1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1994 Commission file number 1-1063.
DANA CORPORATION
(Exact name of registrant as specified in its charter)
Virginia 34-4361040
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
4500 Dorr Street, Toledo, Ohio 43615
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (419) 535-4500
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
- ---------------------------- -----------------------------------------
Common Stock of $1 par value New York, Pacific, London Stock Exchanges
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. X
---
The aggregate market value of the voting stock held by non-affiliates of the
registrant at February 16, 1995, was approximately $2,390,408,000.
The number of shares of registrant's Common Stock, $1 Par Value, outstanding at
February 16, 1995, was 101,181,285 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Document Where Incorporated
-------- ------------------
1. Proxy Statement dated March 3, 1995 Part III (Items 10, 11, 12, 13)
for Annual Meeting of Shareholders
to be held on April 5, 1995.
2. Annual Report to Shareholders Part I (Item 1)
for year ended December 31, 1994. Part II (Items 5, 6, 7,8)
Part IV (Item 14)
The Exhibit Index is located at pages 27 - 30 of the sequential numbering
system.
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INDEX
DANA CORPORATION - FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 1994
10-K Pages
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Cover 1
Index 2
Part I
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Item 1 - Business 3 - 11
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Geographical Areas, Markets, Customer Dependence,
Products, Material Source and Supply, Seasonality, Backlog,
Competition, Strategy, Patents and Trademarks, Research
and Development, Employment, Cash Flows, Environmental
Compliance, and Executive Officers of the Registrant
Item 2 - Properties 12
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Item 3 - Legal Proceedings 13 - 14
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Item 4 - Submission of Matters to a Vote of
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Security Holders 14
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Part II
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Item 5 - Market for Registrant's Common Equity and
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Related Stockholder Matters 15
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Item 6 - Selected Financial Data 15
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Item 7 - Management's Discussion and Analysis of
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Financial Condition and Results of Operations 15
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Item 8 - Financial Statements and Supplementary Data 15
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Item 9 - Changes in and Disagreements with Accountants on
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Accounting and Financial Disclosure 15
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Part III
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Item 10 - Directors and Executive Officers of the
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Registrant 16
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Item 11 - Executive Compensation 16
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Item 12 - Security Ownership of Certain Beneficial
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Owners and Management 16
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Item 13 - Certain Relationships and Related Transactions 16
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Part IV
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Item 14 - Exhibits, Financial Statement Schedules,
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and Reports on Form 8-K 17 - 30
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(a)(1) Financial Statements
(2) Financial Statement Schedules
(3) Exhibits
(b) Reports on Form 8-K
Signatures 31 - 32
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PART I
ITEM 1 - BUSINESS
Dana Corporation, incorporated in 1905, is a global leader in
engineering, manufacturing and marketing of products and systems for the
worldwide vehicular, industrial and mobile off-highway original equipment (OE)
markets and is a major supplier to the related aftermarkets (also called
"distribution" or "replacement parts" markets). Dana also owns Dana Credit
Corporation, a significant provider of lease financing services in certain
markets. The Company's products include: drivetrain systems, such as axles,
driveshafts, clutches and transmissions; engine parts, such as gaskets and
sealing systems, piston rings, pistons and filtration products; structural
components, such as vehicular frames, engine cradles and heavy duty side rails;
chassis products, such as steering and suspension components; fluid power
systems, such as pumps, cylinders and control valves; and industrial power
transmission products, such as electrical and mechanical brakes and clutches,
drives and motion control devices.
Dana's Vehicular segment is comprised of components and parts used on
automobiles, pickup trucks, vans, minivans, sport utility vehicles and medium
and heavy trucks. In 1994, sales from this segment accounted for 80% of Dana's
sales. The Company's Industrial segment products include mobile off-highway
vehicle and stationary equipment applications. Sales from this segment
amounted to 20% of the Company's 1994 sales.
"Business Segments" at pages 31 and 32 of Dana's 1994 Report to
Shareholders ("1994 Annual Report") is incorporated herein by reference.
GEOGRAPHICAL AREAS
To serve its global markets, Dana has established regional operating
organizations in North America, Europe, South America and Asia/Pacific, each
with management responsibility for its specific geographic markets. The
Company's significant international operations are located in the following
countries: Argentina, Australia, Brazil, Canada, China, Colombia, France,
Germany, India, Italy, Japan, Korea, Mexico, Netherlands, Singapore,
Switzerland, Taiwan, Thailand, United Kingdom and Venezuela. Dana's
international subsidiaries and affiliates manufacture and sell a number of
vehicular and industrial products which are similar to those produced by Dana
in the United States (U.S.). In addition to normal business risks, operations
outside the U.S. are subject to other risks including, among others, the
political, economic and social environments, governmental laws and regulations,
and currency revaluations and fluctuations.
Consolidated international sales were $1.6 billion, or 25% of the
Company's 1994 sales. Including U.S. exports of $431 million, international
sales accounted for 31% of 1994 consolidated sales. International operating
income was $127 million, or 22% of consolidated 1994 operating income. In
addition, there was $19 million of equity in earnings from international
affiliates in 1994.
"Business Segments" by geographic areas at page 33 of Dana's 1994
Annual Report and "International Operations" at page 26 of Dana's 1994 Annual
Report are incorporated herein by reference.
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MARKETS
During the past three years, Dana's sales to Vehicular and Industrial OE
manufacturers and service parts markets were as follows:
Market Analysis by Business Segment*
Percentage of Consolidated Sales
--------------------------------------
1992 1993 1994
---- ---- ----
Vehicular Products -
OE Manufacturers 50% 54% 56%
Service Parts 31% 28% 24%
--- --- ---
Total 81% 82% 80%
Industrial Products -
OE Manufacturers 10% 9% 10%
Service Parts 9% 9% 10%
--- --- ---
Total 19% 18% 20%
*Note: End use of products is not always identifiable but these are reasonable
estimates derived from expected customer usages.
Sales in the Lease Financing segment consisted of real estate sales
and did not exceed 1% of consolidated sales for 1992, 1993 or 1994. Lease
financing revenues (amounting to less than 5% of Dana's consolidated 1994 total
revenues) have been excluded from this market analysis.
CUSTOMER DEPENDENCE
The Company has thousands of customers and enjoys long-standing
business relationships with many of these customers. The Company's attention
to price, quality, delivery and service has been recognized by numerous
customers who have awarded the Company supplier quality awards. Ford and
Chrysler were the only customers accounting for more than 10% of the Company's
net sales in 1994. The Company has been supplying product to Ford, Chrysler
and their subsidiaries for many years. Sales to Ford, as a percentage of the
Company's net sales, were 17%, 18% and 16% in 1992, 1993 and 1994,
respectively. Sales to Chrysler, as a percentage of net sales, were 9%, 11%
and 12% in 1992, 1993, and 1994, respectively. Loss of all or a substantial
portion of the Company's sales to Ford, Chrysler or other large vehicle
manufacturers, would have a significant adverse effect on the Company's
financial results until this lost sales volume could be replaced. This event
is considered unlikely in the ordinary course of business and would most likely
occur only in the event of a major business interruption such as a prolonged
strike at one of the Company's customers.
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PRODUCTS
The major groups of products within the Vehicular segment are as follows:
Major Product Groups - Vehicular Segment
Percentage of Consolidated Sales
----------------------------------------
1992 1993 1994
---- ---- ----
Types of Products
- -----------------
Front and rear axles for highway
vehicles, primarily trucks 25% 28% 29%
Engine parts and accessories for
highway vehicles, such as gaskets,
seals, pistons, piston rings and filters 17% 14% 14%
Driveshafts and universal joints for
highway vehicles, primarily trucks 10% 11% 11%
Frames and other structural components
for highway vehicles, primarily trucks 9% 8% 8%
Other Vehicular products 20% 21% 18%
--- --- ---
Total 81% 82% 80%
No major product groups within the Industrial or Lease Financing segments
exceeded 10% of consolidated sales during these periods.
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MATERIAL SOURCE AND SUPPLY
Most raw materials (such as steel) and semi-processed or finished items
(such as forgings and castings) are purchased from capable long-term suppliers
within the geographic regions of the Dana operating units. Generally, the
Company does not rely on any one supplier for these materials, which are for
the most part available from numerous sources in quantities needed by the
Company. Temporary shortages of a particular material or part occasionally
occur, but the overall availability of materials is not considered to be a
problem by the Company.
SEASONALITY
Dana's businesses are not considered to be seasonal, but the OE vehicular
businesses do tend to track the vehicle manufacturers' production schedules.
BACKLOG
The majority of Dana's products are not on a backlog status. They are
produced from readily available materials such as steel and have a relatively
short manufacturing cycle. Each operating unit of the Company maintains its
own inventories and production schedules. Nearly all products are available
from more than one facility. Production capacity is either adequate to handle
current requirements or will be expanded to handle anticipated growth in
certain product lines.
COMPETITION
In its Vehicular and Industrial products segments, the Company competes
worldwide with a number of other manufacturers and distributors which produce
and sell similar products. These competitors include vertically-integrated
units of the Company's major vehicular OE customers as well as a number of
independent U.S. and international suppliers. The competitive environment in
these segments has changed dramatically in the past few years. The Company's
traditional U.S. OE customers, faced with substantial international
competition, have expanded their worldwide sourcing of components while
reducing their overall number of suppliers. The Company has established
operations in several regions of the world to enable Dana to be a strong global
supplier of its core products.
In the Lease Financing segment, the Company's primary focus is on leasing
activities. The Company's competitors include national and regional leasing
and finance organizations.
STRATEGY
In the Vehicular and Industrial products segments, the Company is actively
pursuing two broad strategies.
The first of these strategies is to increase the Company's involvement and
investment in its international markets. The Company has developed a
well-defined regional organization in North America, South America, Europe and
Asia-Pacific in support of this initiative to compete in world markets. In
1994, international sales, including exports from the U.S., totaled 31% of
sales. The Company's longer term goal is to derive 50% of its sales (including
exports) from customers outside the U.S. Although subject to certain risks,
the Company believes broadening its sales base will better enable it to offset
effects of economic downturns in specific countries, source product from the
areas of the world which offer the lowest cost, and provide it access to
markets which have the greatest growth potential. To accomplish this
objective, the Company is focusing on meeting OE customers' needs in each of
the local markets in which those customers operate, both through exports and by
locating manufacturing facilities in markets where key OE customers have
assembly plants. In addition, Dana is maximizing its technological
capabilities and resources by offering complete product systems to its global
customers.
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STRATEGY (Continued)
The Company's second long-term strategic objective is to increase its
distribution sales to 50% of sales. The Company believes that distribution
sales are less cyclical than OE sales and offer steady long-term growth
potential. To date, the Company has consistently expanded its distribution
business by increasing market penetration and broadening its product offerings
through internal growth and acquisition. In 1994, the Company's distribution
sales were 34% of sales.
PATENTS AND TRADEMARKS
Dana's proprietary drivetrain, engine parts, chassis, structural
components, fluid power systems, and industrial power transmission product
lines have strong identities in the Vehicular and Industrial markets which Dana
serves. Throughout these product lines, Dana owns or is licensed to
manufacture and sell its products under a number of patents and licenses.
These patents and licenses have been obtained over a period of years and expire
at various times. Dana considers each of them to be of value and aggressively
protects its rights throughout the world against infringement. Because the
Company is involved with many product lines, the loss or expiration of any
particular patent or license would not materially affect the sales and profits
of the Company.
Dana owns numerous trademarks which are registered in many countries
enabling Dana to market its products worldwide. The "Dana", "Spicer", "Perfect
Circle", "Victor Reinz", "Wix", "Weatherhead", "Warner Electric" and "Gresen"
trademarks, among others, are widely recognized in their respective industries.
RESEARCH AND DEVELOPMENT
Dana's facilities engage in engineering, research and development, and
quality control activities to improve the reliability, performance and
cost-effectiveness of Dana's existing Vehicular and Industrial products and to
design and develop new products for both existing and anticipated applications.
The Company employs advanced technology and methods to achieve these
improvements. To promote efficiency and reduce development costs, Dana's
research and engineering people work closely with OE manufacturing customers on
special product and systems designs. Dana's consolidated worldwide
expenditures for engineering, research and development, and quality control
programs were $108 million in 1992, $120 million in 1993 and $138 million in
1994.
EMPLOYMENT
Dana's worldwide employment (including consolidated subsidiaries) was
approximately 39,500 at December 31, 1994.
CASH FLOWS
The Company's cash flow from operating activities does not vary
significantly within a year, although minor increases or decreases do occur.
Cash generated by operating activities is utilized for investing purposes to
purchase fixed assets and acquire new businesses and product lines and for
financing purposes to pay dividends and retire debt. The "Statement of Cash
Flows" on page 21 of Dana's 1994 Annual Report is incorporated herein by
reference.
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8
ENVIRONMENTAL COMPLIANCE
The Company makes capital expenditures in the normal course of
business, as necessary, to ensure that its facilities are in compliance with
applicable environmental laws and regulations. Costs of environmental
compliance did not have a materially adverse effect on the Company's capital
expenditures, earnings or competitive position in 1994, and the Company
currently does not anticipate future environmental compliance costs to be
material. "Environmental Compliance and Remediation" on page 29 of Dana's 1994
Annual Report is incorporated herein by reference.
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EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Company and their ages as of March 7, 1995,
present position(s), and other positions within the past five years are as
follows. Unless otherwise indicated, all positions are with Dana. Hayes-Dana
Inc. is a majority-owned subsidiary of Dana. Diamond Savings and Loan Company
was a wholly-owned subsidiary of DFHI.
Present
Name Position(s) with Other Positions During
and Age the Registrant the Past Five Years
- ------- ---------------- ----------------------
S.J. Morcott Chairman of the Board of Dana Director since 1985;
(56) Directors since 1990 and Chief Chairman of the Board of Hayes-
Executive Officer since 1989, Dana Inc. since 1987 and a
President and Chief Operating Director since 1977
Officer since 1986
B.R. Reimer Executive Vice President President - Dana Europe, 1986-93
(64) since 1981
C.H. Hirsch Executive Vice President Senior Vice President,
(60) since 1991 1985-91
J.E. Ayers Chief Financial Officer since None
(62) 1989, Vice President - Finance
since 1986 and Treasurer
since 1983
J.M. Magliochetti President - Dana North Automotive President - Dana North
(52) American Operations American Operations, 1990-92;
since 1992 Group Vice President - Dana North
American Operations, 1985-90
F.E. Bauchiero Industrial President - Dana North Group Vice President - Dana North
(60) American Operations since 1990 American Operations, 1989-90;
W.J. Carroll President - Dana Distribution Vice President and
(50) Services since January 1995, General Manager - Aftermarket
President - Hayes-Dana Inc. Products Division, 1987-93
since 1993, President - DTF
Trucking since 1985
B.N. Cole President - Parish Structural Vice President and General
(52) Components Group since January Manager - Frame Division,
1995 and Vice President - Heavy 1988-91
Vehicle - Dana North American
Operations since 1991
C.J. Eterovic President - Dana South American Vice President - Dana South
(60) Operations since 1993 American Operations, 1992-93;
President - Dana Andean Common
Market, 1979-92
R.B. Forde Group Vice President - Wix Vice President and General Manager -
(58) Filtration Products Group Wix Division, 1987-95
since January 1995
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EXECUTIVE OFFICERS OF THE REGISTRANT (Continued)
Present
Name Position(s) with Other Positions During
and Age the Registrant the Past Five Years
- ------- ---------------- ----------------------
M.A. Franklin,III President - Dana Europe Vice President and General
(47) since 1993 Manager - Spicer Clutch Division
1991-93; Vice President and General
Manager - Private Brands and Product
Planning, 1989-91
C.W. Hinde Vice President since 1992, Director - Corporate Accounting
(56) Chief Accounting Officer & Taxes, 1986-92
and Assistant Treasurer
since 1986
C.J. McNamara President - Victor Reinz Sealing Vice President and General Manager-
(56) Products Group since January Victor Products Division, 1987-92
1995 and Vice President -
Automotive - Dana North American
Operations since 1993
W.L. Myers President - Spicer Driveshaft Vice President and General Manager-
(54) Group since January 1995 Spicer Universal Joint Division,
1986-95
J.H. Reed President - Spicer Axle Group Vice President - Light Vehicle -
(62) and President - Light Truck - Dana North American Operations,
Dana North American Operations 1992-95, Vice President and General
since January 1995, President - Manager - Spicer Axle Division,
Spicer Axle Division since 1991 1987-91
M.H. Rothlisberger Vice President and Corporate Vice President and Controller,
(51) Controller since December 1994, Dana North American Operations
Assistant Treasurer since 1985 1989-94
E.J. Shultz President - Lease Financing since President - Financial Services,
(52) 1994 1990-94, Group Vice President -
Financial Services, 1986-90
J.S. Simpson President - Dana President - Diamond Savings
(54) Asia/Pacific Operations and Loan Company, 1987-92
since 1992
M.J. Strobel Vice President since 1976, None
(54) General Counsel since 1970,
and Secretary since 1982
J.H. Woodward, Jr. Controller - Dana North American Division Controller - Spicer Heavy
(42) Operations since December 1994 Axle and Brake Division, 1992-94,
Plant Manager - Spicer Trailer
Products Division, 1989-92
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EXECUTIVE OFFICERS OF THE REGISTRANT (Continued)
None of the above officers has a family relationship with any other
officer or with any director of Dana. There are no arrangements or
understandings between any of the above officers and any other person pursuant
to which he was elected an officer of Dana. Officers are elected annually at
the first meeting of the Board of Directors after the Annual Meeting of
Shareholders. The first five officers and Mr. Strobel have employment
agreements with the Company.
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ITEM 2 - PROPERTIES
Dana owns the majority of the manufacturing facilities and the larger
distribution facilities for its Vehicular and Industrial products. A few
manufacturing facilities and many of the Company's smaller distribution
outlets, service branches, and offices are leased. The facilities, in general,
are well-maintained and adapted to the operations for which they are being
used, and their productive capacity is adjusted and expanded as required by
market and customer growth.
On a geographic basis, Dana's facilities (including those of
consolidated subsidiaries and affiliates) are located as follows:
Dana Facilities by Geographic Region
------------------------------------
Type of North South Asia/
Facility America America Europe Pacific Total
- -------- ------- ------- ------ ------- -----
Manufacturing 120 24 44 12 200
Distribution 53 14 143 35 245
Service Branches, Offices 90 6 8 13 117
------- ------- ------ ------- -----
Total 263 44 195 60 562
======= ======= ====== ======= =====
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ITEM 3 - LEGAL PROCEEDINGS
The Company and its consolidated subsidiaries are parties to various
pending judicial and administrative proceedings arising in the ordinary course
of business. The Company's management and legal counsel have reviewed the
probable outcome of these proceedings, the costs and expenses reasonably
expected to be incurred, the availability and limits of the Company's insurance
coverage, and the Company's established reserves for uninsured liabilities.
While the outcome of the pending proceedings cannot be predicted with
certainty, based on its review, management believes that any liabilities that
may result are not reasonably likely to have a material effect on the Company's
liquidity, financial condition or results of operations.
Under the rules of the Securities and Exchange Commission, certain
environmental proceedings are not deemed to be ordinary routine proceedings
incidental to the Company's business and are required to be reported in the
Company's annual and/or quarterly reports. The Company is a party to the
following such proceedings, all of which have been reported previously:
1. In the Matter of Dana Corporation-Victor Products Division and BRC
Rubber Group. In this administrative proceeding, commenced in 1990, the United
States Environmental Protection Agency, Region 5 ("USEPA 5") alleges that the
Company's former plant in Churubusco, Indiana (which ceased operations in 1983)
violated the federal Resource Conservation and Recovery Act ("RCRA") by failing
to submit a closure plan and financial assurances as a RCRA-regulated storage
facility and by failing to notify the subsequent plant owner (Bluffton Rubber
Company or "BRC") of the storage facility's alleged RCRA status. USEPA 5
sought to require a RCRA closure of the storage facility and to recover civil
penalties of approximately $77,000 from the Company and $55,000 from BRC. The
Company agreed to indemnify BRC for liabilities asserted against BRC arising
from alleged RCRA violations during the Company's operation of the storage
facility. In 1992, the Company submitted a settlement proposal to USEPA 5
containing a soil sampling plan designed to establish whether contaminants had
been released from materials that the Company stored at the storage facility.
In 1993, the Indiana Department of Environmental Management ("IDEM"), on behalf
of USEPA 5, notified the Company that the sampling plan was inadequate and
issued a Notice of Deficiency with respect to the Company's closure of the
storage facility. Since then, the Company has been engaged in discussions with
IDEM about the sampling plan and Notice of Deficiency (which the Company
believes imposes obligations beyond the appropriate scope of a RCRA closure)
and with USEPA 5 about the proposed penalties. In the third quarter of 1994,
the administrative law judge ruled on various pending motions for summary
judgment, the effect of which was to retain Dana as a party to the proceeding
and to dismiss BRC. In the fourth quarter of 1994, the Company and USEPA 5
reached agreement on the amount of $80,000 for the civil penalty. The Company
expects that a consent decree will be finalized and site sampling work will
commence in the first half of 1995.
2. Commissioner of the Department of Environmental Management v. Dana
Corporation, Sleeve Plant. In September 1994, the Indiana Department of
Environmental Management ("IDEM") proposed a Consent Order to the Company in
connection with alleged violations of the federal Clean Water Act by the
Company's plant in Richmond, Indiana. The alleged violations are discharges
exceeding certain metal concentration limitations in the plant's water discharge
permit with the City of Richmond and discharges into a ditch in violation of the
plant's National Pollutant Discharge Elimination System permit. In the proposed
Consent Order, IDEM seeks civil penalties in the amount of $227,000. The
Company has contested certain of the allegations and is negotiating the proposed
Consent Order with IDEM. There were no new developments in the fourth quarter of
1994.
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ITEM 3 - LEGAL PROCEEDINGS (Cont)
3. In the Matter of Dana Corporation, Boston Weatherhead Division. In
September 1994, the United States Environmental Protection Agency, Region 6
("USEPA 6") issued an administrative Complaint, Compliance Order and Notice of
Opportunity for Hearing to the Company in connection with various alleged
violations of the federal Resource Conservation and Recovery Act ("RCRA") by the
Company's plant in Vinita, Oklahoma. The alleged violations include, among
others, the plant's failure to manage and maintain hazardous waste containers,
tanks and tank systems in accordance with RCRA requirements and record keeping
violations in connection with the plant's Contingency Plan. In the Compliance
Order, USEPA 6 is seeking civil penalties of $576,640. In the fourth quarter of
1994, the Company met with USEPA 6 to present evidence to refute the allegations
and settlement negotiations were commenced.
The Company has also previously reported that it is a defendant in the
1992 lawsuit, United States v. Dana Corporation. In this suit, the Department
of Justice, on behalf of the United States, sued the Company, Warner Electric
Brake and Clutch Company, Inc.("Warner Electric"), and Beaver Precision
Products, Inc.("Beaver"), in the U.S. District Court, Eastern District of
Michigan under the federal False Claims Act and various common law theories.
The complaint alleged overcharging on eighteen U.S. government contracts or
subcontracts awarded to Beaver during the 1980s. Beaver was a subsidiary of
Warner Electric when Dana acquired that company in January 1985. Both
companies were later merged into Dana, and the Beaver operations were sold in
1991. However, Dana retained financial responsibility for the majority of the
damages alleged in the complaint. Warner Electric and Beaver have now been
dismissed as parties to this suit. The government's complaint includes claims
both for statutory civil penalties and for damages in the amount of $8.9
million. The damages, if proven, may be subject either to doubling or trebling
or to the accrual of interest. Recently, during ongoing settlement
discussions, the government advised the Company that it intends to amend the
complaint to increase the damage demand to approximately $18 million. The
Company is continuing to defend this case vigorously and to engage in
settlement negotiations with the government in which the litigation issues and
alleged damages are being actively discussed and evaluated.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote by Dana's security holders during the
fiscal fourth quarter.
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PART II
ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Dana's common stock is listed on the New York, Pacific, and London Stock
Exchanges. On February 16, 1995, there were approximately 25,900 shareholders
of record.
Dividends have been paid on the common stock every year since 1936.
Quarterly dividends have been paid since 1942.
"Additional Comments - Shareholders' Investment" at page 42 of Dana's 1994
Annual Report is incorporated herein by reference.
ITEM 6 - SELECTED FINANCIAL DATA
"Eleven Year History - Financial Highlights" at page 43 of Dana's 1994
Annual Report is incorporated herein by reference.
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
"Management's Discussion and Analysis of Results" at pages 34-36 of Dana's
1994 Annual Report is incorporated herein by reference.
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements, together with the report thereon of Price
Waterhouse LLP dated February 12, 1995, at pages 18-34 of Dana's 1994 Annual
Report and "Unaudited Quarterly Financial Information" at page 42 of Dana's
1994 Annual Report are incorporated herein by reference.
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
- None -
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PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding Dana's directors and executive officers is set
out in Part I, Item 1 of this Form 10-K and in Dana's Proxy Statement dated
March 3, 1995 for the Annual Meeting of Shareholders to be held on April 5,
1995 (the "1995 Proxy Statement"). "Election of Directors" and "Compliance
with Section 16(a) of the Exchange Act" from the 1995 Proxy Statement are
incorporated by reference.
ITEM 11 - EXECUTIVE COMPENSATION
"The Board and Its Committees" and "Executive Compensation" from
Dana's 1995 Proxy Statement are incorporated herein by reference.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
"Stock Ownership" from Dana's 1995 Proxy Statement is incorporated
herein by reference.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
"Other Transactions" from Dana's 1995 Proxy Statement is incorporated
herein by reference.
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PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
Page in
(a) The following documents are incorporated by reference and Annual Report
filed as part of this report:
(1) Financial Statements:
Introduction to Financial Section 17
Report of Independent Accountants 18
Consolidated Balance Sheet at December 31, 1993 and 1994 19
Consolidated Statement of Income for each of the three years
in the period ended December 31, 1994 20
Consolidated Statement of Cash Flows for each of the three
years in the period ended December 31, 1994 21
Consolidated Statement of Shareholders' Equity for each of the
three years in the period ended December 31, 1994 22
Comments on Financial Statements 23 - 34
Management's Discussion and Analysis of Results 34 - 36
Unaudited Quarterly Financial Information 42
Eleven Year History 43
Page in
Form 10-K
---------
(2) Financial Statement Schedules:
Report of Independent Accountants on Financial Statement
Schedules for the three years ended December 31, 1994 18
Valuation and Qualifying Accounts and Reserves (Schedule VIII) 19 - 22
Supplementary Information - Stock Plans 23 - 25
Supplementary Information - Commitments and Contingencies 26
All other schedules are omitted because they are not applicable
or the required information is shown in the financial
statements or notes thereto.
(3) Exhibits - The Exhibits listed in the "Exhibit Index" are 27 - 30
filed as a part of this report.
(b) Reports on Form 8-K - None
17
18
Report of Independent Accountants on
Financial Statement Schedules
To the Board of Directors
of Dana Corporation
Our audits of the consolidated financial statements referred to in our report
dated February 12, 1995, appearing on page 18 of the 1994 Annual Report to
Shareholders of Dana Corporation (which report and consolidated financial
statements are incorporated by reference in this Annual Report on Form 10-K)
also included an audit of Financial Statement Schedule VIII listed in Item
14(a) of this Form 10-K. In our opinion, this Financial Statement Schedule
presents fairly, in all material respects, the information set forth therein
when read in conjunction with the related consolidated financial statements.
PRICE WATERHOUSE LLP
Toledo, Ohio
February 12, 1995
18
19
DANA CORPORATION AND CONSOLIDATED SUBSIDIARIES
SCHEDULE VIII(a) - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
ALLOWANCE FOR DOUBTFUL ACCOUNTS RECEIVABLE
Adjustment
Trade accounts arising
receivable from change
Balance at Additions "written off" in currency Balance at
beginning charged net of exchange rates end of
of period to income recoveries and other items period
--------- --------- -------------- --------------- ----------
Year ended -
December 31, 1992 $19,123,000 $7,629,000 $(8,826,000) $(526,000) $17,400,000
December 31, 1993 $17,400,000 $7,477,000 $(7,950,000) $( 99,000) $16,828,000
December 31, 1994 $16,828,000 $4,099,000 $(1,252,000) $( 29,000) $19,646,000
19
20
DANA CORPORATION AND CONSOLIDATED SUBSIDIARIES
SCHEDULE VIII(b) - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
ALLOWANCE FOR CREDIT LOSSES - LEASE FINANCING
Adjustments
arising
Amounts from the change
Balance at Additions "written off" in currency Balance at
beginning charged net of exchange rates end of
of period to income recoveries and other items period
--------- --------- -------------- --------------- ----------
Year ended -
December 31, 1992 $44,413,000 $19,520,000 $(22,250,000) $(570,000) $41,113,000
December 31, 1993 $41,113,000 $12,049,000 $(14,796,000) $(126,000) $38,240,000
December 31, 1994 $38,240,000 $13,895,000 $(11,421,000) $ 75,000 $40,789,000
20
21
DANA CORPORATION AND CONSOLIDATED SUBSIDIARIES
SCHEDULE VIII(c) - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
ALLOWANCE FOR LOAN LOSSES
Amounts
Balance at Additions "written off" Balance at
beginning charged net of Acquisitions end of
of period to income recoveries and other items period
--------- --------- ------------- --------------- -----------
Year ended -
December 31, 1992 $ 9,100,000 $ 9,234,000 $ (505,000) $8,989,000(1) $26,818,000
December 31, 1993 $26,818,000 $(1,848,000)(2) $(10,544,000) $ 96,000 $14,522,000
December 31, 1994 $14,522,000 $(2,548,000) $ (6,088,000) $ (247,000)(3) $ 5,639,000
(1) Includes allowances on loans retained subsequent to the sale of Diamond
Savings and Loan Company (DSL). These allowances were classified within
"Subsidiary Held for Sale at December 31, 1991".
(2) Includes $4,255,000 reversal of reserves provided in prior years.
(3) Includes $201,000 transferred to valuation allowance on real estate.
