Dana Achieves Record Second Quarter Sales, Earnings; Board Approves Increase in Dividend
Jul 21, 1997
TOLEDO, Ohio, July 21 /PRNewswire/ -- Dana Corporation (NYSE: DCN) today
posted record second-quarter sales and earnings, the result of its continuing
effort to focus on core businesses and expand worldwide to serve its global
customers. Dana's Board of Directors also raised the company dividend to
27 cents per share, an 8-percent increase.
Second quarter sales of $2.14 billion were the highest for any quarter in
the company's history and up 6 percent compared to the same period last year.
Net income increased 3 percent to $94 million, also a new record. During the
second quarter, work stoppages at two major customers cost Dana an estimated
13 cents per share. Earnings were also affected by the estimated 5-cent-per-
share charge to second quarter earnings for closing Dana's Berwick, Pa., leaf
spring facility. Despite these items, earnings per share were 90 cents, level
with the second quarter of 1996.
Dana's six-month consolidated sales were $4.26 billion, up 7 percent
compared to the same period last year. Income for the first two quarters of
1997 was $186 million, an increase of 9 percent over the first six months of
1996. Again, both results were records for any six-month period in company
history.
Chairman Southwood J. Morcott said the strong quarterly results are a
product of Dana's continuing emphasis on growing its core businesses globally
and divesting businesses which are not consistent with the company's strategic
direction.
"We are just beginning to see the early effects of divesting businesses
that were largely underperforming," he said. "We are also particularly
pleased with our second quarter performance in light of the mixed market
environment. Despite work stoppages at two of our largest customers, we were
able to achieve record sales and net income. We believe this further validates
Dana's strategy of expanding its core businesses on a global scale."
Dana recently announced agreements to sell its global clutch business to
Eaton Corporation and purchase Eaton's worldwide axle and brake operations.
In addition, last week the company reached an agreement to sell its
transmission business to a unit of its Mexican affiliate Spicer, S.A. de C.V.
And in April, Dana announced the divestiture of its global hydraulic cylinder
manufacturing operations. This year, Dana has announced or completed four
acquisitions and joint ventures, and six divestitures.
"These moves are tangible evidence of Dana's resolve to sharpen its focus
on core businesses, which -- by definition -- are global, market leaders, and
very profitable," Morcott said. "These, and other actions to follow, will
position Dana to better serve its customers around the world, which we expect
will lead to growth in earnings per share and increased shareholder value."
Morcott said the recent strategic moves build on the momentum created
during an aggressive first quarter, which included the acquisitions of Clark-
Hurth Components and the worldwide piston ring and cylinder liner business of
SPX Corporation, a joint venture agreement with Polish filter maker FILTRON,
as well as the divestiture of Dana's European warehouse distribution
operations and the rationalization of its Perfect Circle Europe operations in
France.
MAJOR TRANSACTIONS ANNOUNCED
Dana to Purchase Eaton's Global Axle & Brake Business
On July 9, Dana announced plans to purchase Eaton's global axle and brake
business for $287 million. Sales for this business unit will approximate $625
million in 1997. Dana also announced a unique marketing relationship whereby
Eaton will market a complete heavy-duty Class 8 Eaton-Spicer drivetrain system
consisting of Eaton(R) Fuller(R) transmissions, as well as clutches, axles,
brakes, and driveshafts.
The facilities to be acquired by Dana encompass domestic manufacturing
operations in Glasgow, Ky.; Henderson, Ky.; Marion, Ohio; and Humboldt, Tenn.;
as well as facilities in Argentina, England, Mexico, and Spain. Total
employment at the acquired facilities is approximately 3,400, with nearly half
in international operations. In addition, the transaction includes axle and
brake research and development assets located in Eaton's Galesburg, Mich.,
facility, and interests in joint venture manufacturing operations in Venezuela
and India.
Dana to Sell Global Clutch Business to Eaton
Also on July 9, Dana announced the sale of its worldwide vehicular clutch
operations to Eaton for $180 million. Under terms of the agreement, Eaton
will purchase the Spicer Clutch operations, which manufacture new and rebuilt
medium/heavy-duty clutches for original equipment manufacturers. The Dana
operations to be sold have estimated 1997 sales of $179 million. The
transaction will result in an after-tax gain of approximately $70 million to
Dana (67 cents per share) to be recognized upon closing.
