Dana Corporation Reports Stronger First-Quarter Results
Increased Volume and Cost Reductions Drive Improvement
TOLEDO, Ohio, April 21 -- Dana Corporation today announced that its 2004 first-quarter sales were $2.3 billion compared to $2.0 billion during the same period last year. Net income for the quarter totaled $63 million, or 42 cents per share, compared to net income of $41 million, or 28 cents per share, for the period in 2003. First-quarter 2004 net income included $2 million of unusual net gains on the sale of Dana Credit Corporation (DCC) assets, while income during the same period last year included $10 million in comparable gains.
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"We are very pleased with the continued progress demonstrated by our first-quarter performance," said Dana Chairman and CEO Mike Burns. "Our profit improvement was driven by a combination of higher production volumes, new business programs, and the continued realization of benefits from our restructuring and other cost-reduction efforts."
First-quarter sales were up 17 percent over the comparable period last year. While 2004 sales benefited from $125 million of currency translation, the majority of the sales increase was driven by new business programs and higher production volumes in the principal markets served by Dana, particularly the North American heavy-truck sector.
Profit from continuing operations -- those operations not included in the company's proposed divestiture of its aftermarket business -- was $50 million, or 33 cents per share, in the first quarter of 2004, compared to $36 million or 25 cents per share during the first quarter of 2003. Excluding the unusual gains from DCC asset sales, this represents an 85 percent quarter-over-quarter improvement.
"Our improved profitability was evident in a higher operating margin," Mr. Burns said. "In fact, our margin improvement would have been even better if not for continued launch-related costs in our structures group. While these costs are not yet fully behind us, we took further actions to address the remaining issues in the first quarter and are confident that we will see improvement in the second quarter."
Aftermarket Business Performance Improved
Dana also saw improved results from its automotive aftermarket business, which is accounted for as a "discontinued operation" and targeted for divestiture by June 30. Bottom-line performance in the aftermarket business currently held for sale improved from $10 million in the first quarter of 2003 to $13 million in the first quarter of this year. Income from discontinued operations reported for the first quarter of 2003 included a $5 million loss from the company's engine management business, which was sold in June 2003.
Cash Flow Improved
Dana Chief Financial Officer Bob Richter said, "While we experienced our normal seasonal build-up in working capital, the increase in net debt was less than during the comparable period last year, due to stronger earnings and the receipt of more than $70 million in tooling reimbursements from our customers.
"During the quarter, we paid off $231 million in maturing bonds," he added. "So, exclusive of DCC's obligations, our next scheduled maturity of long-term debt does not occur until 2008.
"DCC also reduced its debt as it continues to work down its portfolio through scheduled payments and asset sales," he added. "During the first quarter, the DCC portfolio was reduced by another $100 million, at a net gain of $2 million. This brings the total asset reduction since we began the DCC asset sale program in October 2001 to $940 million, with a cumulative net after-tax gain of $68 million."
Business Unit Combination Leverages Resources for Automotive Customers
Dana recently announced the combination of its Automotive Systems and Engine and Fluid Management groups into a single business unit retaining the Automotive Systems Group name. The move is designed to better leverage Dana's resources to benefit its automotive customers, while also enhancing its own focus on profitable growth with these customers. The new Automotive Systems Group provides Dana with a focused $5.9 billion business integrating the company's product offerings to light-vehicle original equipment manufacturers. All of Dana's segment disclosures now reflect the combination of these business units.
Dana Reiterates Full-Year EPS Guidance
"While we are pleased with our continued progress, we recognize that we still have much work to do," Mr. Burns said. "Specifically, we will increase our customer focus to achieve top-line growth and better leverage our capabilities in areas like purchasing to achieve greater economies of scale.
"The first quarter was not without its challenges, including launch costs and industry-wide steel surcharges," he added. "And yet, we met our expectations in spite of these challenges. There will always be bumps in the road, but we remain committed to achieving our goal of earnings per share of at least $1.90 in 2004."
Quarterly Conference Call Scheduled Today at 10 a.m.
