Dana Corporation Reports First-Quarter Results for 2005
TOLEDO, Ohio, April 20 -- Dana Corporation today announced that its 2005 first-quarter sales were $2.5 billion, compared to $2.3 billion during the same period last year. Net income for the quarter totaled $18 million, or 12 cents per share, versus $65 million, or 43 cents per share, for the period in 2004.
First-quarter 2004 net income included $13 million from the discontinued automotive aftermarket businesses that were sold in November, 2004. Additionally, first-quarter 2004 net income included $2 million of unusual net gains from the sale of Dana Credit Corporation assets, while unusual transactions in the first quarter of 2005 did not have a significant impact on net income.
Dana Chairman and CEO Mike Burns said 2005 first-quarter earnings were impacted by several external factors. "The single greatest factor impacting our earnings was roughly $32 million in additional steel costs that we incurred compared to the first quarter of 2004," he said. "This is an after- tax number and is net of what we've recovered from our customers.
"In addition, this year's results were affected by a component shortage from a principal supplier, which resulted in reduced shipments of heavy-duty axles in March," Mr. Burns said. "The component shortage also affected the operating efficiency in our Heavy Vehicle group and led to significantly higher levels of inventory on other related components.
"Finally, the performance of our Automotive Systems Group was impacted by lower production on many of our key light vehicle platforms in North America.
"Against this challenging backdrop, we are stepping up our focus on those items within our control," Mr. Burns said. "This means accelerating our cost- reduction actions to deliver savings to the bottom line, despite external challenges. We are also working hard to grow our top line. During the quarter, we were awarded net new business that will add approximately $60 million to full-year 2005 sales."
Recent Actions Position Dana for Long-Term Success
Mr. Burns said Dana has also taken several recent actions that position the company to further leverage its capabilities and achieve success over the longer term:
* In February, Dana's principal Brazilian subsidiary, Dana-Albarus,
initiated a tender offer in Brazil for the 15.8 percent of its
outstanding shares not held by Dana. Completion of this offer will
enable Dana to consolidate all profits from this business, while at the
same time saving the administrative costs associated with operating a
separate public company.
* In March, Dana announced an agreement to form a 50/50 joint venture in
China - Dongfeng Dana Axle Co. Ltd. The joint venture is expected to
be established in the third quarter of this year, following government
approvals. Dana will initially have a $60 million net investment in
the joint venture, which will provide axles - and potentially other
driveline products - for the growing Chinese commercial vehicle market.
* Earlier this month, Dana and IBM announced an agreement for IBM
Business Consulting Services to provide Dana with administrative
services in the human resources area, such as payroll and benefits,
compensation, and recruitment and training. This move is designed to
improve Dana's flexibility in managing its human resource processes, as
well as to deliver cost savings over the 10-year life of the contract.
Outlook
Commenting on the company's near-term outlook, Mr. Burns said, "Our full- year guidance remains $1.30 to $1.45 per share."
He continued, "As we put the recent component shortage behind us, and address other operational issues that have held back margin expansion in the Heavy Vehicle group over the past two quarters, we expect to more fully benefit over the remainder of the year from the strong demand anticipated in the North American commercial vehicle market.
"In the case of the Automotive Systems Group, the dominant issue has been the effect of higher steel prices," Mr. Burns added. "The good news is that the market price for raw steel has decreased in recent months and demand appears to be moderating. Although the price we pay for forgings and other parts with high steel content has been slow to follow the decrease for a variety of reasons, we remain hopeful that we'll see less pressure on steel and other material price increases during the balance of the year. Therefore, if light-duty production schedules for the balance of the year do not change significantly, we expect that our accelerated cost reduction efforts will lead to improved performance in this group as well."
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 2 p.m. today. To access this recording, please dial (800) 537-8823. A webcast replay of the call will be available after 4 p.m. today and will be accessible via the Dana web site.
Dana people design and manufacture products for every major vehicle producer in the world. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. A leading supplier of axle, driveshaft, engine, frame, chassis, and transmission technologies, Dana employs 46,000 people in 28 countries. Based in Toledo, Ohio, the company reported sales of $9.1 billion in 2004. Dana's Internet address is: www.dana.com.
