) before income taxes 29 (5)
Income tax benefit (expense) 2 (20)
Minority interest (2) (6)
Equity in earnings of affiliates 17 18
Income (loss) from continuing
operations 46 (13)
Income (loss) from
discontinued operations (5) 4
Income (loss) before effect
of change in accounting 41 (9)
Effect of change in accounting (220)
Net income (loss) $41 $(229)
Basic earnings (loss) per share
Income (loss) of continuing
operations $0.31 $(0.09)
Income (loss) from
discontinued operations (0.03) 0.03
Effect of change in accounting (1.48)
Net income (loss) $0.28 $(1.54)
Diluted earnings (loss) per share
Income (loss) of continuing
operations $0.31 $(0.09)
Income (loss) from
discontinued operations (0.03) 0.03
Effect of change in accounting (1.48)
Net income (loss) $0.28 $(1.54)
Average shares outstanding -
For Basic EPS 148 148
For Diluted EPS 149 149
Dana Corporation
Condensed Balance Sheet (Unaudited)
(in millions)
March 31 December 31
Assets 2003 2002
Current assets
Cash and marketable securities $584 $571
Accounts receivable
Trade 1,492 1,348
Other 313 320
Inventories 1,156 1,116
Other current assets 829 763
Total current assets 4,374 4,118
Property, plant and
equipment, net 2,522 2,556
Investment in leases 763 827
Investments and other assets 2,014 2,052
Total assets $9,673 $9,553
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable and other
current liabilities $2,472 $2,537
Notes payable 644 287
Total current liabilities 3,116 2,824
Long-term debt 2,947 3,215
Deferred employee benefits
and other noncurrent liabilities 1,918 1,925
Minority interest 106 107
Shareholders' equity 1,586 1,482
Total liabilities and
shareholders' equity $9,673 $9,553
Dana Corporation
Condensed Statement of Cash Flows (Unaudited)
(in millions)
Three Months Ended March 31
2003 2002
Net income (loss) $41 $(229)
Depreciation and amortization 103 121
Asset impairment 6 21
Change in accounting for goodwill 220
Loss (gain) on divestitures and asset sales (11) 1
Working capital change (237) (35)
Other (13) (28)
Net cash flows - operating activities (111) 71
Purchases of property, plant and equipment (76) (75)
Purchases of assets to be leased (26)
Payments received on leases 9 9
Net loans to customers 2 (3)
Divestitures 10
Asset sales 104 16
Other 6 27
Net cash flows - investing activities 45 (42)
Net change in short-term debt 87 (12)
Proceeds from long-term debt - 250
Payments on long-term debt (6) (191)
Dividends paid (1) (1)
Other (1) 1
Net cash flows - financing activities 79 47
Net change in cash and cash equivalents 13 76
Net change in cash - discontinued operations (2)
Cash and cash equivalents - beginning
of period 571 195
Cash and cash equivalents - end of period $584 $269
Dana Corporation
(Including Dana Credit Corporation on the Equity Basis)
Condensed Statement of Income (Unaudited)
(in millions)
Three Months Ended March 31
2003 2002
Net sales $2,442 $2,321
Other income 13 14
2,455 2,335
Costs and expenses
Cost of sales 2,196 2,069
Selling, general and
administrative expenses 181 195
Restructuring charges 37
Interest expense 42 45
2,419 2,346
Income (loss) before income taxes 36 (11)
Income tax expense (15) (16)
Minority interest (2) (6)
Equity in earnings of affiliates 27 20
Income (loss) from continuing operations 46 (13)
Income (loss) from discontinued
operations (5) 4
Income (loss) before effect
of change in accounting 41 (9)
Effect of change in accounting (220)
Net income (loss) $41 $(229)
Dana Corporation
(Including Dana Credit Corporation on the Equity Basis)
Condensed Balance Sheet (Unaudited)
(in millions)
March 31 December 31
Assets 2003 2002
Current assets
Cash and marketable securities $542 $551
Accounts receivable
Trade 1,492 1,348
Other 309 209
Inventories 1,156 1,116
Other current assets 793 716
Total current assets 4,292 3,940
Property, plant and equipment, net 2,240 2,253
Investments and other assets 2,377 2,375
Total assets $8,909 $8,568
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable and
other current liabilities $2,616 $2,559
Notes payable 462 53
Total current liabilities 3,078 2,612
Long-term debt 2,218 2,462
