Dana Corporation Completes Best Year, Fourth Quarter; Sales For Year Top $8 Billion, Profits Jump 21 Percent
22 January 1998
Dana Corporation Completes Best Year, Fourth Quarter; Sales For Year Top $8 Billion, Profits Jump 21 Percent
Historic Year Sets Stage for Future Growth
TOLEDO, Ohio, Jan. 22 -- Dana Corporation today
announced all-time high sales and earnings for the fourth quarter of 1997 and
the year, continuing a string of record sales and profit performances.
Fourth-quarter sales of $2.1 billion were up 10 percent compared with
1996. Net profit after tax from operations for the quarter jumped 23 percent
to $86 million, and earnings per share from operations rose 20 percent to
83 cents.
During the quarter, Dana recorded after-tax gains of $26 million (25 cents
per share) on two divestitures and recorded restructuring and rationalization
charges of $28 million (27 cents per share) after tax. With these one-time
items included, reported fourth-quarter net income rose 20 percent to
$84 million, and earnings per share increased 17 percent to 81 cents per
share.
Dana's annual sales exceeded $8 billion for the first time in 1997. Full-
year sales of $8.3 billion were up 8 percent over 1996. Net income jumped
21 percent to $369 million, and earnings per share increased 18 percent to
$3.54.
Earnings for the year included non-recurring gains net of one-time charges
in the amount of $20 million (19 cents per share). Excluding these one-time
items, net income for 1997 was up 14 percent to $349 million, and earnings per
share increased 11 percent to $3.35.
Dana's announcement today marks the first time the company has reported
sales of $2 billion or more in each of its four quarters and the first time
the company exceeded $2 billion in the fourth quarter.
Dana Chairman and Chief Executive Officer Southwood J. Morcott said, "1997
was a historic year for Dana in many ways. Our record performance this
quarter and this year are indicative of the changes that have taken place to
make our company a more solid investment for our shareholders. Our improved
financial performance, our focus on core businesses, and our new global
Strategic Business Unit structure have Dana strongly positioned for future
growth."
Morcott went on to say, "The Dana team is again proud to report that
shareholder value was significantly improved in 1997. Total shareholder value
grew $1.5 billion during the year. The price of Dana stock began the year at
$32.63 and closed the year at $47.50, an increase of 46 percent. In addition,
we increased the dividend 8 percent to an annualized rate of $1.08 per share.
The purpose of Dana is to improve shareholder value, and this was accomplished
in 1997."
Dana's strong performance for the year was paced by a 56-percent increase
in sales of off-highway components and a 19-percent gain in sales of engine
components, both of which included the effects of acquisitions. Sales of
heavy-truck components rose 10 percent, followed by automotive components (up
6 percent) and industrial components (up 1 percent).
Sales by region for the year were led by an 18-percent increase in the
South America. North American sales were also strong, up 8 percent. Sales in
Europe rose 4 percent, as Dana's restructuring plans there began to take
effect. And sales in Asia Pacific remained steady, despite a fourth-quarter
financial crisis in the region.
GLOBAL NEW BUSINESS AWARDED
Some of Dana's success this year can be attributed to new business the
company secured throughout the world.
During the year, Dana announced new business activity that included its
selection to supply a number of modules and components to Chrysler
Corporation's new Jeep(R) Grand Cherokee manufacturing facility in Argentina.
Dana was also chosen to supply:
-- axles for the 1998 Dodge Durango sport utility vehicle;
-- frames for light trucks manufactured at Toyota Motor Corporation's new
Princeton, Ind., facility;
-- cylinder liners up to one million annually for Toyota's Georgetown,
Ky., manufacturing facility;
-- axles that will be exported to Japan for use on the 1998 Isuzu Motors
Ltd. Trooper and Acura SLX; and
-- lease financing for a unit of Compaq Computer Company, which supplies
microcomputers to small and medium-sized businesses in the United
States and Canada.
Morcott said, "We are very excited about the amount of new business that
was secured from our worldwide customers. Our new Strategic Business Unit
structure makes us more fundamentally aligned with the needs of our customers
and positions us to win even more business on a global basis."