Dana will discuss its first-quarter results in a conference call at 10 a.m. (EDT) today. The call may be accessed via Dana's web site ( www.dana.com ), where it will be accompanied by a brief 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 1 p.m. today. To access this recording, please dial (800) 537-8823. A webcast replay of the call will be available after 3 p.m. today and will be 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 vehicles. Delivering on a century of innovation, the company's continuing operations employ approximately 45,000 people worldwide dedicated to advancing the science of mobility. Founded in 1904 and based in Toledo, Ohio, Dana operates technology, manufacturing, and customer-service facilities in 30 countries. Sales from continuing operations totaled $7.9 billion in 2003.
Forward-Looking Statements
Certain statements contained in this release constitute "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements represent Dana's expectations based on our current information and assumptions. Forward-looking statements are inherently subject to risks and uncertainties. Dana's actual results could differ materially from those that are anticipated or projected due to a number of factors. These factors include national and international economic conditions; adverse effects from terrorism or hostilities; the strength of other currencies relative to the U.S. dollar; the cyclical nature of the global vehicular industry; changes in business relationships with our major customers and in the timing, size and continuation of their and our programs; the ability of our customers and suppliers to achieve their projected sales and production levels; competitive pressures on our sales and pricing; increases in production or material costs that cannot be recouped in product pricing; the continued success of our cost reduction and cash management programs and of our long-term transformation strategy for the company; the success and timing of the contemplated divestiture of the automotive aftermarket business; and other factors set out in our public filings with the Securities and Exchange Commission. Dana does not undertake to update any forward-looking statements in this release.
Dana Corporation
Financial Summary (Unaudited)
(in millions, except per share amounts)
Three Months Ended March 31
Percent
2004 2003 Change
Sales $2,311 $1,976 17%
Income from continuing operations $50 $36 39%
Income from discontinued operations 13 5 160%
Net income $63 $41 54%
Income from continuing operations $50 $36 39%
Less - gains from sales of DCC assets (2) (10) -80%
Income from continuing operations
excluding unusual items $48 $26 85%
Components of discontinued operations:
Income from automotive
aftermarket business $13 $10 30%
Loss from engine management business (5) -100%
Income from discontinued operations $13 $5 160%
Diluted earnings per share:
Income from continuing operations $0.33 $0.25 32%
Income from discontinued operations 0.09 0.03 200%
Net income $0.42 $0.28 50%
Income from continuing operations,
excluding unusual items $0.32 $0.18 78%
Income from discontinued operations 0.09 0.03 200%
Net income, excluding unusual items 0.41 0.21 95%
Unusual items 0.01 0.07
Net income $0.42 $0.28 50%
Dana Corporation
Condensed Statement of Income (Unaudited)
(in millions, except per share amounts)
Three Months Ended March 31
2004 2003
Net sales $2,311 $1,976
Revenue from lease financing
and other income 14 29
2,325 2,005
Costs and expenses
Cost of sales 2,105 1,801
Selling, general and
administrative expenses 136 136
Interest expense 51 59
2,292 1,996
Income before income taxes 33 9
Income tax benefit 3 12
Minority interest (3) (2)
Equity in earnings of affiliates 17 17
Income from continuing operations 50 36
Income from discontinued operations 13 5
Net income $63 $41
Basic earnings per share
Income from continuing operations $0.34 $0.25
Income from discontinued operations 0.09 0.03
Net income $0.43 $0.28
Diluted earnings per share
Income from continuing operations $0.33 $0.25
Income from discontinued operations 0.09 0.03
Net income $0.42 $0.28
Average shares outstanding -
For Basic EPS 148 148
For Diluted EPS 150 149
Dana Corporation
Condensed Balance Sheet (Unaudited)
(in millions)
March 31 December 31
Assets 2004 2003
Current assets
Cash and cash equivalents $546 $731
Accounts receivable
Trade 1,334 1,048
Other 296 326
Inventories 736 743