Deferred employee benefits
and other noncurrent liabilities 1,922 1,906
Minority interest 105 106
Shareholders' equity 1,586 1,482
Total liabilities and
shareholders' equity $8,909 $8,568
Dana Corporation
(Including Dana Credit Corporation on an Equity Basis)
Cash Flow Impact on Net Debt
(in millions)
Three Months Ended March 31
2003 2002
Sources
Net income (loss) $41 $(229)
Change in accounting for goodwill 220
Net income (loss) before
goodwill change 41 (9)
Depreciation 86 98
Asset sales 4
Divestitures 10
Change in working capital (192) (10)
(61) 89
Uses
Capital spend (72) (64)
Dividends (1) (1)
Net changes in other accounts (8) (32)
(81) (97)
October 2001 restructuring cash impact
After-tax charges 37
Cash payments (44) (39)
Proceeds from asset sales 20 2
(24) -
Cash change in net debt $(166) $(8)
Dana Corporation
Condensed Consolidating Statement of Income (Unaudited)
(in millions)
Three Months Ended March 31, 2003
Dana
with DCC on Elimina- Dana
Equity tion Consoli-
Basis DCC Entries dated
Net sales $2,442 $ $ $2,442
Other income 13 38 (21) 30
2,455 38 (21) 2,472
Costs and expenses
Cost of sales 2,196 (13) 2,183
Selling, general and
administrative expenses 181 29 (9) 201
Interest expense 42 17 59
2,419 46 (22) 2,443
Income (loss) before income
taxes 36 (8) 1 29
Income tax benefit (expense) (15) 17 2
Minority interest (2) (2)
Equity in earnings of affiliates 27 7 (17) 17
Income from continuing operations 46 16 (16) 46
Loss from discontinued operations (5) (5)
Net income $41 $16 $(16) $41
This consolidating statement provides a reconciliation of the
amounts presented for Dana with Dana Credit Corporation (DCC) on
an equity basis to amounts reported for Dana Corporation on a
fully consolidated basis.
Dana Corporation
Condensed Consolidating Statement of Income (Unaudited)
(in millions)
Three Months Ended March 31, 2002
Dana
with DCC on Elimina- Dana
Equity tion Consoli-
Basis DCC Entries dated
Net sales $2,321 $ $ $2,321
Other income 14 68 (29) 53
2,335 68 (29) 2,374
Costs and expenses
Cost of sales 2,069 (15) 2,054
Selling, general and
administrative expenses 195 39 (13) 221
Restructuring charges 37 37
Interest expense 45 22 67
2,346 61 (28) 2,379
Income (loss) before income
taxes (11) 7 (1) (5)
Income tax expense (16) (4) (20)
Minority interest (6) (6)
Equity in earnings of affiliates 20 7 (9) 18
Income (loss) from continuing
operations (13) 10 (10) (13)
Income from discontinued
operations 4 4
Income (loss) before effect of
change in accounting (9) 10 (10) (9)
Effect of change in accounting (220) (220)
Net income (loss) $(229) $10 $(10) $(229)
This consolidating statement provides a reconciliation of the
amounts presented for Dana with Dana Credit Corporation (DCC) on
an equity basis to amounts reported for Dana Corporation on a
fully consolidated basis.
Dana Corporation
Condensed Consolidating Balance Sheet (Unaudited)
(in millions)
March 31, 2003
Dana
with DCC on Elimina- Dana
Equity tion Consoli-
Basis DCC Entries dated
Assets
Current assets
Cash and marketable
securities $542 $42 $ $584
Accounts receivable
Trade 1,492 1,492
Other 309 4 313
Inventories 1,156 1,156
Other current assets 793 207 (171) 829
Total current assets 4,292 253 (171) 4,374
Property, plant and
equipment, net 2,240 37 245 2,522
Investments in leases 1,008 (245) 763
Investments and other
assets 2,377 544 (907) 2,014
Total assets $8,909 $1,842 $(1,078) $9,673
Liabilities and
Shareholders' Equity
Current liabilities
Accounts payable and
other current
liabilities $2,616 $27 $(171) $2,472
Notes payable 462 182 644
Total current
liabilities 3,078 209 (171) 3,116
Long-term debt 2,218 729 2,947
Deferred employee
benefits and other
noncurrent liabilities 1,922 616 (620) 1,918
Minority interest 105 1 106
Shareholders' equity 1,586 287 (287) 1,586
Total liabilities and
shareholders' equity $8,909 $1,842 $(1,078) $9,673
This consolidating statement provides a reconciliation of the
amounts presented for Dana with Dana Credit Corporation (DCC)
on an equity basis to amounts reported for Dana Corporation on
a fully consolidated basis.
