Dana Q1 Operating Profits Jump 21% on Record Sales of $3.4 Billion
19 April 1999
Dana First-Quarter Operating Profits Jump 21 Percent on Record Sales of $3.4 Billion
TOLEDO, Ohio, April 19 -- Dana Corporation today
announced record first-quarter sales of $3.4 billion, an increase of nearly
5 percent over the same period last year.
Net income for the period rose 15 percent to a record $162 million, and
earnings per share for the quarter rose more than 15 percent to 97 cents. The
comparisons include non-recurring, after-tax charges of $5.7 million (3 cents
per share) in 1999 and a one-time gain of $2.3 million (1 cent per share) in
1998. Exclusive of non-recurring items, operating profits for the quarter
jumped 21 percent and earnings per share on an operating basis rose 20 percent
to $1.00.
Dana Chairman Southwood J. Morcott said, "These results mark our seventh
consecutive first quarter with record sales and our sixth consecutive first
quarter with record operating profits. In fact, by emphasizing returns and
margins, we have seen first-quarter profits grow nearly twice as fast as sales
since 1995.
"I am especially pleased with the performance of our Automotive
Aftermarket Group, which improved its operating margin by nearly 300 basis
points to 10 percent compared to the first quarter of last year. Our synergy
plan is ahead of schedule through March, and we expect continued improvements
in the performance of our Aftermarket Group."
Morcott noted that a contract has been signed to sell the former Echlin
Inc. headquarters in Branford, Conn., and that staffing levels in Branford
have been reduced to levels comparable with other Dana strategic business
units. Additionally, Dana has closed three manufacturing facilities and four
distribution centers in connection with its synergy plan. By the end of the
year, Dana plans to have closed 15 manufacturing facilities and 30
distribution points.
Dana President and CEO Joe Magliochetti said, "Despite difficult economic
conditions in South America, a continuing soft market in Asia Pacific, and a
sluggish economy in Europe, our international operations continue to perform
relatively well. In fact, South America - which seems to be improving -
remains in the black, as it has each year since the 1950s, when we first
became involved in the region. Europe continues to benefit from recent
acquisitions and performance improvements. And demand in Asia Pacific has
shown some recent improvement. North America remains very strong. And in
that region we are particularly pleased with sales to the light-truck/SUV and
medium- and heavy-duty truck markets.
"More important is the improvement in Dana's operating margin, which has
risen from 8.0 to 8.3 percent, excluding Dana Credit Corporation, over the
same period last year. This is the result of focusing on the fundamentals -
productivity, operating efficiency, quality, and service."
The company also announced a number of strategic moves during the first
quarter.
On March 29, Dana announced agreements to form a strategic alliance with
GKN plc -- a global leader in constant-velocity (CV) joint driveshaft
technology -- to design advanced driveline systems for all-wheel and four-
wheel drive passenger cars, light trucks, and sport utility vehicles and to
jointly develop modular assemblies for similar applications worldwide.
Additionally, the companies agreed to exchange certain assets, allowing
each company to focus on its core competencies. Dana plans to sell its CV-
joint business to GKN and acquire most of GKN's global cardan-jointed
propeller shaft business. The transactions are subject to customary
approvals.
On March 3, Dana sold $1 billion of new senior unsecured notes.
Consisting of five-, 10-, and 30-year notes, the sale was originally planned
as a $700 million offering but was increased in response to demand by
investors. The notes were rated "A-" by Standard & Poor's Corporation and
"Baa1" by Moody's Investor Services. Proceeds were used to refinance short-
term debt.
Jack Simpson, executive vice president and chief financial officer, said,
"This move further strengthens our balance sheet and lengthens the maturities
of our debt portfolio."
On Feb. 8, Magliochetti, a 32-year Dana veteran who most recently served
as president and chief operating officer, was promoted to president and chief
executive officer. Morcott will continue to serve as chairman of the board.
Finally, Dana's revolutionary Rolling Chassis(TM) modular system was
recognized as a finalist for the 1999 PACE Awards for innovation. The most
complex module ever supplied to an original-equipment supplier for a light-
duty application -- the Dodge Dakota pickup truck -- the Rolling Chassis
module incorporates more than 200 components from 66 suppliers. The PACE
(Premier Automotive suppliers' Contribution to Excellence) Awards recognize
suppliers for innovative product, manufacturing, and service achievements.
This was the seventh time in five years that Dana divisions were recognized by
the PACE Awards.
One of the world's largest independent suppliers to vehicle and engine
manufacturers and related aftermarkets, Dana Corporation produces components
and systems found under the vehicles and under the hoods of millions of
applications. Founded in 1904 and based in Toledo, Ohio, the company operates
some 340 major facilities in 32 countries and employs more than 86,000 people.
Dana reported sales of $12.5 billion in 1998. Dana's Internet address is
http://www.dana.com.
(in millions, except
per share amounts)
Unaudited
Three Months Ended March 31
1998 1999
Sales $3,232.8 $3,380.6
Net Income 140.6 161.5
Net Income Per Common Share -
Basic $0.86 $0.97
Diluted 0.84 0.97
Average Shares Outstanding -
For Basic EPS 164.3 165.8
For Diluted EPS 166.7 167.0