"Although our clutch operations represent a very solid business, they did
not meet our core business criteria," Morcott said. "We believe Eaton can
provide an excellent environment for the future growth of the clutch
operations and the people who work in them."
Dana Announces Sale of Transmission Business
In another move to further focus on its core business units, Dana
announced July 16 that it has reached an agreement to sell its transmission
business to a unit of its Mexican affiliate, Spicer, S.A. de C.V. The
transmission operations to be sold reported 1996 sales of $104 million. Dana
holds a 49-percent share of Spicer, S.A., an affiliate since 1964, which
consists of 22 facilities and employs nearly 5,000 people. Spicer, S.A.
operates vehicular component manufacturing and distribution facilities
primarily for the Mexican market. The move will enable Spicer, S.A., a
leading independent transmission manufacturer in North America, to provide
customers with a full range of transmissions, from automotive to heavy truck.
Sale of Berwick, Pa., Spring Manufacturing Operation Announced
On July 14, Dana announced that it has signed an agreement to sell the
manufacturing assets of its leaf spring manufacturing operation at Berwick,
Pa., to Hendrickson International Corporation, of Woodridge, Ill. As a
result, the Berwick facility, which makes springs for the U.S. heavy truck and
trailer market, will be closed later this year. The estimated after-tax cost
of closing, $5.3 million (five cents per share), was charged to earnings
during the second quarter.
Divestiture of Global Hydraulic Cylinder Operations Announced
In April, Dana signed a letter of intent to sell its global hydraulic
cylinder manufacturing operations to Empire Financial Corporation of Dallas.
Included in the proposed divestiture are hydraulic cylinder operations in
Arab, Ala., and Lancaster, Tex., as well as the Lessard operation in St.
Wenceslas, Quebec, Canada, and the Erwin Hengstler Hydraulik, GmbH facility in
Hausach, Germany. The four facilities involved in the transaction employ
approximately 500 people and produced consolidated sales of nearly $75 million
in 1996.
SALES STRONG IN SEVERAL WORLD MARKETS
Year-to-date sales are strong in several Dana markets around the world.
Global sales of light truck components (for sport utility vehicles, pick-up
trucks and vans) to original equipment manufacturers were 8 percent above
Dana's solid performance during the same period in 1996 in spite of several
assembly plant closures due to labor issues. Fueled by Dana's first-quarter
acquisition of Clark-Hurth Components, sales to global manufacturers of off-
highway vehicles were up 37 percent (international sales were up 64 percent).
Additionally, worldwide sales to passenger car makers were up 20 percent over
the comparable period last year.
NEW BUSINESS
Dana to Supply Up to One Million Cylinder Liners Annually to Toyota in
Kentucky
During the second quarter, Dana's Richmond, Ind., Engine Products Group
facility began supplying cylinder liners to the Toyota Motor Manufacturing
Kentucky, Inc., facility in Georgetown, Ky. Dana expects to supply as many as
one million Perfect Circle(R) brand cylinder liners annually to support
production of Toyota's 3-liter "1MZ" V-6 engine, which is produced at the
Georgetown plant. The facility produces Toyota Camry(R) and Avalon(R)
passenger cars. The Dana-Toyota agreement represents one of the automotive
manufacturer's largest purchases of U.S.-made engine components for mass
production purposes.
Dana to Supply Driveshafts, Axle/Suspension Modules to Chrysler in
Argentina
Dana Argentina will supply a number of components and modules to
Chrysler's new Jeep(R) Grand Cherokee manufacturing facility in Cordoba,
Argentina. Dana will provide a set of two driveshafts, and front and rear
axle/suspension modules. The rear axle/suspension modules will be assembled
at Dana's Thompson Ramco operations in Cordoba.