Dana Corporation
Financial Summary (Unaudited)
(in millions, except per share amounts)
Three Months Ended March 31
2005 2004
Sales $2,488 $2,311
Income from continuing
operations $18 $52
Income from discontinued
operations - 13
Net income $18 $65
Income from continuing
operations $18 $52
Less - Net gains from sales of
DCC assets (2)
Income from continuing
operations,
excluding unusual items $18 $50
Income from discontinued
operations $- $13
Diluted earnings per share:
Income from continuing
operations $0.12 $0.34
Income from discontinued
operations 0.09
Net income $0.12 $0.43
Income from continuing
operations,
excluding unusual items $0.12 $0.33
Income from discontinued
operations,
excluding unusual items 0.09
Net income, excluding unusual
items 0.12 0.42
Unusual items 0.01
Net income $0.12 $0.43
Dana Corporation
Condensed Statement of Income (Unaudited)
(in millions, except per share amounts)
Three Months Ended March 31
2005 2004
Net sales $2,488 $2,311
Revenue from lease financing
and other income (expense) 32 14
2,520 2,325
Costs and expenses
Cost of sales 2,327 2,105
Selling, general and
administrative expenses 136 134
Interest expense 43 51
2,506 2,290
Income before income taxes 14 35
Income tax benefit 3
Minority interest (3) (3)
Equity in earnings
of affiliates 7 17
Income from continuing
operations 18 52
Income from discontinued
operations 13
Net income $18 $65
Basic earnings per share
Income from continuing
operations $0.12 $0.35
Income from discontinued
operations 0.09
Net income $0.12 $0.44
Diluted earnings per share
Income from continuing
operations $0.12 $0.34
Income from discontinued
operations 0.09
Net income $0.12 $0.43
Average shares outstanding -
For Basic EPS 149 148
For Diluted EPS 151 150
Dana Corporation
Condensed Balance Sheet (Unaudited)
(in millions)
March 31 December 31
Assets 2005 2004
Current assets
Cash and cash equivalents $590 $634
Accounts receivable
Trade 1,479 1,266
Other 379 444
Inventories 977 907
Other current assets 256 217
Total current assets 3,681 3,468
Investment in leases 277 281
Investments and other assets 3,025 3,145
Property, plant and
equipment, net 2,106 2,153
Total assets $9,089 $9,047
Liabilities and Shareholders'
Equity
Current liabilities
Notes payable $305 $155
Accounts payable 1,407 1,317
Other current liabilities 1,138 1,217
Total current
liabilities 2,850 2,689
Long-term debt 2,045 2,054
Deferred employee benefits
and other noncurrent liabilities 1,689 1,746
Minority interest 126 123
Shareholders' equity 2,379 2,435
Total liabilities and
shareholders' equity $9,089 $9,047
Dana Corporation
Condensed Statement of Cash Flows (Unaudited)
(in millions)
Three Months Ended March 31
2005 2004
Net income $18 $65
Depreciation and
amortization 83 93
Gain on divestitures and
asset sales (1) (4)
Working capital increase (266) (222)
Other (37) 6
Net cash flows - operating
activities (203) (62)
Purchases of property, plant
and equipment (70) (79)
Payments received on leases
and loans 4 4
Asset sales 35 103
Proceeds from partnership
distributions 64 6
Other 1 (5)
Net cash flows - investing
activities 34 29
Net change in short-term
debt 164 115
Proceeds from long-term debt 5
Payments on long-term debt (20) (259)
Dividends paid (18) (18)
Other (1) 5
Net cash flows - financing
activities 125 (152)
Net change in cash and cash
equivalents (44) (185)
Cash and cash equivalents -
beginning of period 634 731
Cash and cash equivalents -
end of period $590 $546
Dana Corporation
(Including Dana Credit Corporation on an Equity Basis)
Condensed Statement of Income (Unaudited)
(in millions)
Three Months Ended March 31
2005 2004
Net sales $2,488 $2,311
Other income (expense) 18 7
2,506 2,318
Costs and expenses
Cost of sales 2,331 2,114
Selling, general and
administrative expenses 129 120
Interest expense 35 38
2,495 2,272
Income before income taxes 11 46
Income tax expense (11)
Minority interest (3) (3)
