Dana Corporation Announces Series of Operational & Strategic Initiatives to Enhance Financial Performance
20 Ottobre 2005 - 3:15PM
PR Newswire (US)
TOLEDO, Ohio, Oct. 20 /PRNewswire-FirstCall/ -- Dana Corporation
(NYSE:DCN) today announced that its Board of Directors has approved
a number of operational and strategic initiatives to enhance
financial performance, from which the company expects to benefit in
2006 and beyond. This program consists of the following steps: -
Focusing on Dana's light- and heavy-vehicle drivetrain products,
associated structures, sealing, and thermal products, and divesting
three non-core businesses with annual revenues of $1.3 billion; -
Operational restructuring in Dana's Automotive Systems and Heavy
Vehicle - Technologies and Systems groups; - Enhanced business
efficiency, including workforce reductions; and - Benefit cost
reductions. "These actions will position Dana to be more profitable
moving forward," said Dana Chairman and CEO Michael J. Burns.
"These are unprecedented times for Dana and the automotive
industry. While a number of the actions we are taking are painful,
they are vital to refocusing our company, accelerating cost and
process efficiencies, and driving improved performance across our
global organization. "At the same time, these moves support our
longer-term objective of fully capitalizing on the deep capability
in our remaining businesses and growing our presence in key global
markets," he added. "Execution of this strategy will deliver
improved performance for Dana and its shareholders." Divestiture of
Non-Core Businesses In order to more fully leverage its strengths
and to secure acceptable profit levels, Dana intends to narrow the
breadth of its product line through the divestiture of three
businesses: engine hard parts, fluid products, and pump products.
Collectively, these businesses employ approximately 9,800 people
worldwide and represent 2004 sales of approximately $1.3 billion.
The engine hard parts business consists of 26 operations which
primarily manufacture piston rings, camshafts, and engine bearings
under the Perfect Circle(R), Clevite(R), and Glacier Vandervell(TM)
brands. Sales for the business totaled approximately $720 million
in 2004. The engine hard parts operations to be divested employ
approximately 5,300 people in 10 countries. The fluid products
business consists of 16 operations which manufacture fluid products
for braking, power steering, HVAC, and fuel applications. Combined
sales for this business totaled approximately $470 million in 2004.
The fluid products operations to be divested employ a total of
approximately 3,850 people in 6 countries. The pump products
business consists primarily of an original equipment fluid transfer
pump operation in Diadema, Brazil, and an aftermarket pumps
operation in Santa Marina, Brazil. Sales for the business totaled
approximately $80 million in 2004. The pump products operations to
be divested employ approximately 650 people. Dana expects to incur
non-cash charges in 2005 of approximately $315 million before tax
to reduce the net assets of these businesses to realizable value.
"While no longer central to Dana's future direction, these
operations and the people associated with them have great potential
for owners that are more strategically focused on these market
segments," Mr. Burns said. "We expect to use the proceeds from
these divestitures to reduce debt and reinvest in those businesses
that will be key to profitable growth in the future." Operational
Restructuring Dana will close two facilities in its Automotive
Systems Group and shift production in several other operations to
balance capacity and take advantage of lower cost locations: - The
Buena Vista, Va., axle facility will be closed and its production
consolidated into an existing facility in Dry Ridge, Ky. The Buena
Vista facility employs approximately 275 people. - The Bristol,
Va., driveshaft facility will be closed and its production
consolidated into Dana operations in Mexico. The Bristol facility
employs approximately 270 people. - The assembly and component
lines that support the steering shaft business in the Lima, Ohio,
driveshaft facility will also be moved to Dana operations in
Mexico. Approximately 100 of the 385 people at Lima will be
impacted by this move. Dana is also moving aggressively to enhance
efficiency, logistics, and throughput in its Commercial Vehicle
business. To this end, Dana will undertake the following actions to
balance capacity and enhance manufacturing efficiencies in this
business: - Service parts activities at Dana's principal commercial
vehicle parts assembly facility in Henderson, Ky., will be moved to
a Dana service parts operation in Crossville, Tenn. - Assembly
activity will be increased at the Dana facility in Monterrey,
Mexico, to improve throughput at the Henderson plant. - Gear
production will be increased at the Dana operation in Toluca,
Mexico, to relieve constraints at the company's principal
commercial vehicle gear plant in Glasgow, Ky. Dana expects to incur
a charge of $9 million before tax during the fourth quarter of
2005, and additional charges in 2006 and 2007 in association with
these operational restructuring actions totaling $21 million before
tax. The company expects the impact of these actions in 2006 to be
a net expense of approximately $8 million due to both the time
required to complete the moves and the recognition of additional
expenses related to separation costs and equipment transfers.