21
22
DANA CORPORATION AND CONSOLIDATED SUBSIDIARIES
SCHEDULE VIII(d) - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
VALUATION ALLOWANCE - REAL ESTATE
Amounts
Balance at Additions "written off" Balance at
beginning charged net of Acquisitions end of
of period to income recoveries and other items period
--------- --------- ------------- --------------- ----------
Year ended -
December 31, 1992 $24,689,000 $20,009,000 $( 6,105,000) $ 3,989,000(1) $42,582,000
December 31, 1993 $42,582,000 $10,743,000 $(14,509,000) $ 2,238,000(2) $41,054,000
December 31, 1994 $41,054,000 $10,337,000 $(12,699,000) $ 226,000(3) $38,918,000
(1) Includes allowances on real estate retained subsequent to the sale of DSL.
These allowances were classified within "Subsidiary Held for Sale at
December 31, 1991".
(2) Includes reduction of $3,560,000 relating to real estate transferred to a
partnership classified as an equity investment and an increase of
$5,798,000 due to a reclassification from Investment Held for Sale - (DSL).
(3) Includes $201,000 transferred from allowance for loan losses.
22
23
DANA CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTARY INFORMATION TO FINANCIAL STATEMENTS
EMPLOYEE STOCK OPTION PLANS
The Company has in effect two stock option plans for employees which were
approved by the shareholders in 1977 and 1982. The 1977 Plan was amended in
1981, 1986, 1990 and 1994. The 1982 Plan was amended with shareholder approval
in 1988 and 1993. These plans authorize the grant of options and/or stock
appreciation rights ("SARs") to key employees to purchase 6,000,000 and
11,900,000 shares, respectively, of common stock at exercise prices no less
than 85% of the market value of such stock at date of grant; the exercise
periods may extend for no more than ten years from date of grant. All options
and SARs granted to date under these two plans have been granted at 100% of the
market value of the Company's common stock at the date of grant.
The number of shares above and all references below to the number of
shares and per share prices have been adjusted for all stock dividends and
distributions subsequent to the dates the plans were approved by the
shareholders, including the June 1, 1994 two-for-one stock split.
The number of shares subject to options (by year of grant) at December 31,
1994, and the exercise prices per share were as follows:
Number of Average Price
Shares Per Share Total
--------- ------------- -----
Year granted -
1985 20,500 $12.94 $ 265,200
1986 124,328 15.78 1,962,100
1987 133,200 23.44 3,121,900
1988 226,302 18.75 4,243,200
1989 158,550 21.06 3,338,500
1990 363,304 18.25 6,630,300
1991 283,500 16.37 4,642,300
1992 1,046,269 20.16 21,088,900
1993 709,500 27.56 19,555,600
1994 1,045,950 29.06 30,397,900
--------- -----------
4,111,403 $95,245,900
========= ===========
At December 31, 1994, there were 5,551,606 shares available for future
grants under the 1982 Plan, as amended. No shares have been available for
grants under the 1977 Plan since 1987, and there were no SARs outstanding at
December 31, 1994.
23
24
Options becoming exercisable and options exercised, their exercise prices
and their market prices during the three years ended December 31, 1994, under
these plans were as follows:
Exercise Price Market Price
---------------------- -----------------------
No. of Avg. Per Avg. Per
Shares Share Aggregate Share Aggregate
------ -------- --------- -------- ---------
Options becoming
exercisable
(Market prices
at dates
exercisable):
Year ended
December 31,
1992 496,024 $18.49 $ 9,172,000 $20.59 $10,211,000
1993 667,124 19.21 12,817,000 26.80 17,878,000
1994 668,968 21.28 14,236,000 28.89 19,329,000
Options exercised
(Market prices
at dates
exercised):
Year ended
December 31,
1992 600,418 $10.92 $ 6,554,000 $17.26 $10,363,000
1993 810,736 15.47 12,541,000 24.03 19,483,000
1994 309,915 17.13 5,309,000 28.74 8,906,000
The amount by which proceeds exceeded the par value of shares issued under
options was credited to additional paid-in capital. No amounts were charged
against income either at the time of granting options or issuing shares.
24
25
The following table sets forth (1) the aggregate number of shares of
the Company's common stock subject at December 31, 1994, to outstanding
options, (2) the average exercise prices per share of such options, (3) the
aggregate exercise prices of such options, (4) the ranges of expiration dates
of such options, and (5) the aggregate market values of such shares at February
16, 1995, based on $23.63 per share, the closing sales price in the New York
Stock Exchange Composite Transactions Index as reported in The Wall Street
Journal:
Aggregate Aggregate
No. of Shares Average Market
Covered By Exercise Aggregate Range of Value at
Outstanding Price Exercise Expiration February 16,
Options Per Share Price Dates 1995
------------- --------- --------- ---------- -----------
1977 Amended 239,350 $19.94 $ 4,772,900 7/15/95 $ 5,655,800
Plan to
7/13/97
1982 Amended 3,872,053 $23.37 $90,473,000 7/15/95 $91,496,600
Plan to
7/18/04
At December 31, 1994, 1,221 employees of the Company and its
subsidiaries and affiliates held exercisable options under the Company's stock
option plans, consisting of 208 employees under the 1977 Amended Plan and 1,013
employees (some of whom also held options under the 1977 Amended Plan) under
the 1982 Amended Plan.
EMPLOYEES' STOCK PURCHASE PLAN
With respect to the Company's Amended Employees' Stock Purchase Plan,
as of December 31, 1994, 29,700 employees of the Company and its subsidiaries
were eligible to participate. Of such employees, 8,900 were participating at
December 31, 1994.
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
In 1993, the shareholders approved a stock option plan for
non-employee Directors of the Company. The plan provides for the granting of
options to purchase the Company's common stock at prices equal to the market
value of the stock at the date of grant. The options are exercisable after one
year for a period not to exceed ten years from the date of grant. In 1993 and
1994, options were granted for 21,000 shares each year at per share exercise
prices of $24.25 in 1993 and $28.88 in 1994. These options expire 4/19/03 and
4/18/04. During 1994, 3,000 options were exercised at an aggregate exercise
price of $72,800 and had an aggregate market price at date of exercise of
$87,800. At December 31, 1994, 39,000 options were outstanding, 21,000 options
were exercisable and there were 88,000 options available for future grant. The
21,000 options which became exercisable during 1994 had an aggregate exercise
price of $509,300 and an aggregate market price at date of exercisability of
$589,300. As of February 16, 1995, the aggregate exercise price of the 39,000
options outstanding under the Plan was $1,042,900 and the aggregate market
value of those options was $921,600.
25
26
DANA CORPORATION AND CONSOLIDATED SUBSIDIARIES
SUPPLEMENTARY INFORMATION TO FINANCIAL STATEMENTS
COMMITMENTS AND CONTINGENCIES
As discussed on page 29 of the 1994 Annual Report under the comments
on "Commitments and Contingencies," the Company and its consolidated
subsidiaries are parties to various legal proceedings (judicial and
administrative) arising in the normal course of business, including proceedings
which involve environmental and products liability claims.
With respect to environmental claims, the Company is involved in
investigative and/or remedial efforts at a number of locations, including
"on-site" activities at currently or formerly owned facilities and "off-site"
activities at Superfund sites where the Company has been named as a potentially
responsible party. "Environmental Compliance and Remediation" at page 29 of
Dana's 1994 Annual Report and "Management's Discussion and Analysis of Results"
at pages 34 and 35 of Dana's 1994 Annual Report are incorporated herein by
reference.
With respect to product liability claims, from time to time the
Company is named in proceedings involving alleged defects in its products.
Currently included in such proceedings are a large number of claims (most of
which are relatively small) based on alleged asbestos-related personal
injuries. At December 31, 1994, approximately 19,100 such claims were
outstanding, of which approximately 8,000 were subject to pending settlement
agreements. The Company has agreements with its insurance carriers providing
for the payment of substantially all of the indemnity costs and the legal and
administrative expenses for these claims. The Company is also a party to a
small number of asbestos-related property damage proceedings. The Company's
insurance carriers are paying the major portion of the defense costs in
connection with such cases, and the Company has incurred no indemnity costs to
date. "Management's Discussion and Analysis of Results" at pages 34 and 35 of
Dana's 1994 Annual Report is incorporated herein by reference.
26
27
EXHIBIT INDEX
EXHIBIT PAGE NO.
- ------- --------
3-A Restated Articles of Incorporation, amended effective
June 1, 1994 (filed by reference to Exhibit 4
to Registrant's Form 8 - A/A, Amendment No. 3, filed
on October 4, 1994)
3-B Restated By-Laws of Registrant, effective November 1, 1994
4-A Specimen Single Denomination Stock Certificate
of Registrant (filed by reference to Exhibit 4 to
Registrant's Registration Statement No. 33-47863 on
Form S-3, filed on May 13, 1992)
No class of long-term debt of Registrant exceeds 10% of
Registrant's total assets. Registrant agrees to furnish
copies of agreements defining the rights of debt holders
to the Securities and Exchange Commission upon request.
4-B Rights Agreement, dated as of July 14, 1986, between
Registrant and Chemical Bank (successor to Manufacturers
Hanover Trust Company), Rights Agent (filed by reference
to Exhibit 1 to Registrant's Form 8-K dated July 18, 1986)
4-C Amendment to Rights Agreement, dated as of December 12, 1988,
between Registrant and Chemical Bank (successor to
Manufacturers Hanover Trust Company), Rights Agent (filed
by reference to Exhibit 1 to Registrant's Form 8-K dated
December 12, 1988)
10-A Additional Compensation Plan, amended effective May 1, 1991
(filed by reference to Exhibit 10-A to Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 1992)
10-D(1) 1977 Incentive Stock Option Plan, as amended (filed
by reference to Exhibit 1-D to Registration Statement
No. 2-60466 filed December 13, 1977 and to Registrant's
Proxy Statement for its Annual Meeting of Shareholders
held on December 3, 1980)
10-D(2) Amendment to 1977 Incentive Stock Option Plan,
dated December 15, 1986 (filed by reference to
Exhibit 10-D(2) to Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1986)
10-D(3) Amendment to 1977 Incentive Stock Option Plan,
dated December 10, 1990 (filed by reference to
Exhibit 10-D(3) to Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1991)
10-D(4) Fourth Amendment to 1977 Incentive Stock Option Plan,
dated December 12, 1994
10-E 1982 Amended Stock Option Plan (filed by reference to
Exhibit A to Registrant's Proxy Statement for its
Annual Meeting of Shareholders held on April 7, 1993)
27
28
EXHIBIT INDEX (Continued)
EXHIBIT PAGE NO.
--------
10-F Excess Benefits Plan, amended effective January 29,
1993 (filed by reference to Exhibit 10-F to Registrant's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1992)
10-G Dana Corporation Retirement Plan, amended and restated as of
December 13, 1994
10-H Directors Retirement Plan, amended effective January 26,
1993 (filed by reference to Exhibit 10-H to Registrant's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1992)
10-I(1) Director Deferred Fee Plan, amended effective October 28, 1992
10-I(2) Trust Agreement between Registrant and Society Bank and Trust
dated October 18, 1993, under which Messrs. Bailar, Carpenter,
Fridholm, Hiner, Stevenson and Sumner are each, and separately,
beneficiaries
10-J(6) Employment Agreement between Registrant and Southwood J.
Morcott, dated December 14, 1992 (filed by reference to
Exhibit 10-J(6) to Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1992)
10-J(7) Employment Agreement between Registrant and Martin J.
Strobel, dated December 14, 1992 (filed by reference
to Exhibit 10-J(7) to Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1992)
10-J(8) Employment Agreement between Registrant and Carl H. Hirsch,
dated December 14, 1992 (filed by reference to Exhibit
10-J(8) to Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1992)
10-J(10) Employment Agreement between Registrant and James E. Ayers,
dated December 14, 1992 (filed by reference to Exhibit
10-J(10) to Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1992)
10-J(11) Employment Agreement between Registrant and Borge R. Reimer,
dated December 14, 1992 (filed by reference to Exhibit
10-J(11) to Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1992)
10-J(12) Employment Agreement between Registrant and
Joe M. Magliochetti, dated December 14, 1992 (filed by
reference to Exhibit 10-J(12) to Registrant's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1992)
28
29
EXHIBIT INDEX (Continued)
EXHIBIT PAGE NO.
- ------- --------
10-J(13) Collateral Assignment Split-Dollar Insurance Agreement for
Universal Life Policies between Registrant and Southwood J.
Morcott, dated April 18, 1989. Messrs. Reimer, Hirsch, Ayers and
Magliochetti have substantially identical Agreements. (Filed by
reference to Exhibit 10-J(13) to Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1992)
10-K Supplemental Benefits Plan, amended effective January 29, 1993
(filed by reference to Exhibit 10-K to Registrant's Annual Report
on Form 10-K for the fiscal year ended December 31, 1993)
10-L(1) 1989 Restricted Stock Plan (filed by reference to Exhibit A of the
Registrant's Proxy Statement for its Annual Meeting of
Shareholders held on April 5, 1989)
10-L(2) First Amendment to 1989 Restricted Stock Plan, adopted
December 10, 1990 (filed by reference to Exhibit 10-L(2) to
Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1991)
10-L(3) Second Amendment to 1989 Restricted Stock Plan, adopted
October 18, 1993 (filed by reference to Exhibit 10-L(3) to
Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1993)
10-M Directors' Stock Option Plan (filed by reference to Exhibit B to
Registrant's Proxy Statement for its Annual Meeting of
Shareholders held on April 7, 1993)
10-M(1) First Amendment to Directors' Stock Option Plan, adopted April 18,
1994
13 The following sections of the 1994 Annual Report to Shareholders:
Business Segments (at pages 31-33 of the Annual Report)
Statement of Cash Flows (at page 21 of the Annual Report)
Environmental Compliance and Remediation (at page 29 of the Annual
Report)
Additional Comments - Shareholders' Investment (at page 42 of the
Annual Report)
Eleven Year History - Financial Highlights (at page 43 of the
Annual Report)
Management's Discussion and Analysis of Result (at pages 34-36 of
the Annual Report)
29
30
EXHIBIT INDEX (Continued)
EXHIBIT PAGE NO.
- ------- --------
13 Introduction to Financial Section, Financial Statements and
Independent Accountants' Report(at pages 17-34 of the Annual Report)
Unaudited Quarterly Financial Information (at page 42 of the Annual
Report)
21 List of Subsidiaries of Registrant
23 Consent of Price Waterhouse LLP
24 Power of Attorney
27 Financial Data Schedule
Note: Exhibits 10-A through 10-M are management contracts or compensatory
plans required to be filed as exhibits to this Form 10-K pursuant to
Item 14(c) of this report.
30
31
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
DANA CORPORATION
---------------------------------------------
(Registrant)
Date: March 10 , 1995 By: Martin J. Strobel
------------------------- -----------------------------------------
Martin J. Strobel, Vice President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
Date: March 10, 1995 Southwood J. Morcott
------------------------- -----------------------------------------------
Southwood J. Morcott, Chairman of the Board
of Directors, Chief Executive Officer,
President and Chief Operating Officer
Date: March 10, 1995 James E. Ayers
------------------------- -----------------------------------------------
James E. Ayers, Chief Financial Officer,
Vice President - Finance and Treasurer
Date: March 10, 1995 Charles W. Hinde
------------------------- -----------------------------------------------
Charles W. Hinde, Chief Accounting Officer,
Vice President and Assistant Treasurer
Date: March 10, 1995 * B. F. Bailar
------------------------- -----------------------------------------------
B. F. Bailar, Director
Date: March 10, 1995 * E. M. Carpenter
------------------------- -----------------------------------------------
E. M. Carpenter, Director
Date: March 10, 1995 * E. Clark
------------------------- -----------------------------------------------
E. Clark, Director
Date: March 10, 1995 * R. T. Fridholm
------------------------- -----------------------------------------------
R. T. Fridholm, Director
Date: March 10, 1995 * G. H. Hiner
------------------------- -----------------------------------------------
G. H. Hiner, Director
31
32
SIGNATURES (Continued)
Date: March 10, 1995 * M. R. Marks
------------------------- -----------------------------------------------
M. R. Marks, Director
Date: March 10, 1995 * J. D. Stevenson
------------------------- -----------------------------------------------
J. D. Stevenson, Director
Date: March 10, 1995 * T. B. Sumner, Jr
------------------------- -----------------------------------------------
T. B. Sumner, Jr., Director
*By: Martin J. Strobel
-------------------------------------------
Martin J. Strobel, Attorney-in-Fact
32
1
Exhibit 3B
RESTATED BY-LAWS
OF
DANA CORPORATION
(EFFECTIVE NOVEMBER 1, 1994)
ARTICLE I
STOCKHOLDERS' MEETING
Section 1. Place of Meetings: All meetings of the Stockholders shall
be held at the place designated by the Board of Directors.
Section 2. Annual Meeting: The Annual Meeting of the Stockholders of
the Corporation shall be held on the first Wednesday in April, 1982, and the
first Wednesday in April each year thereafter, in each year, if not a legal
holiday, and if a legal holiday, then on the next business day, for the election
of Directors and for the transaction of such other business as may be properly
brought before the meeting.
ARTICLE II
BOARD OF DIRECTORS
Section 1. Number: The number of Directors shall be nine. The number of
directors shall be fixed from time to time by the Board of Directors, and only
by the Board, pursuant to a resolution adopted by a majority of the entire Board
of Directors amending the By-Laws.
Section 2. Meetings and Notice: Regular meetings of the Board of
Directors shall be held at such places and times as the Board by vote may
determine from time to time, and if so determined no notice thereof need be
given except that notice shall be given to all Directors of any change made in
the time or place. Special meetings of the Board of Directors may be held at any
time or place whenever called by the Chairman of the Board of Directors, the
President, the Secretary or three or more Directors. Notice of special meetings,
stating the time and place thereof, shall be given by mailing it to each
Director at his residence or business address at least five days before the
meeting, or by delivering it to him personally or telephoning or telegraphing it
to him at his residence or business address at least two days before the
meeting.
2
Section 3. Except as otherwise required by law, any newly created
Directorships resulting from an increase in the authorized number of directors
and any vacancies resulting from death, resignation, retirement,
disqualification, removal from office or other cause shall be filled by a
majority vote of the directors then serving, and directors so chosen shall hold
office for a term expiring at the next Annual Meeting of Shareholders.
Section 4. Notice Period for Nominations to the Board of Directors:
Nominations to the Board of Directors, other than those made pursuant to Article
II, Section 3, or Article III, Section 5 and other than for incumbent Directors
shall be presented by Stockholders in writing to the Secretary on a business day
not less than seventy days before the Annual Meeting of Shareholders. Said
notice shall contain: (a) as to each person whom the stockholder proposes to
nominate for election or re-election as a Director, (i) the name, age, business
address and residence address of such person, (ii) the principal occupation or
employment of such person, (iii) the class and number of shares of the
Corporation which are beneficially owned by such person and (iv) any other
information relating to such person that is required to be disclosed in
solicitations of proxies for election of Directors, or is otherwise required, in
each case pursuant to Regulation 14A under the Securities Exchange Act of 1934,
as amended (including without limitation such person's written consent to being
named in the proxy statement as a nominee and to serving as a Director if
elected) and (b) as to the stockholder giving the notice, (i) the name and
address, as they appear on the Corporation's books of such stockholder and (ii)
the class and number of shares of the Corporation which are beneficially owned
by such stockholder. No person shall be eligible for election as a Director of
the Corporation unless nominated in accordance with the procedures set forth in
these By-Laws. The Chairman of the meeting shall, if the facts warrant,
determine and declare to the meeting that a nomination was not made in
accordance with the procedures prescribed by the By-Laws, and if he should so
determine, he shall so declare to the meeting and the defective nomination shall
be disregarded.
ARTICLE III
Committees
Section 1. Establishment of Committees: The Board may designate one or
more committees, each committee to include two or more of the Directors of the
Corporation.
-2-
3
Section 2. Audit Committee: The Audit Committee shall have primary
responsibility for maintaining contact with the Corporation's independent
certified public accountants and the Corporation's personnel to satisfy itself
(a) that appropriate audit programs and procedures are maintained and (b) that
the public accountants discharge their responsibility with thoroughness and
dispatch. The Audit Committee shall make such recommendations to the Board of
Directors as it deems necessary.
The Audit Committee shall be composed of directors who are not
employees of the Corporation.
Section 3. Compensation Committee: The Compensation Committee shall be
responsible for recommending total compensation for officers of the Corporation
to the Board of Directors, for reviewing general plans of compensation for the
officers and management personnel and for reviewing and approving proposed
awards of additional compensation and stock options.
Through their own knowledge and with the help of such consultants,
outside agencies and generally accepted national and international guidelines as
they deem advisable, the Committee members shall endeavor at all times to
maintain the compensation of officers and management personnel at levels
appropriate for the size and nature of the Corporation and the responsibilities
of the persons involved.
The Compensation Committee shall be composed of Directors who are not
employees of the Corporation.
Section 4. Finance Committee: The Finance Committee shall have the
primary responsibility for reviewing long-range world-wide needs for capital and
considering the financial state of affairs and shall recommend courses of action
to insure the continued liquidity of the Corporation.
It shall also review major corporate expenditures including, but not
limited to, fixed capital, working capital and acquisitions. It shall report to
the Board of Directors its opinions concerning these major expenditures.
The Committee shall be composed of Directors and such employees of the
Corporation, including members ex-officio, as shall be recommended by the
chairman of the Committee and approved by the Board of Directors.
Section 5. Advisory Committee: The purpose of this Committee
is to advise the Chairman and the Board on matters of directors,
board meetings, board committees and miscellaneous director related
items.
-3-
4
Under the heading of "Directors," things to be considered should be the
required background of a director, the number of directors, the names of new
directors to be considered for possible board membership, as well as
compensation of board members.
Under "Meetings," we should consider the number of meetings per year,
the location, the length, what day of the week, as well as items requested to be
covered in the meetings.
Under "Committees," we should consider which committees are needed to
be in tune with the times, as well as the size of the committees, the number of
people on a committee and the rotation of members.
Finally, under "Miscellaneous," we should consider how to bring to the
attention of the Chairman, as well as the Board, items which directors would
like to discuss but, because of the time pressure or for whatever reason, these
items might not be felt important enough to be discussed during a board meeting.
Section 6. Funds Committee: The Funds Committee shall audit (without
making any investment decisions or giving investment advice) the activities of
those who have the responsibility of managing the various pension and other
employee benefit funds of the Corporation. The Committee shall also monitor
operations of the investment managers to assure compliance with rules and
regulations regarding management of pension funds and other employee benefit
funds.
ARTICLE IV
Officers
Section 1. Titles and Election: The Board of Directors shall elect a
Chairman of the Board of Directors, a President and such other officers as shall
be required or deemed appropriate. Each officer shall hold office until the
meeting of the Board following the next annual meeting of the stockholders or
until a successor shall have been elected and qualified or until death,
resignation or removal as hereinafter provided in these By-Laws.
Section 2. Eligibility: The Chairman of the Board of Directors and
the President shall be Directors of the Corporation. Any person may hold more
than one office but no one person shall, at the same time, hold the offices of
President and Secretary.
-4-
5
Section 3. Resignations: Any Director or officer of the Corporation may
resign at any time by giving written notice to the Board of Directors or to the
Chairman of the Board, the President or the Secretary, and any member of any
committee may resign by giving written notice either as aforesaid or to the
Chairman or Secretary of the Committee of which he is a member. Any such
resignation shall take effect at the time specified therein or, if the time be
not specified, upon receipt thereof; and, unless otherwise specified therein,
the acceptance of such resignation shall not be necessary to make it effective.
Section 4. Vacancies: A vacancy in any office whether arising from
death, resignation, removal or any other cause, may be filled for the unexpired
portion of the term of such office in the manner prescribed in these By-Laws for
the regular election or appointment to such office.
Section 5. Chairman of the Board of Directors: The Chairman of the
Board shall preside at all meetings of the Board of Directors. He shall perform
all duties incident to the office of Chairman of the Board and such other duties
as may be from time to time assigned to him by the Board.
Section 6. President: The President shall perform the duties of the
Chairman during his absence and shall perform all duties incident to the office
of the President and such other duties as may be assigned to him by the Board of
Directors.
Section 7. Chief Executive Officer: The Chief Executive Officer of the
Corporation shall be responsible for the general management of the Corporation.
He shall perform all duties incident to the office of Chief Executive Officer
and such other duties as may be assigned to him by the Board of Directors.
Section 8. President-North American Operations: The President-North
American Operations shall direct the North American Operations of the
Corporation and shall perform such other duties as may be assigned to him by the
Chairman or the Board of Directors.
Section 9. Officers: Any two Executive Vice Presidents, or the
President-North American Operations together with any Executive Vice President,
shall perform the duties and have the powers of the President during the absence
of the President and the Chairman of the Board of Directors. The Vice Presidents
shall perform such other duties and have such other powers as the Board of
Directors shall designate from time to time.
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Section 10. Secretary: The Secretary shall keep accurate minutes of all
meetings of the Stockholders, the Board of Directors and the Executive
Committee, respectively, shall perform all the duties commonly incident to his
office, and shall perform such other duties and have such other powers as the
Board of Directors shall designate from time to time. In his absence an
Assistant Secretary shall perform his duties.
Section 11. Execution of Deeds and Contracts: The Chairman of the
Board, the President, the Presidents of North American, South American, European
and Asia/Pacific Operations or any Vice President shall have the power to enter
into, sign either manually or through facsimile, execute and deliver in the name
of the Corporation, powers of attorney, contracts, deeds and other obligations
of the Corporation.
Section 12. Guarantees: The giving by the Corporation or any subsidiary
of any guarantee (or other similar obligation) of any other corporation or
persons shall be approved by the Corporation's Board of Directors except that
between meetings of the Board of Directors, the Chairman of the Board, the
President or the Vice President-Finance may approve guarantees of indebtedness
not previously reported to the Board of Directors, up to an aggregate amount of
Five Million Dollars ($5,000,000).
Section 13. Delegation of Authority: The Chairman of the Board, the
President, the Presidents of North American, South American, European and
Asia/Pacific Operations or any Vice President of the Corporation may by written
special power of attorney, attested to by the Secretary or any Assistant
Secretary of the Corporation, delegate the authority to enter into, sign,
execute and deliver deeds and contracts to any other officer, employee or
attorney-in-fact of the Corporation.
ARTICLE V
Indemnification
The Corporation shall defend, indemnify and hold harmless any present,
past or future director, officer or employee who acts or acted at the request or
direction of the corporation in a fiduciary capacity for an employee benefit
plan, against all claims, liabilities and expenses actually and reasonably
incurred or imposed on him in connection with any civil, criminal or
administrative action, suit or proceeding, or settlement or compromise thereof,
in which he is made or threatened to be made a party by reason of being or
having been or because of any act or omission as a fiduciary with respect to any
employee benefit
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plan sponsored by the corporation, or to which the corporation makes
contributions for employees(including without limitation jointly trusteed
Taft-Hartley Funds), except in relation to matters as to which he is finally
adjudged in such action, suit or proceeding, to be liable due to his own gross
negligence, willful misconduct or lack of good faith in the performance of any
obligation, duty or responsibility imposed on him as a plan fiduciary. The right
to be defended, indemnified, and held harmless herein shall extend to the
estate, executor, administrator, guardian, conservator and heirs of such
director, officers, or employee who himself would have been entitled thereto.
Such rights shall not be deemed exclusive of any other rights to which such
director, officer, or employee may be entitled under any by-law, agreement, vote
of shareholder, or otherwise.
The Corporation is also authorized to purchase out of corporate assets
insurance on behalf of any director, officer or employee of the corporation who
at the request or direction of the corporation acts or acted as a fiduciary with
respect to any employee benefit plan sponsored by the corporation or to which
the corporation makes contributions for employees, which insures against any
expenses and liability asserted against him and incurred by him in such capacity
or arising out of any acts or omissions in such capacity, whether or not the
corporation would have the power to defend, indemnify and hold him harmless
against such expenses and liability under applicable law. Notwithstanding any
provision herein to the contrary, the right to be defended, indemnified and held
harmless, set forth in the immediately preceding paragraph, shall not apply to
any liability to the extent the fiduciary is indemnified, defended, and held
harmless under an insurance policy or other defense, indemnification or hold
harmless agreement or provision.
The aforementioned provisions with respect to defense and
indemnification of any liability insurance for plan fiduciaries shall include
without limitation any director, officer or employee who is found to be a
fiduciary under the Employee Retirement Income Security Act of 1974 with respect
to the above-referenced plans notwithstanding the absence of a specific
designation of such person as a plan fiduciary.
In addition, the corporation shall indemnify against any loss,
liability, damage and expenses: (i) its employees with respect to their acts or
omissions as employees, and (ii) its directors, officers and employees with
respect to their service on the board of any other company at the request of the
corporation and may by written agreement indemnify any such person or any other
person whom the corporation may indemnify under the Indemnification
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Provisions of the Virginia Corporation Law as now in effect or as hereafter
amended to the full extent permissible under and consistent with such
provisions. The right of indemnification provided in this Article shall not be
deemed exclusive of any other rights to which such director, officer, employee
or other person may be entitled, apart from this Article V.
ARTICLE VI
Voting of Stock Held
The Chairman of the Board, the President, and Executive Vice President
or the Secretary may attend any meeting of the holders of stock or other
securities of any other corporation any of whose stock or securities may be held
by this Corporation, and in the name and on behalf of this Corporation thereat
vote or exercise any or all other powers of this Corporation as the holder of
such stock or other securities of such other corporation. Unless otherwise
provided by vote of the Board of Directors, the Chairman of the Board, the
President, any Executive Vice President or the Secretary may from time to time
appoint any attorney or attorneys or agent or agents of this Corporation in the
name and on behalf of this Corporation to cast the votes which this Corporation
may be entitled to cast as a stockholder or otherwise at meetings of the holders
of stock or other securities of any such other corporation, and may instruct the
person or persons so appointed as to the manner of casting such votes or acting
upon such matters as may come before the meeting, and may execute or cause to be
executed on behalf of this Corporation and under its corporate seal or otherwise
such written proxies, consents, waivers or other instruments as he may deem
necessary or proper in the premises.
