Dana Corporation Announces Fourth-Quarter Earnings
28 January 2000
Dana Corporation Announces Fourth-Quarter Earnings
Company completes strong year with quarter of repositioning
TOLEDO, Ohio, Jan. 28 -- Dana Corporation today
reported sales for the fourth quarter of 1999 of more than $3.2 billion and
operating profits after tax of $143 million. Operating earnings per share
were 87 cents on a diluted basis, in line with consensus forecasts.
(Photo: http://www.newscom.com/cgi-bin/prnh/19990903/DANA )
The quarter included net non-recurring charges of nearly $144 million
(87 cents per share), compared with $14 million (8 cents per share) in 1998.
Including these items, the company had no net income or earnings per share in
the fourth quarter.
For the year, Dana's sales totaled $13.2 billion, up 6 percent over 1998.
Operating profits after tax rose 15 percent to $678 million, and operating
earnings per share increased 15 percent to $4.07. The results marked Dana's
eighth consecutive year of record sales and sixth straight year of record
operating profits. Including all non-recurring items for the year, net income
was $513 million, and earnings per share were $3.08 on a fully diluted basis.
The non-recurring items in the fourth quarter consisted primarily of
charges for the rationalization of a number of operations globally. The most
significant item was the downsizing of Dana's structural products operations
in Reading, Pa. Other affected operations included certain driveshaft,
forging, and chassis facilities in Argentina, as well as selected engine parts
and aftermarket operations in Europe. Other non-recurring items included
costs associated with the integration of Echlin and a one-time gain from the
sale of the Sierra marine aftermarket operations.
Joe Magliochetti, Dana president and chief executive officer, said,
"Previously, we had indicated that we expected softer international
conditions, and we approached the fourth quarter with due caution. Therefore,
we said we would look at global asset utilization in order to optimize capital
efficiencies and improve future performance. This was the reason for the
rationalization charges during the fourth quarter. The total charge for
rationalization, $170 million before taxes, was within the range of
$150-200 million we had mentioned before.
"For the year, there were many successes. Our sales growth in North
America was strong, and operating margins were up sharply year over year. We
recorded some major new business, which will benefit us going forward, and we
launched a number of new products that have been very well received by our
customers.
"We continue to be pleased with the direction of our Five-Point Plan and
are confident that we have the fundamentals in place to continue improving our
performance in the future. We have taken steps this quarter to optimize our
asset utilization and improve our capital efficiency on a global basis. While
difficult, we believe these moves improve our competitiveness and will
ultimately enhance shareholder value."
Southwood J. Morcott, Dana's chairman, said, "As we end the 20th century,
it is appropriate to reflect on Dana's accomplishments. Over the decade, we
have grown at more than 11 percent annually - from a company that reported
sales of less than $5 billion in 1990 to well over $13 billion in 1999. More
importantly, operating profit after tax has climbed at a rate of nearly 28
percent annually, from $76 million reported in 1990 to $678 million this year.
And operating profit after tax as a percent of sales has grown from 1.5
percent to 5.1 percent.
"As we continue to position our company for future growth, we can look
back on these accomplishments with a real sense of pride. We also believe
this level of performance can continue into the future."
IMPLEMENTATION OF FIVE-POINT PLAN CONTINUES
During the quarter, Dana continued with implementation of its Five-Point
Plan, which provides a blueprint for continued growth and increased
profitability. The primary element of the plan is to "grow while focusing on
returns and maintaining financial discipline." In line with this objective,
Dana's operating profit after tax as a percent of sales increased from
4.7 percent to 5.1 percent for the year.
Among the plan's other elements is the divestiture of "non-strategic and
non-performing operations." Since April, Dana has announced plans to divest
businesses with some $850 million in annual sales. During the fourth quarter,
Dana completed the sale of its Sierra operations and reached an agreement to
sell its global Warner Electric operations to Colfax Corporation. Dana also
reached an agreement with a subsidiary of Iveco SpA for the sale of its
Australian Truckline Parts Centres business and announced plans to sell an
English forging operation.