Dana Corporation
Condensed Consolidating Balance Sheet (Unaudited)
(in millions)
December 31, 2002
Dana
with DCC on Elimina- Dana
Equity tion Consoli-
Basis DCC Entries dated
Assets
Current assets
Cash and marketable
securities $551 $20 $ $571
Accounts receivable
Trade 1,348 1,348
Other 209 111 320
Inventories 1,116 1,116
Other current assets 716 105 (58) 763
Total current assets 3,940 236 (58) 4,118
Property, plant and
equipment, net 2,253 39 264 2,556
Investments in leases 1,091 (264) 827
Investments and other
assets 2,375 569 (892) 2,052
Total assets $8,568 $1,935 $(950) $9,553
Liabilities and
Shareholders' Equity
Current liabilities
Accounts payable and
other current
liabilities $2,559 $37 $(59) $2,537
Notes payable 53 234 287
Total current
liabilities 2,612 271 (59) 2,824
Long-term debt 2,462 753 3,215
Deferred employee benefits
and other noncurrent
liabilities 1,906 639 (620) 1,925
Minority interest 106 1 107
Shareholders' equity 1,482 271 (271) 1,482
Total liabilities and
shareholders' equity $8,568 $1,935 $(950) $9,553
This consolidating statement provides a reconciliation of the
amounts presented for Dana with Dana Credit Corporation (DCC)
on an equity basis to amounts reported for Dana Corporation on
a fully consolidated basis.
Dana Corporation
Consolidating Cash Flow Impact on Net Debt
(in millions)
Three Months Ended March 31, 2003
Dana
with DCC on Elimina- Dana
Equity tion Consoli-
Basis DCC Entries dated
Sources
Net income $41 $16 $(16) $41
Depreciation 86 17 103
Asset sales 4 80 84
Change in working capital (192) (8) 7 (193)
(61) 105 (9) 35
Uses
Capital spend (72) (5) 1 (76)
Dividends (1) (1)
Net changes in other accounts (8) (2) 8 (2)
(81) (7) 9 (79)
October 2001 restructuring cash impact
Cash payments (44) (44)
Proceeds from asset sales 20 20
(24) - - (24)
Cash change in net debt $(166) $98 $- $(68)
Analysis of components of net debt:
Net change in short term debt $(157) $70 $ $(87)
Payments on long term debt 6 6
Change in cash (9) 22 13
Cash change in net debt (166) 98 - (68)
Non-cash changes in net debt (8) (8)
Total changes in net debt $(174) $98 $- $(76)
This consolidating statement provides a reconciliation of the
amounts presented for Dana with Dana Credit Corporation (DCC) on an
equity basis to amounts presented for Dana Corporation on a
fully consolidated basis.
Dana Corporation
Consolidating Cash Flow Impact on Net Debt
(in millions)
Three Months Ended March 31, 2002
Dana
with DCC on Elimina- Dana
Equity tion Consoli-
Basis DCC Entries dated
Sources
Net income (loss) $(229) $10 $(10) $(229)
Change in accounting for
goodwill 220 220
Net income (loss) before
goodwill change (9) 10 (10) (9)
Depreciation 98 23 121
Divestitures 10 10
Change in working capital (10) (3) (6) (19)
89 30 (16) 103
Uses
Capital spend (64) (2) (9) (75)
Dividends (1) (1)
Acquisitions
Net changes in other accounts (32) 9 25 2
(97) 7 16 (74)
October 2001 restructuring cash impact
After-tax charges 37 37
Cash payments (39) (39)
Proceeds from asset sales 2 2
- - - -
Cash change in net debt $(8) $37 $- $29
Analysis of components of net debt:
Net change in short term debt $34 $(22) $ $12
Proceeds from long term debt (250) (250)
Payments on long term debt 135 56 191
Change in cash 73 3 76
Cash change in net debt (8) 37 - 29
Non-cash changes in net debt 35 35
Total changes in net debt $27 $37 $- $64
This consolidating statement provides a reconciliation of the
amounts presented for Dana with Dana Credit Corporation (DCC) on an
equity basis to amounts presented for Dana Corporation on a
fully consolidated basis.
