Dana Second-Quarter Sales, Earnings at Record Highs
20 July 1999
Dana Second-Quarter Sales, Earnings at Record Highs
Sales Top $3.4 Billion; Net Income Jumps 19%
TOLEDO, Ohio, July 19 -- Dana Corporation today
announced record second-quarter sales of $3.4 billion, an increase of more
than 5 percent over the same period last year. Operating profits for the
quarter rose to $195 million, and earnings per share on an operating basis
were $1.17, in line with consensus estimates.
Reported net income for the period rose 19 percent to a record
$190 million, and earnings per share for the quarter rose 18 percent to $1.14.
These figures include non-recurring, after-tax charges of $5 million (3 cents
per share) for the second quarter of 1999 and $7.5 million (4 cents per share)
in 1998.
Dana's six-month consolidated sales were $6.8 billion, up 5 percent over
the same period last year. Net income for the first two quarters was
$352 million, an increase of 17 percent over the first six months of 1998.
Earnings per share on a diluted basis also rose 17 percent for the first half
of the year to $2.10.
Dana Chairman Southwood J. Morcott said, "This was our best quarter ever
in terms of sales volume, net income, and earnings per share. These record
results are the product of continued focus on realizing acquisition synergies,
as well as disciplined pursuit of our Five-Point Plan. By focusing on
operational improvements while growing our businesses, we have seen excellent
profit growth."
"We're seeing the effects of the successful integration of our recent
acquisitions, as well as continued strength in many of our core businesses.
As a result, all key operating ratios have shown improvement," said Joe
Magliochetti, Dana president and CEO. "Organic growth is up 8 percent in the
Heavy Truck Group and 7 percent in the Automotive Systems Group. This is due
in part to very robust North American light-truck and SUV and medium- and
heavy-duty truck markets. In total, North American sales were up nearly
9 percent over the second quarter of last year."
Return on sales for the second quarter increased to 5.7 percent, compared
with 5.2 percent a year ago. For the quarter, all strategic business units
except the Off-Highway Systems and Industrial groups showed increases in
operating margin.
Operating margins improved to 9.9 percent, 90 basis points higher than the
second quarter of 1998, mainly due to restructuring and rationalization
efforts, as well as ongoing cost-control initiatives.
The quarter also saw aggressive implementation of the other elements of
Dana's Five-Point Plan, unveiled in April. The plan, a tactical link to the
company's overall strategic plan, provides a blueprint for continued growth
and increased profitability.
It includes the following five tactics:
* Grow while focusing on returns and maintaining financial discipline;
* Seek strategic, bolt-on acquisitions at reasonable valuations;
* Divest non-strategic and non-performing operations;
* Repurchase stock as the company generates cash; and
* Complete integration efforts and realize synergy savings.
In keeping with the plan, the company has announced plans to sell its
Commercial Vehicle Systems Group, most of its Warner Electric industrial
products businesses, its Sierra aftermarket marine and power equipment
operations, and its Australian Truckline Parts Centres. These businesses had
1998 sales of more than $530 million and are part of an overall plan to divest
operations with annual sales of approximately $850 million.
During the quarter, the company also launched a program to repurchase its
stock under a plan approved by the Board of Directors in April. The
authorization, in effect until October 2000, allows the company to repurchase
up to $350 million of its common stock.
Finally, Dana's plan for $120 million in new automotive aftermarket
operational and sourcing synergies this year is ahead of schedule year-to-date
and on target for the full year. To date, the company has closed six
manufacturing facilities and six distribution centers -- with a seventh
distribution point slated for closure this month. By the end of the year,
Dana plans to close 15 manufacturing facilities and 30 distribution points.
NEW BUSINESS, PRODUCTS ANNOUNCED
During the second quarter, Dana announced more than $150 million in new
aftermarket business and $570 million in new structural business. The latter
includes a multi-year contract -- beginning in model year 2002 -- for the
global frame platforms for the Chevrolet S-10 and Isuzu pickup trucks.
Dana also was selected to supply complete, heavy-duty chassis systems for
Western Star Trucks Inc. In the spirit of Dana's Rolling Chassis(TM) module,
the systems will include a ladder assembly frame, dressed front and rear
axles, suspension, steering gear, electric and pneumatic connection harnesses,
and other components. They will be delivered just in time, in sequence, to
Western Star's new facility in North Charleston, S.C. Delivery is expected to
begin late this year, with full production levels estimated at 6,000 units
annually.
Dana also unveiled a revolutionary new trailer module. Developed in
alliance with Neway Anchorlok International, Inc., Dana's iPac module consists
of an air-ride suspension, axles, wheel ends, and brakes. The innovative
module offers improved performance, durability, assembly, and serviceability.
