Dana Corporation Posts 30 Percent Gain in Net Income on Record Sales

Oct 19, 1998

    TOLEDO, Ohio, Oct. 19 /PRNewswire/ -- Dana Corporation (NYSE: DCN) today
posted record third-quarter sales and profits.  The quarter was the first in
which Dana's financial results included those of the former Echlin Inc., which
was merged with a Dana subsidiary in July.
    Sales for the quarter were $3 billion, up 3.4 percent compared with the
third quarter of 1997.  Net income for the quarter rose to $98 million, and
reported earnings per share increased to 59 cents, including non-recurring
charges of $38 million (23 cents per share) associated with the Echlin merger.
Excluding these one-time items, net income for the quarter jumped 30 percent
to $136 million, and earnings per share rose 28 percent to 82 cents, compared
to the same period in 1997.  Dana Chairman Southwood J. Morcott noted that the
results were slightly better than the current consensus expectations from the
financial community.
    In accordance with accounting rules for pooling of interests, all periods
presented include Echlin's financial results.  During the third quarter of
1997, Dana recorded a one-time gain of $70 million (43 cents per share) on the
sale of its clutch division and non-recurring restructuring charges of
approximately $52 million (31 cents per share).  In that period, Echlin
reported $182 million ($1.11 per share) of one-time restructuring and other
charges, as well as a non-recurring gain of $13 million (8 cents per share) on
the sale of a plastics division.  Excluding these one-time items, net income
for the combined company for the third quarter of 1997 was $105 million
(64 cents per share).
    Nine-month consolidated sales totaled $9.4 billion, up 5.4 percent
compared with the same period last year.  Net income for the first three
quarters of 1998 was $399 million, and earnings per diluted share were $2.39.
Excluding the effect of non-recurring gains and charges for the periods, net
income for the first nine months of 1998 was $442 million, up 26 percent over
the first three quarters of 1997, and earnings per share were $2.65, up
24 percent over the same period last year.
    Despite adverse economic circumstances abroad, Dana's international sales
during the third quarter grew 11 percent over last year's third quarter,
excluding the net effect of acquisitions and divestitures.  U.S. sales for the
quarter were up 1 percent.
    Dana experienced strong growth during the third quarter in the medium- and
heavy-duty truck segments, up 52 and 39 percent, respectively, including the
effects of acquisitions.
    Morcott credited the third-quarter earnings growth to the strategic
actions initiated in 1997 and continued in 1998 to strengthen the company.
"The aggressive implementation of our strategic plan has positioned Dana for
global growth, despite international turmoil," he said.
    Joe Magliochetti, Dana's president and chief operating officer, also
pointed out the contributions of Dana's people.  "All key operating ratios for
the quarter showed year-over-year improvement.  Additionally, the hard work of
our people -- finding better ways to manufacture and assemble components and
systems -- has led to some very exciting and successful product launches
during the quarter.  The Rolling Chassis(TM) module for the Brazilian Dodge
Dakota and Dana's contributions to the Quadra-Drive(TM) four-wheel-drive
system on the new Jeep(R) Grand Cherokee are just two examples."