STRATEGIC PLAN LEADS TO RESULTS
Dana President and Chief Operating Officer Joseph M. Magliochetti
attributed the impressive earnings growth to further implementation of the
company's strategic plan. "We introduced our 'Beyond 2000' strategic plan one
year ago. Through it, we have focused on leveraging our resources, optimizing
capital efficiency, and improving our speed to market. A consistent
improvement in our operating earnings is the result," he said.
As part of its strategic plan, Dana announced or completed nine
divestitures of businesses with sales of nearly $900 million in 1997. The
fourth quarter saw activity related to four divestitures, including:
-- the sale of Dana's flat rubber products business to a unit of Coltec
Industries, Inc., resulting in a gain of about $8 million (8 cents per
share);
-- the sale of its 49-percent share of Korea Spicer Corporation to its
partner, Sung Shin Cement Industrial Co., Ltd., for a gain of
$18 million (17 cents per share). Dana will continue its presence in
Korea through its wholly owned subsidiary, Dana Korea;
-- the divestiture of its remaining European warehouse distribution
facilities -- Dana Distribution France -- to Spanish automotive
components distributor Cecauto S.A; and
-- the announcement of the sale of its brake hose business to CF Gomma,
S.p.A. of Italy. That transaction is expected to close later this
month.
Earlier in 1997, Dana completed the sale of its U.S. heavy truck
structural components operation and sold its European warehouse distribution
facilities in the United Kingdom, the Netherlands, and Portugal; its vehicular
clutch business; its transmission business; and its leaf spring manufacturing
assets.
During the quarter, Dana also received clearance from the Federal Trade
Commission to proceed with the acquisition of the heavy axle and brake
business of Eaton Corporation for approximately $287 million. The transaction
became effective Jan. 1, 1998, eclipsing in size two other acquisitions that
were completed earlier in 1997 -- the purchase of Clark Hurth Components from
Ingersoll-Rand Company and the Sealed Power Division of SPX Corporation.
Along with two joint ventures earlier in the year, these acquisitions had
aggregate sales of $1.3 billion in 1997.
WORLDWIDE EXPANSION CONTINUES
During the fourth quarter, Dana also announced that it would build a new
axle manufacturing facility in China's Fujian Province. It was the latest in
a series of new facility announcements for the year that included:
-- plans for a new axle assembly operation in Dry Ridge, Ky., that will
support production of the 1999 Jeep(R) Grand Cherokee;
-- opening a Paris office for Dana Capital, a unit of Dana Commercial
Credit;
-- groundbreaking for a frame plant in Owensboro, Ky., that will supply a
nearby Toyota facility with frames for T-100 pickup trucks; and
-- construction of a facility in Curitiba, Brazil, which will supply a
"rolling chassis" to Chrysler for use on the 1999 Dodge Dakota pickup
truck.
DANA'S QUALITY RECOGNIZED
During the quarter Dana achieved many quality milestones, including
QS-9000 certification of all 50 of its U.S. and Canadian facilities that
provide production components to the Big 3 automakers.
Additionally, the company's Danville, Ky., gasket manufacturing plant was
the sole recipient of the inaugural Kentucky Governor's Gold Quality Award,
and Dana's two Spicer Trailer Products facilities in Alabama received quality
honors from that state.
Dana also recorded many international quality honors during the year, as
well, including:
-- Dana's first ISO 14001 registration for its gasket manufacturing
facility at Neu-Ulm, Germany. ISO 14001 is the international standard
for environmental quality.
-- Taiwan's prestigious Golden Tower, the equivalent of the Malcolm
Baldrige National Quality Award in the United States. The award was
presented by Taiwan's president, Lee Teng-hui, to a quality circle of
Dana's Taiway operation.
-- selection of Dana's Albarus Transmisiones Homocineticas Ltda. (ATH) as
General Motors Corporation's best worldwide supplier of
constant-velocity joints. ATH also earned GM's Quality Supplier
Performance award as one of its top global suppliers.
ADDITIONAL ACTIVITY
Also during the quarter, Dana's Board of Directors elected Joseph M.
Magliochetti to the position of President and Chief Operating Officer.
The company also filed a "Universal Shelf" registration statement with the
Securities and Exchange Commission to register common stock and/or debt
securities with a maximum aggregate offering price of $600 million.
Dana expects to use the net proceeds from the sale of the securities for
general corporate purposes, including the repayment or refinancing of existing
indebtedness. Dana does not intend to issue equity in the immediate future.
