Dana Announces Third-Quarter Results, Takes Actions To Enhance Financial and Competitive Position
Oct 17, 2001
TOLEDO, Ohio, Oct. 17 /PRNewswire/ -- Dana Corporation (NYSE: DCN) today announced its third-quarter results, including sales of $2.4 billion and a net loss, excluding non-recurring items, of $8 million, or 5 cents per share, in line with previously announced expectations. Including non-recurring items, the company recorded a net profit of $13 million, or 8 cents per share. The company also announced actions to enhance its financial position and overall competitiveness. (Photo: http://www.newscom.com/cgi-bin/prnh/19990903/DANA ) "While global economic conditions had already shown signs of weakening, given the events following September 11, we now face the prospect of a further significant decline in our markets," said Dana Chairman and CEO Joe Magliochetti. "These extraordinary circumstances necessitate extraordinary actions to secure the long-term competitive position of the company." Specifically, the company announced the following actions to strengthen the company's financial position and focus resources on its foundation businesses: -- Dana's Board of Directors reduced the fourth-quarter dividend to one cent per share; -- The company will pursue the sale of the businesses of Dana Commercial Credit Corporation (DCC), its leasing services operation; and -- The company will accelerate the restructuring of its operations, including a reduction of its global workforce by more than 15 percent, and anticipates recording after-tax charges of $400 to $450 million, primarily in the fourth quarter of 2001. Results Reflect Declining Markets Sales for the third quarter of 2001 were $2.4 billion, down from $2.9 billion for the same period last year. Excluding non-recurring items, the company incurred a net loss of $8 million, or 5 cents per share for the quarter. This compared with net income, excluding non-recurring items, of $61 million, or 41 cents per share, during the third quarter of 2000. Net income for the quarter, including non-recurring items, totaled $13 million, or 8 cents per share. This compares with net income of $29 million, or 19 cents per share, in the third quarter of 2000. Dana's nine-month consolidated sales were $7.9 billion, down from $9.6 billion over the same period last year. Net income, excluding non-recurring items for the period, was $19 million, or 13 cents per share, compared with $375 million, or $2.43 per share, in 2000. Net non-recurring charges offset operating income for the first nine months of 2001. Net income for the same period in 2000 was $418 million, or $2.71 per share, which included net non- recurring income of $43 million, or 28 cents per share after tax. Dividend Reduction Dana's Board of Directors has declared a dividend of one cent per share payable on Dec. 14 to shareholders of record on Nov. 30. This is a reduction from the previous quarterly rate of 31 cents per share. The annualized effect is a $178 million improvement in cash flow. "While this was an extremely difficult decision, it was clearly a prudent response to these unprecedented circumstances," Mr. Magliochetti said. "Our primary objective remains to ensure that the Dana Corporation represents a solid, long-term investment and it's imperative that we focus our financial resources on strengthening our balance sheet." Dana Commercial Credit Sale The company announced that it will pursue the sale of the businesses of Dana Commercial Credit Corporation, its leasing services operation. Dana has engaged the firm of Lazard Freres and Company in connection with this matter. "We have often said that Dana does not believe in taking long-term actions in response to short-term challenges," Mr. Magliochetti said. "However, given the expected duration of the downturn in our markets, we now believe that DCC's very successful businesses will be better served as part of a different corporate structure. At the same time, this will allow Dana to increase its focus on its foundation