ARTICLE VII
Lost Stock Certificates
Any stockholder claiming a certificate of stock to have been lost or
destroyed shall furnish the Corporation with an affidavit as to the facts
relating to such loss or destruction and if such affidavit shall in the opinion
of the Chairman of the Board, the President, any Executive Vice President or the
Secretary of the Corporation be satisfactory, and upon the giving of a bond
without limit as to amount with surety and in form approved by the
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Chairman of the Board, the President, any Executive Vice President or the
Secretary of the Corporation, to protect the Corporation or any person injured
by the issue of a new certificate from any liability or expense which it or they
may incur by reason of the original certificate remaining outstanding, shall be
entitled to have a new certificate issued in the place of the certificate
alleged to have been lost or destroyed.
ARTICLE VIII
Seal
The Board of Directors shall provide a suitable corporate seal, which
shall be kept in the custody of the Secretary, to be used as directed by the
Board of Directors.
ARTICLE IX
Restrictions on Transfer
To the extent that the Rights Agreement, dated as of July 14, 1986,
between the Corporation and Manufacturers Hanover Trust Company, may be deemed
to impose restrictions on the transfer of the securities of the Corporation,
such restrictions on transfer are hereby authorized.
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Exhibit 10-D(4)
12/12/94
FOURTH AMENDMENT TO THE DANA CORPORATION
1977 INCENTIVE STOCK OPTION PLAN
Pursuant to Resolutions of the Board of Directors of the Corporation
adopted on December 12, 1994, the Dana Corporation 1977 Incentive Stock Option
Plan (the "Plan") is hereby amended, effective December 12, 1994, as follows:
1. Amend the second sentence of the last paragraph of Section 7 to read
in its entirety as follows:
"An option may be exercised no more than ten years after the date of
grant by giving written notice of exercise to the Corporation
specifying the number of shares to be purchased and by paying the
purchase price in full in cash or, with the approval of the Committee,
in Common Stock of the Corporation ("Stock") or any combination of
cash and Stock in an amount determined by the fair market value (as
determined under Section 5) of the Stock on the date of exercise,
payable no later than ten days following the exercise of the option,
and provided, further, that any Stock so tendered in payment must have
been held by the optionee for a period of not less than six (6) months
prior to such tender in payment."
1
Exhibit 10-G
PLAN 001
THE DANA CORPORATION
RETIREMENT PLAN
AS AMENDED AND RESTATED
EFFECTIVE JANUARY 1, 1994
2
THE DANA CORPORATION RETIREMENT PLAN
TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS
1.01 Account 2
1.02 Actuarially Adjusted 3
1.03 Adoption Date 3
1.04 Benefit Commencement Date 3
1.05 Break in Service 3
1.06 Committee 3
1.07 Company 3
1.08 Code 3
1.09 Credited Service 3
1.10 Earnings 4
1.11 Employee 4
1.12 Employer 5
1.13 Entry Date 5
1.14 Former Employee 5
1.15 Fund 5
1.16 Hour of Service 5
1.17 Normal Retirement Age 6
1.18 Participant 6
1.19 Part-Time Employee 6
1.20 PBGC Interest Rates 6
1.21 Plan 6
1.22 Plan Administrator 7
1.23 Plan Year 7
1.24 Surviving Spouse 7
1.25 Transition Period 7
1.26 Trustee 7
1.27 Vesting Service 7
ARTICLE II ELIGIBILITY AND RETIREMENT DATES
2.01 Eligibility to Participate 9
2.02 Eligibility for Retirement Benefit 9
2.03 Normal Retirement Date 10
2.04 Early Retirement Date 10
2.05 Postponed Retirement Date 10
2.06 Eligibility For Vested Deferred 10
Retirement Benefit
i
3
PAGE
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ARTICLE III AMOUNT OF RETIREMENT BENEFIT
3.01 Account Balances 11
3.02 Credits While Disabled or Separated, 12
or on Military Leave
3.03 Accounts For Individuals Whose 13
Employment Terminates
3.04 Payment Options 15
1. Life Annuity 15
2. Joint and Survivor Option 15
3. Five- or Ten-Year Certain Option 16
4. Social Security Level Income 17
Option
3.05 Automatic Forms of Payment and 18
Elections of Optional Forms
A. Automatic Election of Life Annuity 18
B. Automatic Election of Joint and 18
Survivor Annuity
C. Requirements for Election 18
D. Notices 19
3.06 Vested Deferred Retirement Benefit 20
3.07 Survivor Benefit 20
A. Benefit 20
B. Beneficiary 21
C. Notice and Consent 22
3.08 Cash-out of Small Benefits 22
3.09 Direct Rollovers 22
ARTICLE IV TRANSFERRED EMPLOYEES
4.01 Transfer Out Of Or Into The Plan 24
ARTICLE V FUNDING
5.01 Pension Fund 25
5.02 Pension Fund Trustee or Insurer 25
5.03 Contributions To The Pension Fund 25
5.04 Gains Within Funds 26
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PAGE
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ARTICLE VI ADMINISTRATION
6.01 General Administration 27
6.02 Applications and Information To 28
Be Supplied
6.03 Claims Procedures 28
6.04 Administrative Discretion 29
ARTICLE VII RETIREMENT BENEFIT PAYMENTS
7.01 Manner of Payment 30
7.02 Small Amounts 30
7.03 Benefit Commencement Dates 30
7.04 Minimum Required Distribution 30
ARTICLE VIII MISCELLANEOUS PROVISIONS
8.01 Nonduplication of Benefits 32
8.02 Merger, Consolidation or Transfer 32
8.03 Exclusive Benefit of Participants 32
8.04 Construction 32
8.05 Maximum Limitation on Benefit 33
Amount
8.06 Facility of Payment 34
8.07 Nonalienation of Benefits 34
8.08 Evidence of Survival 37
8.09 Governing Law 37
8.10 Withholding of Taxes 38
ARTICLE IX AMENDMENT OR TERMINATION
9.01 Plan Amendment 39
9.02 Plan Termination 40
9.03 Termination and Pre-Termination 40
Restrictions
ARTICLE X CHANGE IN CONTROL
10.01 Change in Control 43
10.02 Benefits in the Event of a Change in 43
Control
10.03 Amendment or Elimination of Change in 44
iii
5
Control Provisions
iv
6
PAGE
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ARTICLE XI TOP HEAVY PROVISIONS
11.01 General 45
11.02 Vesting 45
11.03 Minimum Benefits 45
11.04 Top-Heavy Determination 46
11.05 Limitation On Contributions and 47
Benefits
11.06 Definitions 47
ARTICLE XII NORMAL, EARLY, AND ACCRUED BENEFITS
12.01 Normal Retirement Benefit 49
12.02 Early Retirement Benefit 51
12.03 Postponed Retirement Benefit 51
12.04 Present Value of Accrued Benefits 51
ARTICLE XIII RETIREE BENEFIT IMPROVEMENTS
13.01 October 1, 1990, Improvement 53
APPENDIX A SOCIAL SECURITY SCHEDULE
APPENDIX B SUMMIT AND DANETICS EMPLOYEES
APPENDIX C ACTUARIAL FACTORS
APPENDIX D CERTAIN LAID-OFF EMPLOYEES
APPENDIX E TRANSITION RULES
APPENDIX F EMPLOYEES OF FOREIGN AFFILIATES
WHO PARTICIPATE IN THE PLAN
APPENDIX G ACTUARIAL EQUIVALENTS
APPENDIX H INTEREST CREDITS AND ESCALATOR
PERCENTAGES
APPENDIX I SPECIAL SERVICE-CREDITING AND
VESTING PROVISIONS
APPENDIX J SCHEDULE OF EFFECTIVE DATES
v
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THE DANA CORPORATION RETIREMENT PLAN
INTRODUCTION
Dana Corporation established the Dana Corporation
Retirement Income Plan as of January 1, 1942, as a tax- qualified defined
benefit plan. The Plan was amended from time to time after it was established.
As of July 1, 1988, Dana Corporation amended the Plan to
convert its benefit formula to a cash balance formula. The Plan was restated
as the Dana Corporation Retirement Plan; the unofficial name of the Plan is
"CashPlus." Transition benefits and other special rules for individuals who
were covered by the Plan at the time of its conversion are set forth in Part I
of Appendix E.
Since July 1, 1988, Dana Corporation has merged a number
of its other tax-qualified defined benefit plans into the Plan. The effective
dates of the mergers, and special transition benefits and other rules for
individuals who were covered by the merged plans, are set forth in Part II of
Appendix E. Part III of Appendix E sets forth special rules for certain
individuals who were affected by the sale of the Williams Air Controls
division.
The Plan is hereby amended and restated to incorporate
amendments adopted since the last restatement and to make certain other
changes. This restatement of the Plan shall be effective as of January 1,
1994, except to the extent that particular provisions of the Plan (including
the schedule of effective dates that appears in Appendix J) specify different
effective dates. Except where the Plan expressly provides otherwise, the
rights to benefits of any Participant whose employment terminated prior to the
effective date of a particular provision shall be determined solely by the
provisions of the Plan as in effect at the time of the Participant's
termination.
8
ARTICLE I
DEFINITIONS
The following terms, as used in the Plan, shall have the
following meanings unless a different meaning is plainly required by the
context.
1.01 "ACCOUNT" means the present value of an Employee's or Former
Employee's undistributed accrued benefit or projected benefit
under the Plan. "Account" may also include the present value of
certain undistributed ancillary benefits that are not part of the
Employee's or Former Employee's accrued benefit or projected
benefit. The present value of each Employee's or Former
Employee's undistributed benefit under the Plan shall be
expressed as the balance of one or more of the following
Accounts:
A. "ACCRUED BENEFIT ACCOUNT" means the present value of the
Employee's or Former Employee's accrued benefit under the
Plan as of the Adoption Date, determined in accordance
with Appendix E, and the present value of any increase in
such benefit that occurs on or after such Adoption Date.
B. "SUPPLEMENTAL BENEFIT ACCOUNT" means the present value of
the Employee's or Former Employee's projected benefit
under the Plan as of the Adoption Date, determined in
accordance with Appendix E, and the present value of any
increase in such benefit that occurs on or after such
Adoption Date.
C. "FUTURE SERVICE ACCOUNT" means the present value of the
benefit that the Employee or Former Employee has accrued
under the Plan since the Adoption Date (or, if later,
since the date on which he first became a Participant),
determined in accordance with Section 3.01 B., and the
present value of any increase in such benefit determined
in accordance with Section 3.01 C.
D. "EARNED BENEFIT ACCOUNT" means the sum of (1) the
Employee's or Former Employee's Accrued Benefit Account,
and (2) the Employee's or Former Employee's Future Service
Account, and (3) the product of (a) the Employee's or
Former Employee's Supplemental Benefit Account times (b)
the ratio specified in Appendix E.
E. "ANCILLARY BENEFIT ACCOUNT" means the present value of the
Employee's or Former Employee's ancillary benefit under
the Plan as of the Adoption Date, determined in accordance
with Appendix E, and the present value of any increase in
such benefit that occurs on or after such Adoption Date.
1.02 "ACTUARIALLY ADJUSTED" means converted to a benefit that is of
equivalent value to
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another benefit based upon the factors set forth in Appendix C.
1.03 "ADOPTION DATE" means the date specified in Appendix E as of
which an Employer adopted the Plan.
1.04 "BENEFIT COMMENCEMENT DATE" means the first day of the first
period for which an amount is paid as an annuity or in any other
form.
1.05 "BREAK IN SERVICE" means a Plan Year during which an individual
is not at any time an employee or leased employee of the Company.
For the purpose of measuring a Break in Service, an individual's
employment with the Company shall not be deemed to have
terminated during any period in which he is accruing a benefit
under the Plan pursuant to Section 3.02; during any period for
which he is credited with vesting service under the Plan pursuant
to Section 1.27; during any period to the extent required by the
Family and Medical Leave Act of 1993; or during any period of
parental leave to the extent required by the Internal Revenue
Code and applicable Treasury regulations.
1.06 "COMMITTEE" means the Investment Committee of Dana Corporation.
1.07 "COMPANY" means Dana Corporation, a corporation organized under
the laws of the Commonwealth of Virginia, and any subsidiary or
affiliate that is required to be aggregated with Dana Corporation
pursuant to Section 414(b), Section 414(c), Section 414(m), or
Section 414(o) of the Code.
1.08 "CODE" means the Internal Revenue Code of 1986, as amended from
time to time.
1.09 "CREDITED SERVICE" means a Participant's Vesting Service, except
to the extent otherwise provided in Section 1.27 or in this
Section 1.09. Credited Service shall also include a
Participant's periods of temporary layoff and leaves of absence
to the extent determined by the Company in a manner that
precludes individual selection among employees. "Credited
Service" shall not include service that is disregarded pursuant
to Section 3.03 of the Plan. "Credited Service" shall not
include service that an individual completed while he was a
leased employee and was ineligible to participate in the Plan.
1.10 "EARNINGS" means an Employee's basic salary paid by an Employer
in any Plan Year (before any reduction as a result of an election
to have his pay reduced in accordance with a "cafeteria" plan or
a "cash or deferred arrangement" pursuant to Section 125 or
Section 401(k) of the Code), plus overtime, bonuses, and
incentive payments paid by an Employer in any Plan Year, but not
to exceed the limit in effect for the Plan Year under Section
401(a)(17) of the Code. "Earnings" shall not include any amount
paid to an Employee by reason of his participation in any
employee benefit plan of the Company.
1.11 "EMPLOYEE" means any salaried employee and any Part-Time Employee
of an Employer if such salaried employee or Part-Time Employee
is identified as office-clerical,
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technical, production, professional, supervisory, managerial, or
administrative; except that "Employee" shall not include any of
the following:
A. an individual covered by a collective bargaining agreement
entered into by the Company (unless such agreement, by
specific reference to the Plan, provides for coverage
under the Plan); or
B. an individual who is eligible to accrue a benefit under
any other tax-qualified defined benefit plan of an
Employer, or who is eligible to receive a nonelective
employer contribution (other than a matching contribution)
under any tax-qualified defined contribution plan of an
Employer; or
C. an individual whose basic compensation for services on
behalf of an Employer is paid by an individual or entity
other than the Company; or
D. a Part-Time Employee who has not completed 1,000 Hours of
Service during the 12-month period beginning on his
original date of hire or during any Plan Year; or
E. an individual who works for an Employer under the
Employer's college cooperative education program; or
F. an individual leased by an Employer who must be treated as
an employee of the Employer by virtue of Section 414(n) of
the Code; or
G. a non-resident alien who receives no U.S.-source earned
income from an Employer, unless the individual has been
designated on a list maintained by the Plan Administrator
as a "Key Local National" or a "Third Country National,"
in accordance with Appendix F; or
H. an individual employed at a facility that is established
or acquired by an Employer after the Employer's Adoption
Date, unless Appendix E is amended to extend coverage
under the Plan to such facility.
An individual shall be treated as an "Employee" to the extent
required by the Family and Medical Leave Act of 1993.
1.12 "EMPLOYER" means any facility, division, subsidiary, or affiliate
of Dana Corporation identified in Appendix E as an employer that
has adopted the Plan. An entity described in the preceding
sentence shall cease to be an "Employer" when it withdraws from
participation in the Plan, or when it ceases to be part of the
Company. "Employer" also includes certain foreign affiliates;
but any foreign affiliate shall be considered an "Employer" only
while it is identified as such in Appendix F, and only with
respect to its employees who are Participants as provided in
Appendix F.
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1.13 "ENTRY DATE" means January 1 or July 1.
1.14 "FORMER EMPLOYEE" means a Participant who has ceased to be an
Employee and who has a vested accrued benefit under the Plan, but
who has not yet received or begun to receive a benefit under the
Plan.
1.15 "FUND" means the trust fund or funds established and maintained
under the Plan, or the monies held under one or more insurance
contracts established and maintained under the Plan.
1.16 "HOUR OF SERVICE" means each of the following, counted without
duplication:
A. each hour for which a Part-Time Employee is paid, or
entitled to payment, for the performance of duties for the
Company, and
B. each hour for which a Part-Time Employee is paid, or
entitled to payment, by the Company for a period of time
during which the Part-Time Employee performs no duties
(irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity
(including disability), layoff, jury duty, military duty,
or leave of absence, and
C. each hour for which back pay, irrespective of mitigation
of damages, is either awarded or agreed to by the Company.
To the extent not otherwise included, "Hour of Service" also
shall include each hour required to be included by the Family and
Medical Leave Act of 1993. Hours credited pursuant to the
preceding sentence shall not be treated as "Hours of Service"
under Section 3.01 B. or 12.01 C. of the Plan.
This Section 1.16 shall be administered in accordance with
Department of Labor regulations set forth in 29 C.F.R. Section
2530.200b.
1.17 "NORMAL RETIREMENT AGE" means age 65. An Employee's right to his
normal retirement benefit shall be nonforfeitable upon his
attainment of Normal Retirement Age.
1.18 "PARTICIPANT" means any individual who has become eligible to
participate in the Plan pursuant to Section 2.01, and whose
accrued benefit under the Plan has not been forfeited or
completely distributed. The term "active Participant" means a
Participant who is eligible to receive a credit under Section
3.01 B. of the Plan, or who would be eligible to receive a credit
under Section 3.01 B. if the limits imposed by Section 8.05 of
the Plan and Section 415 of the Code were disregarded.
1.19 "PART-TIME EMPLOYEE" means any individual who is classified as a
part-time employee
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12
on the records of the Company. The Company shall classify an
individual as a part-time employee only if the Company reasonably
expects that the individual will render less than 1,000 Hours of
Service during the 12-month period beginning on his original date
of hire and during each Plan Year.
1.20 "PBGC INTEREST RATES" means the interest rates that would be used
(as of January 1 of the Plan Year in which the first benefit
payment is to be made to a Participant) by the Pension Benefit
Guaranty Corporation for purposes of determining the present
value of a lump-sum distribution on plan termination. "IMMEDIATE
PBGC INTEREST RATE" means the interest rate that would be so used
with respect to immediate annuities.
1.21 "PLAN" means the Dana Corporation Retirement Plan, as amended
from time to time.
1.22 "PLAN ADMINISTRATOR" means the Chairman of the Committee.
1.23 "PLAN YEAR" means the period of 12 consecutive months beginning
with January 1 and ending with December 31.
1.24 "SURVIVING SPOUSE" means the wife of a male Participant, or the
husband of a female Participant, to whom the Participant was
married for at least one year prior to the Participant's death;
and, in the case of a Participant whose monthly benefit under the
Plan has commenced, to whom the Participant was married on the
Participant's Benefit Commencement Date.
1.25 "TRANSITION PERIOD" means a period specified in Appendix E during
which increases in an Employee's accrued benefit or projected
benefit are determined in accordance with Appendix E rather than
in accordance with Section 3.01 C. or Section 12.01 B. of the
Plan.
1.26 "TRUSTEE" means the bank or trust company, or the banks or trust
companies, acting at any time under a trust agreement with
respect to all or a portion of the Fund.
1.27 "VESTING SERVICE" means an Employee's total service with the
Company (except as otherwise provided below with respect to
Part-Time Employees, or as otherwise provided in Section 3.02,
Section 3.03 D., or Appendix E), including all periods of
employment, whether continuous or not, and shall be the period of
time, expressed in years and months, between the date on which an
Employee first performs any service for the Company and the
earlier of:
A. the date on which an Employee resigns, retires, is
discharged or dies, or
B. the first anniversary of the first date in a period of
continuous absence for any reason other than resignation,
retirement, discharge or death,
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and provided that in no event shall any period of absence be
excluded for purposes of determining service under this Section
1.27 unless a 12-month period has elapsed during which the
Employee has not performed any service for the Company. In a case
in which the Company maintains a plan of a predecessor employer,
"Vesting Service" shall include service with the predecessor
employer to the extent required by Section 414(a)(1) of the Code.
In all other cases, "Vesting Service" shall include service with a
predecessor employer only to the extent provided in Appendix I.
A Part-Time Employee who has not become a Participant shall
receive credit for a year of Vesting Service for the Plan Year in
which he completes at least 1,000 Hours of Service. A Part-Time
Employee who has become a Participant shall receive credit for
Vesting Service under the elapsed time rules set forth in the
first part of this Section 1.27, measured from the January 1 that
coincides with or next follows the date on which he becomes a
Participant. If a Part-Time Employee becomes a Participant on
July 1 of any Plan Year, he shall be credited with a year of
Vesting Service for that Year.
If a leased employee becomes an Employee or a Part-Time Employee,
he shall be credited with Vesting Service as if he had been an
Employee or a Part-Time Employee (whichever is applicable) for
all periods during which he was required to be treated as an
employee of the Company by virtue of Section 414(n) of the Code.
Service credited pursuant to this paragraph shall not be treated
as "Credited Service" under Section 1.09 of the Plan.
To the extent not otherwise included, "Vesting Service" shall
include any period required to be included by the Family and
Medical Leave Act of 1993. Service credited pursuant to this
paragraph shall not be treated as "Credited Service" under
Section 1.09 of the Plan.
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ARTICLE II
ELIGIBILITY AND RETIREMENT DATES
2.01 ELIGIBILITY TO PARTICIPATE
A. If an individual was, on the Adoption Date, a participant
in a tax-qualified defined benefit plan sponsored by his
Employer that is merged with or replaced by the Plan on
such Adoption Date, the individual shall become a
Participant in the Plan on such Adoption Date, provided
that he is an Employee on such Adoption Date.
B. Each Part-Time Employee who completes 1,000 Hours of
Service during the 12-month period beginning on his
original date of hire or during any Plan Year shall become
a Participant on the first Entry Date following the
expiration of such 12-month period or Plan Year, provided
that he is an Employee on that Entry Date. Once a
Part-Time Employee has become a Participant, he shall
remain eligible to participate in the Plan as long as he
remains an Employee, even if he completes fewer than 1,000
Hours of Service in a Plan Year subsequent to his Entry
Date.
C. Each individual who is not described in A. or B., above,
shall become a Participant as of the later of
1. the January 1 following the date on which his first
period of employment with the Company commenced,
provided that he is an Employee on such January 1;
or
2. the date on which he becomes an Employee.
D. An individual who ceases to be an Employee after he has
become a Participant shall be eligible to participate in
the Plan as of the date on which he again becomes an
Employee.
2.02 ELIGIBILITY FOR RETIREMENT BENEFIT
An Employee who has terminated his employment with the Company on
his Normal, Early, or Postponed Retirement Date shall be eligible
to receive a benefit under the Plan; provided, however, that the
benefit payable shall be offset by the amount of any worker's
compensation payments received that are provided through
premiums, taxes or other payments paid by or at the expense of
the Company.
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2.03 NORMAL RETIREMENT DATE
An Employee's Normal Retirement Date shall be the first day of
the month coincident with or next following his sixty- fifth
birthday.
2.04 EARLY RETIREMENT DATE
An Employee who has not reached Normal Retirement Age but who has
attained his fiftieth birthday may elect to retire on the first
day of any month, provided that he has completed at least ten
years of Vesting Service and that the sum of his age and years of
Vesting Service, both calculated to the nearest month, equals 70
or more. Such date shall be his Early Retirement Date.
2.05 POSTPONED RETIREMENT DATE
If an Employee remains actively employed by the Company after his
Normal Retirement Date, the Employee shall be eligible to retire
on the first day of any month. Such date shall be his Postponed
Retirement Date.
2.06 ELIGIBILITY FOR VESTED DEFERRED RETIREMENT BENEFIT
If an Employee terminates employment with the Company for any
reason before attaining Normal Retirement Age and before
completing at least five years of Vesting Service, he shall have
no right to any benefit under the Plan.
If an Employee terminates employment with the Company after
completing five or more years of Vesting Service but before his
Normal, Early, or Postponed Retirement Date, he shall be entitled
to a benefit pursuant to Section 3.06 of the Plan.
The Company may provide for the full and immediate vesting of
designated groups of Employees or Former Employees in a manner
that precludes individual selection among employees. Appendix I
lists the groups of Employees or Former Employees who are
entitled to full and immediate vesting under this provision.
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ARTICLE III
AMOUNT OF RETIREMENT BENEFIT
3.01 ACCOUNT BALANCES
The Plan Administrator shall determine benefits under the Plan by
maintaining Accounts for each Employee or Former Employee in
accordance with the following rules.
A. The Accrued Benefit Account and Supplemental Benefit
Account (if any) of each individual who is an Employee on
or after the Adoption Date shall be initially determined
in accordance with Appendix E.
B. The Future Service Account of each individual who was an
Employee on the Adoption Date shall be initially
determined in accordance with Appendix E. At the end of
each Plan Year beginning after the Adoption Date, an
active Participant's Future Service Account shall be
credited with the following percentage of the Earnings
that the Participant received in such Plan Year while he
was an active Participant:
PERCENTAGE OF EARNINGS CREDITED
FULL YEARS OF EARNINGS UP TO 1/4TH OF EARNINGS OVER 1/4TH OF
CREDITED SERVICE THE MAXIMUM TAXABLE THE MAXIMUM TAXABLE
AT THE BEGINNING SOCIAL SECURITY WAGE BASE SOCIAL SECURITY WAGE BASE
OF THE PLAN YEAR FOR THE PLAN YEAR FOR THE PLAN YEAR
---------------- ------------------------- -------------------------
0 to 4 1.5% 3.0%
5 to 9 1.9% 3.8%
10 to 14 2.5% 5.0%
15 to 19 3.1% 6.2%
20 to 24 4.0% 8.0%
25 to 29 5.0% 10.0%
30 or more 6.4% 12.8%
No credits shall be made to the Future Service Account
under this subsection B. for the Plan Year in which an
Employee is first employed by the Company. No credits
shall be made to the Future Service Account under this
subsection B. for any Plan Year unless the individual is,
at some time during such Plan Year, either an Employee or
an individual described in Section 3.02. An individual
who is otherwise eligible to receive a credit under this
subsection B. for a Plan Year shall not fail to receive
such credit solely because he completes less than 1,000
Hours of Service in that Plan Year.
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C. The increases in an Employee's or Former Employee's
Accounts during the Transition Period shall be determined
in accordance with Appendix E. On the last day of each
Plan Year ending after the Transition Period, each
Employee's or Former Employee's Accounts shall be
increased by a percentage of the account balance at the
beginning of such Plan Year. The applicable percentage
for the Plan Year shall be indicated in Appendix H.
The Funds Committee of the Board of Directors of Dana
Corporation may increase the applicable percentage for any
Plan Year by adopting a written resolution that adds the
increased percentage to the table in Appendix H.
If an Employee or Former Employee dies after completing
five years of Vesting Service and before his Benefit
Commencement Date, and if such Employee's or Former
Employee's Surviving Spouse is eligible to receive a
deferred benefit pursuant to Section 3.07 A., below, the
Employee's or Former Employee's Accounts shall be
increased as described in the first paragraph of this
subsection C. until the survivor benefit commences or is
paid.
D. The Employee's or Former Employee's Earned Benefit Account
shall equal the sum of (1) his Accrued Benefit Account
plus (2) his Future Service Account plus (3) the product
of (a) his Supplemental Benefit Account times (b) the
ratio specified in Appendix E.
As of any date within the Plan Year, the Employee's or
Former Employee's Earned Benefit Account shall include (1)
a pro rata share of the credits to be made as of the end
of the Plan Year in accordance with subsection C., above,
and (2) the credit that would be made as of the end of the
Plan Year in accordance with subsection B., above, based
on the Employee's Earnings received in that Plan Year
prior to such date.
3.02 CREDITS WHILE DISABLED OR SEPARATED, OR ON MILITARY LEAVE
An Employee who becomes entitled to benefits under a
Company-sponsored short-term disability plan, long-term
disability plan, or income protection plan, or who is on an
approved leave of absence to enter into active service in the
Armed Services of the United States (or any of its reserve
units), shall continue to receive credits under his Future
Service Account, shall continue to earn his Supplemental Benefit
Account, and shall earn Vesting Service and Credited Service
under the Plan, during any period in which he is entitled to
benefits under such other plan, as well as during the period of
such military leave of absence (not to exceed four
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years, or any longer period during which he retains re-employment
rights under a federal statute governing the re-employment of
members of the Armed Services). For the purpose of determining
the amount credited to such individual's Future Service Account
under Section 3.01 B. of the Plan, the individual's Earnings shall
be determined as though he continued to receive basic salary, at
the rate last in effect, during the period of such benefit
entitlement or military leave of absence, whichever the case may
be.
An individual described in this Section 3.02 shall not be eligible
to receive a distribution from the Plan during the period of his
leave of absence to serve in the Armed Services or while he is
entitled to receive benefits under a Company-sponsored short-term
disability plan, long-term disability plan, or income protection
plan. If the individual does not return to employment with the
Company when the period of such military leave of absence or
benefit entitlement ceases, he shall be eligible to receive a
distribution of his Earned Benefit Account under the Plan in
accordance with Section 3.04, Section 3.06, or Section 3.08,
whichever is applicable, as if his employment with the Company had
terminated on the date on which such military leave of absence or
benefit entitlement ceased.
Notwithstanding the foregoing, if an individual's Vesting Service
calculated under Section 1.27 B. (without regard to this Section
3.02) would be greater than his Vesting Service calculated under
this Section 3.02, such individual's Vesting Service shall be
calculated under Section 1.27 B. (without regard to this Section
3.02), and the date on which such individual's employment is
deemed to have terminated will be determined under Section 1.27 B.
3.03 ACCOUNTS FOR INDIVIDUALS WHOSE EMPLOYMENT TERMINATES
A. If an individual terminates his employment with an
Employer prior to the Adoption Date, and if such individual
is reemployed by an Employer and becomes a Participant
before his Benefit Commencement Date, his accrued benefit
under any tax-qualified defined benefit plan that has
become part of the Plan shall be converted to an Accrued
Benefit Account in accordance with Appendix E. If an
individual terminates his employment with an Employer prior
to the Adoption Date, and if such individual is reemployed
by the Employer and becomes a Participant after his Benefit
Commencement Date, he shall be subject to the rules set
forth in E., below.