Another element of the plan is to "seek strategic, bolt-on acquisitions at
reasonable valuations." In recent weeks, Dana has received final regulatory
approval for an exchange of driveshaft assets with GKN plc. This will allow
the companies to form a joint venture for the design of advanced driveline
systems and modular assemblies for all-wheel drive and four-wheel drive
passenger cars, light trucks, and sport utility vehicles worldwide.
The Five-Point Plan also calls for Dana to "repurchase stock as the
company generates cash." During the quarter, Dana continued to repurchase its
stock under a plan approved by the Board of Directors in April. During the
year, Dana has spent $100 million on the repurchase of company stock. The
authorization, in effect through October 2000, allows the company to buy back
up to $350 million of its common stock.
Bob Richter, chief financial officer, said, "We increased the pace of
share repurchases during the fourth quarter. And, as we continue to receive
proceeds from our divestitures, we may be in a position to use our entire
authorization well before it expires. Obviously, we will reassess our
situation if that happens."
The final element of the plan calls for Dana to "complete integration
efforts and realize synergy savings." Dana achieved its plan for $216 million
before tax in new automotive aftermarket operational and sourcing synergies in
1999.
NEW BUSINESS, PRODUCTS ANNOUNCED
During the quarter, Dana began production of rear drive modules for Holden
Limited, a General Motors Corporation subsidiary, for that company's Commodore
passenger car. Sales of the modules, which are manufactured in Australia, are
expected to exceed $100 million annually. The production of the rear drive
modules expands Dana's most ambitious modular program to date in the Asia-
Pacific region. Dana already provides Holden with the front corner modules for
the Commodore.
Other new business launched in the fourth quarter included production of
hydroformed engine cradles for the Ford Motor Company's Windstar minivan. The
engine cradle is one of the most complex hydroformed components being produced
today. The process was named a finalist for the 2000 PACE Awards, which
recognize supplier innovation and technology.
In addition, Dana's Brake and Chassis Group introduced a new line of
Spicer(R) Professional Grade Chassis Products to the automotive aftermarket.
The product line includes idler arms, pitman arms, ball joints, drag links,
center links, tie rod ends and bushings, as well as many alignment products
and tools. Applications are available for domestic and imported passenger
cars, light trucks, SUVs, and medium- and heavy-duty trucks.
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 approximately 330 major facilities
in 32 countries and employs more than 84,000 people. 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 international 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.
(in millions, except
per share amounts)
Unaudited
Three Months Ended December 31
1998 1999
Sales $ 3,032 $ 3,243
Net Income 135 --
Net Income Per Common Share -
Basic 0.82 --
Diluted 0.81 --
Average Shares Outstanding -
For Basic EPS 165 165
For Diluted EPS 167 166
Audited
Year Ended December 31
1998 1999
Sales $12,464 $13,159
Net Income 534 513
Net Income Per Common Share
Basic 3.24 3.10
Diluted 3.20 3.08
Average Shares Outstanding
For Basic EPS 165 165
For Diluted EPS 167 166
* Amount is less than $.5 and per share amounts are less than one-half
cent.
Dana Corporation
Statement of Income (Unaudited)
December 31, 1999
(in millions, except per share amounts)
Three Months Ended December 31
1998 1999
Net Sales $ 3,032 $ 3,243
Revenue from Lease Financing
and Other Income 200 75
Total 3,232 3,318
Costs and Expenses
Cost of Sales 2,589 2,788
Selling, General and
Administrative Expenses 258 317
Restructuring and
Integration Charges 118 151
Merger Expense 3 --
Interest Expense 69 72
Total 3,037 3,328
Income Before Income Taxes 195 (10)
Estimated Taxes on Income (69) 15
Minority Interest 3 (3)
Equity in Earnings
of Affiliates 6 (2)
Net Income $135 $--
Net Income Per Common Share -
Basic $0.82 --
Diluted $0.81 --
Average Shares Outstanding -
For Basic EPS 165 165
For Diluted EPS 167 166
* Amount is less than $.5 and per share amounts are less than one-half
cent.