COMPANY LAUDED FOR PERFORMANCE
During the quarter, Dana was recognized as a Most Admired Manufacturer in
the United States in the June 1999 issue of start magazine, a business
publication focused on technological issues. In recognizing Dana, the
magazine emphasized Dana's strategic objectives, focus on technology, employee
involvement, and reputation.
Also, Dana was rated No. 1 among the world's 44 best-performing automotive
suppliers in a study based on measure of earnings, revenue growth, stock
price, and return on assets. The results of the study, conducted by automotive
consulting firm A.T. Kearney, Inc., were published in the June 21 issue of
Automotive News. The companies studied were selected because of their focus
on improved productivity of company assets, increased earnings, and aggressive
growth.
Dana common stock was listed as one of the most popular and widely held
issues among investment clubs nationwide. The April 1999 issue of Better
Investing magazine ranked Dana common stock 31st in terms of the number of
shares held by investment clubs. Dana also ranked 39th in total value of
shares held by investment clubs and 55th in the number of investment clubs
holding the stock. The May 1999 issue of Better Investing featured a cover
story of Dana as a "Stock to Study."
BOARD APPROVES QUARTERLY DIVIDEND
Dana's Board of Directors today approved a quarterly dividend of $0.31 per
share payable Sept. 15, 1999, to shareholders of record Sept. 1, 1999. This
will mark Dana's 247th consecutive dividend without a decreased or missed
payment.
Dana Corporation is one of the world's largest independent suppliers to
vehicle manufacturers and their related aftermarkets. Founded in 1904 and
based in Toledo, Ohio, the company operates some 330 major facilities in
32 countries and employs more than 86,000 people. The company reported sales
of $12.5 billion in 1998. Dana's internet address is http://www.dana.com .
Certain statements contained herein constitute "forward-looking"
statements within the meaning of the Private Securities Litigation Reform Act
of 1995. These statements involve assumptions, uncertainties, and risks, and
Dana's actual future results, performance, or achievements may differ
materially from those expressed or implied in these statements. Among the
factors that could affect Dana's actual results are the ability of its
customers to achieve projected vehicle sales levels, the cyclical nature of
the automotive industry, and economic conditions. Additional factors are
detailed in Dana's public filings with the Securities and Exchange Commission.
Dana does not undertake to update any forward-looking statements contained
herein.
Dana Corporation
(in millions, except
per share amounts)
Unaudited
Three Months Ended June 30
1998 1999
Sales $ 3,236.6 $ 3,407.6
Net Income 160.2 190.2
Net Income Per Common Share -
Basic $0.97 $1.15
Diluted 0.96 1.14
Average Shares Outstanding -
For Basic EPS 164.6 165.9
For Diluted EPS 167.0 167.4
Six Months Ended June 30
1998 1999
Sales $ 6,469.4 $ 6,788.2
Net Income 300.8 351.7
Net Income Per Common Share
Basic $1.83 $2.12
Diluted 1.80 2.10
Average Shares Outstanding
For Basic EPS 164.6 165.9
For Diluted EPS 167.0 167.4
Dana Corporation
Statement of Income (Unaudited)
June 30, 1999
(in millions, except per share amounts)
Three Months Ended June 30
1998 1999
Net Sales $ 3,236.6 $ 3,407.6
Revenue from Lease Financing
and Other Income 53.4 33.4
Total 3,290.0 3,441.0
Costs and Expenses
Cost of Sales 2,681.3 2,797.3
Selling, General and
Administrative Expenses 294.9 289.3
Restructuring and
Integration Charges -- 7.3
Interest Expense 68.4 67.3
Total 3,044.6 3,161.2
Income Before Income Taxes 245.4 279.8
Estimated Taxes on Income (91.0) (101.7)
Minority Interest (5.3) (4.4)
Equity in Earnings
of Affiliates 11.1 16.5
Net Income $ 160.2 $ 190.2
Net Income Per Common Share -
Basic $0.97 $1.15
Diluted $0.96 $1.14
Average Shares Outstanding -