B. If an Employee terminates his employment with an Employer
after the Adoption Date, and if such Former Employee had
acquired a vested right to his Earned Benefit Account, such
Former Employee's Accounts shall be
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maintained in accordance with the terms of the Plan, and
shall be increased pursuant to Section 3.01 C., until such
Former Employee's (or, where applicable, his Surviving
Spouse's) Benefit Commencement Date, provided, however,
that in the year of termination of employment, the Former
Employee's Accounts determined as of the date of
termination (rather than as of the beginning of the Plan
Year) shall receive interest credits at the rate in effect
for that year from the date of termination to the earlier
of his Benefit Commencement Date or the end of the year in
which his termination of employment occurred.
C. If an Employee terminates his employment with the Company
before he has acquired a vested right to his Earned Benefit
Account, his Accounts shall be increased pursuant to
Section 3.01 C. until he incurs five consecutive Breaks in
Service.
D. If an individual described in Section 3.03 C., above,
incurs five consecutive Breaks in Service, his Accounts
shall cease to be maintained, and his Vesting Service and
Credited Service for the period prior to the Breaks in
Service shall be disregarded for all purposes under the
Plan.
E. If an individual is reemployed by the Company after his
Benefit Commencement Date, his Credited Service earned
before such re-employment shall be disregarded for purposes
of determining his rate of benefit accrual after
reemployment and his Credited Service earned after such
reemployment shall be disregarded for purposes of
determining the earned portion of his Supplemental Benefit
Account. Such Participant's benefit payments shall
continue as though the Participant had not been reemployed.
If an individual is reemployed by the Company before his
Benefit Commencement Date, and before a 12-month period has
elapsed since the Employee last performed any service for
the Company, then he shall be credited with Vesting Service
for the period of his absence, but shall not earn any
Credited Service during such period of absence for purposes
of determining the earned portion of his Supplemental
Benefit Account.
3.04 PAYMENT OPTIONS
Except as provided in Section 3.08, below, an Employee who retires
at his Normal, Early, or Postponed Retirement Date may elect the
benefit described in A., B., or C., below, or may elect half of
the benefit described in A. and half of
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the benefit described in either B. or C. Any election of a
benefit described in this Section 3.04 must satisfy the
requirements of Section 3.05, below.
A. A lump-sum payment equal to the amount of the
Participant's Earned Benefit Account as of the payment
date.
B. A monthly annuity benefit that remains level throughout
the Participant's lifetime, payable in one of the
following forms:
1. LIFE ANNUITY
A monthly retirement benefit payable only during the
Participant's lifetime that is the actuarial
equivalent of the amount of the Participant's Earned
Benefit Account as of the Benefit Commencement Date,
determined on the basis of the factors using 120% of
the Immediate PBGC Interest Rate, as indicated in
Appendix C.
2. JOINT AND SURVIVOR OPTION
In lieu of the life annuity described in Section
3.04 B. 1., above, a Participant may elect an
Actuarially Adjusted monthly retirement benefit with
the provision that if his joint annuitant shall be
living at his death, 50%, 75%, or 100% (at the
election of the Participant) of the Actuarially
Adjusted monthly retirement benefit payable to the
Participant shall be payable to his joint annuitant
during the further lifetime of such joint annuitant.
3. FIVE- OR TEN-YEAR CERTAIN OPTION
a. In lieu of the life annuity described in
Section 3.04 B. 1., above, a Participant may
elect an Actuarially Adjusted life annuity
payable with either of the following
provisions:
(i) the provision that if the
Participant dies before 60 monthly
payments have been made to him, there
shall be paid to his beneficiary,
commencing on the first day of the
month following his death, for the
remainder of such 60 months, the
monthly benefit that had been paid to
the Participant, or
(ii) the provision that if the
Participant dies before 120
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monthly payments have been made to
him, there shall be paid to his
beneficiary, commencing on the first
day of the month following his death,
for the remainder of such 120 months,
the monthly benefit that had been
paid to the Participant.
Such election shall be made in the form
prescribed by the Company, and shall include
the designation of a beneficiary.
b. A Participant may change the beneficiary
designated pursuant to paragraph a., above,
at any time; provided, however, that any
change in the designated beneficiary must be
made in accordance with the spousal consent
requirements of Section 3.05, below. If,
upon the death of a Participant after his
Benefit Commencement Date, no
validly-designated beneficiary exists, or if
a designated beneficiary dies prior to the
complete disbursement of the payments due
and such designated beneficiary had not
named a beneficiary, the remaining monthly
payments shall be paid to:
(i) the Surviving Spouse of the deceased
Participant, if any, or
(ii) if there is no Surviving Spouse at
the time a monthly payment is made,
in equal shares to the children of
the deceased Participant, if any,
surviving at the time such monthly
payment is made, or
(iii) if there is no Surviving Spouse or
surviving child at the time a
monthly payment is made, to the
executor or administrator of the
estate of the last to die of the
deceased Participant or the deceased
designated beneficiary.
In the event a Participant designates his
spouse as beneficiary and they thereafter
divorce, such designation shall be
automatically revoked.
4. SOCIAL SECURITY LEVEL INCOME OPTION
A Participant may elect to receive part of his
benefit in the form of
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22
a temporary monthly benefit equal to the highest
monthly Social Security retirement benefit that
would be payable to an eligible individual retiring
at age 62 in the year of the election. The last
payment of such temporary monthly benefit shall be
due on the first day of the month of the
Participant's sixty-second birthday. A Participant
making this election shall have his Accounts reduced
by the present value of such temporary monthly
benefit, determined in accordance with Appendix C,
and the balance of his benefit shall be calculated
based on the remainder of his Earned Benefit Account
after such reduction.
If such present value exceeds the amount of his
Earned Benefit Account, however, such temporary
monthly benefit shall equal the amount of the
temporary monthly benefit determined in accordance
with the preceding paragraph times the ratio of such
present value to the amount of his Earned Benefit
Account, and no additional benefits shall be payable
after the first day of the month of his sixty-second
birthday.
If a Participant dies before the first day of the
month of his sixty-second birthday, the temporary
monthly benefit shall be paid to the Participant's
beneficiary until the first day of the month in
which the Participant would have reached age 62.
C. A monthly annuity benefit, payable only during the
Participant's lifetime, that increases 5% in amount as of
the first day of each Plan Year (or, if smaller, by the
percentage increase in the Consumer Price Index for Urban
Wage Earners during the preceding Plan Year). The amount
of such benefit during the first Plan Year of payment shall
equal the amount of the Participant's Earned Benefit
Account as of the Benefit Commencement Date (excluding any
credits made during that Plan Year in accordance with
Section 3.01 C.), divided by the applicable factor from the
table in Appendix C, based on the Participant's age at the
Benefit Commencement Date. No survivor benefit shall be
provided with respect to the benefit described in this
Section 3.04 C.
3.05 AUTOMATIC FORMS OF PAYMENT AND ELECTIONS OF OPTIONAL FORMS
A. AUTOMATIC ELECTION OF LIFE ANNUITY
If a Participant is not married on the date his benefits
are to commence, then
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he shall be deemed automatically to have elected to receive
his entire benefit under the life annuity option described
in Section 3.04 B. 1., above, unless he specifically elects
against this option as provided in subsection C., below.
B. AUTOMATIC ELECTION OF JOINT AND SURVIVOR ANNUITY
If a Participant is married on the date his benefits are to
commence, then he shall be deemed automatically to have
elected to receive his entire benefit under the joint and
survivor option described in Section 3.04 B. 2., above,
with his spouse (as of his Benefit Commencement Date) as
his 50% joint annuitant, unless he specifically elects
against this option as provided in subsection C., below.
C. REQUIREMENTS FOR ELECTION
Each Participant described in subsection A. or B., above,
shall be given an election period no longer than 90 days,
ending on his Benefit Commencement Date, within which to
decline in writing the life annuity or joint and survivor
annuity, as the case may be, and to elect to receive
retirement benefits in another form provided by the Plan.
An election to decline the life annuity or joint and
survivor annuity and to receive retirement benefits in
another form provided by the Plan may be made only during
the 90-day election period. Any election made during the
90-day election period may be revoked during the election
period by the Participant. Such election or revocation
shall be subject to the following terms and conditions:
(1) Any election or revocation shall be made in writing
on a form filed with the Plan Administrator.
(2) The election to decline the joint and survivor
annuity shall be ineffective unless the
Participant's spouse consents in writing to such
election, and such consent acknowledges the effect
of such election and is witnessed by a Plan
representative or notary public. The spouse's
consent must acknowledge the effect of the
designation of any beneficiary or class of
beneficiaries and any contingent beneficiary.
(3) Paragraph (2), above, shall not apply if the Plan
Administrator determines that consent cannot be
obtained because no spouse exists, because the
spouse cannot be located, or because of such other
cir-
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cumstances as are specified by the Secretary of
the Treasury by regulation.
(4) Any consent by a spouse pursuant to paragraph (2),
above, shall be effective only with respect to such
spouse. Similarly, any failure to obtain the consent
of a spouse for the reasons described in paragraph
(3), above, shall be effective only with respect to
such spouse.
(5) To the extent provided in a qualified domestic
relations order, as defined in Section 414(p) of the
Code, a former spouse of a Participant shall be
treated as the spouse of such Participant for
purposes of this Section 3.05.
D. NOTICES
The Plan Administrator shall provide to each Participant,
not more than 90 nor less than 30 days before the Benefit
Commencement Date, a written explanation of the automatic
life annuity or joint and survivor annuity described in
this Section, information concerning optional forms of
benefit, and notification of the Participant's right to
waive the life annuity or joint and survivor annuity and
the right to revoke a previous election to waive the life
annuity or joint and survivor annuity.
3.06 VESTED DEFERRED RETIREMENT BENEFIT
This Section 3.06 shall apply if a Former Employee is entitled to
a Vested Deferred Retirement Benefit pursuant to Section 2.06 of
the Plan and the amount of the Former Employee's vested Earned
Benefit Account at the time of his termination of employment is
greater than $3,500.
If the Vested Deferred Retirement Benefit commences at a time when
the Former Employee does not satisfy the age and service
requirements in the following paragraph, the Vested Deferred
Retirement Benefit shall be paid in the automatic form specified
in Section 3.05 A. or Section 3.05 B., whichever is applicable,
unless the Former Employee elects a lump-sum benefit. The Former
Employee may receive the Vested Deferred Retirement Benefit in the
form of a lump-sum benefit described in Section 3.04 A. of the
Plan if he satisfies the election and consent requirements of
Section 3.05; but he may not elect to receive the Vested Deferred
Retirement Benefit in any other optional form described in the
Plan.
If a Former Employee has reached at least age 50 and completed at
least 10 years
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of Vesting Service, and if the sum of the Former Employee's age
and years of Vesting Service equals 70 or more, the Former
Employee may elect to receive his Vested Deferred Retirement
Benefit in any of the optional forms described in Section 3.04 of
the Plan (subject to the election and consent requirements of
Section 3.05).
The Former Employee must make application for a lump-sum payment
or for commencement of a Vested Deferred Retirement Benefit on a
form approved for this purpose by the Company. Such benefit
shall commence effective as of the first day of the month
following the date the application is received by the Company,
provided that such Benefit Commencement Date complies with the
notice requirements set forth in Section 3.05 D. If such
application is not made within 60 days after the Former Employee
attains age 65, the Company shall make a reasonable effort to
locate him and notify him of the necessity of making the
application.
3.07 SURVIVOR BENEFIT
A. BENEFIT
If a Participant dies before benefits begin to be paid
under the Plan, and after reaching Normal Retirement Age
while employed by the Company or after completing five
years of Vesting Service, a benefit shall be paid to the
beneficiary described in B., below.
If such beneficiary is not the Participant's Surviving
Spouse, the beneficiary shall receive, as soon as
practicable after the Participant's death, a lump-sum
payment equal to the amount of the Participant's Earned
Benefit Account.
If such beneficiary is the Participant's Surviving Spouse,
the Surviving Spouse shall receive a level monthly benefit
determined in accordance with Section 3.04 B. 1., based on
the age of the Surviving Spouse at the Benefit Commencement
Date. In lieu of such monthly benefit, the Surviving
Spouse may elect a lump-sum payment of the Earned Benefit
Account. The Surviving Spouse may elect to commence the
level monthly benefit or to receive the lump-sum payment at
any time between the date of the Participant's death and
the date on which the Participant would have attained age
70 1/2.
If the amount of the Participant's vested Earned Benefit
Account at the time
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of his death is $3,500 or less, such Account shall be paid
in accordance with Section 3.08, below, and not in
accordance with the preceding paragraph.
B. BENEFICIARY
Subject to the consent of the Participant's spouse, each
Participant may designate, or change a prior designation
of, a beneficiary or beneficiaries to receive benefits
under this Plan in the event of the Participant's death
before his Benefit Commencement Date. A married individual
who is still employed by the Company may not designate any
beneficiary other than his spouse unless the individual has
attained age 35 (or will attain age 35 during the Plan Year
in which the designation is made). Absent the valid
designation (with spousal consent) of an alternate
beneficiary or beneficiaries, the Participant's Surviving
Spouse shall be the designated beneficiary.
If no designated beneficiary is living at the time any
benefit is to be paid, such benefit shall be paid to:
1. The Surviving Spouse of the deceased Participant,
if any, or
2. If there is no Surviving Spouse at the time a
benefit is paid, in equal shares to the children of
the deceased Participant, if any, surviving at the
time the benefit is paid, or
3. If there is no Surviving Spouse or surviving child
at the time a benefit is paid, to the executor or
administrator of the estate of the last to die of
the deceased Participant or the deceased designated
beneficiary.
C. NOTICE AND CONSENT
The Plan Administrator shall provide to each Participant a
written explanation of the Surviving Spouse benefit
described in A., above; information concerning the
nonspouse benefit described in A., above; notification of
the Participant's right to waive the Surviving Spouse
benefit; the requirements regarding spousal consent to such
a waiver; and the Participant's right to revoke such a
waiver. The Plan Administrator shall provide the notice
described in this paragraph within the last to end of (1)
the three-year period preceding the year in which an
Employee attains age 35, or (2) the twelve-month period
beginning on an Employee's first day of participation in
the Plan, or (3) in the case of a Former Employee whose
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27
employment terminates before he reaches age 35, the period
beginning twelve months before, and ending twelve months
after, the Former Employee's termination of employment with
the Company. The spouse's consent to such a waiver shall
be obtained in a manner that satisfies the rules set forth
in paragraphs (1) through (5) of Section 3.05 C. of the
Plan.
3.08 CASH-OUT OF SMALL BENEFITS
If the amount of the Participant's vested Earned Benefit Account
at the time of his retirement, death, or termination of employment
is $3,500 or less, the amount of such Account shall be paid in the
form of an immediate lump-sum payment, and neither the Participant
nor a Surviving Spouse may elect deferred payment or payment in
the form of a monthly benefit.
3.09 DIRECT ROLLOVERS
If a Participant, a Surviving Spouse, or an alternate payee named
in a qualified domestic relations order is entitled to receive an
"eligible rollover distribution" (within the meaning of Section
402(c)(4) of the Code) from the Plan on or after January 1, 1993,
the Plan shall, at the election of the recipient, make a direct
rollover of the taxable portion of the distribution to an
"eligible retirement plan" (within the meaning of section
401(a)(31)(D)). This Section 3.09 is intended, and shall be
construed, solely to satisfy the direct rollover requirements of
Section 401(a)(31) of the Code: it shall not confer any rights
other than those required under Section 401(a)(31) and the
regulations or other guidance of general applicability
interpreting that section.
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ARTICLE IV
TRANSFERRED EMPLOYEES
4.01 TRANSFER OUT OF OR INTO THE PLAN
An Employee covered by the Plan who is transferred, whether before
or after the Adoption Date, to a position wherein he is no longer
covered by this Plan shall continue to earn portions of his
Supplemental Benefit Account as long as he continues to earn
Credited Service, and shall continue to receive credits in
accordance with Section 3.01 C., but shall not receive any credits
in accordance with Section 3.01 B. with respect to Earnings
received after the transfer date.
This paragraph shall apply to any individual transferred into or
out of a position covered by the Plan, whether such transfer takes
place before or after the Adoption Date. If an individual to whom
this paragraph applies is entitled to any pension benefit under
any other Company pension plan, the benefit payable under this
Plan shall be equal to the excess of (1) the benefit otherwise
payable pursuant to the Plan, over (2) the corresponding benefit
payable under any such other Company pension plan that is
attributable to periods of employment for which benefits accrue
under this Plan in accordance with subsection 3.01 B., above, or
for any periods for which Credited Service is granted under
Appendix E.
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ARTICLE V
FUNDING
5.01 PENSION FUND
The Company has established a Fund to be held and invested by the
Trustees and their successors, or by a life insurance company or
companies, into which the Company's payments to fund pensions
shall be made. No Employee shall be required or permitted to make
any payment to the Fund. Benefits under the Plan shall be payable
only from the Fund and all expenses of the Fund shall be payable
from the Fund except to the extent the Company shall pay them.
5.02 PENSION FUND TRUSTEE OR INSURER
The Company may enter into one or more trust agreements with a
Trustee or Trustees selected by the Company to manage or operate
the Fund and to receive, hold and disburse such contributions,
interest, and other income as may be necessary to pay such
benefits under the Plan as are not provided for by an insured
fund; and/or the Company may enter into one or more contracts with
an insurance company or companies selected by the Company for the
payment of such benefits under this Plan as are not provided for
by a trust fund.
The Company may select and contract with a Trustee or Trustees or
insurance company or companies, remove any Trustee or Trustees or
insurance company or companies, select successors, and determine
the form and terms of the trust agreements with the Trustee or
Trustees or the form of the insurance contracts with the insurance
company or companies.
5.03 CONTRIBUTIONS TO THE PENSION FUND
The Company shall make contributions to the Fund in such amounts
and at such times as the Company shall determine. The Company
intends, subject to the provisions of Section 9.02, to make
contributions to the Fund sufficient to satisfy the minimum
funding requirements of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"). Except to the extent otherwise
required by the Pension Benefit Guaranty Corporation pursuant to
Title IV of ERISA, the Company shall not be required to make any
contributions to the Fund, or otherwise to provide any benefit
described by the Plan, after the Plan has been terminated. Each
contribution made to the Fund shall be made on the condition
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that it is currently deductible under Section 404 of the Code for
the taxable year with respect to which the contribution is made
and without regard to any subsequent amendment improving benefits
under the Plan.
The credits described in Section 3.01 B. shall be made to the
Future Service Accounts of eligible Employees regardless of the
amount of the Company contribution during any Plan Year.
Notwithstanding any other provision in this Plan to the contrary:
A. In the case of a contribution made by the Company by a
mistake of fact, such contribution shall be returned to
the Company within one year after its payment.
B. If the deduction of a contribution is disallowed by the
Internal Revenue Service for the taxable year with respect
to which the contribution is made, the contribution
(adjusted for any investment losses allocable thereto, but
not for any investment gains allocable thereto) shall be
returned to the Company, to the extent disallowed, within
one year after the disallowance.
5.04 GAINS WITHIN FUNDS
Any actuarial gain of any kind shall be used to reduce the
Company's future contributions to the Fund, and shall not be
applied to increase the benefit that any individual would
otherwise receive under the Plan.
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ARTICLE VI
ADMINISTRATION
6.01 GENERAL ADMINISTRATION
The Committee has the overall responsibility and authority as
named fiduciary to manage and control the operation and
administration of the Plan. The Committee may designate one or
more individuals to carry out the Company's fiduciary
responsibility and authority to manage and control the Plan
assets.
The Committee shall carry out the following responsibilities and
exercise the following authority:
A. To determine the amounts and time of payment of benefits
and the rights of Participants and beneficiaries to Plan
benefits, all in accordance with the terms of the Plan;
B. To take any actions necessary to assure timely payment of
benefits to any Participant or beneficiary eligible to
receive benefits under the Plan; and to assure a full and
fair review for any Participant or beneficiary who is
denied a claim to any benefit under the Plan;
C. To maintain Plan records, to communicate required
information to Participants and their beneficiaries, and
to submit required reports to appropriate regulatory
authorities;
D. To employ other persons to render advice with respect to
any responsibility or authority being carried out by the
Committee, including the employment of counsel, and to
assist in the administration of the Plan;
E. To give necessary or appropriate instructions relating to
plan administration to any person or entity appointed to
provide services that the Committee and/or the Company
requires in performing its duties;
F. To take any action necessary or appropriate to assure that
the Plan is administered for the exclusive purpose of
providing benefits to Participants and their beneficiaries
in accordance with the Plan and defraying reasonable
expenses of administering the Plan, subject to the
requirements of ERISA and, to the extent not preempted by
ERISA, the requirements of the law of
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Ohio; and
G. To construe the terms of the Plan, in its sole discretion.
6.02 APPLICATIONS AND INFORMATION TO BE SUPPLIED
Participants and beneficiaries shall furnish such benefit
applications, documents, evidence and information as the Plan
Administrator may deem necessary or desirable for the purpose of
administering the Plan. It shall be a condition for payment of
benefits under the Plan that each person must furnish promptly
true and complete data, evidence, and information and sign such
applications and documents as may be required.
6.03 CLAIMS PROCEDURE
A request for a Plan benefit shall be deemed filed when a written
communication is made by a Participant or beneficiary, or the
authorized representative of either, that is reasonably calculated
to bring the claim to the attention of the Plan Administrator.
If a claim is wholly or partially denied, notice of such decision
shall be furnished to the claimant within 90 days after the
receipt of the claim by the Plan Administrator. Such notice shall
include:
A. The specific reason or reasons for the denial;
B. Specific reference to pertinent Plan provisions on which
denial is based;
C. A description of any additional material or information
necessary to perfect the claim and explanation of why such
material or information is necessary; and
D. An explanation of the Plan's claim review procedure.
Within 60 days from the receipt of the notice of denial, the
claimant may appeal such denial to the Plan Administrator for a
full and fair review. The review shall be instituted by the
filing of a written request for review by the claimant or his
authorized representative within the 60-day period stated above. A
request for review shall be deemed filed as of the date of receipt
of such written request by the Plan Administrator. The decision
of the Plan Administrator shall be made not later than 60 days
after the receipt of the request for review, unless special
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33
circumstances, such as the need to hold a hearing, require an
extension of time, in which case decisions shall be rendered not
later than 120 days after receipt of a request for review. The
claimant, or his authorized representative, may review all
pertinent documents, may submit issues and comments in writing,
and may do such other appropriate things as the Plan Administrator
may allow.
6.04 ADMINISTRATIVE DISCRETION
The Committee shall have discretionary authority to determine
eligibility for benefits, to construe the terms of the Plan, and
to decide any and all matters arising under the Plan, including
without limitation the right to remedy possible ambiguities,
inconsistencies, or omissions by general rule or particular
decision; provided that all such interpretations and decisions
shall be applied in a uniform and nondiscriminatory manner to all
Participants and beneficiaries who are similarly situated.
To the extent that administrative powers or duties are properly
delegated to the Plan Administrator or to any other individual or
entity, such individual or entity shall have discretionary
authority, as described in the preceding paragraph, to exercise
such powers or duties.
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ARTICLE VII
RETIREMENT BENEFIT PAYMENTS
7.01 MANNER OF PAYMENT
Retirement benefits shall normally be paid monthly. The first
monthly payment of an Employee's retirement benefit shall be made
as of his Benefit Commencement Date. Thereafter, the retirement
benefit shall be payable monthly, but in no event shall a
retirement benefit be payable after the date of the Participant's
death, except to the extent that the form of payment elected by
the Participant expressly provides for benefits to be paid after
his death to his Surviving Spouse or other beneficiary.
7.02 SMALL AMOUNTS
In the event that any monthly retirement benefit payable under
the Plan would amount to less than $50.00, the Company may direct
that such payments be made at such intervals as will make each
payment amount to at least $50.00.
7.03 BENEFIT COMMENCEMENT DATES
A. Except as provided in Section 3.08, above, no benefit
shall be payable under the Plan to a Participant until
such Participant reaches Normal Retirement Age, unless
such Participant is eligible for and elects an earlier
Benefit Commencement Date.
B. A Former Employee's benefit under the Plan shall commence
not later than 60 days after his Normal Retirement Date
(or, if later, his Postponed Retirement Date), provided
that the Former Employee has applied for the benefit on a
form approved for this purpose by the Company.
7.04 MINIMUM REQUIRED DISTRIBUTIONS
A. Notwithstanding any other Section of the Plan, the
distribution of a Participant's benefit under the Plan
shall commence not later than April 1 of the calendar year
following the calendar year in which he attains age 70
1/2, unless he is described in subsection B., below.
B. If a Participant attained age 70 1/2 before January 1,
1988, and if he was not
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a 5% owner (as that term is defined in Section 416(i)(1)(B)
of the Code) at any time after the end of the Plan Year in
which he attained age 65 1/2, his benefit under the Plan
shall commence not later than April 1 of the calendar year
following the later of (1) the calendar year in which he
attains age 70 1/2, or (2) the calendar year in which he
retires from the Company.
C. Unless the mode of distribution is a single payment,
distributions will be made over a period not extending
beyond the Participant's life or life expectancy, or the
joint lives or life expectancies of the Participant and his
beneficiary. If the Participant's entire benefit is to be
distributed over a period longer than one (1) year, then
the amount to be distributed each year shall be no less
than the amount prescribed by the regulations under Section
401(a)(9) of the Code.
D. If a Participant dies before his Benefit Commencement
Date, his benefit shall be distributed in accordance with
Section 3.07 A., above.
E. Benefits shall not be distributed pursuant to any schedule
under the Plan unless the schedule satisfies the incidental
benefit requirement at Section 401(a)(9)(G) of the Code and
the regulation at Prop. Treas. Reg. Section 1.401(a)(9)-2.
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ARTICLE VIII
MISCELLANEOUS PROVISIONS
8.01 NONDUPLICATION OF BENEFITS
Notwithstanding any other provision of this Plan, there shall be
no duplication of benefits under this Plan and/or any other
qualified plan maintained by the Company, other than the Savings
and Investment Plan for Management Employees of Dana Corporation.
8.02 MERGER, CONSOLIDATION OR TRANSFER
This Plan may be merged or consolidated with, or its assets and
liabilities may be transferred to, any other plan. Each
Participant must receive a benefit immediately after such merger,
consolidation, or transfer, if the transferee plan were then to
terminate, that is equal to or greater than the benefits he would
have received immediately prior to such merger, consolidation, or
transfer if the Plan were to have terminated on such date.
8.03 EXCLUSIVE BENEFIT OF PARTICIPANTS
Except as provided in Section 5.03 of the Plan, it shall be
impossible at any time prior to satisfaction of all liabilities
hereunder for contributions of the Company or any part of the Fund
to revert to the Company or to be used for or diverted to any
purpose other than the exclusive benefit of Participants and their
beneficiaries and the payment of administrative expenses of the
Plan.
8.04 CONSTRUCTION
The headings in the Plan are inserted for convenience of reference
only and are to be ignored in any construction of the provisions
hereof. Pronouns and other words indicating masculine, feminine,
or neuter gender shall be deemed to include other genders unless
the context clearly indicates otherwise, and singular words shall
include the plural in all cases where such meaning would be
appropriate.
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8.05 MAXIMUM LIMITATION ON BENEFIT AMOUNT
A. In addition to any other limitation set forth in the Plan
and notwithstanding any other provision of the Plan, in no
event shall the annual amount of a Participant's accrued
benefit (including any optional benefit) determined under
the provisions of the Plan, together with the aggregate
annual amount of such Participant's accrued benefits under
all other defined benefit plans required to be aggregated
with the Plan under the provisions of Section 415 of the
Code, increase to an amount in excess of the maximum amount
permitted under Section 415 of the Code. For purposes of
applying the Section 415 limits to the Plan, a
Participant's compensation shall be determined under the
safe harbor definition in Treas. Reg. Section
1.415-2(d)(10), except that the Participant's compensation
for this purpose shall also exclude taxable car allowances
and taxable credits under a flexible benefits plan.
B. The limitation imposed by this Section 8.05 shall be
applied after taking into account (1) the transition rules
prescribed in Section 1106(i) of the Tax Reform Act of 1986
(and any other transition rule that preserved the
Participant's current accrued benefit under the Plan as of
the effective date of an amendment to Section 415 of the
Code), and (2) any cost-of-living increase that may be
taken into account pursuant to regulations or other
guidance issued under Section 415(d) of the Code.
C. In the event that the limitations provided in this Section
8.05 become applicable to a Participant who is entitled to
benefits under more than one defined benefit plan
maintained by the Company, the benefits under such other
plan or plans shall be reduced so that the benefits
provided under such other plan or plans and the benefit
provided under this Plan do not, in the aggregate, exceed
the limitations provided in this Section.
D. If the sum of the Participant's defined benefit plan
fraction and defined contribution plan fraction (as defined
in Section 415(e) of the Code) exceeds 1.0 for a Plan Year
(except to the extent permitted under regulations or other
guidance promulgated by the Secretary of the Treasury or
his designee), the Company shall cause the rate of benefit
accrual under the Plan to be adjusted to the extent
necessary to comply with the limitations of this Section
8.05.
8.06 FACILITY OF PAYMENT
In the event that it shall be found that any person who may become
entitled to a
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benefit under the Plan is unable to care for his affairs because
of illness or accident, any payment due may be paid to his legal
representative. Any such payment shall be a payment for the
account of such person and shall completely discharge any
liability of the Plan therefor. No heirs or personal
representative of a deceased Participant or other payee shall have
any claim to a benefit payable to such deceased Participant or
other payee, except such as is payable under the terms of the
Plan.
8.07 NONALIENATION OF BENEFITS
A. NONALIENATION RULE AND QDRO EXCEPTION.
1. The Plan shall not in any manner be liable for or
subject to the debts or liabilities of any
Participant or beneficiary. No right or benefit
under the Plan shall be subject in any manner to
alienation, sale, transfer, assignment, pledge, or
encumbrance of any kind, except to the extent
permitted under Section 401(a)(13) of the Code and
the regulations thereunder.
2. The nonalienation provisions of this Section shall
also apply to the creation, assignment, or
recognition of a right to any benefit payable with
respect to a Participant under a domestic relations
order, unless such order is determined to be a
qualified domestic relations order.
3. The terminology used in this Section 8.07 to
describe the rules governing domestic relations
orders shall have the same meaning as that used in
Section 206(d)(3) of ERISA and Section 414(p) of the
Code.