Investor Relations
Dana Corporation
Quarterly Financial Information (Unaudited)
Q1 - 2003
(in millions)
Inter-Segment
External Sales Sales
03 02 03 02
Automotive Systems Group $943 $873 $31 $21
Automotive Aftermarket Group 513 534 4 4
Engine and Fluid Management Group 518 491 23 25
Heavy Vehicle Technologies and
Systems Group 454 408 21 26
Dana Commercial Credit
Other 14 15 1 5
Continuing Operations 2,442 2,321 80 81
Discontinued Operations
Unusual Items Excluded from
Performance Measurement
Effect of change in Accounting
Consolidated $2,442 $2,321 $80 $81
North America $1,780 $1,758 $22 $11
Europe 430 366 20 18
South America 111 120 43 42
Asia Pacific 121 77 1
Dana Commercial Credit
Other
Continuing Operations 2,442 2,321 86 71
Discontinued Operations
Unusual Items Excluded from
Performance Measurement
Effect of change in Accounting
Consolidated $2,442 $2,321 $86 $71
Information for Discontinued
Operations 80 200 3 16
Investor Relations
Dana Corporation
Quarterly Financial Information (Unaudited)
Q1 - 2003
(in millions)
EBIT Operating PAT
03 02 03 02
Automotive Systems Group $43 $45 $36 $38
Automotive Aftermarket Group 25 36 15 22
Engine and Fluid Management Group 36 26 23 17
Heavy Vehicle Technologies and
Systems Group 25 17 16 10
Dana Commercial Credit 6 10
Other (54) (52) (60) (65)
Continuing Operations 75 72 36 32
Discontinued Operations (7) (6) (5) (4)
Unusual Items Excluded from
Performance Measurement (46) 10 (37)
Effect of change in Accounting (220)
Consolidated $68 $20 $41 $(229)
North America $74 $99 $45 $63
Europe 27 17 25 16
South America 11 9 7 5
Asia Pacific 11 2 7 1
Dana Commercial Credit 6 10
Other (48) (55) (54) (63)
Continuing Operations 75 72 36 32
Discontinued Operations (7) (6) (5) (4)
Unusual Items Excluded from
Performance Measurement (46) 10 (37)
Effect of change in Accounting (220)
Consolidated $68 $20 $41 $(229)
Information for Discontinued
Operations
Investor Relations
Dana Corporation
Quarterly Financial Information (Unaudited)
Q1 - 2003
(in millions)
Net Profit Net Assets
03 02 03 02
Automotive Systems Group $15 $16 $1,822 $1,840
Automotive Aftermarket Group 2 7 1,018 1,078
Engine and Fluid Management Group 13 6 1,001 984
Heavy Vehicle Technologies and
Systems Group 3 (1) 631 685
Dana Commercial Credit 6 10 287 209
Other (3) (6) 16 25
Continuing Operations 36 32 4,775 4,821
Discontinued Operations (5) (4)
Unusual Items Excluded from
Performance Measurement 10 (37)
Effect of change in Accounting (220)
Consolidated $41 $(229) $4,775 $4,821
North America $9 $19 $2,979 $3,186
Europe 16 7 1,112 1,008
South America 5 2 325 411
Asia Pacific 4 (1) 164 141
Dana Commercial Credit 6 10 287 209
Other (4) (5) (92) (134)
Continuing Operations 36 32 4,775 4,821
Discontinued Operations (5) (4)
Unusual Items Excluded from
Performance Measurement 10 (37)
Effect of change in Accounting (220)
Consolidated $41 $(229) $4,775 $4,821
Information for Discontinued
Operations 91 373
See Notes 20 and 21 in Dana's 2002 Annual Report for further
information ( www.dana.com )
FOR MORE INFORMATION
( www.dana.com ) - Dial-For-Dana U.S. or Canada 800-537-8823;
OH 800-472-8810
E-Mail Michelle.Hards@Dana.com or Karen.Crawford@Dana.Com
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