Equity in earnings
of affiliates 10 20
Income from continuing
operations 18 52
Income from discontinued
operations 13
Net income $18 $65
Dana Corporation
(Including Dana Credit Corporation on an Equity Basis)
Condensed Balance Sheet (Unaudited)
(in millions)
March 31 December 31
Assets 2005 2004
Current assets
Cash and cash
equivalents $564 $619
Accounts receivable
Trade 1,479 1,266
Other 380 445
Inventories 977 907
Other current assets 234 192
Total current assets 3,634 3,429
Investments and other
assets 3,310 3,337
Property, plant and
equipment, net 1,969 2,015
Total assets $8,913 $8,781
Liabilities and
Shareholders' Equity
Current liabilities
Notes payable $504 $289
Accounts payable 1,407 1,317
Other current
liabilities 1,212 1,269
Total current
liabilities 3,123 2,875
Long-term debt 1,604 1,611
Deferred employee benefits
and other noncurrent
liabilities 1,683 1,739
Minority interest 124 121
Shareholders' equity 2,379 2,435
Total liabilities and
shareholders' equity $8,913 $8,781
Dana Corporation
(Including Dana Credit Corporation on an Equity Basis)
Cash Flow Impact on Net Debt (Unaudited)
(in millions)
Three Months Ended March 31
2005 2004
Sources
Net income $18 $65
Depreciation 78 83
Asset sales 19 14
Working capital increase (250) (180)
(135) (18)
Uses
Capital spend (70) (76)
Dividends (18) (18)
Restructuring cash payments (8) (23)
Net changes in other
accounts (36) 14
(132) (103)
Cash change in net debt $(267) $(121)
Dana Corporation
Condensed Consolidating Statement of Income (Unaudited)
(in millions)
Three Months Ended March 31, 2005
Dana
with DCC on
Equity Elimination Dana
Basis DCC Entries Consolidated
Net sales $2,488 $ $ $2,488
Other income (expense) 18 23 (9) 32
2,506 23 (9) 2,520
Costs and expenses
Cost of sales 2,331 (4) 2,327
Selling, general and
administrative
expenses 129 10 (3) 136
Interest expense 35 10 (2) 43
2,495 20 (9) 2,506
Income before income
taxes 11 3 - 14
Income tax expense -
Minority interest (3) (3)
Equity in earnings
of affiliates 10 5 (8) 7
Net income $18 $8 $(8) $18
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, 2004
Dana
with DCC on
Equity Elimination Dana
Basis DCC Entries Consolidated
Net sales $2,311 $ $ $2,311
Other income (expense) 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 120 20 (6) 134
Interest expense 38 13 51
2,272 33 (15) 2,290
Income (loss) before income
taxes 46 (11) - 35
Income tax benefit
(expense) (11) 14 3
Minority interest (3) (3)
Equity in earnings of
affiliates 20 6 (9) 17
Income from continuing
operations 52 9 (9) 52
Income from discontinued
operations 13 13
Net income $65 $9 $(9) $65
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, 2005
Dana
with DCC on
Equity Elimination Dana
Assets Basis DCC Entries Consolidated
Current assets
Cash and cash
equivalents $564 $26 $ $590
Accounts receivable
Trade 1,479 1,479
Other 380 262 (263) 379
Inventories 977 977
Other current assets 234 151 (129) 256
Total current assets 3,634 439 (392) 3,681
Investment in leases 406 (129) 277
Investments and other
assets 3,310 402 (687) 3,025
Property, plant and
equipment, net 1,969 8 129 2,106
Total assets $8,913 $1,255 $(1,079) $9,089
Liabilities and
Shareholders' Equity
Current liabilities
Notes payable $504 $57 $(256) $305
Accounts payable 1,407 1,407
Other current
liabilities 1,212 63 (137) 1,138
Total current
liabilities 3,123 120 (393) 2,850
Long-term debt 1,604 441 2,045
Deferred employee
benefits and other
noncurrent liabilities 1,683 334 (328) 1,689
Minority interest 124 2 126
Shareholders' equity 2,379 358 (358) 2,379
Total liabilities and
shareholders' equity $8,913 $1,255 $(1,079) $9,089
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, 2004
Dana
with DCC on
Equity Elimination Dana
Assets Basis DCC Entries Consolidated
Current assets
Cash and cash
equivalents $619 $15 $ $634
Accounts receivable
Trade 1,266 1,266
Other 445 208 (209) 444
Inventories 907 907