Dana Corporation is a global leader in the engineering, manufacture, and
distribution of products and services for the automotive, heavy truck, off-
highway, engine, industrial, and leasing markets. Founded in 1904 and based
in Toledo, Ohio, Dana operates facilities in 30 countries and employs more
than 50,000 people. The Internet address for Dana's home page is http://www.dana.com.
Dana Corporation
(in millions, except
per share amounts)
Unaudited
Three Months Ended December 31
1996 1997
Sales $1,877.3 $2,074.0
Net Income 70.6 84.4
Net Income Per Common Share -
Basic $0.69 $0.81
Diluted 0.69 0.79
Average Shares Outstanding -
For Basic EPS 101.8 104.3
For Diluted EPS 102.4 105.8
Audited
Year Ended December 31
1996 1997
Sales $7,686.3 $8,290.8
Net Income 306.0 369.1
Net Income Per Common Share -
Basic $3.01 $3.54
Diluted 2.99 3.49
Average Shares Outstanding -
For Basic EPS 101.8 104.3
For Diluted EPS 102.4 105.8
Dana Corporation
Statement of Income (Unaudited)
December 31, 1997
(in millions, except per share amounts)
Three Months Ended December 31
1996 1997
Net Sales $1,877.3 $2,074.0
Revenue from Lease Financing
and Other Income 43.2 92.8
Total 1,920.5 2,166.8
Costs and Expenses
Cost of Sales 1,611.9 1,818.6
Selling, General and
Administrative Expenses 163.3 174.5
Interest Expense 42.6 51.9
Total 1,817.8 2,045.0
Income Before Income Taxes 102.7 121.8
Estimated Taxes on Income (26.5) (41.7)
Minority Interest (7.7) (3.5)
Equity in Earnings
of Affiliates 2.1 7.8
Net Income $70.6 $84.4
Net Income Per Common Share -
Basic $0.69 $0.81
Diluted $0.69 $0.79
Average Shares Outstanding -
For Basic EPS 101.8 104.3
For Diluted EPS 102.4 105.8
Dana Corporation
Statement of Income (Audited)
December 31, 1997
(in millions, except per share amounts)
Year Ended December 31
1996 1997
Net Sales $7,686.3 $8,290.8
Revenue from Lease Financing
and Other Income 204.4 479.5
Total 7,890.7 8,770.3
Costs and Expenses
Cost of Sales 6,525.2 7,180.4
Selling, General and
Administrative Expenses 714.8 739.7
Interest Expense 159.0 196.1
Total 7,399.0 8,116.2
Income Before Income Taxes 491.7 654.1
Estimated Taxes on Income (166.3) (293.6)
Minority Interest (32.8) (23.5)
Equity in Earnings
of Affiliates 13.4 32.1
Net Income $306.0 $369.1
Net Income Per Common Share -
Basic $3.01 $3.54
Diluted $2.99 $3.49
Average Shares Outstanding -
For Basic EPS 101.8 104.3
For Diluted EPS 102.4 105.8
Dana Corporation
Condensed Balance Sheet (Audited)
December 31, 1997
(in millions)
December 31 December 31
Assets 1996 1997
Cash and Marketable Securities $227.8 $394.3
Accounts Receivable
Trade 1,026.7 1,032.4
Other 42.4 130.5
Inventories 912.9 909.8
Lease Financing 1,167.3 1,330.1
Investments and Other Assets 958.1 1,276.8
Property, Plant & Equipment, Net 1,824.8 2,044.8
Total Assets $6,160.0 $7,118.7
Liabilities and Shareholders' Equity
Accounts Payable and Other
Liabilities $1,196.8 $1,518.4
Short-Term Debt 640.3 504.2
Long-Term Debt 1,697.7 2,178.3
Deferred Employee Benefits 1,025.6 1,062.5
Minority Interest 170.9 154.1
Shareholders' Equity 1,428.7 1,701.2
Total Liabilities and
Shareholders' Equity $6,160.0 $7,118.7
Dana Corporation
(Including Dana Credit Corporation on an Equity Basis)
Statement of Income (Unaudited)
December 31, 1997
(in millions)
Three Months Ended December 31
1996 1997
Net Sales $1,877.3 $2,074.0
Other Income 6.1 54.0