B. GENERAL PROCEDURES FOR PROCESSING DOMESTIC RELATIONS
ORDERS.
1. Any domestic relations order shall be referred to
the Plan Administrator or his designee within the
Company (each referred to in this Section 8.07 as
the Plan Administrator) as soon as it is received by
the Plan. The Plan Administrator shall review the
order and promptly notify the Participant and each
alternate payee (at the address included in the
domestic relations order) of the receipt of such
order and of the Plan's procedures for determining
the qualified status of domestic relations orders.
Each alternate payee may designate in writing a
representative to receive copies of notices that
otherwise would be sent to the alternate payee with
respect to the domestic
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relations order. The term "alternate payee" means
any spouse, former spouse, child or other dependent
of a Participant who is recognized by the domestic
relations order as having a right to receive all, or
a portion of, the benefits payable under the Plan
with respect to the Participant.
2. The Plan Administrator shall have full discretionary
authority to interpret and apply domestic relations
orders, ERISA Section 206(d)(3), and Code Section
414(p). This grant of authority shall be broadly
construed and shall include the discretionary
authority to interpret and apply ambiguous terms,
and to supply missing terms reasonably necessary to
a determination of the qualified status of a
domestic relations order. Within a reasonable period
after receipt of the order, the Plan Administrator
shall determine whether the order is a qualified
domestic relations order and shall notify the
Participant and each alternate payee of the
determination. In making the determination, the
Plan Administrator may consult with and rely upon
advisers.
3. Any dispute over the Plan Administrator's
determination shall be resolved through the Plan's
appeal procedure.
C. PROCEDURES FOR ANTICIPATED ORDERS.
1. The Plan Administrator shall not withhold or delay
the payment of any benefit that is otherwise due to
a Participant under the terms of the Plan at the
oral or written request of any individual who is
seeking a domestic relations order.
2. The Plan Administrator shall not withhold or delay
the payment of any benefit that is otherwise due to
a Participant under the terms of the Plan in
response to a court order entered in a domestic
relations proceeding unless the court order is a
domestic relations order.
D. PROCEDURES FOR DETERMINATION PERIOD.
1. During any period in which the issue whether a
domestic relations order is a qualified domestic
relations order is being determined (by the Plan
Administrator, by a court of competent jurisdiction,
or otherwise), the Plan Administrator shall maintain
a separate bookkeeping account for the amounts
(hereinafter referred to in this
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Section as the "segregated amounts") that would have
been payable to the alternate payee during such
period, if the order had been determined to be a
qualified domestic relations order. The segregated
amounts shall remain segregated for a period not
longer than 18 months, beginning with the date on
which the first payment would be required to be made
under the domestic relations order.
2. If, within the 18-month period described in
paragraph 1., above, the order (or modification
thereof) is determined to be a qualified domestic
relations order, the Plan Administrator shall pay
the segregated amounts (including any interest
thereon) to the person or persons entitled thereto.
The Plan shall credit the segregated amounts with
interest in accordance with the interest rates and
crediting rules that apply to the Participant's
Earned Benefit Account under Section 3.01 C. and D.
and Appendix H of the Plan.
3. If, within the 18-month period described in
paragraph 1., above --
a. it is determined that the order is not a
qualified domestic relations order, or
b. the issue as to whether such order is a
qualified domestic relations order is not
resolved,
the Plan Administrator shall pay the segregated
amounts (including any interest thereon) to the
person or persons who would have been entitled to
such amounts if there had been no order.
4. If a determination that an order is a qualified
domestic relations order is made after the close of
the 18-month period described in paragraph 1.,
above, the determination shall be applied
prospectively only.
E. PROCEDURES FOR PAYING AN ALTERNATE PAYEE'S BENEFIT.
1. An alternate payee may file a written election to
commence payment of the amount that he is entitled
to receive under a qualified domestic relations
order. An alternate payee may select any Benefit
Commencement Date that is permitted under the terms
of the qualified domestic relations order, including
a date that precedes the Participant's earliest
retirement date under the Plan, provided that the
Benefit Commencement Date (i) is not earlier than
the date on which
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the Plan Administrator receives the alternate
payee's written election, and (ii) is not later than
the latest date on which the Participant's benefit
under the Plan could commence.
2. An alternate payee may receive an immediate
single-sum distribution under the terms of a
qualified domestic relations order, provided that
the order directs that the alternate payee's benefit
be paid in a single sum and further stipulates that
payment of the single sum shall be in full
satisfaction of the alternate payee's right, title,
and interest in the Plan.
8.08 EVIDENCE OF SURVIVAL
The Company shall have the right to require satisfactory evidence
that a Participant, joint annuitant or beneficiary is living on
each and every date when a retirement benefit is due such person.
In the absence of such evidence when required by the Company, the
benefits otherwise due shall not be paid until such evidence shall
have been received.
8.09 GOVERNING LAW
The Plan and all rights thereunder shall be construed, regulated
and administered under the Employee Retirement Income Security Act
of 1974 insofar as it supersedes state laws. However, in any
matter where said Act may not control, this Plan shall be
construed, regulated and administered under the laws of Ohio, and
the Trustee shall be liable to account only in the federal courts
as provided by the Act or in the state courts of said state.
8.10 WITHHOLDING OF TAXES
The Trustee may withhold, or require withholding, from any
distribution that it is directed to make, such sum as the Trustee
may reasonably estimate is necessary to cover any taxes for which
the Trustee may be liable, which are, or may be, assessed with
regard to such distribution or because of a Participant's or
distributee's interest in the trust fund providing benefits under
the Plan, including (but not by way of limitation) any federal or
state estate or inheritance taxes for which the Trustee may be
liable as a result of being deemed to be in possession of property
of a Participant or a distributee (even if such liability is
partly or wholly attributable to property that is unrelated to
such trust fund). Upon discharge or settlement of such tax
liability, the Trustee shall distribute the balance of such sum,
if any, to the distributee from whose distribution it was
withheld, or if such
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distributee is then deceased, to such other person as the Company
shall direct. Prior to making any distribution hereunder, the
Trustee may require such releases or other documents from any
taxing authority, or may require such indemnity and surety bond,
as the Trustee shall reasonably deem necessary for its protection.
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ARTICLE IX
AMENDMENT OR TERMINATION
9.01 PLAN AMENDMENT
The Company reserves the right, at any time and from time to time,
to amend in whole or in part, either retroactively or
prospectively, any or all of the provisions of this Plan without
the consent of any Participant or beneficiary hereunder. Such
amendment shall be stated in an instrument executed by the
Company, provided, however, that no amendment:
A. Shall authorize, cause or permit part of the Fund (other
than such part as is required to pay taxes or other
administrative expenses) to be used for or diverted to
purposes other than the exclusive benefit of Participants
or their beneficiaries or estates, except as provided in
Section 5.03, above, or in Section 9.02, below.
B. Shall have the effect of vesting in the Company any
interest in or control over any part of the Fund, except as
provided in Section 5.03, above, or in Section 9.02, below.
C. Shall affect the rights, duties, or responsibilities of the
Trustee and/or insurance company without its consent.
D. Shall have any retroactive effect to deprive any
Participant of his vested interest already accrued, save
only that any such amendment may be made retroactive to the
extent necessary to conform the Plan to mandatory
provisions of applicable federal or state laws, regulations
or rulings.
The right to amend the Plan shall be exercised by the Board of
Directors of Dana Corporation pursuant to a written resolution;
provided, however, that either the Committee or the proper officer
or officers of Dana Corporation (including the chairman of the
Committee) may amend the Plan to the extent and in the manner
expressly provided in the Plan or in a written resolution adopted
by the Board of Directors. The adoption of any amendment to the
Plan shall be a settlor function undertaken on behalf of Dana
Corporation, and not a fiduciary function, even if the amendment
is adopted by an individual or group that otherwise serves as a
Plan fiduciary.
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9.02 PLAN TERMINATION
The Plan was established as a permanent program, and the Company
expects to continue the Plan indefinitely. However, the Company
reserves the right to terminate the Plan, in whole or in part, at
any time by a resolution of the Board of Directors of Dana
Corporation. In the event of the partial or complete termination
of the Plan, the accrued benefit of any affected Participant
shall become nonforfeitable to the extent then funded, except as
otherwise required by Section 9.03, below.
Upon the complete termination of the Plan, the assets then
remaining under the Plan, after providing for the expenses of the
Plan, shall be allocated (to the extent that they are sufficient)
for the purpose of providing benefits that have accrued to
Participants and their beneficiaries as of the date of such
termination, in a manner that is not inconsistent with the order
of precedence prescribed by Section 4044 of ERISA.
Any assets remaining in the Fund because of variations in actual
from expected actuarial requirements, after the complete
satisfaction of all liabilities under the Plan in accordance with
the preceding paragraph, shall revert to the Company.
9.03 TERMINATION AND PRE-TERMINATION RESTRICTIONS
A. BENEFIT RESTRICTION ON TERMINATION. Upon the termination
of the Plan pursuant to Section 9.02, the benefit of each
highly compensated employee and each highly compensated
former employee (both as defined in Section 414(q) of the
Code) shall be limited to a benefit that is
nondiscriminatory under Section 401(a)(4) of the Code.
B. BENEFIT RESTRICTION ON DISTRIBUTIONS.
1. The restrictions set forth in this subsection B.
shall apply only to a Participant who is one of the
25 highly compensated employees and highly
compensated former employees (both as defined in
Section 414(q) of the Code) with the greatest
compensation from the Company in the current or any
prior year. A Participant described in the
preceding sentence shall be referred to in this
subsection B. as a "Restricted Employee."
2. Except as provided in paragraph 3., below, the
benefits paid in any year to or on behalf of a
Restricted Employee shall not exceed the
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maximum amount permitted under Treas. Reg. Section
1.401(a)(4)-5(b)(3) or any successor to that
regulation, determined after taking into account any
applicable exceptions. The portion of any scheduled
benefit payment that exceeds the maximum amount
described in the preceding sentence shall be
referred to in this subsection B. as the "Restricted
Amount."
3. The Plan shall distribute the Restricted Amount to
or on behalf of a Restricted Employee if the
Restricted Employee enters into an agreement to
secure any necessary repayment to the Plan of the
Restricted Amount, and the Plan Administrator
determines that the agreement securing the
Restricted Employee's repayment obligation is in
all respects consistent with the escrow, bond, or
letter of credit arrangements described in Rev.
Rul. 92-76. The Plan Administrator may, in its
sole discretion, determine which of the three
permissible security arrangements the Restricted
Employee shall use to secure the Restricted
Employee's repayment obligation.
C. DURATION OF RESTRICTIONS.
1. The restrictions imposed under subsection B.,
above, on any scheduled benefit payment shall be
removed, and any escrow or similar security
arrangement with respect to the payment under
subsection B. shall be released, in the first Plan
Year in which the payment would not be restricted
under Treas. Reg. Section 1.401(a)(4)-5(b) or any
successor regulation.
2. This paragraph 2. shall apply to any benefit
payment that was made (or was scheduled to be made)
from the Plan before January 1, 1994, and that was
subject to the pre-termination restrictions set
forth in Treas. Reg. Section 1.401-4(c), as in
effect at the time of the payment. The
pre-termination restrictions imposed at the time of
the payment shall be removed, and any escrow or
similar security arrangement with respect to the
payment that was required to comply with those
restrictions shall be released, in the first Plan
Year beginning on or after January 1, 1994, in which
the payment would not be restricted under Treas.
Reg. Section 1.401(a)(4)-5(b) and this Section 9.03
(or, if earlier, in the first Plan Year in which the
distribution would no longer be restricted under
Treas. Reg. Section 1.401-4(c)).
D. INTERPRETATION. This Section 9.03 is intended, and shall
be construed,
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solely to comply with the pre-termination restrictions in
regulations under Section 401(a) of the Code: it shall not
impose any limitation on the benefit of any Participant
except to the extent necessary to satisfy the applicable
pre-termination restrictions.
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ARTICLE X
CHANGE IN CONTROL
10.01 CHANGE IN CONTROL
For purposes of the Plan, "Change in Control" means a change in
control of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934; provided
that, without limitation, such a change in control shall be deemed
to have occurred if and when (1) any "person" (as such term is
used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act
of 1934) is or becomes a beneficial owner, directly or indirectly,
of securities of Dana Corporation representing twenty percent
(20%) or more of the combined voting power of Dana Corporation's
then outstanding securities or (2) during any period of 24
consecutive months, commencing before or after July 1, 1988,
individuals who at the beginning of such 24-month period were
directors of Dana Corporation cease for any reason to constitute
at least a majority of the Board of Directors of Dana Corporation.
Notwithstanding anything to the contrary in this Plan, the term
"person" referred to in clause (1) above of this Section 10.01
shall not include within its meaning, and shall not be deemed to
include, for any purpose of this Plan, any employee benefit plan
(or related trust) sponsored or maintained by the Company.
10.02 BENEFITS IN THE EVENT OF A CHANGE IN CONTROL
The following amendments to the Plan shall automatically become
effective, without the need for any action by the Board of
Directors of Dana Corporation, the Committee, or any other person
or entity, as of the date on which a Change in Control occurs:
A. Section 1.01 D. shall be amended to read as follows:
"'EARNED BENEFIT ACCOUNT' means the sum of (1) the
Employee's or Former Employee's Accrued Benefit
Account, and (2) the Employee's or Former Employee's
Future Service Account, and (3) the Employee's or
Former Employee's Supplemental Benefit Account."
B. The first paragraph of Section 3.01 D. shall be amended to
read as follows:
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48
"The Employee's or Former Employee's Earned Benefit
Account shall equal the sum of (1) his Accrued
Benefit Account plus (2) his Future Service Account
plus (3) his Supplemental Benefit Account."
C. In Section 6. A. of Appendix E (the definition of First
Objective Benefit), the second sentence of paragraph
(a)(ii) shall be amended to read as follows:
"In no event, however, shall the amount determined
in accordance with the preceding sentence exceed
0.59% of the Employee's Final Monthly Earnings
(excluding any compensation not subject to FICA
tax) at June 30, 1988, reduced in accordance with
Treasury regulations if such Final Monthly Earnings
exceed $1,309, multiplied by the number of years
and fractional parts thereof of his projected
Credited Service three years before his Normal
Retirement Date (not in excess of 35) or, if less,
his actual Credited Service at the time of a Change
in Control."
10.03 AMENDMENT OR ELIMINATION OF CHANGE IN CONTROL PROVISIONS
A. The Board of Directors of Dana Corporation reserves the
right to amend, modify, suspend, or eliminate this Article
X prior to the date on which a Change in Control occurs;
provided, however, that any such amendment, modification,
suspension, or elimination shall be null and void, even if
it occurs prior to any Change in Control, if the
amendment, modification, suspension, or elimination occurs
after the time that a person described in clause (1) of
Section 10.01 has become the beneficial owner of
securities of Dana Corporation representing five percent
(5%) or more of the combined voting power of Dana
Corporation's then outstanding voting securities.
B. No other provision of the Plan shall be amended, modified,
suspended, or eliminated, directly or indirectly, in a
manner that would alter the meaning or operation of this
Article X or that would undermine or frustrate its
purposes, on or after the date on which a Change in
Control occurs or at any time at which this Article X
could not be amended, modified, suspended, or eliminated.
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ARTICLE XI
TOP HEAVY PROVISIONS
11.01 GENERAL
For any Plan Year beginning after 1983 for which this Plan is
considered a Top-Heavy Plan, the requirements of this Article
shall be met in accordance with Code Section 416, and the
regulations thereunder, notwithstanding any other Plan provisions
to the contrary.
11.02 VESTING
Any Employee who is an active Participant in the Plan during a
Plan Year in which the Plan is deemed to be Top-Heavy, or in any
Plan Year after a Plan Year in which the Plan is Top-Heavy, who
has completed at least two years of Vesting Service but who has
not reached Normal Retirement Age, shall have a nonforfeitable
right to a percentage of his accrued benefit determined under the
following table:
YEARS OF
VESTING SERVICE NONFORFEITABLE %
2 20
3 40
4 60
5 or more 100
Any benefit to which the Employee has a nonforfeitable right
pursuant to the preceding sentence, may not become forfeitable at
a subsequent date in the event the Plan later ceases to be
Top-Heavy.
11.03 MINIMUM BENEFITS
A. For any year in which this Plan is considered a Top-Heavy
Plan, each active Participant who is a Non-Key Employee
must derive an accrued benefit from Company contributions,
when expressed as an "Annual Retirement Benefit," that is
not less than the "Applicable Percentage" of the
Participant's average Earnings for years in the "Testing
Period." The minimum Annual Retirement Benefit shall be
determined without taking into account a Participant's
Social Security Benefit. If a Non-Key Employee is
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50
an active Participant both in this Plan and in any other
defined benefit plan included in an Aggregation Group that
is Top-Heavy, the minimum Annual Retirement Benefit
described in this Section 11.03 shall be reduced by the
amount of any minimum Annual Retirement Benefit provided
under such other Plan.
B. For purposes of this Section, the term "Applicable
Percentage" shall mean the lesser of (1) 2% multiplied by
the number of the Participant's years of Vesting Service
with the Company (excluding years of Vesting Service
completed in Plan Years beginning before January 1, 1984,
and years of Vesting Service with respect to which the
Plan was not a Top-Heavy Plan in the Plan Years ending
during such years of Vesting Service) or (2) 20%; the term
"Annual Retirement Benefit" shall mean a benefit payable
annually in the form of a single life annuity (with no
ancillary benefits) beginning at Normal Retirement Age;
and the term "Testing Period" shall mean a period of
consecutive years (not exceeding five) during which a
Participant had the greatest aggregate Earnings from the
Company, adjusted in accordance with Section 416(c)(1)(D)
of the Code for years that are not taken into account in
determining the Participant's Applicable Percentage.
C. In any Plan Year in which a Non-Key Employee is an active
Participant both in this Plan and in a defined
contribution plan included in an Aggregation Group that is
Top-Heavy, the Company shall not be required to provide
such Non-Key Employee with both the full separate defined
benefit plan minimum benefit and the full separate defined
contribution plan minimum allocation. Instead, the
Participant shall receive the minimum Annual Retirement
Benefit described in subsection B., above, and the
benefits provided under the defined contribution plan
shall be taken into account in determining whether the
minimum Annual Retirement Benefit under the Plan has been
provided.
11.04 TOP-HEAVY DETERMINATION
This Plan shall be deemed a "Top-Heavy Plan" with respect to any
Plan Year in which, as of the Determination Date, the present
value of cumulative accrued benefits under the Plan for Key
Employees exceeds 60% of the present value of the cumulative
accrued benefits under the Plan for all Employees. For purposes
of calculating the Top-Heavy Ratio described in the preceding
sentence, the present value of an Employee's cumulative accrued
benefits shall be determined as of the most recent Valuation
Date. In determining the ratio of accrued benefits for Key
Employees to accrued benefits for all other Employees, the Plan
Administrator
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51
shall use procedures outlined in Section 416(g) of the Code, or in
any regulations promulgated under that Section, both of which are
incorporated herein by reference. All plans within the
Aggregation Group shall be considered in determining whether this
Plan is considered a Top-Heavy Plan.
11.05 LIMITATION ON CONTRIBUTIONS AND BENEFITS
If for any Plan Year the Plan is a Top-Heavy Plan, then for
purposes of the limitations on contributions and benefits under
Section 415 of the Code, the dollar limitations in a Key
Employee's Defined Benefit Plan Fraction and his Defined
Contribution Plan Fraction shall be multiplied by 1.0, rather
than by 1.25.
11.06 DEFINITIONS
For purposes of this Section:
A. "Aggregation Group" means the following:
1. Each plan of the Company in which a Key Employee is
a Participant;
2. Each other plan of the Company that enables the plan
described in paragraph 1., above, to meet the
nondiscrimination requirements of Section 401(a)(4)
of the Code or the minimum participation
requirements of Section 410 of the Code;
3. At the option of the Company, any other plan
maintained by the Company as long as the expanded
Aggregation Group including such plan (or plans)
continues to satisfy the requirements of Section
401(a)(4) and 410 of the Code.
B. "Determination Date" means with respect to any Plan Year
the last day of the preceding Plan Year.
C. "Key Employee" means any individual who, at any time
during such Plan Year (or any of the four preceding Plan
Years) is:
1. Any officer of the Company whose annual
compensation exceeds 50 percent of the maximum
dollar limitation in effect under Section
415(b)(1)(A) of the Code for such Plan Year;
2. One of the ten persons employed by the Company
owning (or
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52
considered as owning within the meaning of Section
318 of the Code) the largest interest in the
Company. (In no event, however, shall an Employee
be considered as one of the ten employees owning the
largest interest in the Company if such employee
earns less than the maximum dollar limitation
provided under Section 415(c)(1)(A) of the Code, as
in effect for the Plan Year in which the
Determination Date falls);
3. Any person owning (or considered as owning within
the meaning of Section 318 of the Code) more than
five percent of the outstanding stock of the
Company, or stock possessing more than five percent
of the total combined voting power of such stock;
or
4. Any person owning (or considered as owning within
the meaning of Section 318 of the Code) more than
one percent of the outstanding stock of the
Company, or stock possessing more than one percent
of the total combined voting power of such stock,
and who has annual compensation of more than
$150,000.
D. "Non-Key Employee" means any Employee who is not a Key
Employee.
E. "Top-Heavy Ratio" means the percentage calculated in
accordance with Section 11.04 of the Plan and Section
416(g)(2) of the Code.
F. "Valuation Date" means the valuation date for minimum
funding purposes under the Plan on or next preceding the
Determination Date.
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ARTICLE XII
NORMAL, EARLY, AND ACCRUED BENEFITS
12.01 NORMAL RETIREMENT BENEFIT
The normal form of benefit accruing under the Plan is the
increasing annuity benefit described in Section 3.04 C.,
commencing at a Participant's Normal Retirement Date, in an
amount described in this Section 12.01. The Accounts maintained
in accordance with Section 3.01 represent the present value of
such accrued benefits, determined in accordance with Section
12.04.
The amount of the monthly Normal Retirement Benefit, payable for
the lifetime of a Participant who retires on or after July 1,
1988, on his Normal Retirement Date, shall equal the sum of (1)
the amounts accrued during each Plan Year, as described in A.
below, and (2) the Accrued Benefit described in Appendix E, and
(3) the Supplemental Benefit described in Appendix E. Such
amounts shall be automatically increased each year, as described
in B. below.
A. The benefit accrued for the period from the Adoption Date
through the end of the Plan Year in which the Adoption
Date occurs shall be determined in accordance with
Appendix E. For each Plan Year beginning after the Plan
Year in which the Adoption Date occurs, an Employee shall
accrue a benefit equal to the sum of (1) the applicable
rate from the following table times the Employee's
Earnings received while an active Participant during such
Plan Year, and (2) such rate times the excess of such
Earnings over 1/4th of the maximum Social Security taxable
wage base for such Plan Year. However, if the Employee
will not have completed 31 full years of Credited Service
at the end of the Plan Year in which he will attain age 65
(assuming that he is continuously employed by the Company
after the end of the Plan Year in which the benefit
described in this paragraph A. accrues), the Employee's
rate of benefit accrual shall be reduced 5% per year
(compounded annually) for each year that the Employee's
full years of Credited Service at the end of the Plan Year
in which he will attain age 65 will be less than 31 years.
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54
N is the number of full years of Credited Service at the
beginning of the Plan Year.
N BENEFIT ACCRUAL RATE N BENEFIT ACCRUAL RATE
- -------------------- - --------------------
0 0.000341205976986 15 0.000339193545062
1 0.000324958073320 16 0.000323041470487
2 0.000309483879352 17 0.000307658544274
3 0.000294746551764 18 0.000293008137404
4 0.000280711001680 19 0.000279055368956
5 0.000338635494090 20 0.000342925184585
6 0.000322509994371 21 0.000326595413890
7 0.000307152375592 22 0.000311043251324
8 0.000292526071992 23 0.000296231667928
9 0.000278596259040 24 0.000282125398026
10 0.000349118119098 25 0.000335863569079
11 0.000332493446760 26 0.000319870065789
12 0.000316660425486 27 0.000304638157895
13 0.000301581357605 28 0.000290131578947
14 0.000287220340577 29 0.000276315789474
30 0.000336842105263
or more
B. The increases in an Employee's or Former Employee's Earned
Benefit (and in the Supplemental Benefit that could accrue
in the future) during the Transition Period shall be
determined in accordance with Appendix E. On the last day
of each Plan Year ending after the Transition Period, each
Employee's or Former Employee's Earned Benefit as of the
beginning of the Plan Year (and the Supplemental Benefit
that could accrue in the future) shall be increased by a
cost-of-living escalator percentage for such Plan Year.
The applicable percentage for the Plan Year shall be as
indicated in Appendix H. Except as provided in Section
3.03 B., no benefit described in Section 12.01 A. shall be
increased during the Plan Year in which it is accrued. In
addition, no benefit described in this Section 12 shall be
increased after the Benefit Commencement Date for any
portion of such benefit.
The Committee may increase the applicable escalator
percentage for any
48
55
Plan Year by adopting a written resolution that adds the
increased percentage to the table in Appendix H.
C. An Employee shall not accrue any benefits under Section
12.01 A., above, with respect to the Plan Year in which he
is first employed by the Company. An individual shall not
accrue any benefits under Section 12.01 A., above, with
respect to any Plan Year unless the individual is, at some
time during such Plan Year, either an Employee or an
individual described in Section 3.02. An individual who
is otherwise eligible to accrue benefits under Section
12.01 A., above, with respect to a Plan Year shall not
fail to accrue such benefits solely because he completes
less than 1,000 Hours of Service in that Plan Year.
D. The amount of the monthly Normal Retirement Benefit shall
not be less than the greatest monthly Early Retirement
Benefit to which the Employee would have been entitled had
he retired in accordance with Section 2.04 before his
Normal Retirement Date.
12.02 EARLY RETIREMENT BENEFIT
The amount of the monthly Early Retirement Benefit payable for
the lifetime of an Employee who retires on or after the Adoption
Date on his Early Retirement Date shall equal the retirement
benefit described in Section 12.01, actuarially reduced by
multiplying it by the ratio of 190 to the factor indicated in
Appendix C.
12.03 POSTPONED RETIREMENT BENEFIT
The amount of the monthly Postponed Retirement Benefit payable
for the lifetime of an Employee who retires on or after the
Adoption Date shall equal the retirement benefit described in
Section 12.01, actuarially increased by multiplying it by the
ratio of 190 to the factor indicated in Appendix C.
12.04 PRESENT VALUE OF ACCRUED BENEFITS
The present value of the monthly annuity benefit described in
Section 12.01 shall equal 190 times such benefit, except that any
benefit described in Section 12.01 A. shall be discounted 5% per
year (compounded annually) for each year that the lump-sum
payment date precedes the earlier of (a) the end of the Plan Year
in which the Participant will complete 31 full years of Credited
Service (assuming continuous employment by the Company after the
Plan Year in which such benefit was accrued) and (b) the end of
the Plan Year in which the Participant will attain
49
56
age 65.
In no event, however, shall such lump-sum amount be less than the
present value of such retirement benefit, based on the factors
indicated in Appendix C and the assumption that the Consumer
Price Index will increase 4% per year.
The lump-sum payment as of any date within a Plan Year shall be
determined by straight line interpolation between the lump-sum
payment that would be made at the beginning and the end of the
Plan Year, except for benefits accrued during that Plan Year,
with respect to which the lump-sum payment shall be the amount
that would be payable at the end of such Plan Year.
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57
ARTICLE XIII
RETIREE BENEFIT IMPROVEMENTS
13.01 OCTOBER 1, 1990, IMPROVEMENT
Effective October 1, 1990, the monthly basic benefits (excluding
Temporary and Medicare Benefits) shall be increased by six percent
(6%) for Retired Employees who retired after December 31, 1984,
and before January 1, 1988. In addition, and also effective
October 1, 1990, the monthly benefits (excluding Temporary and
Medicare Benefits) shall be increased six percent (6%) for
beneficiaries of deceased Retired Employees who retired after
December 31, 1984, and before January 1, 1988, and for Surviving
Spouses of Employees whose benefits commenced during that period.
Also effective October 1, 1990, the monthly basic benefits
(excluding Temporary and Medicare Benefits) shall be increased by
ten percent (10%) for Retired Employees who retired before January
1, 1985. In addition, and also effective October 1, 1990, the
monthly benefits (excluding Temporary and Medicare Benefits) shall
be increased ten percent (10%) for beneficiaries of deceased
Retired Employees who retired before January 1, 1985, and for
Surviving Spouses of Employees whose benefits commenced prior to
January 1, 1985.
The increases described in this Section 13.01 shall not be payable
to:
A. Former Employees with deferred vested rights under
the Plan and employees with a deferred vested right under a
Merged Plan; or
B. Any Retired Employee, beneficiary, or Surviving Spouse who
elected or received a lump sum option under the Plan or
under a Merged Plan.
For purposes of this Section 13.01, the term "Retired Employee"
means any person who at the time he retired was covered under the
Dana Corporation Retirement Income Plan (001), or under any Merged
Plan (as defined in the following paragraph), but excludes former
employees who at the time they terminated employment were eligible
to receive a deferred vested monthly retirement benefit under the
Dana Corporation Retirement Income Plan (001), or under any Merged
Plan.
For purposes of this Section 13.01, and for no other purpose under
the Plan, the
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58
term "Merged Plan" shall mean each of the plans listed below that
were merged with the Dana Corporation Retirement Plan (001):
Industrial Power Transmission Division, Dana Corporation
Hourly Production Employees Pension Plan (031)
Dana Corporation Weatherhead Division Pension Plan for
Salaried Employees (037)
The Dana Corporation Hyco Division Retirement Income Plan
(039)
The Dana Corporation Weatherhead Division General Pension
Plan (041)
Gresen Manufacturing Division Management Pension Plan (046)
The Dana Corporation Retirement Plan for Salaried Employees
of Boston Industrial Products Division (047)
The Retirement Plan for Management Employees of Racine
Hydraulics Division, Dana Corporation (053)
Dana Corporation Pension Plan for Hourly Employees of the
Racine Hydraulics Division - Sarasota Operations (055)
Tyrone Salaried Pension Plan (059)
Warner Electric Brake & Clutch Company Uniform Salaried
Employees Retirement Plan (065)
PSI Hourly Employees' Pension Plan (067)
Alcoils Hourly Employees' Pension Plan (068)
Marengo Hourly Employees' Pension Plan (069)
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59
IN WITNESS WHEREOF, Dana Corporation has adopted this amended and
restated plan document, including the amended and restated appendices to the
Plan, on this 13 day of December, 1994.
