Toledo's Dana Corp. lost $229 million - or $1.54 a share - in the first quarter after the auto supplier took non-recurring charges related to a required change in accounting and its ongoing downsizing efforts.
Without the non-recurring charges of $220 million for the change in accounting for goodwill and other intangible assets and $37 million for restructuring, Dana had a profit last quarter of $28 million, or 18 cents a share.
The results announced yesterday beat the $1 million before-charge profit Dana had in the first quarter last year, as well as the 15-cents-a-share consensus estimate from 15 analysts polled by First Call/Thomson Financial. After non-recurring charges, Dana lost $27 million in the first quarter last year, or 18 cents a share.
Dana's first-quarter sales, meanwhile, declined 7 percent from $2.7 billion last year to $2.5 billion.
The first quarter was a “positive improvement” as the restructuring takes hold, said Joe Magliochetti, Dana's chairman and chief executive.
Dana has cut more than 5,000 of 11,200 targeted jobs, has closed seven facilities, and has announced plans to close 21 more.
“Clearly, we are benefiting from this effort,” Mr. Magliochetti told analysts, investors, and reporters during a conference call yesterday.
Dana's share price plunged on the New York Stock Exchange yesterday, closing at 4 p.m. down 75 cents at $20.90.
The Fortune 500 firm reduced goodwill by $289 million after adopting the new accounting standards, resulting in the after-tax charge of $220 million.
Remaining goodwill no longer will be amortized but will be reviewed annually under the new standards issued by the Financial Accounting Standards Board.
Dana's restructuring plan announced in October is expected to cost $445 million, and $316 million in charges have been recorded so far. The restructuring should be complete early next year, Mr. Magliochetti said.
As part of the restructuring, the company plans to sell its Dana Commercial Credit leasing subsidiary, which has a book value of $209 million.
The subsidiary probably will be sold in two parts, with the first sale expected this quarter and the second later in the year, said Bob Richter, Dana's chief financial officer.
Robert Hinchliffe, an analyst with UBS Warburg in New York, said Dana is on the right track with the restructuring, and asset divestitures and substantial inventory reductions are key to its success.
Mr. Magliochetti sidestepped a question during the conference call about when Dana will reinstate dividends of more than a penny a share. The company decreased its dividend to one cent a share as part of the restructuring.