    QUARTER SEES MANY BUSINESS ACHIEVEMENTS
    The company recorded a number of significant business achievements during
the quarter.
    In July, Dana unveiled its Rolling Chassis(TM) vehicle component module in
conjunction with Chrysler Corporation's grand opening of its Dodge Dakota
pickup truck assembly plant near Curitiba, Brazil. Designed for Brazilian-made
Dakota pickup trucks, the Rolling Chassis module is the most complex module
ever supplied to Chrysler.  Incorporating more than 200 components, the module
includes a full-perimeter frame, rear axle, driveshaft, suspension, steering
system, brakes, fuel tank, electrical circuits, and wheels and tires.
    The Rolling Chassis module is the first application of its kind to be used
in volume pickup truck production anywhere in the world.  Dana integrates
approximately 70 other suppliers in the production of the Rolling Chassis
module.  Assembled at Dana's new, state-of-the-art facility near Curitiba,
Brazil, Dana's chassis are assembled and literally "rolled" onto Chrysler's
assembly line within 1.8 hours of order.
    Dana innovation was also present on Chrysler Corporation's 1999 Jeep(R)
Grand Cherokee, which was introduced in July.  The Grand Cherokee marks the
first use of Vari-Lok(TM) axles, designed by Dana, which feature progressive,
speed-sensing torque-transfer differentials.  The axles are important
components of Jeep's Quadra-Drive(TM) four-wheel-drive system, which keeps the
vehicle moving, without any driver involvement, even if only one wheel has
minimal traction.
    Finally, Dana was selected to produce front pan axles for Land Rover's
redesigned Range Rover luxury sport utility vehicle beginning with the 2001
model year.  The innovative axle design allows for more room under the body
without sacrificing 4X4 capability.  Dana expects to produce 30,000 such axles
annually.

    MAJOR TRANSACTIONS REVIEWED
    Last week, Dana's leasing and financial services unit, Dana Commercial
Credit Corporation (DCC), agreed to sell its technology leasing group
portfolio to Chicago-based Heller Financial, Inc.  Completion of the sale,
which is subject to approval by U.S. and foreign agencies, is expected to
occur during the fourth quarter of 1998.  The sale is expected to result in an
after-tax gain of approximately $80 million to Dana, which will be recognized
upon closing of the transaction.
    Dana also signed a joint-venture agreement with Daewoo-FSO Sp.zo.o, a unit
of Daewoo Group Korea, to produce rear axles and driveshafts in Warsaw,
Poland.  Dana will begin with a 49-percent ownership in the joint venture,
with an option to acquire majority ownership.  The company, to be named Spicer
ZPZP, is Daewoo-FSO's first joint venture with a non-Korean partner.  The
transaction provides Dana with an important foothold in Eastern Europe.

    COMPANY RECEIVES HONORS
    Dana was named one of the world's 100 best-managed companies by
IndustryWeek magazine.  The magazine said it recognized companies that are
positioning themselves for the future by investing heavily in such areas as
change, market development, people, and society.
    Additionally, Dana's Board of Directors was selected as one of the five
best in the United States by Chief Executive magazine, which said, "Dana Corp.
does just about everything right in the way of corporate governance."
    Dana's Structural Products facility in Hopkinsville, Ky., was named one of
the 10 best plants in North America by IndustryWeek magazine.  The facility
manufactures full frames for the Chevrolet S-10, GMC Sonoma, and Isuzu Hombre
pickup trucks; engine cradles for left- and right-hand-drive Saturn passenger
cars; a new rear axle module for the new Saturn LS; and front and rear sub-
frames for the Mercedes-Benz M-Class sport utility vehicles.
    The Hopkinsville plant is Dana's third facility to be selected by
IndustryWeek for its annual listing of Top 10 plants.  Dana's Spicer
Driveshaft facility in Bristol, Va., was selected in 1996, and the Gresen
Hydraulics facility in Minneapolis was selected in 1990, the first year for
the IndustryWeek awards.
    Dana was also named by CIO magazine as one of the Top 100 companies in
America at managing business relationships.  The magazine, in its issue
recognizing excellence in "value-chain management," said that Dana uses
innovative information technology practices to integrate business goals and
corporate vision.

    SYNERGY PLAN PROGRESSING
    At its regularly scheduled meeting tomorrow, Dana's Board of Directors
plans to review the company's comprehensive synergy plan for integrating the
former Echlin Inc. with Dana.  Further information about the plan is expected
to be released Oct. 20 following the board meeting.
    One of the world's largest independent suppliers to vehicular, off-
highway, and industrial manufacturers and their related aftermarkets, Dana
Corporation produces components and systems used on more than 95 percent of
the world's 650 million motor vehicles.  Founded in 1904 and based in Toledo,
Ohio, the company operates 270 major facilities in 33 countries and employs
more than 79,000 people.  The company had pro forma sales of $11.9 billion in
1997.  Dana's Internet address is http://www.dana.com.