Other current assets 192 137 (112) 217
Total current assets 3,429 360 (321) 3,468
Investment in leases 411 (130) 281
Investments and other
assets 3,337 467 (659) 3,145
Property, plant and
equipment, net 2,015 8 130 2,153
Total assets $8,781 $1,246 $(980) $9,047
Liabilities and
Shareholders' Equity
Current liabilities
Notes payable $289 $68 $(202) $155
Accounts payable 1,317 1,317
Other current
liabilities 1,269 67 (119) 1,217
Total current
liabilities 2,875 135 (321) 2,689
Long-term debt 1,611 443 2,054
Deferred employee benefits
and other noncurrent
liabilities 1,739 316 (309) 1,746
Minority interest 121 2 123
Shareholders' equity 2,435 350 (350) 2,435
Total liabilities and
shareholders' equity $8,781 $1,246 $(980) $9,047
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, 2005
Dana
with DCC on
Equity Elimination Dana
Basis DCC Entries Consolidated
Sources
Net income $18 $8 $(8) $18
Depreciation 78 5 83
Asset sales 19 16 35
Working capital increase (250) (7) (1) (258)
(135) 22 (9) (122)
Uses
Capital spend (70) (70)
Dividends (18) (18)
Restructuring cash payments (8) (8)
Net changes in other accounts (36) 3 63 30
(132) 3 63 (66)
Cash change in net debt $(267) $25 $54 $(188)
Analysis of components
of increase (decrease)
in net debt:
Net change in short-term
debt $218 $ $(54) $164
Net payments on long-term
debt (6) (14) (20)
Change in cash 55 (11) 44
Cash change in net debt 267 (25) (54) 188
Non-cash changes in net
debt (4) 1 (3)
Total change in net debt $263 $(24) $(54) $185
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, 2004
Dana
with DCC on
Equity Elimination Dana
Basis DCC Entries Consolidated
Sources
Net income $65 $9 $(9) $65
Depreciation 83 10 93
Asset sales 14 89 103
Working capital increase (180) (8) (11) (199)
(18) 100 (20) 62
Uses
Capital spend (76) (3) (79)
Dividends (18) (18)
Restructuring cash payments (23) (23)
Net changes in other accounts 14 (22) 20 12
(103) (25) 20 (108)
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.
Investor Relations
Dana Corporation
Quarterly Financial Information (Unaudited)
For the Quarter Ended March 31, 2005
(in millions)
Inter-
Segment
External Sales Sales EBIT
05 04 05 04 05 04
Automotive Systems Group $1,810 $1,712 $37 $45 $59 $103
Heavy Vehicle Technologies and
Systems Group 674 578 8 9 40 39
Dana Commercial Credit
Other 4 21 1 2 (59) (59)
Continuing Operations 2,488 2,311 46 56 40 83
Discontinued Operations 25
Unusual Items Excluded from
Performance Measurement (2) (1)
Consolidated $2,488 $2,311 $46 $56 $38 $107
North America $1,586 $1,594 $27 $27 $24 $83
Europe 532 438 42 30 38 30
South America 209 130 59 44 22 18
Asia Pacific 161 149 5 1 10 8
Dana Commercial Credit
Other (54) (56)
Continuing Operations 2,488 2,311 133 102 40 83
Discontinued Operations 25
Unusual Items Excluded from
Performance Measurement (2) (1)
Consolidated $2,488 $2,311 $133 $102 $38 $107
Information for Discontinued
Operations 510 4
Investor Relations
Dana Corporation
Quarterly Financial Information (Unaudited)
For the Quarter Ended March 31, 2005
(in millions)
Operating PAT Net Profit Net Assets
05 04 05 04 05 04
Automotive Systems Group $40 $71 $5 $40 $3,169 $3,031
Heavy Vehicle Technologies and
Systems Group 25 24 8 10 746 637
Dana Commercial Credit 6 7 6 7 358 301
Other (53) (52) (1) (7) 9 (29)
Continuing Operations 18 50 18 50 4,282 3,940
Discontinued Operations 13 13
Unusual Items Excluded from
Performance Measurement 2 2
Consolidated $18 $65 $18 $65 $4,282 $3,940
North America $12 $54 $(16) $25 $2,308 $2,165
Europe 26 22 16 14 1,223 1,136
South America 14 11 10 9 411 312
Asia Pacific 7 5 3 2 206 183
Dana Commercial Credit 6 7 6 7 358 301
Other (47) (49) (1) (7) (224) (157)
Continuing Operations 18 50 18 50 4,282 3,940
Discontinued Operations 13 13
Unusual Items Excluded from
Performance Measurement 2 2
Consolidated $18 $- $65 $18 $65 $4,282 $3,940
Information for Discontinued
Operations 945