businesses." Restructuring Moves Dana announced that it expects to incur restructuring charges of $400 to $450 million after tax, primarily in the fourth quarter of 2001, as it focuses on making its businesses more competitive. As part of these restructuring actions, the company will further reduce its global workforce by more than 15 percent. This is in addition to the approximately 10,000 positions eliminated over the past 18 months. Dana will also initiate a series of plant closures and consolidations. These moves are in addition to the company's ongoing exploration of previously announced strategic opportunities involving its Engine Management, Engine Products, Industrial Fluid, and Quinton-Hazell operations. The company will also accelerate the outsourcing of non-core manufacturing and processes as part of its program to reduce assets and costs. "Since our markets began to soften in mid-2000, we have devoted significant effort to scaling our operations for lower production forecasts," Mr. Magliochetti said. "Unfortunately, recent events require that we quicken the pace and make even further reductions. As we take these difficult actions, we will be cautious not to compromise our longer-term objectives." Market Outlook "While we entered the third-quarter believing we were at or near the bottom of the current cycle, recent events have significantly changed our markets - and our world - making it increasingly difficult to predict even near-term conditions with precision," Mr. Magliochetti said. "In general, we believe the balance of 2001 will be extremely soft. Looking further ahead, indications are that 2002 production of both light vehicles and commercial vehicles may be significantly lower than 2001 levels. This more negative outlook was a critical factor in our decision to pursue the more aggressive actions we are undertaking. "Dana and its people have weathered severe market conditions in the past," he added. "As consumer confidence returns and our markets recover, we will be well-positioned as a technology-driven, market leader serving domestic, transplant, and international customers. I am confident that we will emerge from the current situation a stronger, more competitive company better positioned for an upturn." Dana to Host Conference Call Today Dana will host a conference call at 10 a.m. (EDT) today to discuss its quarterly results. The call may be accessed via Dana's website (http://www.dana.com), where it will be accompanied by a slide presentation, or by dialing (800) 275-3210. Please dial into the conference 15 minutes prior to the call. A recording of this conference call will be available after 1 p.m. (EDT) today. To access this recording, please dial (800) 537-8823. Dana Corporation Overview Dana Corporation is one of the world's largest suppliers of components, modules and complete systems to global vehicle manufacturers and their related aftermarkets. Founded in 1904 and based in Toledo, Ohio, the company operates some 300 major facilities in 34 countries and employs approximately 75,000 people. The company reported sales of $12.3 billion in 2000. Dana's Internet address is http://www.dana.com . Forward-Looking Statements Certain statements contained herein (including our forecasts, beliefs, and expectations) 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 impact of national and international economic conditions (including additional adverse effects from terrorism or hostilities) on production and sales by the company's vehicular customers; the company's ability to complete the sale of DCC's businesses as contemplated; and the success and timing of the company's restructuring, cost reduction and cash management programs. 