For Dana Corporation
Robert C. Richter
-------------------------------------
Robert C. Richter
Chairman, Investment Committee
Witness:
Mark A. Smith Jr.
- -------------------------------------
53
60
THE DANA CORPORATION
RETIREMENT PLAN
APPENDIX E
AS AMENDED AND RESTATED
EFFECTIVE JANUARY 1, 1994
61
THE DANA CORPORATION RETIREMENT PLAN
APPENDIX E
TRANSITION RULES
TABLE OF CONTENTS
PAGE
----
PART I. PROVISIONS APPLICABLE TO PARTICIPANTS
IN THE PLAN AS OF JUNE 30, 1988 1
1. Eligible Employees 1
2. Adoption Date 1
3. Participating Employers 1
4. Accrued Benefit; Accrued 2
Benefit Account
5. Supplemental Benefit; 2
Supplemental Benefit Account
6. First Objective Benefit 3
A. Definitions 3
B. Assumptions 4
7. Second Objective Benefit 4
8. Third Objective Benefit 4
9. Compensation Limit 5
10. Future Service Accounts 6
11. Interest Credits During 6
Transition Period
12. Earned Benefit; Earned Benefit 6
Account
13. Ancillary Benefit Account 7
14. No Reduction in Benefits 7
15. Transfers From Certain Plans 8
16. Persons With Service Under 11
Certain Plans Before
July 1, 1988
17. Former Participants Rejoining 12
the Plan
18. Certain Disabled Employees 13
19. Section 12.01 A. Accruals 13
i
62
20. Section 12.01 B. Cost-of Living 13
Increases During Transition Period
PART II. PROVISIONS APPLICABLE TO MERGED PLANS
AND EMPLOYERS ADOPTING THE PLAN AFTER 1988 14
SUBPART II(A): UNIFORM PROVISIONS 14
1. General 14
2. Adoption Date; Participating 14
Employers
3. Merged Plans 16
4. Compensation Limit 17
5. Future Service Accounts 18
6. Interest Credits During 18
Transition Period
7. Earned Benefit; Earned 19
Benefit Account
8. Ancillary Benefit Account 19
9. Former Participants in 19
Merged Plans
10. Certain Transferred Employees 20
11. Certain Disabled Employees 21
12. Section 12.01 A. Accruals 21
13. Section 12.01 B. Cost-of-Living 21
Increases During Transition Period
14. Vesting Service 22
15. Actuarial Assumptions 22
SUBPART II(B): PROVISIONS APPLICABLE TO PARTICIPANTS
IN THE RACINE SALARIED PLAN 24
SUBPART II(C): PROVISIONS APPLICABLE TO PARTICIPANTS
IN THE SPICER SALARIED PLAN 30
SUBPART II(D): PROVISIONS APPLICABLE TO PARTICIPANTS
IN THE BIP PLAN 31
SUBPART II(E): PROVISIONS APPLICABLE TO BIP EMPLOYEES
IN THE EVERFLEX PLAN 34
SUBPART II(F): PROVISIONS APPLICABLE TO
CALHOUN, GEORGIA, EMPLOYEES 36
SUBPART II(G): PROVISIONS APPLICABLE TO
COLUMBIA, MISSOURI EMPLOYEES 38
ii
63
SUBPART II(H): PROVISIONS APPLICABLE TO
COLUMBIA, SOUTH CAROLINA, EMPLOYEES 40
SUBPART II(I): PROVISIONS APPLICABLE TO
PARTICIPANTS IN THE HYCO SALARIED PLAN 41
SUBPART II(J): PROVISIONS APPLICABLE TO
FREDERICKTOWN, OHIO, EMPLOYEES 46
SUBPART II(K): PROVISIONS APPLICABLE TO
RUSSELLVILLE, ARKANSAS, EMPLOYEES 47
SUBPART II(L): PROVISIONS APPLICABLE TO PARTICIPANTS
IN THE WEATHERHEAD GENERAL PLAN 48
SUBPART II(M): PROVISIONS APPLICABLE TO PARTICIPANTS
IN THE WEATHERHEAD SALARIED PLAN 50
SUBPART II(N): PROVISIONS APPLICABLE TO PARTICIPANTS
IN THE SARASOTA HOURLY PLAN 55
SUBPART II(O): PROVISIONS APPLICABLE TO PARTICIPANTS
IN THE TYRONE SALARIED PLAN 57
SUBPART II(P): PROVISIONS APPLICABLE TO PARTICIPANTS
IN THE GRESEN SALARIED PLAN 62
SUBPART II(Q): PROVISIONS APPLICABLE TO PARTICIPANTS
IN THE HEIL SALARIED PLAN 67
SUBPART II(R): PROVISIONS APPLICABLE TO
ARAB, ALABAMA, EMPLOYEES 70
SUBPART II(S): PROVISIONS APPLICABLE TO CERTAIN
EMPLOYEES OF THE MOBILE FLUID
PRODUCTS DIVISION 72
SUBPART II(T): PROVISIONS APPLICABLE TO PARTICIPANTS
IN THE WARNER UNIFORM SALARIED PLAN 74
SUBPART II(U): PROVISIONS APPLICABLE TO PARTICIPANTS
IN THE PSI HOURLY PLAN 80
SUBPART II(V): PROVISIONS APPLICABLE TO PARTICIPANTS
IN THE ALCOILS HOURLY PLAN 83
iii
64
SUBPART II(W): PROVISIONS APPLICABLE TO PARTICIPANTS
IN THE MARENGO HOURLY PLAN 86
SUBPART II(X): PROVISIONS APPLICABLE TO PARTICIPANTS
IN THE IPTD PENSION PLAN 90
SUBPART II(Y): PROVISIONS APPLICABLE TO PARTICIPANTS
IN THE WCT RETIREMENT PLAN 93
SUBPART II(Z): PROVISIONS APPLICABLE TO
HOPKINSVILLE, KENTUCKY, EMPLOYEES 95
SUBPART II(AA): PROVISIONS APPLICABLE TO
LUGOFF, SOUTH CAROLINA, EMPLOYEES 96
SUBPART II(BB): PROVISIONS APPLICABLE TO CERTAIN EMPLOYEES
OF THE PERFECT CIRCLE DIVISION'S
HASTINGS, NEBRASKA, FACILITY 97
PART III. PROVISIONS APPLICABLE TO PARTICIPANTS AFFECTED
BY THE SALE OF WILLIAMS AIR CONTROLS 99
iv
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APPENDIX E
TRANSITION RULES
PART I. PROVISIONS APPLICABLE TO PARTICIPANTS IN THE PLAN
AS OF JUNE 30, 1988
1. ELIGIBLE EMPLOYEES
The special provisions in this Part I of Appendix E shall apply to
any individual who had an undistributed accrued benefit under the
Plan as of June 30, 1988, and who is an Employee on July 1, 1988.
If an individual had an undistributed accrued benefit under the
Plan as of June 30, 1988, and such individual becomes an Employee
after July 1, 1988, the special provisions in this Part I shall
apply to such individual in the manner prescribed by Section 17 of
Part I, below.
If an individual transferred out of the Plan before July 1, 1988,
and if the individual works for Dana Corporation on July 1, 1988,
but is not an Employee on or after July 1, 1988, the special
provisions of this Part I (other than Sections 10 and 13 of this
Part I) shall apply to such individual, with the following
modifications:
(i) In determining the individual's Supplemental Benefit
Account under Section 5 hereof, paragraph 5(c) shall be
disregarded; and
(ii) In determining the individual's First Objective Benefit
under Section 6 A. hereof, each calculation shall be based
on the individual's Credited Service as of July 1, 1988,
rather than on his projected Credited Service three years
before his Normal Retirement Date.
An individual shall not be eligible for any benefit under this
Part I unless he is described in this Section 1.
2. ADOPTION DATE
The Adoption Date with respect to individuals described in this
Part I shall be July 1, 1988.
3. PARTICIPATING EMPLOYERS
66
Any facility of a division, subsidiary, or affiliate of Dana
Corporation (other than a foreign affiliate described in Appendix
F) whose employees were eligible to accrue benefits under the Plan
as of June 30, 1988, shall be deemed to be an Employer for
purposes of the Plan. A facility whose employees were not eligible
to accrue benefits under the Plan as of June 30, 1988, shall not
be deemed to be an Employer for purposes of this Part I.
4. ACCRUED BENEFIT; ACCRUED BENEFIT ACCOUNT
Each Employee's Accrued Benefit Account as of July 1, 1988, shall
equal 190 times the Employee's Accrued Benefit. Each Employee's
Accrued Benefit shall equal the greater of (a) or (b), where Final
Monthly Earnings, Primary Social Security Benefit and Credited
Service are as defined in the Plan as in effect on June 30, 1988:
(a) The excess of (i) over (ii):
(i) 1.6% of the Employee's Final Monthly Earnings at
June 30, 1988, multiplied by the number of years and
fractional parts thereof of his Credited Service at
June 30, 1988, discounted 7% per year (compounded
annually) for each year that July 1, 1988, precedes
the Employee's Normal Retirement Date, and
multiplied by 86.037/190ths.
(ii) 2.0% of the Employee's Primary Social Security
Benefit at June 30, 1988, multiplied by the number
of years and fractional parts thereof of his
Credited Service at June 30, 1988 (not in excess of
25), discounted 7% per year (compounded annually)
for each year that July 1, 1988, precedes the
Employee's Normal Retirement Date, and multiplied
by 86.037/190ths.
(b) $15.00, multiplied by the number of years and fractional
parts thereof of his Credited Service at June 30, 1988,
discounted 7% per year (compounded annually) for each year
that July 1, 1988, precedes the Employee's Normal
Retirement Date, and multiplied by 86.037/190ths.
5. SUPPLEMENTAL BENEFIT; SUPPLEMENTAL BENEFIT ACCOUNT
Each Employee's Supplemental Benefit Account as of July 1, 1988,
shall equal the greatest of (1) the excess of (a) over the sum of
(b) and (c), or (2) the excess of (d) over (b), or (3) the excess
of (e) over (b):
2
67
(a) 190 times the First Objective Benefit described below.
(b) 190 times the Accrued Benefit as of July 1, 1988.
(c) the sum of the credits expected to be made in accordance
with Section 3.01 B. from July 1, 1988, until three years
before the Employee's Normal Retirement Date, discounted 7%
per year (compounded annually) from the date each such
credit is expected to be made to July 1, 1988, using the
assumptions described in Section 6. B. of this Part I.
(d) 190 times the Second Objective Benefit described below.
(e) 190 times the Third Objective Benefit described below.
Each Employee's Supplemental Benefit shall equal 1/190th of the
Employee's Supplemental Benefit Account, times the ratio, not to
exceed 1.0, of the Employee's Credited Service after July 1, 1988,
to the number of years and months from July 1, 1991, to the
Employee's Normal Retirement Date.
If an Employee has reached age 62 on or before July 1, 1988, the
Employee shall not have a Supplemental Benefit or a Supplemental
Benefit Account.
6. FIRST OBJECTIVE BENEFIT
A. DEFINITIONS
Each Employee's First Objective Benefit shall equal the greater of
(a) or (b), where Final Monthly Earnings, Primary Social Security
Benefit and Credited Service are as defined in the Plan as in
effect on June 30, 1988:
(a) The excess of (i) over (ii):
(i) 1.6% of the Employee's projected Final Monthly
Earnings three years before his Normal Retirement
Date, multiplied by the number of years and
fractional parts thereof of his projected Credited
Service three years before his Normal Retirement
Date, discounted 7% per year (compounded annually)
for each year that July 1, 1991, precedes the
Employee's Normal Retirement Date, multiplied by
91.553/190ths and, unless the Employee was age 45
or older and an active participant in the Plan on
December
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31, 1983, multiplied by 85%.
(ii) 2.0% of the Employee's projected Primary Social
Security Benefit three years before his Normal
Retirement Date, multiplied by the number of years
and fractional parts thereof of his projected
Credited Service three years before his Normal
Retirement Date (not in excess of 25), discounted 7%
per year (compounded annually) for each year that
July 1, 1991, precedes the Employee's Normal
Retirement Date, multiplied by 91.553/190ths and,
unless the Employee was age 45 or older and an active
participant in the Plan on December 31, 1983,
multiplied by 85%.
(b) $15.00, multiplied by the number of years and fractional
parts thereof of his Credited Service three years before
his Normal Retirement Date, discounted 7% per year
(compounded annually) for each year that July 1, 1991,
precedes the Employee's Normal Retirement Date, multiplied
by 91.553/190ths and, unless the Employee was age 45 or
older and an active participant in the Plan on December
31, 1983, multiplied by 85%.
B. ASSUMPTIONS
For purposes of determining the Employee's First Objective
Benefit, the Employee's projected Final Monthly Earnings and
projected Primary Social Security Benefit shall be determined
assuming:
(a) The Employee's 1988 Earnings will equal the greatest of (1)
his basic salary for the period January 1, 1988, to June
30, 1988, annualized, plus the excess of his Earnings over
his basic salary for such period, (2) 105% of his 1987
Earnings, and (3) 110% of his 1986 Earnings.
(b) his Earnings for subsequent years increase at the rate of
5.0% per year.
(c) Earnings for any part of a year will be a pro rata part of
the projected earnings for the entire year.
(d) his previous Earnings increased at a rate of 6% per year,
and were of such amounts that the Employee's average
Earnings for 1985 to 1987 equal his Final Monthly Earnings
as of June 30, 1988; the maximum taxable Social Security
wage bases after 1988 increase at the rate of 4.0% per
year; and increases in Social
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69
Security benefits on account of changes in the Consumer
Price Index are at the rate of 3.5% per year.
7. SECOND OBJECTIVE BENEFIT
Each Employee's Second Objective Benefit shall be the same as his
First Objective Benefit, except that:
(a) his Credited Service shall be as of June 30, 1988, rather
than projected to three years before his Normal Retirement
Date.
(b) his Earnings for years after 1988 shall be assumed to
increase at the rate of 4.5% per year.
(c) the maximum taxable Social Security wage bases after 1988
shall be assumed to increase at the rate of 3.5% per year;
and increases in Social Security benefits on account of
changes in the Consumer Price Index are at the rate of 3.0%
per year.
8. THIRD OBJECTIVE BENEFIT
Each Employee's Third Objective Benefit shall be the same as his
Second Objective Benefit, except that:
(a) it shall be based on his projected Final Monthly Earnings
at Normal Retirement Date and projected Primary Social
Security Benefit at Normal Retirement Date.
(b) the 7% discount shall be applied for each year that July 1,
1988, precedes his Normal Retirement Date.
(c) the fraction 86.037/190ths shall be substituted for the
fraction 91.553/190ths.
9. COMPENSATION LIMIT
A. $200,000 COMPENSATION LIMIT. If an Employee's Earnings
exceed $200,000 (or such greater amount as shall be
permitted pursuant to Section 401(a)(17) of the Code) for
any Plan Year (including Plan Years commencing before July
1, 1988), his Accrued Benefit, Accrued Benefit Account,
Supplemental Benefit, and Supplemental Benefit Account
shall be determined without regard to any Earnings or
projected Earnings in excess of
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$200,000 (or such greater amount as shall be permitted
pursuant to Section 401(a)(17) of the Code).
B. $150,000 COMPENSATION LIMIT.
(a) If an Employee's Supplemental Benefit and
Supplemental Benefit Account at December 31, 1993,
are based on 1988 Earnings (as defined in paragraph
(a) of Section 6. B.) that exceeded $150,000, the
Employee's Supplemental Benefit and Supplemental
Benefit Account shall be recalculated as if his 1988
Earnings had been limited to $150,000. On and after
January 1, 1994, the Employee's Credited Service
ratio shall be applied to his recalculated
Supplemental Benefit and Supplemental Benefit
Account in order to determine the portion of his
Supplemental Benefit and Supplemental Benefit
Account that the Employee earns in Plan Years
beginning after 1993.
(b) In no event shall the recalculation of the
Employee's Supplemental Benefit and Supplemental
Benefit Account to reflect the $150,000 compensation
limit reduce the Employee's Earned Benefit and
Earned Benefit Account below the amount that the
Employee had accrued as of December 31, 1993.
(c) The recalculated Supplemental Benefit and
Supplemental Benefit Account described in paragraph
(a) shall be credited with percentage increases
under the regular provisions of Appendix H. The
Supplemental Benefit and Supplemental Benefit
Account that the Employee had earned at the end of
1993, as described in paragraph (b), shall be
credited with percentage increases under the
two-tier method described in Appendix H for
benefits affected by the $150,000 limit. The
Employee's Supplemental Benefit and Supplemental
Benefit Account shall be the larger of the two
amounts calculated in accordance with the preceding
two sentences.
(d) If an Employee's Supplemental Benefit and
Supplemental Benefit Account at December 31, 1993,
are not based on 1988 Earnings that exceeded
$150,000, the Employee's Supplemental Benefit and
Supplemental Benefit Account shall continue to be
calculated under the regular provisions of the Plan
and Appendix E, without regard to this Section 9.B.
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71
10. FUTURE SERVICE ACCOUNTS
At December 31, 1988, the Employee's Future Service Account shall
be established equal to the percentage, determined in accordance
with the table in Section 3.01 B., of the Employee's Earnings
during the period July 1, 1988, to December 31, 1988, except that
(i) the percentage in the second column shall apply to Earnings up
to $5,625 (1/8th of the maximum Social Security taxable wage base
for 1988), (ii) the percentage in the third column shall apply to
Earnings in excess of $5,625, and (iii) Credited Service shall be
determined as of July 1, 1988. Notwithstanding Section 3.01 B.,
such an Account shall be established for any Employee first hired
by the Company before July 1, 1988, provided that the Employee is
an active Participant in the Plan on July 1, 1988.
The credits described in Section 3.01 B. shall be applicable for
the 1989 and subsequent Plan Years.
11. INTEREST CREDITS DURING TRANSITION PERIOD
For purposes of this Part I of Appendix E, the "Transition Period"
shall be the period from July 1, 1988, through December 31, 1989.
Interest credits during such Transition Period shall be determined
as follows:
Section 3.01 C. notwithstanding, at December 31, 1988, an
Employee's or Former Employee's Accrued Benefit Account and
Supplemental Benefit Account shall be increased by 3.5% of the
account balance at July 1, 1988; and at December 31, 1989, such
accounts, and the Employee's or Former Employee's Future Service
Account, shall be increased by 7.0% of the account balance at
January 1, 1989.
The increases described in Section 3.01 C. shall be applicable for
the 1990 and subsequent Plan Years.
12. EARNED BENEFIT; EARNED BENEFIT ACCOUNT
Except as otherwise provided in Section 10.02, the Employee's or
Former Employee's Earned Benefit Account shall equal the sum of
(1) his Accrued Benefit Account plus (2) his Future Service
Account plus (3) the product of (a) his Supplemental Benefit
Account, if any, times (b) the ratio (not to exceed 1.0) of his
Credited Service after July 1, 1988, to the number of years and
months from July 1, 1991, to the Employee's Normal Retirement
Date.
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13. ANCILLARY BENEFIT ACCOUNT
An Ancillary Benefit Account shall be established for each
Participant who is an Employee as of July 1, 1988, equal to $2,134
discounted by 7% per year (compounded annually) for each year that
July 1, 1988, precedes the Participant's Normal Retirement Date.
Such Ancillary Benefit Account shall be increased at the end of
each Plan Year in the manner described in Section 3.01 C.
The Ancillary Benefit Account shall be added to the Participant's
Earned Benefit Account and paid in the form applicable to such
Earned Benefit Account upon the death of the Participant with a
Surviving Spouse, or upon the Participant's retirement on his
Normal, Early, or Postponed Retirement Date, provided that the
Participant or Surviving Spouse demonstrates to the Company that
he has paid, or will in the future continue to pay, the Medicare
Part B premium.
No Ancillary Benefit Account shall be payable with respect to a
Participant who terminates his employment with the Company (other
than by his death with a Surviving Spouse) prior to the earliest
of his Normal, Early, or Postponed Retirement Date.
14. NO REDUCTION IN BENEFITS
If a Participant's benefit is paid in the form of a level annuity
or lump-sum payment, such benefit shall not be less than the
benefit that would have been paid under the terms of the Plan in
effect as of June 30, 1988 (without regard to amendments that are
effective after June 30, 1988), based on the Participant's
Credited Service, Final Monthly Earnings, and Primary Social
Security Benefit as of June 30, 1988, and his Vesting Service as
of the date of termination or retirement.
If a Participant retires on or before July 1, 1993, and his
benefit is paid in the form of a level annuity or lump-sum
payment, such benefit shall not be less than the level annuity or
lump-sum benefit that would have been paid under the terms of the
Plan in effect as of June 30, 1988, based on the Participant's
Credited Service, Final Monthly Earnings, and Primary Social
Security Benefit as of the Employee's retirement date. Such amount
shall be determined without regard to amendments that are
effective after June 30, 1988, except that:
A. effective January 1, 1989, no Earnings in excess of
$200,000 (or such greater amount as shall be permitted
pursuant to Section 401(a)(17) of the Code) shall be taken
into account, and
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B. effective July 1, 1988, the value of any Temporary
Retirement Benefit shall equal at least 50% of the value
of such Temporary Retirement Benefit were it payable
through the month in which the Participant attains age 65,
and
C. effective May 1, 1989, for any Participant who, except for
age, would have been eligible for a Temporary Retirement
Benefit, a monthly Temporary Retirement Benefit shall be
payable through the month in which the Participant attains
age 65. Such benefit amount shall equal the Participant's
Social Security offset calculated pursuant to Section 3.01
A. of the Plan (as in effect on June 30, 1988) and reduced,
if applicable, for early retirement.
If the Participant's level annuity benefit would be increased by
the preceding portions of this Section 14, the Participant's
increasing annuity benefit provided under Section 3.04 C. of the
Plan shall be increased by the same percentage.
If a Participant is eligible to retire on July 1, 1993, but
retires after July 1, 1993, the lump-sum payment to which the
Participant will be entitled when he retires shall equal at least
the sum of (a) the lump-sum benefit to which he would have been
entitled had he retired on July 1, 1993, plus (b) increases
thereon from July 1, 1993, at the rate described in Section 3.01
C. If the Participant's lump-sum payment would be increased by
this paragraph, the Participant's level annuity benefit and
increasing annuity benefit shall be increased by the same
percentage.
This Section 14 shall also apply to a transferred employee who is
described in the second paragraph of Section 1; but Section 14
shall not apply to any individual who was not employed by the
Company on July 1, 1988.
15. TRANSFERS FROM CERTAIN PLANS
A. This subsection A. of Section 15 shall apply to any
Employee who was transferred, before July 1, 1988, from a
position covered by a Company pension plan listed in
subsection B., below, to a position covered by the Plan.
This subsection A. shall apply only with respect to a
Company pension plan listed in subsection B., below (the
"transferor plan") in which the Employee participated
immediately before he became a participant in the Plan;
this subsection A. shall not apply with respect to any
plan in which the Employee participated before he became a
participant in the transferor plan. For purposes of
determining such Employee's
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74
Accrued Benefit, Accrued Benefit Account, Supplemental
Benefit, and Supplemental Benefit Account, Credited Service
shall include all service credited under the transferor
plan with respect to which a benefit is payable from such
plan.
An Employee described in this subsection A. shall receive
from the transferor plan any benefit that accrued before
July 1, 1988, and to which he is entitled under such plan,
and his benefit under the Plan shall be the excess of (1)
the benefit otherwise payable pursuant to the Plan, over
(2) the corresponding benefit (if any) that accrued before
July 1, 1988, under the transferor plan.
B. Subsection A of this Section 15 shall apply to the
following Company pension plans:
003 Dana - U.A.W. Pension Agreement
004 Dana Corporation Pension Plan for Spicer Axle
Employees of Local No. 903, A.I.W., Fort Wayne,
Indiana
005 Dana - A.I.W. Pension Agreement
006 Dana Corporation Pension Plan for Members of Local
Union No. 3733 United Steelworkers of America (AFL-
CIO)
Parish Division - Reading Plant
007 Pension Agreement Between Dana Corporation - Perfect
Circle Division and United Steelworkers of America,
Local 2754
008 Dana Corporation Pension Plan for Members of Local
No. 4206 United Steelworkers of America (AFL-CIO),
Pueblo Piston Plant, Perfect Circle Division
010 Dana Corporation Distribution Center and Victor Seal
Division Churubusco Pension Plan for Hourly- Paid
Employees at the Churubusco, Indiana, Plants
013 Dana Corporation Victor Products Division Chicago
Plant U.A.W. Local 1648 Pension Agreement
015 Dana Corporation Victor Products Division Pension
Plan
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75
for Hourly Paid Employees at the Robinson, Illinois
Plant
026 Dana Corporation Pension Plan for Members of Local
No. 1355 U.A.W., Hillsdale Production & Maintenance
Unit
028 Supplemental Agreement Retirement Plan for Plant
Guards Dana Corporation Midwest Frame Division,
Ecorse Plant & International Union United Plant
Guard Workers of America Local No. 114
029 Dana Corporation Pension Plan for Members of Local
No. 644 U.A.W., Berwick Production & Maintenance
Unit
032 Dana Corporation Pension Plan for Members of Local
No. 1897, U.A.W., Havana Production and Maintenance
Unit
033 Dana Corporation Pension Plan for Employees of Local
No. 125, U.A.W., Plymouth, Minnesota
034 Dana Corporation Pension Plan for Spicer Axle
Employees of Local No. 1405, U.A.W., Syracuse,
Indiana
C. This subsection C. of Section 15 shall apply to an Employee
or former Employee who meets both of the following
requirements:
i. The Employee or former Employee was transferred,
before June 14, 1992, from a position covered by the
Dana Corporation Pension Plan for Spicer Axle
Employees of Local No. 903, A.I.W., Fort Wayne,
Indiana ("Plan 004") to a position covered by the
Plan at a facility where the Employee had seniority
under the collective bargaining agreement between
the Company and Local No. 903, A.I.W.; and
ii. The Employee or former Employee either (a) was still
an active Participant in the Plan on June 13, 1992,
or (b) had terminated employment with the Company
before June 14, 1992, while he was an active
Participant in the Plan.
If an individual is covered by this subsection C. under the
rules set forth above, the credited service that the
individual had earned under Plan 004 before he was
transferred to the Plan shall be recognized for all
purposes as Credited Service under the Plan (as in effect
on the date of the individual's transfer). Accordingly, if
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76
the individual was an Employee on July 1, 1988, the
credited service that the individual had earned under Plan
004 shall be taken into account for purposes of determining
his Accrued Benefit, Accrued Benefit Account, Supplemental
Benefit, and Supplemental Benefit Account under the Plan
(as provided above in subsection A.), and shall also be
taken into account for purposes of calculating any
five-year grandfather benefit to which he is entitled under
Section 14, above. If the individual was not an Employee on
July 1, 1988, but the individual is later re-hired by the
Company as an Employee, the credited service that the
individual had earned under Plan 004 shall be taken into
account for purposes of calculating any benefit to which he
is entitled under Section 17, below.
This subsection C. of Section 15 shall not apply to any
individual who had been re-transferred to Plan 004 before
June 14, 1992, or to any individual who was first
transferred from Plan 004 to the Plan on or after June 14,
1992. The benefit of any individual described in the
preceding sentence shall be determined as set forth above
in subsection A. of this Section 15 (if applicable), and in
Section 4.01 of the Plan.
16. PERSONS WITH SERVICE UNDER CERTAIN PLANS BEFORE JULY 1, 1988
A. The Gerbing Manufacturing Corporation Retirement and
Thrift Plan was terminated by Dana Corporation effective
June 30, 1976, and account balances for salaried
participants were transferred to the Savings and Investment
Plan for Management Employees of Dana Corporation. The
amendment terminating the plan provided that the actuarial
equivalent of the amount attributable to the Participant's
Initial and Basic account value as of December 31, 1975,
would be used to reduce the benefit attributable to service
prior to January 1, 1976, provided under any other
qualified Retirement Plan maintained by the Company in
which such employees may become eligible to participate.
The following individuals participating in the Plan on June
30, 1988, received Credited Service under the Plan for
service before January 1, 1976. The actuarial equivalent of
their account value expressed as a single life monthly
benefit commencing at age 65 was determined using a 6%
interest factor and the 1971 TPF&C Forecast Mortality
table. Their accrued benefit under this Plan shall be
reduced by the actuarial equivalent of the monthly benefit
thus determined as indicated.
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77
Soc. Sec. Monthly Opening
Name Number Benefit Offset Balance Offset
---- -------- -------------- --------------
Eisbrener ###-##-#### $265.10 $8361.00
Knous ###-##-#### $229.26 $5935.00
B. The Dana Corporation Pension Plan for Members of Local No.
1897, U.A.W., Havana Production and Maintenance Unit was
terminated, effective December 5, 1981 and immediate or
deferred annuities were purchased for all vested
participants.
The following individuals participating in the Plan on June
30, 1988, received Credited Service under the Plan in
accordance with the provisions of Appendix E, Part 1,
Section 15. Accordingly, their accrued benefit under this
Plan shall be reduced by the actuarial equivalent of the
monthly benefit used to determine the annuity purchased for
them under the Havana Plan as indicated.
Soc. Sec. Monthly Opening
Name Number Benefit Offset Balance Offset
---- -------- -------------- --------------
Steging ###-##-#### $156.75 $3369.00
Taylor ###-##-#### $ 72.74 $2973.00
C. As part of the acquisition of the Spicer Heavy Axle
facility from Napco Industries, Inc., certain individuals
participating in the Plan on June 30, 1988, received
Credited Service under the Plan for prior service under
the Napco Industries, Inc. Profit Sharing Plan and Trust.