Assets of discontinued operations 1,283 1,254
Other current assets 387 431
Total current assets 4,582 4,533
Investment in leases 530 622
Investments and other assets 2,243 2,252
Property, plant and equipment, net 2,182 2,210
Total assets $9,537 $9,617
Liabilities and Shareholders' Equity
Current liabilities
Notes payable $361 $493
Accounts payable 1,242 1,076
Liabilities of discontinued
operations 328 307
Other current liabilities 1,033 1,089
Total current liabilities 2,964 2,965
Long-term debt 2,588 2,605
Deferred employee benefits
and other noncurrent liabilities 1,786 1,901
Minority interest 99 96
Shareholders' equity 2,100 2,050
Total liabilities and
shareholders' equity $9,537 $9,617
Dana Corporation
Condensed Statement of Cash Flows (Unaudited)
(in millions)
Three Months Ended March 31
2004 2003
Net income $63 $41
Depreciation and amortization 93 103
Asset impairment 1 6
Gain on divestitures and asset sales (4) (11)
Working capital increase (222) (237)
Other 7 (13)
Net cash flows - operating activities (62) (111)
Purchases of property, plant and equipment (79) (76)
Payments received on leases 3 9
Net loan repayments from customers 1 2
Asset sales 103 104
Other 1 6
Net cash flows - investing activities 29 45
Net change in short-term debt 115 87
Proceeds from long-term debt 5
Payments on long-term debt (259) (6)
Dividends paid (18) (1)
Other 5 (1)
Net cash flows - financing activities (152) 79
Net change in cash and cash equivalents (185) 13
Cash and cash equivalents -
beginning of period 731 571
Cash and cash equivalents -
end of period $546 $584
Dana Corporation
(Including Dana Credit Corporation on an Equity Basis)
Condensed Statement of Income (Unaudited)
(in millions)
Three Months Ended March 31
2004 2003
Net sales $2,311 $1,976
Other income 7 13
2,318 1,989
Costs and expenses
Cost of sales 2,114 1,814
Selling, general and
administrative expenses 122 116
Interest expense 38 42
2,274 1,972
Income before income taxes 44 17
Income tax expense (11) (6)
Minority interest (3) (2)
Equity in earnings of affiliates 20 27
Income from continuing operations 50 36
Income from discontinued operations 13 5
Net income $63 $41
Dana Corporation
(Including Dana Credit Corporation on an Equity Basis)
Condensed Balance Sheet (Unaudited)
(in millions)
March 31 December 31
Assets 2004 2003
Current assets
Cash and cash equivalents $451 $664
Accounts receivable
Trade 1,334 1,048
Other 280 300
Inventories 736 743
Assets of discontinued operations 1,283 1,254
Other current assets 364 399
Total current assets 4,448 4,408
Investments and other assets 2,577 2,580
Property, plant and
equipment, net 1,992 2,014
Total assets $9,017 $9,002
Liabilities and Shareholders' Equity
Current liabilities
Notes payable $172 $260
Accounts payable 1,242 1,076
Liabilities of
discontinued operations 328 307
Other current liabilities 1,200 1,235
Total current liabilities 2,942 2,878
Long-term debt 2,099 2,087
Deferred employee benefits
and other noncurrent liabilities 1,779 1,893
Minority interest 97 94
Shareholders' equity 2,100 2,050
Total liabilities and
shareholders' equity $9,017 $9,002
Dana Corporation
(Including Dana Credit Corporation on an Equity Basis)
Cash Flow Impact on Net Debt (Unaudited)
(in millions)
Three Months Ended March 31
2004 2003
Sources
Net income $63 $41
Depreciation 83 86
Asset sales 14 24
Working capital decrease (increase) (180) (192)
(20) (41)
Uses
Capital spend (76) (72)
Dividends (18) (1)
Restructuring cash payments (23) (44)
Net changes in other accounts 16 (8)
(101) (125)
Cash change in net debt $(121) $(166)
Dana Corporation
Condensed Consolidating Statement of Income (Unaudited)
(in millions)
Three Months Ended March 31, 2004
Dana
with DCC on Elimi- Dana
Equity nation Consoli-
Basis DCC Entries dated
Net sales $2,311 $ $ $2,311
Other income 7 22 (15) 14
2,318 22 (15) 2,325
Costs and expenses
Cost of sales 2,114 (9) 2,105
Selling, general and
administrative expenses 122 20 (6) 136
Interest expense 38 13 51
2,274 33 (15) 2,292
Income (loss) before income taxes 44 (11) - 33
Income tax benefit (expense) (11) 14 3
Minority interest (3) (3)
Equity in earnings of affiliates 20 6 (9) 17
Income from continuing operations 50 9 (9) 50
Income from discontinued operations 13 13
Net income $63 $9 $(9) $63
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, 2003
Dana
with DCC on Elimi- Dana
Equity nation Consoli-
Basis DCC Entries dated
Net sales $1,976 $ $ $1,976