Total 1,883.4 2,128.0
Costs and Expenses
Cost of Sales 1,621.2 1,829.9
Selling, General and
Administrative Expenses 143.8 142.5
Interest Expense 23.4 31.7
Total 1,788.4 2,004.1
Income Before Income Taxes 95.0 123.9
Estimated Taxes on Income (25.8) (48.8)
Minority Interest (7.7) (3.5)
Equity in Earnings
of Affiliates 9.1 12.8
Net Income $70.6 $84.4
Dana Corporation
(Including Dana Credit Corporation on an Equity Basis)
Statement of Income (Unaudited)
December 31, 1997
(in millions)
Year Ended December 31
1996 1997
Net Sales $7,686.3 $8,290.8
Other Income 28.0 285.9
Total 7,714.3 8,576.7
Costs and Expenses
Cost of Sales 6,549.8 7,212.1
Selling, General and
Administrative Expenses 627.7 628.9
Interest Expense 84.6 117.2
Total 7,262.1 7,958.2
Income Before Income Taxes 452.2 618.5
Estimated Taxes on Income (154.5) (286.0)
Minority Interest (32.8) (23.5)
Equity in Earnings
of Affiliates 41.1 60.1
Net Income $306.0 $369.1
Dana Corporation
(Including Dana Credit Corporation on an Equity Basis)
Condensed Balance Sheet (Unaudited)
December 31, 1997
(in millions)
December 31 December 31
Assets 1996 1997
Current Assets
Cash and Marketable Securities $224.3 $382.0
Accounts Receivable
Trade 1,026.7 1,032.4
Other 60.3 147.9
Inventories 912.9 909.8
Other Current Assets 141.4 259.1
Total Current Assets 2,365.6 2,731.2
Property, Plant & Equipment, Net 1,637.2 1,844.9
Investments and Other Assets 934.2 1,201.0
Total Assets $,937.0 $5,777.1
Liabilities and Shareholders' Equity
Accounts Payable and Other
Current Liabilities $1,114.2 $1,422.9
Notes Payable 362.9 403.7
Long-Term Debt 810.4 991.9
Deferred Employee Benefits
and Other Noncurrent Liabilities 1,049.9 1,103.3
Minority Interest 170.9 154.1
Shareholders' Equity 1,428.7 1,701.2
Total Liabilities and
Shareholders' Equity $4,937.0 $5,777.1
Dana Credit Corporation
(A Wholly-Owned Subsidiary of Dana Corporation)
Statement of Income (Unaudited)
December 31, 1997
(in millions)
Three Months Ended December 31
1996 1997
Lease Financing $43.9 $42.2
Other Income 11.4 11.9
Total 55.3 54.1
Interest Expense 19.0 20.6
General and Administrative
Expenses 28.5 35.5
Total 47.5 56.1
Income Before Income Taxes 7.8 (2.0)
Estimated Taxes on Income (0.7) 6.9
Equity in Earnings of Affiliates 0.8 1.7
Net Income $7.9 $6.6
Dana Credit Corporation
(A Wholly-Owned Subsidiary of Dana Corporation)
Statement of Income (Audited)
December 31, 1997
(in millions)
Year Ended December 31
1996 1997
Lease Financing $170.5 $181.9
Other Income 59.1 72.6
Total 229.6 254.5
Interest Expense 74.4 80.9
General and Administrative
Expenses 115.6 137.9
Total 190.0 218.8
Income Before Income Taxes 39.6 35.7
Estimated Taxes on Income (11.8) (7.7)
Equity in Earnings of Affiliates 2.7 3.2
Net Income $30.5 $31.2
Dana Credit Corporation
(A Wholly-Owned Subsidiary of Dana Corporation)
Balance Sheet (Audited)
December 31, 1997
(in millions)
December 31 December 31
Assets 1996 1997
Cash $3.5 $12.3
Lease Financing 1,327.9 1,498.4
Loans Receivable and Other Assets 337.8 350.2
Total Assets $1,669.2 $1,860.9
Liabilities and Shareholder's Equity
Short-Term Debt $456.4 $324.9
Long-Term Debt 708.3 961.9
Other Liabilities and
Accrued Expenses 86.6 80.3
Deferred Income Taxes 294.0 355.2
Shareholder's Equity 123.9 138.6
Total Liabilities and
Shareholder's Equity $1,669.2 $1,860.9
SOURCE Dana Corporation