They also received a distribution of their accrued benefit
from that plan. The actuarial equivalent of the
distribution received expressed as a single life monthly
benefit commencing at age 65 was determined using a 7%
interest factor and the 1971 TPF&C Forecast Mortality
table.
Their accrued benefit under this Plan shall be reduced by
the actuarial equivalent of the monthly benefit thus
determined under the Napco plan times the ratio of their
Napco service to their total service were it projected to
age 65. The following list identifies those affected
individuals and the amount of their offsets.
Soc. Sec. Monthly Opening
Name Number Benefit Offset Balance Offset
---- -------- -------------- --------------
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78
Klevann ###-##-#### $ 105.02 $ 2017.00
Morgan ###-##-#### 26.51 1563.00
Schwerin ###-##-#### 121.45 3383.00
Stacken ###-##-#### 38.81 608.00
Staley ###-##-#### 61.60 3653.00
Stansbury ###-##-#### 177.41 8349.00
Thompson ###-##-#### 10.83 273.00
Tritten ###-##-#### 5.49 86.00
Weigel ###-##-#### 15.36 183.00
Wylie ###-##-#### 94.80 1461.00
Schram ###-##-#### 35.08 517.00
Berg ###-##-#### 21.42 374.00
Boersma ###-##-#### 172.10 5217.00
Endrizzi ###-##-#### 146.51 3466.00
Hakel ###-##-#### 47.92 1121.00
Wold ###-##-#### 87.74 1984.00
Hoffman ###-##-#### 54.84 1388.00
Gimpel ###-##-#### 18.35 585.00
17. FORMER PARTICIPANTS REJOINING THE PLAN
If an individual terminated his employment with the Company on or before
June 30, 1988, but did not receive a distribution of his entire accrued
benefit under the Plan, and if such individual becomes an Employee after
July 1, 1988, such individual shall not be entitled to a Supplemental
Benefit Account or an Ancillary Benefit Account. The Accrued Benefit
Account of an individual described in this paragraph shall be established
as described in Section 4(a), above, with the following modifications: (i)
such Accrued Benefit Account shall be determined as of the date such
individual again becomes an Employee rather than as of July 1, 1988; (ii)
such individual's Final Monthly Earnings and Primary Social Security
Benefit shall be determined as of the date such individual previously
terminated employment; and (iii) the numerator of the fraction used to
convert such individual's monthly benefit to a present value shall be the
lump-sum discount factor that is in effect as of the date such individual
again becomes an Employee rather than 86.037, and the denominator of the
fraction shall be 190.
18. CERTAIN DISABLED EMPLOYEES
An individual who is a disabled Employee on the Adoption Date shall not be
entitled to a Supplemental Benefit Account. The Accrued Benefit Account of
an individual described in this paragraph shall be established as provided
in Section 4, above.
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79
19. SECTION 12.01 A. ACCRUALS
The accruals described in Section 12.01 A. shall be applicable for the
1989 and subsequent Plan Years.
The benefit to be accrued for the period July 1, 1988, to December 31,
1988 shall be determined pursuant to Section 12.01 A., based on the
Employee's Earnings during such period, and based on the excess of such
Earnings over $5,625 (1/8th of the maximum Social Security taxable wage
base for 1988).
20. SECTION 12.01 B. COST-OF-LIVING INCREASES DURING TRANSITION PERIOD
The increases described in Section 12.01 B. shall be applicable during the
Transition Period (as defined in Section 11, above), except that:
A. At December 31, 1988, the Employee's previously accrued benefit (and
the Supplemental Benefit that could accrue in the future) shall be
increased by 3.5% of such amount at July 1, 1988.
B. At December 31, 1989, the Employee's previously accrued benefit (and
the Supplemental Benefit that could accrue in the future) shall be
increased by:
i. 1.90476% of such amount at January 1, 1989, if the
benefit would not otherwise be increased on
account of the second paragraph of Section 12.01
B., or
ii. 7.0% of such amount at January 1, 1989, if
otherwise.
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PART II: PROVISIONS APPLICABLE TO MERGED PLANS AND EMPLOYERS ADOPTING THE
PLAN AFTER 1988
SUBPART II(A): UNIFORM PROVISIONS
1. GENERAL
The divisions and facilities of Dana Corporation that are identified in
Section 2 have adopted the Plan with respect to their eligible Employees
(as defined in Section 1.11 of the Plan), effective as of the Adoption
Dates indicated in Section 2. The plans that are identified in Section 3
have been merged with the Plan, effective as of the dates indicated in
Section 3. This Part II of Appendix E sets forth transition rules and
other special provisions that are applicable to eligible Employees of the
adopting divisions or facilities, and to individuals covered by the merged
plans.
Subpart II(A) sets forth provisions that are uniformly applicable (except
as otherwise provided) to all individuals described in this Part II.
Subparts II(B) through II(AA) set forth provisions that are applicable
only to employees or former employees of the particular divisions or
facilities identified in those subparts, and to the beneficiaries of such
employees or former employees.
2. ADOPTION DATE; PARTICIPATING EMPLOYERS
Each of the following entities shall be deemed to be an Employer for
purposes of the Plan as of the Adoption Date indicated below:
EMPLOYER ADOPTION DATE
-------------------------------------------- ------------------
DIVISIONS: Boston Industrial Products Division
--------- Weatherhead Division (except the Vinita,
Oklahoma, facility)
Mobile Fluid Products Division (except
the Arab, Alabama, facility)
Warner Electric Brake & Clutch Division
(except the Charlotte, North Carolina,
facility, the Lancaster, South
Carolina, facility, and the Superior
Electric Company)
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EMPLOYER ADOPTION DATE
-------------------------------------------------- ----------------
FACILITIES: Ashland, Ohio January 1, 1989
---------- Calhoun, Georgia January 1, 1989
Columbia, Missouri January 1, 1989
Columbia, South Carolina January 1, 1989
Dana Commercial Credit at Troy, Michigan January 1, 1989
Dowagiac, Michigan January 1, 1989
Fredericktown, Ohio January 1, 1989
Russellville, Arkansas January 1, 1989
Sarasota, Florida January 1, 1989
Arab, Alabama July 1, 1989
Buena Vista, Virginia January 1, 1990
Danville, Kentucky January 1, 1990
Laurinburg, North Carolina January 1, 1990
Lugoff, South Carolina January 1, 1990
Troy, Michigan, facility of the Beaver January 1, 1990
Aerospace Division
Cape Girardeau, Missouri January 1, 1991
Hopkinsville, Kentucky January 1, 1991
Charlotte, North Carolina January 1, 1992
Lancaster, South Carolina January 1, 1992
Hilliard, Ohio January 1, 1993
Oklahoma City, Oklahoma (Air Refiner) January 1, 1993
Hastings, Nebraska (Perfect Circle) January 1, 1994
Mishawaka, Indiana January 1, 1994
If a facility listed above is part of a division that has a different
Adoption Date (or no Adoption Date), the Adoption Date of the facility
shall be controlling for that facility.
Hourly employees at the Warner Electric Brake & Clutch Division (including
the San Marcos, Texas, and Mt. Pleasant, Michigan, facilities); the
Dowagiac, Michigan, facility; and the Sarasota, Florida, facility shall be
deemed to be salaried employees for purposes of Section 1.11 of the Plan.
However, an hourly employee described in the preceding sentence shall be
ineligible to participate in the Plan as long as the hourly employee fails
to satisfy any part of
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the definition of "Employee" in Section 1.11 (other than the requirement
that the individual be a salaried employee).
3. MERGED PLANS
The following qualified defined benefit plans (the "Merged Plans") have
been merged with the Plan as of the dates indicated below:
As of December 31, 1988:
037 The Dana Corporation Weatherhead Division Pension Plan for Salaried
Employees (the "Weatherhead Salaried Plan");
039 The Dana Corporation Hyco Division Retirement Income Plan (the "Hyco
Salaried Plan");
041 The Dana Corporation Weatherhead Division General Pension Plan (the
"Weatherhead General Plan");
047 The Dana Corporation Retirement Plan for Salaried Employees of
Boston Industrial Products Division (the "BIP Plan");
050 The Dana Corporation Spicer Axle Salaried Pension Plan (the "Spicer
Salaried Plan");
053 The Retirement Plan for Management Employees of Racine Hydraulics
Division, Dana Corporation (the "Racine Salaried Plan");
055 The Dana Corporation Pension Plan for Hourly Employees of the Racine
Hydraulics Division -Sarasota Operations (the "Sarasota Hourly
Plan").
As of December 31, 1989:
031 The Industrial Power Transmission Division, Dana Corporation Hourly
Production Employees Pension Plan (the "IPTD Pension Plan");
046 The Gresen Manufacturing Division Management Pension Plan
(the "Gresen Salaried Plan");
059 Tyrone Salaried Pension Plan (the "Tyrone Salaried Plan");
065 The Warner Electric Brake & Clutch Company Uniform Salaried
Employees' Retirement Plan (the "Warner Uniform Salaried Plan");
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067 The PSI Hourly Employees' Pension Plan (the "PSI Hourly Plan");
068 The Alcoils Hourly Employees' Pension Plan (the "Alcoils Hourly
Plan");
069 The Marengo Hourly Employees' Pension Plan (the "Marengo Hourly
Plan").
As of December 31, 1991:
098 The Warner Control Techniques Retirement Plan (the "WCT Retirement
Plan").
4. COMPENSATION LIMIT
A. $200,000 COMPENSATION LIMIT. If an Employee's Earnings exceed
$200,000 (or such greater amount as shall be permitted pursuant to
Section 401(a)(17) of the Code) for any Plan Year (including Plan
Years commencing before the Adoption Date), his Accrued Benefit,
Accrued Benefit Account, Supplemental Benefit, and Supplemental
Benefit Account shall be determined without regard to any Earnings
or projected Earnings in excess of $200,000 (or such greater amount
as shall be permitted pursuant to Section 401(a)(17) of the Code).
B. $150,000 COMPENSATION LIMIT.
(a) If an Employee's Supplemental Benefit and
Supplemental Benefit Account at December 31, 1993,
are based on annual compensation (for any year
preceding the Adoption Date) that exceeded
$150,000, the Employee's Supplemental Benefit and
Supplemental Benefit Account shall be recalculated
as if his annual compensation for each year
preceding the Adoption Date had been limited to
$150,000. (If an Employee's Supplemental Benefit
and Supplemental Benefit Account are based on a
unit of compensation smaller than one year, the
annual compensation limit in this subsection B.
shall be adjusted accordingly: for example, if the
Employee's Supplemental Benefit and Supplemental
Benefit Account are based on monthly compensation,
the compensation limit applicable to the
Employee's monthly compensation under this
subsection B. shall be one twelfth of $150,000, or
$12,500.) On and after January 1, 1994, the
Employee's Credited Service ratio shall be applied
to his recalculated Supplemental Benefit and
Supplemental Benefit Account in
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order to determine the portion of his Supplemental
Benefit and Supplemental Benefit Account that the
Employee earns in Plan Years beginning after 1993.
(b) In no event shall the recalculation of the
Employee's Supplemental Benefit and Supplemental
Benefit Account to reflect the $150,000
compensation limit reduce the Employee's Earned
Benefit and Earned Benefit Account below the amount
that the Employee had accrued as of December 31,
1993.
(c) The recalculated Supplemental Benefit and
Supplemental Benefit Account described in
paragraph (a) shall be credited with percentage
increases under the regular provisions of Appendix
H. The Supplemental Benefit and Supplemental
Benefit Account that the Employee had earned at
the end of 1993, as described in paragraph (b),
shall be credited with percentage increases under
the two-tier method described in Appendix H for
benefits affected by the $150,000 limit. The
Employee's Supplemental Benefit and Supplemental
Benefit Account shall be the larger of the two
amounts calculated in accordance with the
preceding two sentences.
(d) If an Employee's Supplemental Benefit and
Supplemental Benefit Account at December 31, 1993,
are not based on annual compensation (for any year
preceding the Adoption Date) that exceeded
$150,000, the Employee's Supplemental Benefit and
Supplemental Benefit Account shall continue to be
calculated under the regular provisions of the
Plan and Appendix E, without regard to this
Section 4. B.
5. FUTURE SERVICE ACCOUNTS
At the Adoption Date, each Employee's Future Service Account shall be $0.
For a division or facility whose Adoption Date is January 1, the credits
described in Section 3.01 B. shall be applicable for the Plan Year in
which the Adoption Date occurs and subsequent Plan Years.
For a division or facility whose Adoption Date is July 1, the credit for
the Plan Year in which the Adoption Date occurs shall be equal to the
percentage, determined in accordance with Section 3.01 B., of the
Employee's Earnings
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during the period July 1 through December 31 of such Plan Year, except
that (i) the percentage in the second column shall apply to Earnings up to
1/8th of the maximum Social Security taxable wage base for such Plan Year,
(ii) the percentage in the third column shall apply to Earnings in excess
of 1/8th of the maximum Social Security taxable wage base for such Plan
Year, and (iii) Credited Service shall be determined as of the Adoption
Date. The credits described in Section 3.01 B. shall be applicable for
subsequent Plan Years.
6. INTEREST CREDITS DURING TRANSITION PERIOD
For purposes of this Part II of Appendix E, the "Transition Period" shall
be from the Adoption Date to December 31, 1990. At December 31, 1989, an
Employee's or Former Employee's Accounts shall be increased by:
(i) if the Adoption Date is January 1, 1989, 7.0% of
the account balance at January 1, 1989, or
(ii) if the Adoption Date is July 1, 1989, 3.5% of the
account balance at July 1, 1989.
At December 31, 1990, an Employee's or Former Employee's Accounts shall be
increased by 7% of the account balance at January 1, 1990.
The increases described in Section 3.01 C. shall be applicable for the
1991 and subsequent Plan Years.
7. EARNED BENEFIT; EARNED BENEFIT ACCOUNT
Except as otherwise provided in Section 10.02, the Employee's or Former
Employee's Earned Benefit Account shall equal the sum of (1) his Accrued
Benefit Account plus (2) his Future Service Account plus (3) the product
of (a) his Supplemental Benefit Account, if any, times (b) the ratio (not
to exceed 1.0) of his Credited Service after the Adoption Date, to the
number of years and months from the third anniversary of the Adoption Date
to the Employee's Normal Retirement Date.
8. ANCILLARY BENEFIT ACCOUNT
The Ancillary Benefit Account, if any, described in the applicable subpart
of this Part II shall be added to the Participant's Earned Benefit Account
and paid in the form applicable to such Earned Benefit Account upon the
death of the Participant with a Surviving Spouse, or upon the
Participant's retirement on his Normal, Early, or Postponed Retirement
Date, provided that the Participant or Surviving Spouse demonstrates to
the Company that he has paid, or will in the
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future continue to pay, the Medicare Part B premium.
No Ancillary Benefit Account shall be payable with respect to a
Participant who terminates his employment with the Company (other than by
his death with a Surviving Spouse) prior to the earliest of his Normal,
Early, or Postponed Retirement Date.
9. FORMER PARTICIPANTS IN MERGED PLANS
A. Former Participants Still Employed By the Company. This subsection
A. of Section 9 shall apply to any individual who transferred out of
employment covered by a Merged Plan before the Adoption Date for the
facility at which he worked, and who is still employed by the
Company on the Adoption Date, but who is not eligible to participate
in this Plan as an Employee on or after the Adoption Date.
If an individual is described in the preceding paragraph, this
Subpart II(A), and the subpart of this Part II that is applicable to
the Merged Plan in which the individual formerly participated (the
"applicable subpart"), shall apply to the individual, with the
following modifications:
i. The individual shall not receive a Future Service
Account;
ii. The individual shall not receive an Ancillary
Benefit Account;
iii. In determining the individual's Supplemental
Benefit, if any, under the applicable subpart, it
shall be assumed that no credits will be made in
accordance with Section 3.01 B. to a Future Service
Account for the individual; and
iv. In determining the individual's First Objective
Benefit, if any, under the applicable subpart, the
individual's service shall be calculated as of the
day preceding the Adoption Date, and shall not be
projected.
An individual described in this subsection A. shall be eligible to
receive any grandfathered benefit described under the heading "No
Reduction in Benefits" in the applicable subpart.
If the applicable subpart includes rules that apply specifically to
transferred employees, such rules shall be given their full effect.
To the extent that the rules of the applicable subpart governing
transferred employees are inconsistent with the rules set forth
above in this subsection
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A., the rules of the applicable subpart shall govern.
B. Former Participants Whose Employment Has Terminated. This
subsection B. of Section 9 shall apply to any individual (a "former
participant") who terminated his employment with the Company before
the Adoption Date for the facility at which he worked, but who did
not receive a distribution of his entire accrued benefit under the
Merged Plan in which he participated.
If a former participant does not return to employment covered by the
Plan, his undistributed accrued benefit shall not be converted to an
Accrued Benefit Account. Instead, his benefit shall be paid in
accordance with the applicable provisions of the Merged Plan in
which he participated, as in effect from time to time before the
Adoption Date.
If a former participant is rehired as an Employee after the Adoption
Date, such individual shall not be entitled to a Supplemental
Benefit Account or an Ancillary Benefit Account; and the individual
shall not be entitled to receive any grandfathered benefit described
under the heading "No Reduction in Benefits" in the applicable
subpart. The Accrued Benefit Account of an individual described in
this paragraph shall be established as described in the applicable
subpart, provided that such Accrued Benefit Account shall be
determined as of the date such individual again becomes an Employee
rather than as of the Adoption Date; and the compensation, Social
Security benefit, and benefit formula or benefit rate used to
calculate such individual's Accrued Benefit Account shall be
determined as of the date such individual previously terminated
employment.
10. CERTAIN TRANSFERRED EMPLOYEES
This Section 10 shall apply to any Employee who was transferred between
Employers after July 1, 1988, and at a time when one such Employer had
adopted this Plan and the other had not. When the other Employer later
adopts the Plan, the Employee shall receive the larger of the two First
Objective Benefits, if applicable, determined by treating the Employee as
if he had been an active Participant in the plan of each adopting Employer
as of the Adoption Date for that Employer. If an Employee is involved in
more than one transfer described in this Section 10, he shall receive the
largest of the First Objective Benefits, if applicable, determined in
accordance with the preceding sentence.
11. CERTAIN DISABLED EMPLOYEES
An individual who is a disabled Employee on the Adoption Date shall not be
entitled to a Supplemental Benefit Account. The Accrued Benefit Account of
an
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individual described in this paragraph shall be established as provided in
the applicable subpart of this Part II.
12. SECTION 12.01 A. ACCRUALS
For a division or facility whose Adoption Date is January 1, the accruals
described in Section 12.01 A. shall be applicable for the Plan Year in
which the Adoption Date occurs and subsequent Plan Years.
For a division or facility whose Adoption Date is July 1, the benefit to
be accrued for the Plan Year in which the Adoption Date occurs shall be
determined pursuant to Section 12.01 A., based on the Employee's Earnings
during the period July 1 through December 31 of such Plan Year, and based
on the excess of such Earnings over 1/8th of the maximum Social Security
taxable wage base for such Plan Year. The accruals described in Section
12.01 A. shall be applicable for subsequent Plan Years.
13. SECTION 12.01 B. COST-OF-LIVING INCREASES DURING TRANSITION PERIOD
The increases described in Section 12.01 B. shall be applicable during the
Transition Period (as defined in Section 6, above), except that:
A. At December 31, 1989, the Employee's previously accrued benefit (and
the Supplemental Benefit that could accrue in the future) shall be
increased by:
i. if the Adoption Date is January 1, 1989, 7.0% of
such amount at January 1, 1989, or
ii. if the Adoption Date is July 1, 1989, 3.5% of such
amount at July 1, 1989.
B. At December 31, 1990, the Employee's previously accrued benefit (and
the Supplemental Benefit that could accrue in the future) shall be
increased by:
i. 1.90476% of such amount at January 1, 1990, if the
benefit would not otherwise be increased on
account of the second paragraph of Section 12.01
B., or
ii. 7.0% of such amount at January 1, 1990, if
otherwise.
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14. VESTING SERVICE
This Section 14 shall apply to any Employee who was credited with at least
three years of vesting service under a Merged Plan on the date of the
merger.
Solely for purposes of calculating the vested percentage of the Employee's
Earned Benefit Account, the Employee shall be credited with the greater of
(a) his Vesting Service under the Plan, or (b) his vesting service
determined under the provisions of the Merged Plan as in effect on the day
before the merger.
15. ACTUARIAL ASSUMPTIONS
A. Lump-Sum Factors. This subsection A. of Section 15 shall apply to
any Merged Plan that, immediately before the Adoption Date, provided
no lump-sum form of distribution for benefits with a present value
greater than $3,500. If it is necessary to calculate the lump-sum
benefit that would have been payable to a Participant under the
provisions of such a Merged Plan, the following factors shall be
used to calculate the lump-sum benefit:
i. Unisex Pension 1984 Mortality Table set forward one
year in age, and
ii. The interest rates from subparagraph (a) or (b),
below, whichever is applicable:
(a) The PBGC Interest Rates, if the present value
of the benefit determined using the PBGC
Interest Rates does not exceed $25,000; or
(b) 120% of the PBGC Interest Rates, if
subparagraph (a) does not apply (provided that
the benefit determined under this subparagraph
(b) shall not be less than $25,000).
The lump-sum benefit determined under this subsection A. of Section
15 shall not include the value of any early retirement subsidy,
survivor subsidy, or other subsidy for which the Employee is
eligible.
B. Early Retirement Reduction Factors. This subsection B. of Section
15 shall apply to any Merged Plan that, immediately before the
Adoption Date, imposed retirement eligibility requirements
different from those set
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forth in Sections 2.03, 2.04, and 2.05 of this Plan. If a
Participant becomes eligible to retire under this Plan within the
period described in the "No Reduction in Benefits" section of the
applicable subpart, the Participant shall be eligible for the
protected retirement benefit described in such section even if the
Participant would not have been eligible to retire under the
corresponding provisions of the Merged Plan. If it is necessary to
calculate the early retirement benefit that would have been payable
to such a Participant under the provisions of the Merged Plan, the
following reduction factors shall be used to calculate the early
retirement benefit:
i. If the Merged Plan (as in effect immediately
before the merger) specified an early retirement
reduction factor applicable to a person of the
Participant's age, the reduction factor specified
in the Merged Plan shall be used; and
ii. If the Merged Plan (as in effect immediately before
the merger) did not specify an early retirement
reduction factor applicable to a person of the
Participant's age, the early retirement reduction
factor shall be determined as follows:
(a) The youngest age for which the Merged Plan
provides an unreduced retirement benefit
shall be determined, and
(b) The reduction factor applicable under the
Merged Plan to a person of the Participant's
age shall be determined by reference to the
actuarial table in Appendix G that corresponds
to the age determined pursuant to subparagraph
(a).
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SUBPART II(B): PROVISIONS APPLICABLE TO PARTICIPANTS IN
THE RACINE SALARIED PLAN
1. ELIGIBLE EMPLOYEES
The special provisions in this Subpart II(B) shall apply to any individual
who had an undistributed accrued benefit under the Racine Salaried Plan
(053) as of December 31, 1988, and who is an Employee on January 1, 1989.
If an individual had an undistributed accrued benefit under the Racine
Salaried Plan as of December 31, 1988, and the individual is employed by
the Company on or after January 1, 1989, but is not an Employee on January
1, 1989, the special provisions in this Subpart II(B) shall apply to such
individual in the manner prescribed by Section 9 A. or Section 9 B. of
Subpart II(A), whichever is applicable. An individual shall not be
eligible for any benefit under this Subpart II(B) unless he is described
in one of the two preceding sentences.
If an individual had an undistributed accrued benefit under the Racine
Salaried Plan as of December 31, 1988, and the individual's accrued
benefit was transferred back to the Racine Salaried Plan in connection
with the spinoff described in Section 9 of this Subpart II(B), the special
provisions in this Subpart II(B) shall apply to such individual in the
manner prescribed by Section 9 of this Subpart II(B).
2. ACCRUED BENEFIT; ACCRUED BENEFIT ACCOUNT
Each Employee's Accrued Benefit Account as of January 1, 1989, shall equal
190 times the Employee's Accrued Benefit. Except as provided in Section 8
hereof, each Employee's Accrued Benefit shall equal the greater of (a) or
(b), where Monthly Compensation and Credited Service are as defined in the
Racine Salaried Plan as in effect on December 30, 1988, and Social
Security Benefit is equal to 100% of the Primary Social Security Benefit
determined by reference to Appendix A of the Plan as in effect on December
30, 1988; such amount then discounted 7% per year (compounded annually)
for each year that January 1, 1989, precedes the Employee's Normal
Retirement Date, and multiplied by 86.037/190ths:
(a) The sum of (i) and (ii):
(i) $4.40 multiplied by the number of years and
fractional parts thereof of his Credited Service at
December 31, 1988, to a maximum of 30 such years.
(ii) 1.4% of the excess, if any, of Employee's Monthly
Compensation at December 31, 1988, over $450,
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multiplied by the number of years and fractional
parts thereof of his Credited Service between his
employment anniversary in 1968 and December 31,
1988, to a maximum of 30 such years.
(b) The sum of (i) and (ii) minus (iii):
(i) $4.40 multiplied by the number of years and
fractional parts thereof of his Credited Service
before his employment anniversary in 1968.
(ii) 1 2/3% of the Employee's Monthly Compensation at
December 31, 1988, multiplied by the number of
years and fractional parts thereof of his Credited
Service between October 31, 1968, and December 31,
1988.
(iii) 1 2/3% of the Employee's Social Security Benefit at
December 31, 1988, multiplied by the number of
years and fractional parts thereof of his Credited
Service between his employment anniversary in 1968
and December 31, 1988.
3. SUPPLEMENTAL BENEFIT; SUPPLEMENTAL BENEFIT ACCOUNT
Each Employee's Supplemental Benefit Account as of January 1, 1989, shall
equal the greatest of (1) the excess of (a) over the sum of (b) and (c),
or (2) the excess of (d) over (b):
(a) 190 times the First Objective Benefit described below.
(b) the Accrued Benefit Account as of January 1, 1989.
(c) the sum of the credits expected to be made in accordance with
Section 3.01 B. from January 1, 1989, until three years before the
Employee's Normal Retirement Date, plus related credits under
Section 3.01 C., discounted 7% per year (compounded annually) for
each year that January 1, 1992, precedes the Employee's Normal
Retirement Date, using the assumptions described in Section 4 of
this Subpart II(B).
(d) 190 times the Second Objective Benefit described below.
Each Employee's Supplemental Benefit shall equal 1/190th of the Employee's
Supplemental Benefit Account, times the ratio, not to exceed 1.0, of the
Employee's Credited Service after January 1, 1989, to the number of years
and months from January 1, 1992, to the Employee's Normal Retirement Date.
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If an Employee has reached age 62 on or before January 1, 1989, the
Employee shall not have a Supplemental Benefit or a Supplemental Benefit
Account.
4. FIRST OBJECTIVE BENEFIT
A. DEFINITIONS
Except as provided in Section 8 hereof, each Employee's First Objective
Benefit shall equal the greater of (a) or (b), where Monthly Compensation,
Social Security Benefit, and Credited Service are as defined in the Racine
Salaried Plan as in effect on December 30, 1988, such amount then
discounted 7% per year (compounded annually) for each year that January 1,
1992, precedes the Employee's Normal Retirement Date, and multiplied by
91.553/190ths:
(a) The sum of (i) and (ii):
(i) $4.40 multiplied by the projected number of years
and fractional parts thereof of his Credited
Service three years before his Normal Retirement
Date, to a maximum of 30 such years.
(ii) 1.4% of the excess, if any, of the Employee's
projected Monthly Compensation three years before
his Normal Retirement Date over $450, multiplied
by the projected number of years and fractional
parts thereof of his Credited Service between his
employment anniversary in 1968 and three years
before his Normal Retirement Date, to a maximum of
30 such years.
(b) The sum of (i) and (ii) minus (iii):
(i) $4.40 multiplied by the number of years and
fractional parts thereof of his Credited Service
which is before his employment anniversary in 1968.
(ii) 1 2/3% of the Employee's projected Monthly
Compensation three years before his Normal
Retirement Date, multiplied by the projected
number of years and fractional parts thereof of
his Credited Service between October 31, 1968, and
three years before his Normal Retirement Date, to
a maximum of 30 such years.
(iii) 1 2/3% of the Employee's projected Social Security
Benefit three years before his Normal Retirement
Date, multiplied
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by the projected number of years and fractional
parts thereof of his Credited Service between his
employment anniversary in 1968 and three years
before his Normal Retirement Date, to a maximum of
30 such years.
B. ASSUMPTIONS
For purposes of determining the Employee's First Objective Benefit, the
Employee's projected Monthly Compensation and projected Social Security
Benefit shall be determined assuming:
(a) The Employee's Compensation for 1988 will equal the greatest of (1)
his 1988 Compensation, (2) 105% of his 1987 Compensation, and (3)
110% of his 1986 Compensation.
(b) his Compensation for subsequent years will increase at the rate of
5% per year.
(c) Compensation for any part of a year will be a pro rata part of the
projected Compensation for the entire year.
(d) his previous Compensation increased at a rate of 6% per year, and
was of such amount that the Employee's average monthly Compensation
for 1986 through 1988 equals his Monthly Compensation as of December
31, 1988; the maximum taxable Social Security wage bases after 1988
will increase at the rate of 4.0% per year; and increases in Social
Security Benefits on account of changes in the Consumer Price Index
will be at the rate of 3.5% per year.
5. SECOND OBJECTIVE BENEFIT
Each Employee's Second Objective Benefit shall be the same as his First
Objective Benefit, except that:
(a) his Credited Service shall be as of December 31, 1988, rather than
projected to three years before his Normal Retirement Date.
(b) his Compensation for years after 1988 shall be assumed to increase
at the rate of 4.5% per year.
(c) the maximum taxable Social Security wage bases after 1988 shall be
assumed to increase at the rate of 3.5% per year; and increases in
Social Security benefits on account of changes in the Consumer Price
Index will be at the rate of 3.0% per year.
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6. ANCILLARY BENEFIT ACCOUNT
No Employee shall have an Ancillary Benefit Account under this Subpart
II(B).