For Basic EPS 164.6 165.9
For Diluted EPS 167.0 167.4
Dana Corporation
Statement of Income (Unaudited)
June 30, 1999
(in millions, except per share amounts)
Six Months Ended June 30
1998 1999
Net Sales $ 6,469.4 $ 6,788.2
Revenue from Lease Financing
and Other Income 111.4 72.3
Total 6,580.8 6,860.5
Costs and Expenses
Cost of Sales 5,380.5 5,611.9
Selling, General and
Administrative Expenses 594.0 585.7
Restructuring and
Integration Charges -- 13.9
Interest Expense 139.1 137.3
Total 6,113.6 6,348.8
Income Before Income Taxes 467.2 511.7
Estimated Taxes on Income (179.1) (185.0)
Minority Interest (8.0) (6.5)
Equity in Earnings
of Affiliates 20.7 31.5
Net Income $ 300.8 $ 351.7
Net Income Per Common Share -
Basic $1.83 $2.12
Diluted $1.80 $2.10
Average Shares Outstanding -
For Basic EPS 164.6 165.9
For Diluted EPS 167.0 167.4
Dana Corporation
Condensed Balance Sheet (Unaudited)
June 30, 1999
(in millions)
December 31 June 30
Assets 1998 1999
Current Assets
Cash and Marketable Securities $ 230.2 $ 192.5
Accounts Receivable
Trade 1,616.9 2,069.3
Other 246.7 391.5
Inventories 1,678.7 1,638.9
Other Current Assets 564.5 620.9
Total Current Assets 4,337.0 4,913.1
Property, Plant & Equipment, Net 3,303.8 3,298.6
Investment in Leases 851.9 931.5
Investments and Other Assets 1,644.8 1,628.2
Total Assets $ 10,137.5 $ 10,771.4
Liabilities and Shareholders' Equity
Accounts Payable and Other
Current Liabilities $ 2,288.5 $ 2,456.3
Notes Payable 1,698.1 1,479.7
Total Current Liabilities 3,986.6 3,936.0
Long-Term Debt 1,717.9 2,420.7
Deferred Employee Benefits
and Other Noncurrent Liabilities 1,337.5 1,277.3
Minority Interest 156.3 134.1
Shareholders' Equity 2,939.2 3,003.3
Total Liabilities and
Shareholders' Equity $ 10,137.5 $ 10,771.4
Dana Corporation
(Including Dana Credit Corporation on an Equity Basis)
Statement of Income (Unaudited)
June 30, 1999
(in millions)
Three Months Ended June 30
1998 1999
Net Sales $ 3,236.6 $ 3,407.6
Other Income (8.2) (1.7)
Total 3,228.4 3,405.9
Costs and Expenses
Cost of Sales 2,690.0 2,811.6
Selling, General and
Administrative Expenses 256.2 260.3
Restructuring and
Integration Charges -- 7.3
Interest Expense 45.6 50.8
Total 2,991.8 3,130.0
Income Before Income Taxes 236.6 275.9
Estimated Taxes on Income (90.5) (104.8)
Minority Interest (5.3) (4.4)
Equity in Earnings
of Affiliates 19.4 23.5
Net Income $ 160.2 $ 190.2
Dana Corporation
(Including Dana Credit Corporation on an Equity Basis)
Statement of Income (Unaudited)
June 30, 1999
(in millions)
Six Months Ended June 30
1998 1999
Net Sales $ 6,469.4 $ 6,788.2
Other Income (2.1) 7.7
Total 6,467.3 6,795.9
Costs and Expenses
Cost of Sales 5,397.3 5,637.1
Selling, General and
Administrative Expenses 523.6 535.0
Restructuring and
Integration Charges -- 13.9
Interest Expense 93.8 105.8
Total 6,014.7 6,291.8
Income Before Income Taxes 452.6 504.1
Estimated Taxes on Income (179.6) (190.9)
Minority Interest (8.0) (6.5)
Equity in Earnings
of Affiliates 35.8 45.0
Net Income $ 300.8 $ 351.7
Dana Corporation
(Including Dana Credit Corporation on an Equity Basis)
Condensed Balance Sheet (Unaudited)
June 30, 1999
(in millions)
December 31 June 30
Assets 1998 1999
Current Assets
Cash and Marketable Securities $ 226.6 $ 187.2
Accounts Receivable
Trade 1,616.9 2,069.3
Other 248.3 354.5
Inventories 1,678.7 1,638.9
Other Current Assets 403.5 436.0
Total Current Assets 4,174.0 4,685.9
Property, Plant & Equipment, Net 3,065.9 3,014.4
Investments and Other Assets 1,811.6 1,795.0
Total Assets $ 9,051.5 $ 9,495.3
Liabilities and Shareholders' Equity
Accounts Payable and Other
Current Liabilities $ 2,237.3 $ 2,404.2
Notes Payable 1,393.3 886.0
Total Current Liabilities 3,630.6 3,290.2
Long-Term Debt 1,146.9 1,899.9
Deferred Employee Benefits
and Other Noncurrent Liabilities 1,179.8 1,169.1
Minority Interest 155.0 132.8
Shareholders' Equity 2,939.2 3,003.3
Total Liabilities and
Shareholders' Equity $ 9,051.5 $ 9,495.3