    Dana Corporation
    (in millions, except
    per share amounts)
    Unaudited

                                        Three Months Ended September 30
                                           1997                1998

    Sales                                $2,865.4            $2,962.4

    Net Income                              (45.4)               98.3

    Net Income Per Common Share
      Basic                                ($0.29)              $0.59
      Diluted                               (0.29)               0.59

    Average Shares Outstanding -
      For Basic EPS                         162.4               164.9
      For Diluted EPS                       164.1               166.9

                                        Nine Months Ended September 30
                                           1997                1998

    Sales                                $8,951.3            $9,431.8

    Net Income                              203.6               399.1

    Net Income Per Common Share
      Basic                                 $1.25               $2.42
      Diluted                                1.24                2.39

    Average Shares Outstanding
      For Basic EPS                         162.4               164.9
      For Diluted EPS                       164.1               166.9


    Dana Corporation
    Statement of Income (Unaudited)
    September 30, 1998
    (in millions, except per share amounts)

                                         Three Months Ended September 30
                                              1997              1998
    Net Sales                               $2,865.4          $2,962.4
    Revenue from Lease Financing
      and Other Income                         189.0              63.6
         Total                               3,054.4           3,026.0

    Costs and Expenses
      Cost of Sales                          2,447.6           2,479.2
      Selling, General and
        Administrative Expenses                284.9             271.5
      Restructuring and Rationalization
        Charges                                265.3                --
      Merger Expense                              --              45.5
      Interest Expense                          61.0              72.1
         Total                               3,058.8           2,868.3

    Income Before Income Taxes                  (4.4)            157.7
    Estimated Taxes on Income                  (44.6)            (68.0)
    Minority Interest                           (7.8)             (2.6)
    Equity in Earnings
      of Affiliates                             11.4              11.2

    Net Income                                $(45.4)            $98.3

    Net Income Per Common Share -
      Basic                                   ($0.29)            $0.59
      Diluted                                 ($0.29)            $0.59

    Average Shares Outstanding -
      For Basic EPS                            162.4             164.9
      For Diluted EPS                          164.1             166.9


    Dana Corporation
    Statement of Income (Unaudited)
    September 30, 1998
    (in millions, except per share amounts)

                                        Nine Months Ended September 30
                                            1997                1998

    Net Sales                             $8,951.3           $9,431.8
    Revenue from Lease Financing
      and Other Income                       398.0              175.1
       Total                               9,349.3            9,606.9

    Costs and Expenses
      Cost of Sales                        7,552.9            7,859.8
      Selling, General and
        Administrative Expenses              875.5              864.5
      Restructuring and Rationalization
        Charges                              300.2                 --
      Merger Expense                            --               46.5
      Interest Expense                       186.4              211.2
       Total                               8,915.0            8,982.0

    Income Before Income Taxes               434.3              624.9
    Estimated Taxes on Income               (235.6)            (247.1)
    Minority Interest                        (19.4)             (10.6)
    Equity in Earnings
      of Affiliates                           24.3               31.9

    Net Income                              $203.6             $399.1

    Net Income Per Common Share -
      Basic                                  $1.25              $2.42
      Diluted                                $1.24              $2.39

    Average Shares Outstanding -
      For Basic EPS                          162.4              164.9
      For Diluted EPS                        164.1              166.9


    Dana Corporation
    Condensed Balance Sheet (Unaudited)
    September 30, 1998
    (in millions)

                                          December 31         September 30
    Assets                                   1997                1998

    Cash and Marketable Securities          $422.7              $160.7
    Accounts Receivable
      Trade                                1,439.4             1,672.4
      Other                                  132.2               151.8
    Inventories                            1,606.0             1,660.7
    Lease Financing                        1,330.1             1,468.4
    Investments and Other Assets           1,694.3             1,825.3
    Property, Plant & Equipment, Net       2,776.7             3,027.3