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 September 30 2000 2001 Sales $2,865 $2,399 Net Income (loss), excluding non-recurring items 61 (8) Net Income, including non- recurring items 29 13 Net Income (loss) Per Common Share, excluding non-recurring items - Diluted 0.41 (0.05) Net Income Per Common Share, including non-recurring items - Basic 0.19 0.08 Diluted 0.19 0.08 Average Shares Outstanding - For Basic EPS 149 148 For Diluted EPS 150 149 Unaudited Nine Months Ended September 30 2000 2001 Sales $9,629 $7,898 Net Income, excluding non- recurring items 375 19 Net Income, including non- recurring items 418 -- Net Income Per Common Share, excluding non-recurring items - Diluted 2.43 0.13 Net Income Per Common Share, including non-recurring items - Basic 2.73 * Diluted 2.71 * Average Shares Outstanding - For Basic EPS 153 148 For Diluted EPS 154 149 * Amount is less than $.5 and per share amounts are less than one-half cent. Dana Corporation Statement of Income (Unaudited) September 30, 2001 (in millions, except per share amounts) Three Months Ended September 30 2000 2001 Net sales $2,865 $2,399 Revenue from lease financing and other income 50 98 Total 2,915 2,497 Costs and expenses Cost of sales 2,481 2,149 Selling, general and administrative expenses 276 242 Restructuring and integration charges 69 12 Interest expense 82 76 Total 2,908 2,479 Income before income taxes 7 18 Estimated taxes on income 10 (13) Minority interest (4) (1) Equity in earnings of affiliates 16 9 Net income $29 $13 Net income per common share - Basic $0.19 $0.08 Diluted $0.19 $0.08 Average shares outstanding - For Basic EPS 149 148 For Diluted EPS 150 149 Dana Corporation Statement of Income (Unaudited) September 30, 2001 (in millions, except per share amounts) Nine Months Ended September 30 2000 2001 Net sales $9,629 $7,898 Revenue from lease financing and other income 308 149 Total 9,937 8,047 Costs and expenses Cost of sales 8,161 7,006 Selling, general and administrative expenses 847 775 Restructuring and integration charges 103 38 Interest expense 238 239 Total 9,349 8,058 Income (loss) before income taxes 588 (11) Estimated taxes on income (207) (6) Minority interest (12) (6) Equity in earnings of affiliates 49 23 Net income $418 $-- Net income per common share - Basic $2.73 $ * Diluted $2.71 $ * Average shares outstanding - For Basic EPS 153 148 For Diluted EPS 154 149 * Amount is less than $.5 and per share amounts are less than one- half cent. Dana Corporation Condensed Balance Sheet (Unaudited) September 30, 2001 (in millions) December 31 September 30 Assets 2000 2001 Current assets Cash and marketable securities $179 $228 Accounts receivable Trade 1,548 1,548 Other 318 429 Inventories 1,564 1,350 Other current assets 714 526 Total current assets 4,323 4,081 Property, plant and equipment, net 3,509 3,411 Investment in leases 1,037 1,087 Investments and other assets 2,367 2,230 Total assets $11,236 $10,809 Liabilities and Shareholders' Equity Accounts payable and other current liabilities $2,386 $2,281 Notes payable 1,945 1,223 Total current liabilities 4,331 3,504 Long-term debt 2,649 3,227 Deferred employee benefits and other noncurrent liabilities 1,507 1,595 Minority interest 121 116 Shareholders' equity 2,628 2,367 Total liabilities and shareholders' equity $11,236 $10,809 Dana Corporation Condensed Statement of Cash Flows (Unaudited) September 30, 2001 (in millions) Three Months Ended September 30 2000 2001 Net income $29 $13 Depreciation and amortization 130 137 Gain on divestitures (13) (30) Working capital change (97) (41) Other 45 (42) Net cash from operating activities 94 37 Purchases of property, plant and equipment (130) (68) Purchases of assets to be leased (171) (38) Payments received on leases 61 9 Net loans to customers (41) 18 Acquisitions (74) - Divestitures 38 206 Other (17) 15 Net cash flows - investing activities (334) 142 Net change in short-term debt 58 (680) Proceeds from long-term debt 300 752 Payments on long-term debt (55) (116) Dividends paid (46) (47) Shares repurchased (61) - Other 1 (13) Net cash flows - financing activities 197 (104) Net change in cash and cash equivalents (43) 75 Cash and cash equivalents - beginning of period 187 153 Cash and cash equivalents - end of period $144 $228 Dana Corporation Condensed Statement of Cash Flows (Unaudited) September 30, 2001 (in millions) Nine Months Ended September 30 2000 2001 Net income $418 $- Depreciation and amortization 390 408 Gain on divestitures (110) (10) Working capital change (223) (79) Other (50) 71 Net cash from operating activities 425 390 Purchases of property, plant and equipment (464) (306) Purchases of assets to be leased (242) (124) Payments received on leases 126 28 Net loans to customers (147) 103 Acquisitions (279) (21) Divestitures 562 232 Other 27 127 Net cash flows - investing activities (417) 39 Net change in short-term debt 621 (642) Proceeds from long-term debt 311 796 Payments on long-term debt (388) (383) Dividends paid (142) (139) Shares repurchased (381) - Other 4 (12) Net cash flows - financing activities 25 (380) Net change in cash and cash equivalents 33 49 Cash and cash equivalents - beginning of period 111 179 Cash and cash equivalents - end of period $144 $228 Dana Corporation (Including Dana Credit Corporation on the Equity Basis) Statement of Income (Unaudited) September 30, 2001 (in millions) Three Months Ended September 30 2000 2001 Net sales $2,865 $2,399 Other income 3 61 Total 2,868 2,460 Costs and expenses Cost of sales 2,498 2,164 Selling, general and administrative expenses 246 216 Restructuring and integration charges 69 12 Interest expense 55 52 Total 2,868 2,444 Income before income taxes 16 Estimated taxes on income 13 (13) Minority interest (4) (1) Equity in earnings of affiliates 20 11 Net income $29 $13 Dana Corporation (Including Dana Credit Corporation on the Equity Basis) Statement of Income (Unaudited) September 30, 2001 (in millions) Nine Months Ended September 30 2000 2001 Net sales $9,629 $7,898 Other income 183 36 Total 9,812 7,934 Costs and expenses Cost of sales 8,208 7,054 Selling, general and administrative expenses 770 698 Restructuring and integration charges 103 38 Interest expense 163 156 Total 9,244 7,946 Income (loss) before income taxes 568 (12) Estimated taxes on income (204) (7) Minority interest (12) (6) Equity in earnings of affiliates 66 25 Net income $418 $ * * Amount is less than $.5 and per share amounts are less than one- half cent. Dana Corporation (Including Dana Credit Corporation on the Equity Basis) Condensed Balance Sheet (Unaudited) September 30, 2001 (in millions) December 31 September 30 Assets 2000 2001 Current assets Cash and marketable securities $149 $186 Accounts receivable Trade 1,505 1,549 Other 318 404 Inventories 1,564 1,350 Other current assets 535 502 Total current assets 4,071 3,991 Property, plant and equipment, net 3,069 2,982 Investments and other assets 2,026 1,928 Total assets $9,166 $8,901 Liabilities and Shareholders' Equity Accounts payable and other current liabilities $2,383 $2,212 Notes payable 1,307 750 Total current liabilities 3,690 2,962 Long-term debt 1,574 2,201 Deferred employee benefits and other noncurrent liabilities 1,155 1,257 Minority interest 119 114 Shareholders' equity 2,628 2,367 Total liabilities and shareholders' equity $9,166 $8,901 Dana Corporation (Including Dana Credit Corporation on an Equity Basis) Condensed Statement of Cash Flows (Unaudited) September 30, 2001 (in millions) Three Months Ended September 30 2000 2001 Net income $29 $13 Depreciation and amortization 105 112 Gain on divestitures (13) (30) Working capital change (104) (84) Other (6) (12) Net cash from operating activities 11 (1) Purchases of property, plant and equipment (81) (55) Acquisitions (74) - Divestitures 38 206 Other (24) (29) Net cash flows - investing activities (141) 122 Net change in short-term debt 215 (688) Proceeds from long-term debt - 751 Payments on long-term debt (13) (84) Dividends paid (46) (47) Shares repurchased (61) - Other 2 (13) Net cash flows - financing activities 97 (81) Net change in cash and cash equivalents (33) 40 Cash and cash equivalents - beginning of period 169 146 Cash and cash equivalents - end of period $136 $186 Dana Corporation (Including Dana Credit Corporation on an Equity Basis) Condensed Statement of Cash Flows (Unaudited) September 30, 2001 (in