Dana Announces Sales, Profits and Raises Dividend
20 April 1998
Dana Sales, Profits Set New Records; Board Raises Dividend Rate
TOLEDO, Ohio, April 20 -- Dana Corporation today
announced record first-quarter sales of $2.35 billion, an 11-percent increase
over the same period last year. Profits rose 16 percent to a record
$108 million, marking the first time that the company reported earnings of
more than $100 million in a quarter.
Earnings per diluted share for the first quarter of 1998 rose 12 percent
to $1.00 and included a small, non-recurring gain on the sale of Dana's brake
hose business. This compares with 1997 earnings of $0.89 per diluted share,
which included a net gain of 9 cents per share on the sale of most of Dana's
European warehouse distribution facilities and the rationalization of the
company's Perfect Circle Europe operations in France.
Exclusive of one-time items, operating earnings per share for the quarter
rose 23 percent, from 80 cents per diluted share in 1997 to 98 cents in 1998.
As a sign of its confidence in Dana's direction, the Board of Directors
today voted to increase the next dividend 2 cents to 29 cents per share,
bringing the annualized dividend rate to $1.16 per share. The 7-percent
increase is the second advance in nine months and the fifth increase in as
many years. The dividend is payable June 15, 1998, to shareholders of record
on June 1, 1998, and will be Dana's 242nd consecutive dividend payment --
dating back to 1936 -- without a missed or reduced payment.
Dana Chairman and CEO Southwood J. Morcott said, "These results mark our
sixth consecutive first quarter with record sales and our fifth consecutive
first quarter with record profits. They result from the execution of an
aggressive plan, which included a number of acquisition and restructuring
activities in 1997. I am pleased that by increasing the dividend the board
has expressed its continued faith in our plan."
Morcott also pointed out that net return on sales rose to 4.6 percent for
the quarter -- closer to Dana's objective of 5 percent by the year 1999. "It
is also gratifying to see an increase in the profit margin as we move closer
to our 1/1/99 goals," he said.
Dana President and COO Joe Magliochetti added that tight control of
expenses and better asset utilization led to an increased operating margin of
8.1 percent, compared with 6.9 percent, excluding the effects on cost of sales
of restructuring charges in Europe, in the first quarter of 1997.
"The improvement in our operating margin is significant, and it is a
testament to the hard work of Dana people throughout the world. It is because
of them that our financial fundamentals have shown such improvement,"
Magliochetti said.
Jack Simpson, chief financial officer, said that the company's "vigilant
oversight of the balance sheet" was one of the factors that led to an upgrade
of Dana's credit rating during the first quarter.
In January, Standard & Poor's Corporation increased Dana's corporate
credit and senior debt ratings to "A-" from "BBB+." The ratings of Dana's
leasing subsidiary, Dana Credit Corporation, were also raised to "A-."
In making its announcement, S&P noted that "strong operating results over
the past few years have helped Dana bolster its financial profile, and further
gains in operating performance are expected this year as a result of extensive
restructuring action taken by the company in 1997."
Subsequently, Dana sold $350 million of new senior unsecured notes
consisting of $150 million of 6.5-percent notes due March 15, 2008, and
$200 million of 7-percent notes due March 15, 2028.
The offerings were initially planned to total $300 million, but the amount
of the 30-year note was increased by $50 million in response to market demand.
It was Dana's first public debt offering since 1986. Proceeds from the
offerings are being used to refinance existing short- and medium-term
obligations, Simpson said.
Also during the quarter, Dana acquired full ownership of SIMESC-Parish,
its Brazilian structural components manufacturing company, from its joint-
venture partner, Wiest, S.A. The company, which has been renamed Dana Parish
Produtos Estruturais, S.A., produces a range of structural products, including
full frames and heavy-truck side rails, for customers such as Scania AB, Volvo
AB, Daimler-Benz AG, Chrysler Corporation, and Ford Motor Company.
In February, Dana completed the sale of its hydraulic brake hose
facilities in Columbia City, Ind., and Garching, Germany, to CF Gomma, S.p.A.
of Passirano, Italy. The brake hose operations accounted for $72 million of
Dana's 1997 sales.
On April 17, Dana acquired a 98-percent share of the capital of Nakata
S.A. Industria e Comercio, of Sao Paulo, Brazil, through a Brazilian
subsidiary. Nakata and its subsidiaries are the leading Brazilian
manufacturers of suspension components, such as tie rods and ball joints.
Nakata also manufactures shock absorbers, and a Nakata subsidiary produces
suspension components in Argentina. The combined Nakata group had 1997 sales
in excess of $110 million.
During the quarter, Dana was selected to supply modules to Fiat Auto
Argentina S.A. for its Duna and Uno passenger cars manufactured in Argentina.
Dana expects to supply a combined 35,000 front corner and rear suspension
modules annually for the vehicles with the first shipment anticipated this
May. The Fiat modules will be assembled at Dana's Armetal affiliate in Buenos
Aires.
Dana Corporation is a global leader in the engineering, manufacture, and
distribution of products and services for the automotive, engine, heavy truck,
off-highway, 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 company reported record sales of $8.3 billion in 1997.
