Dana Corporation Announces Record First Quarter Sales, Profit; Major Acquisitions, Divestiture Mark Execution Of Aggressive Plan
Apr 21, 1997
TOLEDO, Ohio, April 21 /PRNewswire/ -- Dana Corporation (NYSE: DCN) today
posted record first-quarter sales and profit, capping an active quarter that
also saw the company complete its two largest acquisitions and largest
divestiture, and announce the establishment of its first operation in Central
Europe.
First quarter sales of $2.12 billion were up 7 percent compared to the
same period last year, while net income increased 18 percent to $92.6 million.
International sales increased 9 percent, while U.S. sales were up 6 percent.
Earnings per share totaled 90 cents, up 15 percent from 78 cents during the
first quarter of 1996.
The quarterly sales, income and EPS results -- which represent the highest
quarterly totals in Dana's 93-year history -- were affected by two
significant, strategic actions taken by the company. In March, Dana sold its
European warehouse distribution operations for 103 million pounds (U.S.
$164 million), resulting in an after-tax gain of $45 million (44 cents per
share). Additionally, Dana initiated a rationalization plan at its Perfect
Circle Europe operations resulting in a charge of $36 million (35 cents per
share), which was recognized during the first quarter.
"Our first quarter results lay a strong foundation for the year," said
Dana Chairman Southwood J. Morcott. "At the close of 1996, we outlined our
'Beyond 2000' strategy for growth. By completing the two largest acquisitions
and the largest divestiture in Dana history during the first quarter, we've
made a strong statement about our commitment to growth, profitability and
increased shareholder value.
"We will continue to work our plan aggressively to sharpen our focus on
our eight core businesses and add technology and product depth," he added,
pointing to the company's recent acquisitions of Clark-Hurth and Sealed Power
as solid examples.
MAJOR ACQUISITIONS HIGHLIGHT ACTIVE FIRST QUARTER
Clark-Hurth Acquisition Makes Dana Global Off-Highway Market Leader
In February, Dana acquired the global assets of Clark-Hurth Components, a
worldwide manufacturer of off-highway vehicle and equipment components. The
transaction was the largest acquisition in Dana's history, making Dana the
world's leading supplier of off-highway drivetrain components. Clark-Hurth's
five manufacturing operations in Belgium, Italy and the United States had
combined 1996 sales of more than $350 million, 60 percent of which came from
outside the U.S. Clark-Hurth's principal products include axles and brakes,
and powershift transmissions for the original equipment and replacement
markets. These components are primarily used in construction, material
handling, mining and forestry equipment.
Sealed Power Acquisition Makes Engine Products a New Core Business
Also in February, Dana acquired the assets of the worldwide piston ring
and cylinder liner operations of SPX Corporation for $223 million. The assets
purchased are SPX's Sealed Power Division in the United States, the operating
companies of Sealed Power Europe, and ownership in two North American joint
ventures. The acquisition provides Dana with a complementary array of engine
component resources and important new customer relationships around the world.
The acquisition also spurred Dana to elevate its Engine Products Group to core
business status.
DANA UNDERTAKES EUROPEAN REORGANIZATION
European Warehouse Distribution Divestiture is Largest in Dana History
In March, Dana completed the sale of its warehouse distribution operations
in the U.K., the Netherlands and Portugal to U.K.-based Partco Group plc for
103 million pounds (U.S. $164 million). The divestiture, which is the largest
in Dana history, included the sale of 135 Brown Brothers distribution
facilities in the United Kingdom, Dana Distribution B.V. (Holland), Tece
Almere (Holland), and Europecas S.A. (Portugal). Combined 1996 sales of the
European warehouse distribution operations were $315 million. CEO Morcott
said the transaction supports Dana's efforts to focus resources squarely on
its eight core businesses to increase shareholder value and to divest
businesses which do not achieve the financial objectives of the company.
Rationalization Plan Initiated at Perfect Circle Europe Operations in
France
In another strategic move, Dana has initiated a rationalization plan at
its Perfect Circle Europe operations in France (formerly known as Floquet
Monopole). Dana plans to sell its Liancourt piston manufacturing facility,
reorganize its Dreux piston ring machining operation, sell its Distribution
France operation, and downsize and relocate its Poissy division office.
According to Morcott, exiting the piston business in France and streamlining
its piston ring manufacturing operations will enhance Perfect Circle Europe's
competitive position.