Other income 13 38 (22) 29
1,989 38 (22) 2,005
Costs and expenses
Cost of sales 1,814 (13) 1,801
Selling, general and
administrative expenses 116 29 (9) 136
Interest expense 42 17 59
1,972 46 (22) 1,996
Income (loss) before income taxes 17 (8) - 9
Income tax benefit (expense) (6) 18 12
Minority interest (2) (2)
Equity in earnings of affiliates 27 6 (16) 17
Income from continuing operations 36 16 (16) 36
Income 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 Balance Sheet (Unaudited)
(in millions)
March 31, 2004
Dana
with DCC on Elimi- Dana
Equity nation Consoli-
Assets Basis DCC Entries dated
Current assets
Cash and cash
equivalents $451 $95 $ $546
Accounts receivable
Trade 1,334 1,334
Other 280 37 (21) 296
Inventories 736 736
Asset of discontinued
operations 1,283 1,283
Other current assets 364 204 (181) 387
Total current assets 4,448 336 (202) 4,582
Investment in leases 701 (171) 530
Investments and other
assets 2,577 551 (885) 2,243
Property, plant and
equipment, net 1,992 19 171 2,182
Total assets $9,017 $1,607 $(1,087) $9,537
Liabilities and Shareholders' Equity
Current liabilities
Notes payable $172 $189 $ $361
Accounts payable 1,242 1,242
Liabilities of
discontinued operations 328 328
Other current
liabilities 1,200 35 (202) 1,033
Total current
liabilities 2,942 224 (202) 2,964
Long-term debt 2,099 489 2,588
Deferred employee
benefits and other
noncurrent liabilities 1,779 592 (585) 1,786
Minority interest 97 2 99
Shareholders' equity 2,100 300 (300) 2,100
Total liabilities and
shareholders' equity $9,017 $1,607 $(1,087) $9,537
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, 2003
Dana
with DCC on Elimi- Dana
Equity nation Consoli-
Assets Basis DCC Entries dated
Current assets
Cash and cash
equivalents $664 $67 $ $731
Accounts receivable
Trade 1,048 1,048
Other 300 26 326
Inventories 743 743
Assets of discontinued
operations 1,254 1,254
Other current assets 399 212 (180) 431
Total current assets 4,408 305 (180) 4,533
Investment in leases 802 (180) 622
Investments and other
assets 2,580 559 (887) 2,252
Property, plant and
equipment, net 2,014 16 180 2,210
Total assets $9,002 $1,682 $(1,067) $9,617
Liabilities and
Shareholders' Equity
Current liabilities
Notes payable $260 $233 $ $493
Accounts payable 1,076 1,076
Liabilities of
discontinued operations 307 307
Other current
liabilities 1,235 34 (180) 1,089
Total current
liabilities 2,878 267 (180) 2,965
Long-term debt 2,087 518 2,605
Deferred employee
benefits and other
noncurrent
liabilities 1,893 604 (596) 1,901
Minority interest 94 2 96
Shareholders' equity 2,050 291 (291) 2,050
Total liabilities and
shareholders' equity $9,002 $1,682 $(1,067) $9,617
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 (Unaudited)
(in millions)
Three Months Ended March 31, 2004
Dana
with DCC on Elimi- Dana
Equity nation Consoli-
Basis DCC Entries dated
Sources
Net income (loss) $63 $9 $(9) $63
Depreciation 83 10 93
Asset sales 14 89 103
Working capital decrease
(increase) (180) (8) (11) (199)
(20) 100 (20) 60
Uses
Capital spend (76) (3) (79)
Dividends (18) (18)
Restructuring cash payments (23) (23)
Net changes in other accounts 16 (22) 20 14
(101) (25) 20 (106)
Cash change in net debt $(121) $75 $- $(46)
Analysis of components of increase
(decrease) in net debt:
Net change in short-term debt $145 $(30) $ $115
Net payments on long-term debt (237) (17) (254)
Change in cash - continuing
operations 213 (28) 185
Cash change in net debt 121 (75) - 46
Non-cash changes in net debt 16 (27) (11)
Total change in net debt $137 $(102) $- $35
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 (Unaudited)
(in millions)
Three Months Ended March 31, 2003
Dana
with DCC on Elimi- Dana
Equity nation Consoli-
Basis DCC Entries dated
Sources
Net income $41 $16 $(16) $41
Depreciation 86 17 103
Asset sales 24 80 104
Working capital increase (192) (8) 7 (193)
(41) 105 (9) 55
Uses
Capital spend (72) (5) 1 (76)
Dividends (1) (1)
Restructuring cash payments (44) (44)
Net changes in other accounts (8) (2) 8 (2)
(125) (7) 9 (123)
Cash change in net debt $(166) $98 $- $(68)
Analysis of components of
increase (decrease) in net
debt:
Net change in short-term debt $(157) $70 $ $(87)
Payments on long term debt 6 6
Change in cash - continuing
operations (9) 22 13
Cash change in net debt (166) 98 - (68)
Non-cash changes in net debt (8) (8)
Total change 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.