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 March 31
1997 1998
Sales $2,115.3 $2,350.2
Net Income 92.6 107.6
Net Income Per Common Share -
Basic $0.90 $1.02
Diluted 0.89 1.00
Average Shares Outstanding -
For Basic EPS 103.4 105.4
For Diluted EPS 104.3 107.2
Dana Corporation
Statement of Income (Unaudited)
March 31, 1998
(in millions, except per share amounts)
Three Months Ended March 31
1997 1998
Net Sales $2,115.3 $2,350.2
Revenue from Lease Financing
and Other Income 135.9 64.2
Total 2,251.2 2,414.4
Costs and Expenses
Cost of Sales 1,821.3 1,985.0
Selling, General and
Administrative Expenses 193.0 199.1
Interest Expense 48.2 57.6
Total 2,062.5 2,241.7
Income Before Income Taxes 188.7 172.7
Estimated Taxes on Income (96.6) (71.4)
Minority Interest (5.6) (3.3)
Equity in Earnings
of Affiliates 6.1 9.6
Net Income $92.6 $107.6
Net Income Per Common Share -
Basic $0.90 $1.02
Diluted $0.89 $1.00
Average Shares Outstanding -
For Basic EPS 103.4 105.4
For Diluted EPS 104.3 107.2
Dana Corporation
Condensed Balance Sheet (Unaudited)
March 31, 1998
(in millions)
December 31 March 31
Assets 1997 1998
Cash and Marketable Securities $ 394.3 $ 214.7
Accounts Receivable
Trade 1,030.6 1,341.1
Other 132.3 176.8
Inventories 909.8 1,019.0
Lease Financing 1,330.1 1,359.4
Investments and Other Assets 1,276.8 1,344.1
Property, Plant & Equipment, Net 2,044.8 2,220.7
Total Assets $7,118.7 $7,675.8
Liabilities and Shareholders' Equity
Accounts Payable and Other
Liabilities $1,518.4 $1,847.5
Short-Term Debt 504.2 455.0
Long-Term Debt 2,178.3 2,387.5
Deferred Employee Benefits 1,062.5 1,054.4
Minority Interest 154.1 157.1
Shareholders' Equity 1,701.2 1,774.3
Total Liabilities and
Shareholders' Equity $7,118.7 $7,675.8
Dana Corporation
(Including Dana Credit Corporation on an Equity Basis)
Statement of Income (Unaudited)
March 31, 1998
(in millions)
Three Months Ended March 31
1997 1998
Net Sales $2,115.3 $2,350.2
Other Income 87.9 12.2
Total 2,203.2 2,362.4
Costs and Expenses
Cost of Sales 1,828.1 1,993.1
Selling, General and
Administrative Expenses 168.3 167.3
Interest Expense 29.2 35.1
Total 2,025.6 2,195.5
Income Before Income Taxes 177.6 166.9
Estimated Taxes on Income (92.8) (72.4)
Minority Interest (5.6) (3.3)
Equity in Earnings
of Affiliates 13.4 16.4
Net Income $92.6 $107.6
Dana Corporation
(Including Dana Credit Corporation on an Equity Basis)
Condensed Balance Sheet (Unaudited)
March 31, 1998
(in millions)
December 31 March 31
Assets 1997 1998
Current Assets
Cash and Marketable Securities $ 382.0 $ 211.9
Accounts Receivable
Trade 1,030.6 1,341.1
Other 149.7 182.9
Inventories 909.8 1,019.0
Other Current Assets 259.1 277.7
Total Current Assets 2,731.2 3,032.6
Property, Plant & Equipment, Net 1,844.9 2,020.6
Investments and Other Assets 1,201.0 1,243.9
Total Assets $5,777.1 $6,297.1
Liabilities and Shareholders' Equity
Accounts Payable and Other
Current Liabilities $1,422.9 $1,731.5
Notes Payable 403.7 295.3
Long-Term Debt 991.9 1,247.5
Deferred Employee Benefits
and Other Noncurrent Liabilities 1,103.3 1,091.4
Minority Interest 154.1 157.1
Shareholders' Equity 1,701.2 1,774.3
Total Liabilities and
Shareholders' Equity $5,777.1 $6,297.1
Dana Credit Corporation
(A Wholly-Owned Subsidiary of Dana Corporation)
Statement of Income (Unaudited)
March 31, 1998
(in millions)
Three Months Ended March 31
1997 1998
Lease Financing $45.4 $50.4
Other Income 18.1 16.5
Total 63.5 66.9
Interest Expense 19.8 22.6
General and Administrative
Expenses 32.6 38.6
Total 52.4 61.2
Income Before Income Taxes 11.1 5.7
Estimated Taxes on Income (3.9) 1.0
Equity in Earnings of Affiliates 0.3 1.3
Net Income $7.5 $8.0
Dana Credit Corporation
(A Wholly-Owned Subsidiary of Dana Corporation)
Balance Sheet (Unaudited)
March 31, 1998
(in millions)
December 31 March 31
Assets 1997 1998
Cash $ 12.3 $ 2.8
Lease Financing 1,498.4 1,527.2
Loans Receivable and Other Assets 350.2 351.8
Total Assets $1,860.9 $1,881.8
Liabilities and Shareholder's Equity
Short-Term Debt $ 325.0 $ 382.0
Long-Term Debt 961.9 917.7
Other Liabilities and
Accrued Expenses 80.2 81.3
Deferred Income Taxes 355.2 356.1
Shareholder's Equity 138.6 144.7
Total Liabilities and
Shareholder's Equity $1,860.9 $1,881.8
SOURCE Dana Corporation