GLOBAL MARKETS EXPERIENCE GROWTH
The first quarter was a strong one for several Dana markets. Global sales
of light truck components (for sport utility vehicles, pick-up trucks and
vans) to original equipment manufacturers were 9 percent above Dana's strong
first-quarter performance in 1996. Additionally, sales to global
manufacturers of off-highway vehicles were up 20 percent and worldwide sales
to passenger car makers were up 23 percent over the comparable period last
year. Dana's global distribution business (31 percent of Dana sales) also
grew 8 percent during the quarter. Dana's recent acquisitions played a
significant role in supporting sales growth during the first quarter.
DANA ENTERS CENTRAL EUROPE WITH WIX-FILTRON JOINT VENTURE IN POLAND
Dana's Wix Filtration Products Division will establish its first
manufacturing operation in Europe with the formation of a joint venture
company with Przedsiebiorstwu FILTRON in Gostyn, Poland. The joint venture
will also mark Dana's first operation in Central Europe. Pending government
approvals, Dana will ultimately hold a 75-percent equity position in the new
company, to be called Wix-Filtron. FILTRON currently holds the number-two
market position for filters in Poland and produces a broad line of automotive
oil, air, fuel and cabin air filters for the Polish market. The company also
exports to several countries in Central and Western Europe.
NEW FACILITY, NEW BUSINESS
Owensboro, Kentucky, Frame Plant to Supply New Toyota Facility
Dana's Parish Light Vehicular Structures Division recently announced plans
to build a frame manufacturing facility in Owensboro, Kentucky. The plant
will initially supply light-truck frames on a just-in-time basis for the new
Toyota Motor Manufacturing, Indiana, Inc., facility in nearby Princeton,
Indiana. Construction is expected to begin in mid-1997 and production is to
begin by late 1998. The Owensboro facility will be Dana Corporation's seventh
truck frame manufacturing operation in North America, along with Dana
affiliate facilities in Venezuela, Argentina, Brazil, and Colombia.
Spicer Axle, Dana Commercial Credit Garner New Business
Dana's growing reputation for quality continues to lead to new business.
Dana's Spicer Axle Division will supply front axles for the 1998 Dodge Durango
sport utility vehicle, which will go into production later this year in
Newark, Delaware. Solid worldwide sales of sport utility vehicles and light
trucks continue to be a key factor contributing to Dana's long-term growth.
Additionally, Compaq Capital Corporation recently announced that Dana
Commercial Credit Corporation, Dana's Baldrige-award-winning leasing services
unit, will provide Compaq-branded, turnkey microcomputer lease financing to
the growing small and medium business market in the U.S. and Canada. Compaq
Capital is a subsidiary of Compaq Computer Corporation, the world's
fifth-largest computer company.
DANA UNITS RECOGNIZED FOR INNOVATION AND QUALITY
Dana's Spicer Transmission Division recently received a 1997 PACE Award
from Automotive News magazine. Spicer Transmission earned the award in the
Medium Company category for its AutoMate2 transmission for Class 8 trucks.
Designed to reduce engine wear, the innovation also reduces distractions for
truck drivers, saves fuel and cuts driveline maintenance. In addition, Dana's
Stockton, California, Parish Light Vehicle Structures operation, nominated for
the innovative relationship it has developed with Toyota's New United Motor
Manufacturing Inc. (NUMMI) unit, was a finalist in the competition.
BOARD APPROVES QUARTERLY DIVIDEND
Today, Dana's Board of Directors approved a quarterly dividend of
$0.25 per share payable June 13, 1997, to shareholders of record as of May 30,
1997. This will mark Dana's 238th consecutive dividend (dating back to 1936)
without a missed or reduced payment.
Dana Corporation is a global leader in the engineering, manufacture and
distribution of products and systems for the vehicular, industrial and
off-highway markets. Its core businesses are axles, driveshafts, structural
components (frames), sealing products, filtration products, engine products,
industrial products and leasing. Its leasing services operation was a
recipient of the 1996 Malcolm Baldrige National Quality Award. Founded in
1904 and based in Toledo, Ohio, Dana operates facilities in 30 countries with
more than 48,000 people. Its 1996 sales were $7.7 billion. It has more than
40 product research and development centers worldwide. The Internet address
for Dana's home page is: http://www.dana.com.