Dana Corporation
Statement of Income (Audited)
December 31, 1999
(in millions, except per share amounts)
Year Ended December 31
1998 1999
Net Sales $12,464 $13,159
Revenue from Lease Financing
and Other Income 375 194
Total 12,839 13,353
Costs and Expenses
Cost of Sales 10,449 10,964
Selling, General and
Administrative Expenses 1,122 1,192
Restructuring and
Integration Charges 118 181
Merger Expense 50 --
Interest Expense 280 279
Total 12,019 12,616
Income Before Income Taxes 820 737
Estimated Taxes on Income (315) (251)
Minority Interest (8) (13)
Equity in Earnings
of Affiliates 37 40
Net Income $534 $513
Net Income Per Common Share -
Basic $3.24 $3.10
Diluted $3.20 $3.08
Average Shares Outstanding -
For Basic EPS 165 165
For Diluted EPS 167 166
Dana Corporation
Condensed Balance Sheet (Audited)
December 31, 1999
(in millions)
December 31 December 31
Assets 1998 1999
Current Assets
Cash and Marketable
Securities $230 $111
Accounts Receivable
Trade 1,617 1,935
Other 248 411
Inventories 1,679 1,784
Other Current Assets 563 560
Total Current Assets 4,337 4,801
Property, Plant &
Equipment, Net 3,304 3,450
Investment in Leases 852 1,014
Investments and Other Assets 1,645 1,858
Total Assets $10,138 $11,123
Liabilities and Shareholders' Equity
Accounts Payable and Other
Current Liabilities $ 2,289 $ 2,470
Notes Payable 1,698 1,418
Total Current Liabilities 3,987 3,888
Long-Term Debt 1,718 2,732
Deferred Employee Benefits
and Other Noncurrent
Liabilities 1,337 1,398
Minority Interest 156 148
Shareholders' Equity 2,940 2,957
Total Liabilities and
Shareholders' Equity $10,138 $11,123
Dana Corporation
(Including Dana Credit Corporation on an Equity Basis)
Statement of Income (Unaudited)
December 31, 1999
(in millions)
Three Months Ended December 31
1998 1999
Net Sales $ 3,032 $ 3,243
Other Income 53 40
Total 3,085 3,283
Costs and Expenses
Cost of Sales 2,599 2,802
Selling, General and
Administrative Expenses 220 276
Restructuring and
Integration Charges 118 151
Merger Expense 3 --
Interest Expense 47 51
Total 2,987 3,280
Income Before Income Taxes 98 3
Estimated Taxes on Income (33) 1
Minority Interest 3 (3)
Equity in Earnings
of Affiliates 67 (1)
Net Income $135 $--
* Amount is less than $.5
Dana Corporation
(Including Dana Credit Corporation on an Equity Basis)
Statement of Income (Unaudited)
December 31, 1999
(in millions)
Year Ended December 31
1998 1999
Net Sales $12,464 $13,159
Other Income 59 58
Total 12,523 13,217
Costs and Expenses
Cost of Sales 10,485 11,016
Selling, General and
Administrative Expenses 984 1,074
Restructuring and
Integration Charges 118 181
Merger Expense 50 --
Interest Expense 189 208
Total 11,826 12,479
Income Before Income Taxes 697 738
Estimated Taxes on Income (277) (273)
Minority Interest (8) (13)
Equity in Earnings
of Affiliates 122 61
Net Income $534 $513
Dana Corporation
(Including Dana Credit Corporation on an Equity Basis)
Condensed Balance Sheet (Unaudited)
December 31, 1999
(in millions)
December 31 December 31
Assets 1998 1999
Current Assets
Cash and Marketable Securities $227 $101
Accounts Receivable
Trade 1,617 1,935
Other 248 399
Inventories 1,679 1,784
Other Current Assets 403 418
Total Current Assets 4,174 4,637
Property, Plant &
Equipment, Net 3,066 3,064
Investments and Other Assets 1,812 1,801
Total Assets $ 9,052 $ 9,502
Liabilities and Shareholders' Equity
Accounts Payable and Other
Current Liabilities $ 2,237 $ 2,423
Notes Payable 1,393 897
Total Current Liabilities 3,630 3,320
Long-Term Debt 1,147 1,862
Deferred Employee Benefits
and Other Noncurrent
Liabilities 1,180 1,216
Minority Interest 155 147