millions) Nine Months Ended September 30 2000 2001 Net income $418 $- Depreciation and amortization 319 331 Gain on divestitures (110) (10) Working capital change (202) (139) Other (101) 39 Net cash from operating activities 324 221 Purchases of property, plant and equipment (318) (219) Acquisitions (279) (21) Divestitures 562 232 Other 9 (8) Net cash flows - investing activities (26) (16) Net change in short-term debt 510 (512) Proceeds from long-term debt - 761 Payments on long-term debt (255) (266) Dividends paid (142) (139) Shares repurchased (381) - Other 5 (12) Net cash flows - financing activities (263) (168) Net change in cash and cash equivalents 35 37 Cash and cash equivalents - beginning of period 101 149 Cash and cash equivalents - end of period $136 $186 Dana Corporation Quarterly Financial Information For Nine Months Ended September 30, 2001 (Unaudited) (in millions) Sales 00 01 Automotive Systems Group $3,501 $2,824 Automotive Aftermarket Group 2,134 1,950 Commercial Vehicle Systems 1,312 878 Engine Systems Group 1,070 911 Fluid Systems Group 894 800 Off-Highway Systems Group 627 484 Dana Commercial Credit - - Other 91 51 Total Operations 9,629 7,898 Restructuring and nonrecurring items - - Consolidated $9,629 $7,898 North America $7,435 $5,935 Europe 1,504 1,308 South America 427 414 Asia Pacific 263 241 Dana Commercial Credit - - Other - - Total Operations 9,629 7,898 Restructuring and nonrecurring items - - Consolidated $9,629 $7,898 See Note 13 to Dana's 2000 Annual Report for further information Dana Corporation Quarterly Financial Information For Nine Months Ended September 30, 2001 (Unaudited) (in millions) EBIT 00 01 Automotive Systems Group $356 $165 Automotive Aftermarket Group 125 15 Commercial Vehicle Systems 131 27 Engine Systems Group 78 12 Fluid Systems Group 89 62 Off-Highway Systems Group 52 24 Dana Commercial Credit - - Other (174) (146) Total Operations 657 159 Restructuring and nonrecurring items 63 (25) Consolidated $720 $134 North America $743 $253 Europe 69 40 South America 20 13 Asia Pacific 6 2 Dana Commercial Credit - - Other (181) (149) Total Operations 657 159 Restructuring and nonrecurring items 63 (25) Consolidated $720 $134 See Note 13 to Dana's 2000 Annual Report for further information Dana Corporation Quarterly Financial Information For Nine Months Ended September 30, 2001 (Unaudited) (in millions) Operating PAT 00 01 Automotive Systems Group $236 $115 Automotive Aftermarket Group 76 9 Commercial Vehicle Systems 80 16 Engine Systems Group 57 11 Fluid Systems Group 55 37 Off-Highway Systems Group 32 14 Dana Commercial Credit 28 17 Other (189) (200) Total Operations 375 19 Restructuring and nonrecurring items 43 (19) Consolidated $418 $- North America $469 $149 Europe 41 33 South America 16 (1) Asia Pacific 4 1 Dana Commercial Credit 28 17 Other (183) (180) Total Operations 375 19 Restructuring and nonrecurring items 43 (19) Consolidated $418 $- See Note 13 to Dana's 2000 Annual Report for further information Dana Corporation Quarterly Financial Information For Nine Months Ended September 30, 2001 (Unaudited) (in millions) Net Profit 00 01 Automotive Systems Group $168 $56 Automotive Aftermarket Group 26 (38) Commercial Vehicle Systems 51 (7) Engine Systems Group 37 (7) Fluid Systems Group 39 22 Off-Highway Systems Group 21 5 Dana Commercial Credit 28 17 Other 5 (29) Total Operations 375 19 Restructuring and nonrecurring items 43 (19) Consolidated $418 $- North America $331 $29 Europe 11 4 South America 8 (10) Asia Pacific (5) (6) Dana Commercial Credit 28 17 Other 2 (15) Total Operations 375 19 Restructuring and nonrecurring items 43 (19) Consolidated $418 $- See Note 13 to Dana's 2000 Annual Report for further information Dana Corporation Quarterly Financial Information For Nine Months Ended September 30, 2001 (Unaudited) (in millions) Net Assets 00 01 Automotive Systems Group $1,975 $1,987 Automotive Aftermarket Group 2,000 1,666 Commercial Vehicle Systems 584 436 Engine Systems Group 1,142 960 Fluid Systems Group 699 626 