(in millions, except per share amounts)
Three Months Ended March 31
1996 1997
Sales $1,972.7 $2,115.3
Net Income 78.7 92.6
Net Income Per Common Share $0.78 $0.90
Average Shares Outstanding 101.6 103.4
Dana Corporation
Statement of Income
March 31, 1997
(in millions, except per share amounts)
Three Months Ended March 31
1996 1997
Net Sales $1,972.7 $2,115.3
Revenue from Lease Financing
and Other Income 63.5 135.9
Total 2,036.2 2,251.2
Costs and Expenses
Cost of Sales 1,677.3 1,821.3
Selling, General and
Administrative Expenses 181.8 193.0
Interest Expense 38.5 48.2
Total 1,897.6 2,062.5
Income Before Income Taxes 138.6 188.7
Estimated Taxes on Income (54.0) (96.6)
Minority Interest (8.0) (5.6)
Equity in Earnings
of Affiliates 2.1 6.1
Net Income $78.7 $92.6
Net Income Per Common Share $0.78 $0.90
Average Number of Shares
Outstanding 101.6 103.4
Dana Corporation
Condensed Balance Sheet
March 31, 1997
(in millions)
December 31 March 31
Assets 1996 1997
Cash and Marketable Securities $227.8 $131.1
Accounts Receivable 1,069.1 1,361.7
Inventories 912.9 943.2
Lease Financing 1,167.3 1,167.5
Investments and Other Assets 958.1 1,350.0
Property, Plant & Equipment, Net 1,824.8 1,933.3
Total Assets $6,160.0 $6,886.8
Liabilities and Shareholders' Equity
Accounts Payable and Other
Liabilities $1,196.8 $1,502.6
Short-Term Debt 640.3 621.1
Long-Term Debt 1,697.7 2,040.7
Deferred Employee Benefits 1,025.6 1,035.9
Minority Interest 170.9 156.3
Shareholders' Equity 1,428.7 1,530.2
Total Liabilities and
Shareholders' Equity $6,160.0 $6,886.8
Dana Corporation
(Including Dana Credit Corporation on an Equity Basis)
Statement of Income
March 31, 1997
(in millions)
Three Months Ended March 31
1996 1997
Net Sales $1,972.7 $2,115.3
Other Income 15.3 87.9
Total 1,988.0 2,203.2
Costs and Expenses
Cost of Sales 1,682.5 1,828.1
Selling, General and
Administrative Expenses 161.1 168.3
Interest Expense 19.7 29.2
Total 1,863.3 2,025.6
Income Before Income Taxes 124.7 177.6
Estimated Taxes on Income (47.0) (92.8)
Minority Interest (8.0) (5.6)
Equity in Earnings
of Affiliates 9.0 13.4
Net Income $78.7 $92.6
Dana Corporation
(Including Dana Credit Corporation on an Equity Basis)
Condensed Balance Sheet
March 31, 1997
(in millions)
December 31 March 31
Assets 1996 1997
Current Assets
Cash and Marketable Securities $224.3 $121.2
Accounts Receivable 1,087.0 1,383.4
Inventories 912.9 943.2
Other Current Assets 141.4 191.1
Total Current Assets 2,365.6 2,638.9
Property, Plant & Equipment, Net 1,637.2 1,744.0
Investments and Other Assets 934.2 1,259.0
Total Assets $4,937.0 $5,641.9
Liabilities and Shareholders' Equity
Accounts Payable and Other
Current Liabilities $1,114.2 $1,407.9
Notes Payable 362.9 351.4
Long-Term Debt 810.4 1,128.6
Deferred Employee Benefits
and Other Noncurrent Liabilities 1,049.9 1,067.5
Minority Interest 170.9 156.3
Shareholders' Equity 1,428.7 1,530.2
Total Liabilities and
Shareholders' Equity $4,937.0 $5,641.9
Dana Credit Corporation
(A Wholly-Owned Subsidiary of Dana Corporation)
Statement of Income
March 31, 1997
(in millions)
Three Months Ended March 31
1996 1997
Lease Financing $41.8 $45.4
Other Income 18.2 18.1
Total 60.0 63.5
Interest Expense 18.8 19.8
General and Administrative
Expenses 27.3 32.6
Total 46.1 52.4
Income Before Income Taxes 13.9 11.1
Estimated Taxes on Income (7.0) (3.9)
Equity in Earnings of Affiliates 0.6 0.3
Net Income $7.5 $7.5
Dana Credit Corporation
(A Wholly-Owned Subsidiary of Dana Corporation)
Balance Sheet
March 31, 1997
(in millions)
December 31 March 31
Assets 1996 1997
Cash $3.5 $10.0
Lease Financing 1,327.9 1,332.3
Loans Receivable and Other Assets 337.8 349.6
Total Assets $1,669.2 $1,691.9
Liabilities and Shareholder's Equity
Short-Term Debt $456.4 $437.1
Long-Term Debt 708.3 744.7
Other Liabilities and
Accrued Expenses 86.6 75.9
Deferred Income Taxes 294.0 307.6
Shareholder's Equity 123.9 126.6
Total Liabilities and
Shareholder's Equity $1,669.2 $1,691.9
SOURCE Dana Corporation
CONTACT: Gary Corrigan, Director-Corporate Communications, of Dana
Corporation, 419-535-4813