Shareholders' Equity 2,940 2,957
Total Liabilities and
Shareholders' Equity $ 9,052 $ 9,502
Dana Corporation
Condensed Statement of Cash Flows (Unaudited)
December 31, 1999
(in millions)
Three Months Ended December 31
1998 1999
Net income $135 $ -
Depreciation and amortization 122 127
Working capital change and other (28) 179
Net cash from
operating activities 229 306
Purchases of property,
plant and equipment (207) (245)
Purchases of assets to be leased (74) (162)
Payments received on leases
and loans 111 179
Acquisitions (440) (6)
Divestitures 771 36
Other (47) (100)
Net cash flows
- investing
activities 114 (298)
Net change in short-term debt (92) (146)
Proceeds from long-term debt 45 245
Payments on long-term debt (190) (74)
Dividends paid (48) (51)
Other 11 (56)
Net cash flows
- financing
activities (274) (82)
Net change in cash and
cash equivalents 69 (74)
Cash and Cash Equivalents
- beginning of period 161 185
Cash and Cash Equivalents
- end of period $230 $111
Dana Corporation
Condensed Statement of Cash Flows (Audited)
December 31, 1999
(in millions)
Year Ended December 31
1998 1999
Net income $534 $513
Depreciation and amortization 488 519
Working capital change
and other (227) (424)
Net cash from operating
activities 795 608
Purchases of property,
plant and equipment (661) (807)
Purchases of assets
to be leased (546) (480)
Payments received on
leases and loans 493 406
Acquisitions (829) (18)
Divestitures 1,039 36
Other (230) (238)
Net cash flows -
investing activities (734) (1,101)
Net change in short-term debt 54 (341)
Proceeds from long-term debt 473 1,396
Payments on long-term debt (624) (376)
Dividends paid (198) (205)
Other 41 (100)
Net cash flows -
financing activities (254) 374
Net change in cash and
cash equivalents (193) (119)
Cash and Cash Equivalents
- beginning of period 423 230
Cash and Cash Equivalents
- end of period $230 $111
Dana Corporation
(Including Dana Credit Corporation on an Equity Basis)
Condensed Statement of Cash Flows (Unaudited)
December 31, 1999
(in millions)
Three Months Ended December 31
1998 1999
Net income $135 $--
Depreciation and amortization 106 106
Working capital change and other 131 126
Net cash from operating
activities 372 232
Purchases of property,
plant and equipment (175) (163)
Acquisitions (440) (6)
Divestitures -- 36
Other 14 25
Net cash flows - investing
activities (601) (108)
Net change in short-term debt 378 (82)
Proceeds from long-term debt (8) 15
Payments on long-term debt (56) (31)
Dividends paid (48) (51)
Other 11 (57)
Net cash flows - financing
activities 277 (206)
Net change in cash and
cash equivalents 48 (82)
Cash and Cash Equivalents
- beginning of period 179 183
Cash and Cash Equivalents
- end of period $227 $101
Dana Corporation
(Including Dana Credit Corporation on an Equity Basis)
Condensed Statement of Cash Flows (Unaudited)
December 31, 1999
(in millions)
Year Ended December 31
1998 1999
Net income $534 $513
Depreciation and amortization 396 429
Working capital change and other (94) (478)
Net cash from operating
activities 836 464
Purchases of property,
plant and equipment (553) (547)
Acquisitions (829) (18)
Divestitures 219 36
Other (19) 3
Net cash flows - investing
activities (1,182) (526)
Net change in short-term debt 225 (555)
Proceeds from long-term debt 343 1,017
Payments on long-term debt (248) (220)
Dividends paid (198) (205)
Other 41 (101)
Net cash flows - financing
activities 163 (64)
Net change in cash and
cash equivalents (183) (126)
Cash and Cash Equivalents
- beginning of period 410 227
Cash and Cash Equivalents
- end of period $227 $101