Off-Highway Systems Group 499 472 Dana Commercial Credit 168 186 Other 89 150 Total Operations 7,156 6,483 Restructuring and nonrecurring items - - Consolidated $7,156 $6,483 North America $5,003 $4,233 Europe 1,338 1,397 South America 508 513 Asia Pacific 175 176 Dana Commercial Credit 168 186 Other (36) (22) Total Operations 7,156 6,483 Restructuring and nonrecurring items - - Consolidated $7,156 $6,483 See Note 13 to Dana's 2000 Annual Report for further information Dana Corporation Quarterly Financial Information Q3 - 2001 (Unaudited) (in millions) Sales 00 01 Automotive Systems Group $1,062 $831 Automotive Aftermarket Group 681 639 Commercial Vehicle Systems 346 259 Engine Systems Group 321 273 Fluid Systems Group 266 237 Off-Highway Systems Group 178 141 Dana Commercial Credit - - Other 11 19 Total Operations 2,865 2,399 Restructuring and nonrecurring items Consolidated $2,865 $2,399 North America $2,165 $1,787 Europe 441 380 South America 158 154 Asia Pacific 101 78 Dana Commercial Credit - - Other - - Total Operations 2,865 2,399 Restructuring and nonrecurring items - - Consolidated $2,865 $2,399 See Note 13 to Dana's 2000 Annual Report for further information Dana Corporation Quarterly Financial Information Q3 - 2001 (Unaudited) (in millions) EBIT 00 01 Automotive Systems Group $81 $29 Automotive Aftermarket Group 27 13 Commercial Vehicle Systems 27 6 Engine Systems Group 13 (9) Fluid Systems Group 18 14 Off-Highway Systems Group 11 3 Dana Commercial Credit - - Other (57) (34) Total Operations 120 22 Restructuring and nonrecurring items (68) 38 Consolidated $52 $60 North America $155 $48 Europe 11 - South America 10 6 Asia Pacific 3 2 Dana Commercial Credit - - Other (59) (34) Total Operations 120 22 Restructuring and nonrecurring items (68) 38 Consolidated $52 $60 See Note 13 to Dana's 2000 Annual Report for further information Dana Corporation Quarterly Financial Information Q3 - 2001 (Unaudited) (in millions) Operating PAT 00 01 Automotive Systems Group $57 $25 Automotive Aftermarket Group 17 8 Commercial Vehicle Systems 17 3 Engine Systems Group 14 (5) Fluid Systems Group 11 9 Off-Highway Systems Group 7 2 Dana Commercial Credit 7 5 Other (69) (55) Total Operations 61 (8) Restructuring and nonrecurring items (32) 21 Consolidated $29 $13 North America $101 $29 Europe 6 5 South America 8 4 Asia Pacific 2 1 Dana Commercial Credit 7 5 Other (63) (52) Total Operations 61 (8) Restructuring and nonrecurring items (32) 21 Consolidated $29 $13 See Note 13 to Dana's 2000 Annual Report for further information Dana Corporation Quarterly Financial Information Q3 - 2001 (Unaudited) (in millions) Net Profit 00 01 Automotive Systems Group $33 $9 Automotive Aftermarket Group (1) (6) Commercial Vehicle Systems 8 (3) Engine Systems Group 7 (10) Fluid Systems Group 6 4 Off-Highway Systems Group 3 (1) Dana Commercial Credit 7 5 Other (2) (6) Total Operations 61 (8) Restructuring and nonrecurring items (32) 21 Consolidated $29 $13 North America $54 $(4) Europe (3) (2) South America 4 1 Asia Pacific (1) (2) Dana Commercial Credit 7 5 Other - (6) Total Operations 61 (8) Restructuring and nonrecurring items (32) 21 Consolidated $29 $13 See Note 13 to Dana's 2000 Annual Report for further information Dana Corporation Quarterly Financial Information Q3 - 2001 (Unaudited) (in millions) Net Assets 00 01 Automotive Systems Group $1,975 $1,987 Automotive Aftermarket Group 2,000 1,666 Commercial Vehicle Systems 584 436 Engine Systems Group 1,142 960 Fluid Systems Group 699 626 Off-Highway Systems Group 499 472 Dana Commercial Credit 168 186 Other 89 150 Total Operations 7,156 6,483 Restructuring and nonrecurring items - - Consolidated $7,156 $6,483 North America $5,003 $4,233 Europe 1,338 1,397 South America 508 513 Asia Pacific 175 176 Dana Commercial Credit 168 186 Other (36) (22) Total Operations 7,156 6,483 Restructuring and nonrecurring items - - Consolidated $7,156 $6,483 See Note 13 to Dana's 2000 Annual Report for further information
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