However, starting in the second half of 2007, the company expects
to begin realizing the full annualized savings of more than $20
million before tax. "Collectively, these operational actions will
result in a Dana Corporation that is even more focused on its
light- and heavy-vehicle drivetrain products, associated
structures, sealing, and thermal products businesses," Mr. Burns
said. "This refocused product array will help us better support our
global automotive, commercial vehicle, and off-highway markets and,
along with our extensive global footprint and diverse customer
base, will contribute to making Dana increasingly competitive
moving forward." Enhanced Business Efficiency Dana expects to
realize increased benefits from its programs in lean manufacturing,
value engineering, customer quality and delivery, and other
processes. Many of these programs are already underway and the
incremental results are expected to further improve the company's
efficiency and profitability. In addition, Dana has targeted a
five-percent salaried workforce reduction (in addition to the
operations to be divested or closed) through 2006. This reduction
will be accomplished primarily through attrition. Through this
reduction, the company expects to realize cost savings of more than
$15 million before tax in 2006. Benefit Cost Reductions Dana is
initiating changes to a number of its benefit programs. The company
will eliminate the Employees' Stock Purchase Plan, reduce the
company's share of the costs of its U.S. medical benefit plans,
suspend matching contributions to its U.S. and Canadian long-term
savings programs, and take additional actions to reduce benefit
costs. These changes are expected to generate cost savings of more
than $25 million before tax in 2006. Additionally, Dana has
suspended wage and salary increases globally, subject to local law
and contractual requirements. "While these are difficult steps for
Dana people, they are essential if we are to maintain and grow our
presence in a global market that has seen competitive realities
forever changed," Mr. Burns said. Cash and Tax Impacts In addition
to the $324 million of 2005 charges referred to above, costs to
complete the restructuring actions in 2006 and 2007 are estimated
at $21 million. Of the $345 million of total expected expenses from
these actions, the total cash outlays are expected to be $27
million. Due to the company's recent decision to write off its U.S.
deferred tax assets, Dana does not currently expect to record taxes
on the U.S. portion of any charges or savings associated with these
actions. Dana is currently unable to determine the non-U.S. tax
effects as the structure of the divestitures and the allocation of
proceeds among the taxing jurisdictions are currently unknown. The
2005 charges associated with the divestitures discussed in this
announcement, coupled with the deferred tax write-off announced
previously, although both non-cash, will cause Dana to report a
significant loss for the full year 2005. About Dana Corporation
Dana people design and manufacture products for every major vehicle
producer in the world. Dana is focused on being an essential
partner to automotive, commercial, and off-highway vehicle
customers, which collectively produce more than 60 million vehicles
annually. A leading supplier of axle, driveshaft, engine, frame,
chassis, and transmission technologies, Dana employs 46,000 people
in 28 countries. Based in Toledo, Ohio, the company reported sales
of $9.1 billion in 2004. Dana's Internet address is:
http://www.dana.com/. Forward-Looking Statements Statements in this
release, which are not entirely historical, constitute
"forward-looking" statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements
represent Dana's expectations based on our current information and
assumptions. However, forward-looking statements are inherently
subject to risks and uncertainties and Dana's actual results could
differ materially from those that are anticipated or projected due
to a number of factors. These factors include, Dana's ability to
successfully and timely implement the plans described in this
release, the actual costs incurred by the company in implementing
these plans, and the actual benefits and cost savings that are
realized as a result; the effect of national and international
economic conditions; adverse effects from terrorism or hostilities;
the strength of other currencies relative to the U.S. dollar;
increases in commodity costs, including steel, that cannot be
recouped in product pricing; our ability and that of our customers
to achieve projected sales and production levels; the continued
availability of necessary goods and services from our suppliers;
competitive pressures on our sales and pricing; and other factors
set out in our public filings with the Securities and Exchange
Commission. Forward-looking statements in this release speak only
as of the date of the release. Dana does not undertake to update
such forward- looking statements.
http://www.newscom.com/cgi-bin/prnh/19990903/DANA
http://photoarchive.ap.org/ DATASOURCE: Dana Corporation CONTACT:
Michelle L. Hards of Dana Corporation, +1-419-535-4636, or Web
site: http://www.dana.com/ Company News On-Call:
http://www.prnewswire.com/comp/226839.html
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