BOARD APPROVES INCREASE IN QUARTERLY DIVIDEND
Dana's Board of Directors today approved a dividend increase from 25 to
27 cents per share. This 8-percent increase raises the annualized dividend
rate to $1.08 per share. It also represents Dana's fourth dividend increase
in as many years. The dividend is payable September 15, 1997, to shareholders
of record as of August 29, 1997, and will mark Dana's 239th 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 and
employs more than 48,000 people. Its 1996 sales were $7.7 billion. The
Internet address for Dana's home page is www.dana.com.
(in millions, except
per share amounts)
Three Months Ended June 30
1996 1997
Sales $ 2,020.5 $ 2,140.8
Net Income 91.5 93.8
Net Income Per Common Share $0.90 $0.90
Average Shares Outstanding 101.6 103.8
Six Months Ended June 30
1996 1997
Sales $ 3,993.2 $ 4,256.1
Net Income 170.2 186.4
Net Income Per Common Share $1.68 $1.80
Average Shares Outstanding 101.6 103.8
Dana Corporation
Statement of Income
June 30, 1997
(in millions, except per share amounts)
Three Months Ended June 30
1996 1997
Net Sales $ 2,020.5 $ 2,140.8
Revenue from Lease Financing
and Other Income 49.0 75.5
Total 2,069.5 2,216.3
Costs and Expenses
Cost of Sales 1,700.0 1,825.1
Selling, General and
Administrative Expenses 190.2 187.6
Interest Expense 37.0 49.7
Total 1,927.2 2,062.4
Income Before Income Taxes 142.3 153.9
Estimated Taxes on Income (49.4) (60.7)
Minority Interest (7.0) (6.2)
Equity in Earnings
of Affiliates 5.6 6.8
Net Income $ 91.5 $ 93.8
Net Income Per Common Share $0.90 $0.90
Average Number of Shares
Outstanding 101.6 103.8
Dana Corporation
Statement of Income
June 30, 1997
(in millions, except per share amounts)
Six Months Ended June 30
1996 1997
Net Sales $ 3,993.2 $ 4,256.1
Revenue from Lease Financing
and Other Income 112.5 211.4
Total 4,105.7 4,467.5
Costs and Expenses
Cost of Sales 3,377.3 3,646.4
Selling, General and
Administrative Expenses 372.0 380.6
Interest Expense 75.5 97.9
Total 3,824.8 4,124.9
Income Before Income Taxes 280.9 342.6
Estimated Taxes on Income (103.4) (157.3)
Minority Interest (15.0) (11.8)
Equity in Earnings
of Affiliates 7.7 12.9
Net Income $ 170.2 $ 186.4
Net Income Per Common Share $1.68 $1.80
Average Number of Shares
Outstanding 101.6 103.8
Dana Corporation
Condensed Balance Sheet
June 30, 1997
(in millions)
December 31 June 30
Assets 1996 1997
Cash and Marketable Securities $ 227.8 $ 179.8
Accounts Receivable 1,069.1 1,363.8
Inventories 912.9 932.4
Lease Financing 1,167.3 1,223.7
Investments and Other Assets 958.1 1,287.6
Property, Plant & Equipment, Net 1,824.8 1,947.3
Total Assets $ 6,160.0 $ 6,934.6
Liabilities and Shareholders' Equity
Accounts Payable and Other
Liabilities $ 1,196.8 $ 1,452.8
Short-Term Debt 640.3 571.1
Long-Term Debt 1,697.7 2,097.5
Deferred Employee Benefits 1,025.6 1,059.9
Minority Interest 170.9 167.7
Shareholders' Equity 1,428.7 1,585.6
Total Liabilities and
Shareholders' Equity $ 6,160.0 $ 6,934.6
Dana Corporation
(Including Dana Credit Corporation on an Equity Basis)
Statement of Income
June 30, 1997
(in millions)
Three Months Ended June 30
1996 1997
Net Sales $ 2,020.5 $ 2,140.8
Other Income 4.4 11.6
Total 2,024.9 2,152.4
Costs and Expenses
Cost of Sales 1,705.9 1,831.8
Selling, General and