Investor Relations
Dana Corporation
Quarterly Financial Information (Unaudited)
Q1 - 2004
(in millions)
Inter-Segment
External Sales Sales
04 03 04 03
Automotive Systems Group $1,712 $1,507 $45 $36
Heavy Vehicle Technologies and
Systems Group 578 455 9 21
Dana Commercial Credit
Other 21 14 2 1
Continuing Operations 2,311 1,976 56 58
Discontinued Operations
Unusual Items Excluded from
Performance Measurement
Consolidated $2,311 $1,976 $56 $58
North America $1,594 $1,409 $27 $24
Europe 438 361 30 19
South America 130 86 44 38
Asia Pacific 149 120 1 1
Dana Commercial Credit
Other
Continuing Operations 2,311 1,976 102 82
Discontinued Operations
Unusual Items Excluded from
Performance Measurement
Consolidated $2,311 $1,976 $102 $82
Information for Discontinued
Operations 510 547 4 4
See Notes 22 in Dana's 2003 Annual Report for further information
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Investor Relations
Dana Corporation
Quarterly Financial Information (Unaudited)
Q1 - 2004
(in millions)
EBIT Operating PAT
04 03 04 03
Automotive Systems Group $103 $76 $71 $57
Heavy Vehicle Technologies and
Systems Group 39 25 24 15
Dana Commercial Credit 7 6
Other (61) (45) (54) (52)
Continuing Operations 81 56 48 26
Discontinued Operations 25 12 13 5
Unusual Items Excluded from
Performance Measurement (1) - 2 10
Consolidated $105 $68 $63 $41
North America $83 $54 $54 $32
Europe 30 29 22 25
South America 18 8 11 5
Asia Pacific 8 11 5 7
Dana Commercial Credit 7 6
Other (58) (46) (51) (49)
Continuing Operations 81 56 48 26
Discontinued Operations 25 12 13 5
Unusual Items Excluded from
Performance Measurement (1) - 2 10
Consolidated $105 $68 $63 $41
Information for Discontinued
Operations
See Notes 22 in Dana's 2003 Annual Report for further information
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Investor Relations
Dana Corporation
Quarterly Financial Information (Unaudited)
Q1 - 2004
(in millions)
Net Profit Net Assets
04 03 04 03
Automotive Systems Group $39 $27 $3,031 $2,888
Heavy Vehicle Technologies and
Systems Group 10 4 637 631
Dana Commercial Credit 7 6 301 287
Other (8) (11) (29) 18
Continuing Operations 48 26 3,940 3,824
Discontinued Operations 13 5
Unusual Items Excluded from
Performance Measurement 2 10
Consolidated $63 $41 $3,940 $3,824
North America $24 $5 $2,165 $2,209
Europe 14 18 1,136 993
South America 9 3 312 269
Asia Pacific 2 4 183 164
Dana Commercial Credit 7 6 301 287
Other (8) (10) (157) (98)
Continuing Operations 48 26 3,940 3,824
Discontinued Operations 13 5
Unusual Items Excluded from
Performance Measurement 2 10
Consolidated $63 $41 $3,940 $3,824
Information for Discontinued
Operations 945 1,056
See Notes 22 in Dana's 2003 Annual Report for further information
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FOR MORE INFORMATION
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OH 800-472-8810
E-Mail Michelle.Hards@Dana.com or Karen.Crawford@Dana.Com
Dana Investor Relations 419-535-4635
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