Dana Synergy Plan Identifies Increased Savings; Board Declares Dividend
Oct 20, 1998
TOLEDO, Ohio, Oct. 20 /PRNewswire/ -- Dana Corporation (NYSE: DCN) announced today that its synergies plan for integrating the operations of the former Echlin Inc. into Dana's business should result in greater operational savings than previously estimated. Southwood J. Morcott, chairman and chief executive officer, said that Dana's original goal of $170 million in pre-tax synergies in 1999 has been revised upward to $200 million, and its projection of $340 million in 2000 has been increased to $375 million. The $375 million in savings is expected to come from the following areas: -- $140 million from previously announced Phase I and II Echlin restructuring activities; -- $115 million from additional plant closures and consolidation, as well as synergies in manufacturing operations; -- $90 million from consolidation of aftermarket sales, marketing, and distribution functions; -- $10 million from consolidation of original equipment sales, marketing, and engineering functions; -- $20 million from the elimination of duplicate corporate expenses. Morcott said that Dana's current plans call for the reduction of more than 3,500 people from the company's global workforce, up from the previously announced number of 3,400. The company also plans to close 15 manufacturing facilities and eliminate 30 distribution points. These closings are in addition to the rationalization plans previously announced by Echlin and the phase out of the former Echlin corporate headquarters in Branford, Conn. Morcott added, "This is a difficult decision for us. All of the facilities and the people involved have been notified. We will do all we can to help the people that are affected." Dana also announced today that nonrecurring charges relating to the synergies plan will approximate $170 million pre-tax. In accordance with existing accounting requirements, $130 million will be recorded in the fourth quarter of 1998 and the balance of $40 million in 1999. Fourth quarter 1998 charges will include $65 million for people costs; $50 million to eliminate excess assets, and $15 million for other exit costs. The estimated 1999 expense includes $40 million in cash integration costs. "More than 125 cross-functional synergy teams have been evaluating areas of possible cost savings and sales synergies. Their recommendations greatly exceeded our expectations and underscore what a valuable, strategic acquisition this is for our company and how well the Echlin lineup fits within Dana," Morcott said. BOARD APPROVES 244TH CONSECUTIVE DIVIDEND Dana's Board of Directors today approved a quarterly dividend of $0.29 per share payable Dec. 15, 1998, to shareholders of record as of Dec. 1, 1998. This will mark Dana's 244th consecutive dividend (dating back to 1936) without a missed or reduced payment. 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 for use on more than 95 percent of the world's 650 million motor vehicles. Founded in 1904 and based in Toledo, Ohio, the company employs 79,000 people at 293 manufacturing and 97 distribution facilities in 33 countries. The company had pro forma sales of $11.9 billion in 1997. 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. Such forward-looking statements involve assumptions, known and unknown risks, uncertainties, and other factors, which may cause Dana's actual future results, performance, or achievements to differ materially from the results, performance, or achievements expressed or implied by such forward- looking statements. Such factors include, among other things, the following: achieving sales levels to fulfill revenue expectations; the absence of presently unexpected costs or charges, certain of which may be outside the control of Dana; the cyclical nature of the automotive industry; achievement of the anticipated synergies or savings; general economic and business conditions, including international economic circumstances; and competition. Additional factors are detailed in Dana's public filings with the Securities and Exchange Commission. Dana disclaims any responsibility to update any forward-looking statement provided in this press release.