Administrative Expenses 166.7 157.3
Interest Expense 20.0 28.6
Total 1,892.6 2,017.7
Income Before Income Taxes 132.3 134.7
Estimated Taxes on Income (47.0) (51.4)
Minority Interest (7.0) (6.2)
Equity in Earnings
of Affiliates 13.2 16.7
Net Income $ 91.5 $ 93.8
Dana Corporation
(Including Dana Credit Corporation on an Equity Basis)
Statement of Income
June 30, 1997
(in millions)
Six Months Ended June 30
1996 1997
Net Sales $ 3,993.2 $ 4,256.1
Other Income 19.7 99.5
Total 4,012.9 4,355.6
Costs and Expenses
Cost of Sales 3,388.4 3,659.9
Selling, General and
Administrative Expenses 327.8 325.6
Interest Expense 39.7 57.8
Total 3,755.9 4,043.3
Income Before Income Taxes 257.0 312.3
Estimated Taxes on Income (94.0) (144.2)
Minority Interest (15.0) (11.8)
Equity in Earnings
of Affiliates 22.2 30.1
Net Income $ 170.2 $ 186.4
Dana Corporation
(Including Dana Credit Corporation on an Equity Basis)
Condensed Balance Sheet
June 30, 1997
(in millions)
December 31 June 30
Assets 1996 1997
Current Assets
Cash and Marketable Securities $ 224.3 $ 177.6
Accounts Receivable 1,087.0 1,382.0
Inventories 912.9 932.4
Other Current Assets 141.4 184.5
Total Current Assets 2,365.6 2,676.5
Property, Plant & Equipment, Net 1,637.2 1,757.2
Investments and Other Assets 934.2 1,218.9
Total Assets $ 4,937.0 $ 5,652.6
Liabilities and Shareholders' Equity
Accounts Payable and Other
Current Liabilities $ 1,114.2 $ 1,339.9
Notes Payable 362.9 422.5
Long-Term Debt 810.4 1,033.3
Deferred Employee Benefits
and Other Noncurrent Liabilities 1,049.9 1,103.6
Minority Interest 170.9 167.7
Shareholders' Equity 1,428.7 1,585.6
Total Liabilities and
Shareholders' Equity $ 4,937.0 $ 5,652.6
Dana Credit Corporation
(A Wholly-Owned Subsidiary of Dana Corporation)
Statement of Income
June 30, 1997
(in millions)
Three Months Ended June 30
1996 1997
Lease Financing $ 42.1 $ 46.8
Other Income 16.1 32.0
Total 58.2 78.8
Interest Expense 17.1 21.4
General and Administrative
Expenses 31.2 38.2
Total 48.3 59.6
Income Before Income Taxes 9.9 19.2
Estimated Taxes on Income (2.4) (9.2)
Equity in Earnings of Affiliates 0.9 0.5
Net Income $ 8.4 $ 10.5
Dana Credit Corporation
(A Wholly-Owned Subsidiary of Dana Corporation)
Statement of Income
June 30, 1997
(in millions)
Six Months Ended June 30
1996 1997
Lease Financing $ 83.9 $ 92.2
Other Income 34.3 50.1
Total 118.2 142.3
Interest Expense 35.9 41.2
General and Administrative
Expenses 58.5 70.8
Total 94.4 112.0
Income Before Income Taxes 23.8 30.3
Estimated Taxes on Income (9.4) (13.1)
Equity in Earnings of Affiliates 1.5 0.8
Net Income $ 15.9 $ 18.0
Dana Credit Corporation
(A Wholly-Owned Subsidiary of Dana Corporation)
Balance Sheet
June 30, 1997
(in millions)
December 31 June 30
Assets 1996 1997
Cash $ 3.5 $ 2.2
Lease Financing 1,327.9 1,387.9
Loans Receivable and Other Assets 337.8 359.3
Total Assets $ 1,669.2 $ 1,749.4
Liabilities and Shareholder's Equity
Short-Term Debt $ 456.4 $ 412.7
Long-Term Debt 708.3 800.1
Other Liabilities and
Accrued Expenses 86.6 81.2
Deferred Income Taxes 294.0 321.9
Shareholder's Equity 123.9 133.5
Total Liabilities and
Shareholder's Equity $ 1,669.2 $ 1,749.4
SOURCE Dana Corporation
CONTACT: Gary Corrigan, Director-Corporate Communications, of Dana
Corporation, 419-535-4813