      Total Assets                        $9,401.4            $9,966.6

    Liabilities and Shareholders' Equity

    Accounts Payable and Other
      Liabilities                         $2,071.5            $2,226.0
    Short-Term Debt                          554.8               947.9
    Long-Term Debt                         2,928.0             2,686.2
    Deferred Employee Benefits             1,062.6             1,075.7
    Minority Interest                        153.6               141.1
    Shareholders' Equity                   2,630.9             2,889.7

    Total Liabilities and
      Shareholders' Equity                $9,401.4            $9,966.6


    Dana Corporation
    (Including Dana Credit Corporation on an Equity Basis)
    Statement of Income (Unaudited)
    September 30, 1998
    (in millions)

                                         Three Months Ended September 30
                                             1997                1998

    Net Sales                              $2,865.4            $2,962.4
    Other Income                              146.1                 8.3
      Total                                 3,011.5             2,970.7

    Costs and Expenses
      Cost of Sales                         2,454.4             2,488.6
      Selling, General and
        Administrative Expenses               261.2               242.0
      Restructuring and Rationalization
        Charges                               265.3                  --
      Merger Expense                             --                45.5
      Interest Expense                         42.4                48.2
         Total                              3,023.3             2,824.3

    Income Before Income Taxes                (11.8)              146.4
    Estimated Taxes on Income                 (43.1)              (64.8)
    Minority Interest                          (7.8)               (2.6)
    Equity in Earnings of Affiliates           17.3                19.3

    Net Income                               $(45.4)              $98.3


    Dana Corporation
    (Including Dana Credit Corporation on an Equity Basis)
    Statement of Income (Unaudited)
    September 30, 1998
    (in millions)

                                             Nine Months Ended September 30
                                               1997                1998

    Net Sales                                $8,951.3           $9,431.8
    Other Income                                243.1                6.2
      Total                                   9,194.4            9,438.0

    Costs and Expenses
      Cost of Sales                           7,573.3            7,885.9
      Selling, General and
        Administrative Expenses                 796.7              764.7
      Restructuring and Rationalization
        Charges                                 300.2                 --
      Merger Expense                               --               46.5
      Interest Expense                          127.6              142.0
       Total                                  8,797.8            8,839.1

    Income Before Income Taxes                  396.6              598.9
    Estimated Taxes on Income                  (221.0)            (244.4)
    Minority Interest                           (19.4)             (10.6)
    Equity in Earnings of Affiliates             47.4               55.2

    Net Income                                 $203.6             $399.1


    Dana Corporation
    (Including Dana Credit Corporation on an Equity Basis)
    Condensed Balance Sheet (Unaudited)
    September 30, 1998
    (in millions)

                                           December 31         September 30
    Assets                                    1997                 1998

    Current Assets
      Cash and Marketable Securities         $410.3               $179.0
      Accounts Receivable
        Trade                               1,439.4              1,672.4
        Other                                 149.7                157.0
      Inventories                           1,606.0              1,660.7
      Other Current Assets                    311.1                313.5

        Total Current Assets                3,916.5              3,982.6

    Property, Plant & Equipment, Net        2,576.8              2,794.6
    Investments and Other Assets            1,566.6              1,688.5

        Total Assets                       $8,059.9             $8,465.7

    Liabilities and Shareholders' Equity

    Accounts Payable and Other
      Current Liabilities                  $1,976.1             $2,108.3
    Notes Payable                             460.2                476.3
    Long-Term Debt                          1,735.8              1,733.4
    Deferred Employee Benefits
      and Other Noncurrent Liabilities      1,103.3              1,116.9
    Minority Interest                         153.6                141.1
    Shareholders' Equity                    2,630.9              2,889.7

        Total Liabilities and
          Shareholders' Equity             $8,059.9             $8,465.7


SOURCE Dana Corporation

Web Site: http://www.dana.com

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