7. NO REDUCTION IN BENEFITS
If a Participant's benefit is paid in the form of a level annuity or
lump-sum payment, such benefit shall not be less than the benefit that
would have been paid under the terms of the Racine Salaried Plan as in
effect on December 30, 1988 (as though the provisions of the Racine
Salaried Plan had remained unchanged after December 30, 1988), based on
the Participant's Credited Service, Monthly Compensation, and Social
Security Benefit as of December 31, 1988, and his Vesting Service as of
the date of termination or retirement.
If a Participant retires before January 1, 1994, and his benefit is paid
in the form of a level annuity or lump-sum payment, such benefit shall not
be less than the level annuity or lump-sum benefit that would have been
paid under the terms of the Racine Salaried Plan as in effect on December
30, 1988, based on the Participant's Credited Service, Monthly
Compensation, and Social Security Benefit as of his retirement date. Such
amount shall be determined as though the provisions of the Racine Salaried
Plan had remained unchanged after December 30, 1988, except that no
Compensation in excess of $200,000 (or such greater amount as shall be
permitted pursuant to Section 401(a)(17) of the Code) shall be taken into
account.
If the Participant's level annuity benefit would be increased by the
preceding portions of this Section 7, the Participant's increasing annuity
benefit shall be increased by the same percentage.
If a Participant is eligible to retire on December 31, 1993, but retires
on or after January 1, 1994, the lump-sum payment to which the Participant
will be entitled when he retires shall equal at least the sum of (a) the
lump-sum benefit to which he would have been entitled had he retired on
December 31, 1993, plus (b) increases thereon from January 1, 1994, at the
rate described in Section 3.01 C. If the Participant's lump-sum payment
would be increased by this paragraph, the Participant's level annuity
benefit and increasing annuity benefit shall be increased by the same
percentage.
8. RACINE AND ZANESVILLE EMPLOYEES
The formulas set forth in Sections 2, 4, and 5 of this Subpart II(B) apply
to employees or former employees of the Sarasota operations who are
described in Section 1 hereof. Benefits payable to former employees of the
Zanesville or
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Racine operations who are described in Section 1 hereof shall be computed
by replacing the formulas set forth in those sections with comparable
formulas that reflect the provisions of Sections 4.1(c), 4.1(d), and 13.1
of the Racine Salaried Plan rather than the provisions of Section 4.1(b)
of that plan.
9. SPINOFF OF RACINE SALARIED PLAN
Pursuant to a resolution of the Chairman of the Investment Committee dated
June 18, 1990, the Racine Salaried Plan was separated from the Plan, and
the accrued benefits of certain participants were transferred, with an
appropriate amount of assets, from the Plan to the Racine Salaried Plan,
effective May 9, 1991. If an individual's accrued benefit was transferred
to the Racine Salaried Plan in connection with the spinoff, the individual
shall not be entitled to any benefit under Part II of Appendix E,
including this Subpart II(B), after the date of the spinoff.
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SUBPART II(C): PROVISIONS APPLICABLE TO PARTICIPANTS IN
THE SPICER SALARIED PLAN
1. GENERAL
This Subpart II(C) shall apply to any individual who, on December 31,
1988, had an accrued benefit under the Spicer Salaried Plan (050) that had
not been fully distributed.
2. ELIGIBLE EMPLOYEES
As of December 31, 1988, no individual covered by the Spicer Salaried Plan
was an active employee of Dana Corporation. Accordingly, the individuals
covered by the Spicer Salaried Plan as of December 31, 1988, shall not be
deemed to be Employees for purposes of the Plan unless such individuals
subsequently return to employment covered by the Plan.
3. PAYMENT OF BENEFITS
The undistributed accrued benefit of an individual described in this
Subpart II(C) shall be paid in accordance with the applicable provisions
of Section 9 of Subpart II(A), above.
4. NO REDUCTION IN BENEFITS
In no event shall an individual's benefit under this Subpart II(C) be less
than the benefit that would have been paid to (or on behalf of) such
individual under the terms of the Spicer Salaried Plan as in effect
immediately before the merger.
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SUBPART II(D): PROVISIONS APPLICABLE TO PARTICIPANTS IN
THE BIP PLAN
1. ELIGIBLE EMPLOYEES
The special provisions in this Subpart II(D) shall apply to any individual
who had an undistributed accrued benefit under the BIP Plan (047) as of
December 31, 1988, and who is an Employee on January 1, 1989. If an
individual had an undistributed accrued benefit under the BIP Plan as of
December 31, 1988, and the individual is employed by the Company on or
after January 1, 1989, but is not an Employee on January 1, 1989, the
special provisions in this Subpart II(D) shall apply to such individual in
the manner prescribed by Section 9 A. or Section 9 B. of Subpart II(A),
whichever is applicable. An individual shall not be eligible for any
benefit under this Subpart II(D) unless he is described in one of the two
preceding sentences.
2. ACCRUED BENEFIT; ACCRUED BENEFIT ACCOUNT
Each Employee's Accrued Benefit Account as of January 1, 1989, shall equal
190 times the Employee's Accrued Benefit. Each Employee's Accrued Benefit
shall equal the greater of (a) or (b), where Average Annual Earnings,
Primary Social Security Benefit, and Credited Service are as defined in
the BIP Plan as in effect on December 30, 1988, such amount then
discounted 7% per year (compounded annually) for each year that January 1,
1989, precedes the Employee's Normal Retirement Date, and multiplied by
86.037/190ths and divided by 0.97:
(a) The excess of (i) over (ii):
(i) 1% of the Employee's Average Annual Earnings at
December 31, 1988, multiplied by the number of
years and fractional parts thereof of his Credited
Service at December 31, 1981.
(ii) 1% of the Employee's Primary Social Security
Benefit at December 31, 1988, multiplied by the
number of years and fractional parts thereof of his
Credited Service at December 31, 1981.
(b) $10.00 (or $12.00 if the Employee was employed at the Cambridge,
Massachusetts, facility), multiplied by the number of years and
fractional parts thereof of his Credited Service at December 31,
1981.
3. SUPPLEMENTAL BENEFIT; SUPPLEMENTAL BENEFIT ACCOUNT; ANCILLARY BENEFIT
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ACCOUNT
No Employee shall have a Supplemental Benefit, a Supplemental Benefit
Account, or an Ancillary Benefit Account under this Subpart II(D).
4. NO REDUCTION IN BENEFITS
If a Participant's benefit is paid in the form of a level annuity or
lump-sum payment, such benefit shall not be less than the benefit that
would have been paid under the terms of the BIP Plan as in effect on
December 30, 1988 (as though the provisions of the BIP Plan had remained
unchanged after December 30, 1988), based on the Participant's Credited
Service as of December 31, 1981, Average Annual Earnings and Primary
Social Security Benefit as of December 31, 1988, and his Vesting Service
as of the date of termination or retirement. In no event shall any benefit
accrue after 1988 under the BIP Plan as in effect before it was merged
with the Plan.
If the Participant's level annuity benefit would be increased by the
preceding portions of this Section 4, the Participant's increasing annuity
benefit shall be increased by the same percentage.
If a Participant is eligible to retire under the terms of the BIP Plan as
of December 31, 1993, but retires on or after January 1, 1994, the
lump-sum payment to which the Participant will be entitled when he retires
shall equal at least the sum of (a) the lump-sum benefit that he was
entitled to receive under the BIP Plan as of December 31, 1988, based on
the Participant's Credited Service as of December 30, 1981, and his
Average Annual Earnings and Primary Social Security Benefit as of December
31, 1988, plus (b) increases thereon from January 1, 1994, at the rate
described in Section 3.01 C. If the Participant's lump-sum payment would
be increased by this paragraph, the Participant's level annuity benefit
and increasing annuity benefit shall be increased by the same percentage.
5. PERIOD CERTAIN ANNUITY
In addition to any form of distribution under Section 3.04 for which he is
eligible, a Participant may receive his vested Accrued Benefit described
in Section 2 of this Subpart II(D) in the form of a life annuity with a
fifteen-year or twenty-year period certain, as described in Section 8.03
of the BIP Plan. A Participant who elects this form of distribution must
satisfy the applicable requirements of the Plan, including the consent and
minimum distribution requirements of Sections 3.05 and 7.04.
A Participant may not elect this form of distribution for any benefit that
accrues
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under the Plan after the Adoption Date. A Participant who elects this form
of distribution shall receive the automatic form of payment described in
Section 3.05 A. or B. (whichever is applicable) for the portion of his
benefit that accrues after the Adoption Date, and shall not be eligible to
elect any optional form of distribution for such portion of his accrued
benefit.
6. CERTAIN TRANSFERRED EMPLOYEES
If an individual transferred out of employment covered by the BIP Plan to
employment covered by another qualified defined benefit plan sponsored by
the Company (regardless of whether the transfer took place before or after
July 1, 1988), the individual's Annual Earnings and Average Annual
Earnings under the BIP Plan, as in effect on December 30, 1988, shall be
deemed to include the individual's compensation paid after the transfer by
any other employer that is part of the Company, but only to the extent
that (i) such compensation would have been treated as Annual Earnings or
Average Annual Earnings under the BIP Plan if it had been paid by a
sponsor of that plan, and (ii) such compensation does not exceed the
applicable limit under Section 401(a)(17) of the Code.
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SUBPART II(E): PROVISIONS APPLICABLE TO BIP EMPLOYEES IN
THE EVERFLEX PLAN
1. ELIGIBLE EMPLOYEES
The special provisions in this Subpart II(E) shall apply to any individual
who had an undistributed accrued benefit under the Dana Corporation
Retirement and Compensation Deferral Thrift Plan for the Boston Industrial
Products Division (the "Everflex Plan") (049) as of December 31, 1988, and
who is an Employee on January 1, 1989. An individual shall not be eligible
for any benefit under this Subpart II(E) unless he is described in the
preceding sentence.
2. SUPPLEMENTAL BENEFIT; SUPPLEMENTAL BENEFIT ACCOUNT
Each Employee's Supplemental Benefit Account as of January 1, 1989, shall
equal the excess of the First Objective Benefit over the Second Objective
Benefit.
Each Employee's Supplemental Benefit shall equal 1/190th of the Employee's
Supplemental Benefit Account, times the ratio, not to exceed 1.0, of the
Employee's Credited Service after January 1, 1989, to the number of years
and months from January 1, 1992, to the Employee's Normal Retirement Date.
If an Employee has reached age 62 on or before January 1, 1989, the
Employee shall not have a Supplemental Benefit or a Supplemental Benefit
Account.
3. FIRST AND SECOND OBJECTIVE BENEFITS
A. DEFINITIONS
Each Employee's First Objective Benefit shall equal the sum of the
employer contributions expected to be made under the Everflex Plan (had it
continued unchanged) after January 1, 1989, and before the Employee
reaches age 62 (or age 65 if the Employee will attain age 62 within five
years after January 1, 1989) accumulated with interest at the rate of 7%
per year (compounded annually) from the date each such contribution is
expected to have been made, such amount then discounted 7% per year
(compounded annually) for each year that January 1, 1989, precedes the
date on which the Employee will reach age 62.
Each Employee's Second Objective Benefit shall equal the sum of the
credits expected to be made in accordance with Section 3.01 B., from
January 1, 1989, until the Employee reaches age 62 (or age 65 if the
Employee will attain age 62 within five years after January 1, 1989),
accumulated with interest at the rate of
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7% per year (compounded annually) from the date each such credit is
expected to have been made, such amount then discounted 7% per year
(compounded annually) for each year that January 1, 1989 precedes the date
on which the Employee will reach age 62.
B. ASSUMPTIONS
For purposes of determining the Employee's First and Second Objective
Benefit, the following assumptions shall be made:
(a) each year's employer contributions under the Everflex Plan would
have equaled 7% of Earnings for the year.
(b) the Employee's 1989 Earnings will equal 105% of the annualized base
pay rate in effect at December 31, 1988.
(c) his Earnings for subsequent years will increase at the rate of 5.0%
per year.
(d) Earnings for any part of a year will be a pro rata part of the
projected Earnings for the entire year.
(e) the maximum taxable Social Security wage bases after 1989 will
increase at the rate of 4.0% per year.
4. ACCRUED BENEFIT; ACCRUED BENEFIT ACCOUNT; ANCILLARY BENEFIT ACCOUNT
No Employee shall have an Accrued Benefit, Accrued Benefit Account, or
Ancillary Benefit Account under this Subpart II(E).
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SUBPART II(F): PROVISIONS APPLICABLE TO CALHOUN, GEORGIA,
EMPLOYEES
1. ELIGIBLE EMPLOYEES
The special provisions in this Subpart II(F) shall apply to all Employees
who were employed at the Calhoun, Georgia, facility on January 1, 1989. An
individual shall not be eligible for any benefit under this Subpart II(F)
unless he is described in the preceding sentence.
2. ACCRUED BENEFIT; ACCRUED BENEFIT ACCOUNT
Each Employee's Accrued Benefit Account as of January 1, 1989, shall equal
the Future Service Account the Employee would have had as of January 1,
1989, had this Plan (i) been effective as of August 1, 1987; (ii) covered
employees at the Calhoun, Georgia, facility as of such date; and (iii)
stated that an Employee hired at the Calhoun, Georgia, facility after that
date and before January 1, 1989, would become a Participant in the Plan on
his date of hire.
For purposes of computing such Future Service Account for an individual
who was an Employee at the Calhoun, Georgia, facility on August 1, 1987:
(a) 1/4th of the maximum taxable Social Security wage bases for 1988 and
1987 shall be assumed to be $11,250 and $4,562 (5/12ths of $10,950),
respectively,
(b) the Employee's Earnings from August 1, 1987, to December 31, 1987,
shall be assumed to be 5/12ths of his 1987 Earnings, and
(c) the credit as of December 31, 1988, in accordance with Section 3.01
C. shall be at the rate of 7%.
For purposes of computing such Future Service Account for an individual
who became an Employee at the Calhoun, Georgia, facility after August 1,
1987, and before January 1, 1989:
(d) 1/4th of the maximum taxable Social Security wage bases for 1988 and
1987 shall be assumed to be $11,250 and $10,950, respectively,
multiplied by the appropriate fraction for each year, the numerator
of which is the number of complete calendar months during which the
individual was an Employee at the Calhoun, Georgia, facility in that
year, and the denominator of which is 12,
(e) the Employee's Earnings for 1988 and 1987 shall be his Earnings for
each
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complete calendar month in 1988 and 1987 during which he was an
Employee at the Calhoun, Georgia, facility, and
(f) the credit as of December 31, 1988, in accordance with Section 3.01
C. shall be at the rate of 7%.
3. SUPPLEMENTAL BENEFIT; SUPPLEMENTAL BENEFIT ACCOUNT; ANCILLARY BENEFIT
ACCOUNT
No Employee shall have a Supplemental Benefit, a Supplemental Benefit
Account, or an Ancillary Benefit Account under this Subpart II(F).
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SUBPART II(G): PROVISIONS APPLICABLE TO COLUMBIA, MISSOURI,
EMPLOYEES
1. ELIGIBLE EMPLOYEES
The special provisions in this Subpart II(G) shall apply to all Employees
who were employed at the Columbia, Missouri, facility on January 1, 1989.
An individual shall not be eligible for any benefit under this Subpart
II(G) unless he is described in the preceding sentence.
2. ACCRUED BENEFIT; ACCRUED BENEFIT ACCOUNT
Each Employee's Accrued Benefit Account as of January 1, 1989, shall equal
the Future Service Account the Employee would have had as of January 1,
1989, had this Plan (i) been effective as of December 1, 1987; (ii)
covered employees at the Columbia, Missouri, facility as of such date; and
(iii) stated that an Employee hired at the Columbia, Missouri, facility
after that date and before January 1, 1989, would become a Participant in
the Plan on his date of hire.
For purposes of computing such Future Service Account for an individual
who was an Employee at the Columbia, Missouri, facility on December 1,
1987:
(a) 1/4th of the maximum taxable Social Security wage bases for 1988 and
1987 shall be assumed to be $11,250 and $912 (1/12th of $10,950),
respectively,
(b) the Employee's Earnings for December, 1987, shall be assumed to be
1/12th of his 1987 Earnings, and
(c) the credit as of December 31, 1988, in accordance with Section 3.01
C. shall be at the rate of 7%.
For purposes of computing such Future Service Account for an individual
who became an Employee at the Columbia, Missouri, facility after December
1, 1987, and before January 1, 1989:
(d) 1/4th of the maximum taxable Social Security wage base for 1988
shall be assumed to be $11,250 multiplied by a fraction, the
numerator of which is the number of complete calendar months during
which the individual was an Employee at the Columbia, Missouri,
facility in 1988, and the denominator of which is 12, and
(e) the Employee's Earnings for 1988 shall be his Earnings for each
complete
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calendar month in 1988 during which he was an Employee at the
Columbia, Missouri, facility.
3. SUPPLEMENTAL BENEFIT; SUPPLEMENTAL BENEFIT ACCOUNT; ANCILLARY BENEFIT
ACCOUNT
No Employee shall have a Supplemental Benefit, a Supplemental Benefit
Account, or an Ancillary Benefit Account under this Subpart II(G).
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SUBPART II(H): PROVISIONS APPLICABLE TO COLUMBIA, SOUTH CAROLINA,
EMPLOYEES
1. ELIGIBLE EMPLOYEES
The special provisions in this Subpart II(H) shall apply to all
hourly-paid Employees who were employed at the Columbia, South Carolina,
facility on January 1, 1989. An individual shall not be eligible for any
benefit under this Subpart II(H) unless he is described in the preceding
sentence.
2. ACCRUED BENEFIT; ACCRUED BENEFIT ACCOUNT
Each Employee's Accrued Benefit Account as of January 1, 1989, shall equal
the Future Service Account the Employee would have had as of January 1,
1989, had this Plan (i) been effective as of January 1, 1988; (ii) covered
hourly-paid employees at the Columbia, South Carolina, facility as of
January 1, 1988; and (iii) stated that an Employee hired at the Columbia,
South Carolina, facility before January 1, 1988, would become a
Participant in the Plan on January 1, 1988.
For purposes of computing such Future Service Account for an individual
who was an Employee at the Columbia, South Carolina, facility on January
1, 1988:
(a) 1/4th of the maximum taxable Social Security wage base for 1988
shall be assumed to be $11,250.
3. SUPPLEMENTAL BENEFIT; SUPPLEMENTAL BENEFIT ACCOUNT; ANCILLARY BENEFIT
ACCOUNT
No Employee shall have a Supplemental Benefit, a Supplemental Benefit
Account, or an Ancillary Benefit Account under this Subpart II(H).
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SUBPART II(I): PROVISIONS APPLICABLE TO PARTICIPANTS IN THE HYCO
SALARIED PLAN
1. ELIGIBLE EMPLOYEES
The special provisions in this Subpart II(I) shall apply to any individual
who had an undistributed accrued benefit under the Hyco Salaried Plan
(039) as of December 31, 1988, and who is an Employee on January 1, 1989.
If an individual had an undistributed accrued benefit under the Hyco
Salaried Plan as of December 31, 1988, and the individual is employed by
the Company on or after January 1, 1989, but is not an Employee on January
1, 1989, the special provisions in this Subpart II(I) shall apply to such
individual in the manner prescribed by Section 9 A. or Section 9 B. of
Subpart II(A), whichever is applicable. An individual shall not be
eligible for any benefit under this Subpart II(I) unless he is described
in one of the two preceding sentences.
2. ACCRUED BENEFIT; ACCRUED BENEFIT ACCOUNT
Each Employee's Accrued Benefit Account as of January 1, 1989, shall equal
190 times the Employee's Accrued Benefit. Each Employee's Accrued Benefit
shall equal the greater of (a) or (b), where Final Monthly Earnings,
Primary Social Security Benefit, and Credited Service are as defined in
the Hyco Salaried Plan as in effect on December 30, 1988, such amount then
discounted 7% per year (compounded annually) for each year that January 1,
1989, precedes the Employee's Normal Retirement Date, and multiplied by
86.037/190ths:
(a) The excess of (i) over (ii):
(i) 1.6% of the Employee's Final Monthly Earnings at
December 31, 1988, multiplied by the number of
years and fractional parts thereof of his Credited
Service at December 31, 1988.
(ii) 2.0% of the Employee's Primary Social Security
Benefit at December 31, 1988, multiplied by the
number of years and fractional parts thereof of his
Credited Service at December 31, 1988, to a maximum
of 25 such years.
(b) $15.00 multiplied by the number of years and fractional parts
thereof of his Credited Service at December 31, 1988.
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3. SUPPLEMENTAL BENEFIT; SUPPLEMENTAL BENEFIT ACCOUNT
Each Employee's Supplemental Benefit Account as of January 1, 1989, shall
equal the greater of (1) the excess of (a) over the sum of (b) and (c), or
(2) the excess of (d) over (b):
(a) 190 times the First Objective Benefit described below.
(b) the Accrued Benefit Account as of January 1, 1989.
(c) the sum of the credits expected to be made in accordance with
Section 3.01 B. from January 1, 1989, until three years before the
Employee's Normal Retirement Date, plus related credits under
Section 3.01 C., discounted 7% per year (compounded annually) for
each year that January 1, 1992, precedes the Employee's Normal
Retirement Date, using the assumptions described in Section 4 of
this Subpart II(I).
(d) 190 times the Second Objective Benefit described below.
Each Employee's Supplemental Benefit shall equal 1/190th of the Employee's
Supplemental Benefit Account, times the ratio, not to exceed 1.0, of the
Employee's Credited Service after January 1, 1989, to the number of years
and months from January 1, 1992, to the Employee's Normal Retirement Date.
If an employee has reached age 62 on or before January 1, 1989, the
Employee shall not have a Supplemental Benefit or a Supplemental Benefit
Account.
4. FIRST OBJECTIVE BENEFIT
A. DEFINITIONS
Each Employee's First Objective Benefit shall equal the greater of (a) or
(b), where Final Monthly Earnings, Primary Social Security Benefit, and
Credited Service are as defined in the Hyco Salaried Plan as in effect on
December 30, 1988, such amount then discounted 7% per year (compounded
annually) for each year that January 1, 1992, precedes the Employee's
Normal Retirement Date, and multiplied by 91.553/190ths and by 85%:
(a) The excess of (i) over (ii):
(i) 1.6% of the Employee's projected Final Monthly
Earnings three years before his Normal Retirement
Date, multiplied by the projected number of years
and fractional parts thereof of his Credited
Service three years before his
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Normal Retirement Date.
(ii) 2.0% of the Employee's projected Primary Social
Security Benefit three years before his Normal
Retirement Date, multiplied by the projected number
of years and fractional parts thereof of his
Credited Service three years before his Normal
Retirement Date, to a maximum of 25 such years.
(b) $15.00 multiplied by the number of years and fractional parts
thereof of his Credited Service three years before his Normal
Retirement Date.
B. ASSUMPTIONS
For purposes of determining the Employee's First Objective Benefit, the
Employee's projected Final Monthly Earnings and projected Primary Social
Security Benefit shall be determined assuming:
(a) The Employee's Earnings for 1989 will equal 105% of the greatest of
(1) his 1988 Earnings, (2) 105% of his 1987 Earnings, and (3) 110%
of his 1986 Earnings.
(b) his Earnings for subsequent years will increase at the rate of 5%
per year.
(c) Earnings for any part of a year will be a pro rata part of the
projected Earnings for the entire year.
(d) his previous Earnings increased at a rate of 6% per year, and were
of such amounts that the Employee's average monthly Earnings for
1986 through 1988 equal his Final Monthly Earnings as of December
31, 1988; the maximum taxable Social Security wage bases after 1988
will increase at the rate of 4% per year; and increases in Social
Security benefits on account of changes in the Consumer Price Index
will be at the rate of 3.5% per year.
5. SECOND OBJECTIVE BENEFIT
Each Employee's Second Objective Benefit shall be the same as his First
Objective Benefit, except that:
(a) his credited Service shall be as of December 31, 1988, rather than
projected to three years before his Normal Retirement Date.
(b) it shall be based on his projected Final Monthly Earnings and
projected Primary Social Security Benefit at Normal Retirement Date.
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(c) his Earnings for years after 1988 shall be assumed to increase at
the rate of 4.5% per year.
(d) the maximum taxable Social Security wage bases after 1988 shall be
assumed to increase at the rate of 3.5% per year; and increases in
Social Security benefits on account of changes in the Consumer Price
Index shall be at the rate of 3.0% per year.
(e) the 7% discount shall be applied for each year that January 1, 1989,
precedes his Normal Retirement Date.
(f) the fraction 86.037/190ths shall be substituted for the fraction
91.553/190ths and the factor 100% shall be substituted for the
factor 85%.
6. ANCILLARY BENEFIT ACCOUNT
An Ancillary Benefit Account shall be established for each Participant who
is an Employee as of January 1, 1989, equal to $2,134 discounted by 7% per
year (compounded annually) for each year that January 1, 1989, precedes
the Participant's Normal Retirement Date. Such Ancillary Benefit Account
shall be increased at the end of each Plan Year in the manner described in
Section 3.01 C.
A Participant's Ancillary Benefit Account shall be paid only as provided
in Section 8 of Subpart II(A).
7. NO REDUCTION IN BENEFITS
If a Participant's benefit is paid in the form of a level annuity or
lump-sum payment, such benefit shall not be less than the benefit that
would have been paid under the terms of the Hyco Salaried Plan as in
effect on December 30, 1988 (as though the provisions of the Hyco Salaried
Plan had remained unchanged after December 30, 1988), based on the
Participant's Credited Service, Final Monthly Earnings, and Primary Social
Security Benefit as of December 31, 1988, and his Vesting Service as of
the date of termination or retirement.
If a Participant retires before January 1, 1994, and his benefit is paid
in the form of a level annuity or lump-sum payment, such benefit shall not
be less than the level annuity or lump-sum benefit that would have been
paid under the terms of the Hyco Salaried Plan as in effect on December
30, 1988, based on the Participant's Credited Service, Final Monthly
Earnings, and Primary Social Security Benefit as of his retirement date.
Such amount shall be determined as
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though the provisions of the Hyco Salaried Plan had remained unchanged
after December 30, 1988, except that no Earnings in excess of $200,000 (or
such greater amount as shall be permitted pursuant to Section 401(a)(17)
of the Code) shall be taken into account.
If the Participant's level annuity benefit would be increased by the
preceding portions of this Section 7, the Participant's lump-sum benefit
or increasing annuity benefit shall be increased by the same percentage.
If a Participant is eligible to retire on December 31, 1993, but retires
on or after January 1, 1994, the lump-sum payment to which the Participant
will be entitled when he retires shall equal at least the sum of (a) the
lump-sum benefit to which he would have been entitled had he retired on
December 31, 1993, plus (b) increases thereon from January 1, 1994, at the
rate described in Section 3.01 C. If the Participant's lump-sum payment
would be increased by this paragraph, the Participant's level annuity
benefit and increasing annuity benefit shall be increased by the same
percentage.
8. CERTAIN TRANSFERRED EMPLOYEES
If an individual transferred out of employment covered by the Hyco
Salaried Plan to employment covered by another qualified defined benefit
plan sponsored by the Company (regardless of whether the transfer took
place before or after July 1, 1988), the individual's Final Monthly
Earnings under the Hyco Salaried Plan, as in effect on December 30, 1988,
shall be deemed to include the individual's compensation paid after the
transfer by any other employer that is part of the Company, but only to
the extent that (i) such compensation would have been treated as Final
Monthly Earnings under the Hyco Salaried Plan if it had been paid by a
sponsor of that plan, and (ii) such compensation does not exceed the
applicable limit under Section 401(a)(17) of the Code.
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SUBPART II(J): PROVISIONS APPLICABLE TO FREDERICKTOWN, OHIO,
EMPLOYEES
1. ELIGIBLE EMPLOYEES
The special provisions in this Subpart II(J) shall apply to all Employees
who were employed at the Fredericktown, Ohio, facility on January 1, 1989.
An individual shall not be eligible for any benefit under this Subpart
II(J) unless he is described in the preceding sentence.
2. ACCRUED BENEFIT; ACCRUED BENEFIT ACCOUNT
Each Employee's Accrued Benefit Account as of January 1, 1989, shall equal
the Future Service Account that the Employee would have had as of January
1, 1989, had this Plan (i) been effective as of November 1, 1987; (ii)
covered Employees at the Fredericktown, Ohio, facility as of such date;
and (iii) stated that an Employee hired at the Fredericktown, Ohio,
facility after that date and before January 1, 1989, would become a
Participant in the Plan as of his date of hire.
For purposes of computing such Future Service Account for an individual
who became an Employee at the Fredericktown, Ohio, facility on or after
November 1, 1987, and before January 1, 1989:
(a) 1/4th of the maximum taxable Social Security wage bases for 1988 and
1987 shall be assumed to be $11,250 and $1,825 (2/12ths of $10,950),
respectively, and
(b) the credit as of December 31, 1988, in accordance with Section 3.01
C. shall be at the rate of 7%.
3. SUPPLEMENTAL BENEFIT; SUPPLEMENTAL BENEFIT ACCOUNT; ANCILLARY BENEFIT
ACCOUNT
No Employee shall have a Supplemental Benefit, a Supplemental Benefit
Account, or an Ancillary Benefit Account under this Subpart II(J).
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SUBPART II(K): PROVISIONS APPLICABLE TO RUSSELLVILLE, ARKANSAS,
EMPLOYEES
1. ELIGIBLE EMPLOYEES
The special provisions in this Subpart II(K) shall apply to all Employees
who were employed at the Russellville, Arkansas, facility on January 1,
1989. An individual shall not be eligible for any benefit under this
Subpart II(K) unless he is described in the preceding sentence.
2. ACCRUED BENEFIT; ACCRUED BENEFIT ACCOUNT
Each Employee's Accrued Benefit Account as of January 1, 1989, shall equal
the Future Service Account the Employee would have had as of January 1,
1989, had this Plan (i) been effective as of October 1, 1987; (ii) covered
employees at the Russellville, Arkansas, facility as of such date; and
(iii) stated that an Employee hired at the Russellville, Arkansas,
facility after that date and before January 1, 1989, would become a
Participant in the Plan on his date of hire.
For purposes of computing such Future Service Account for an individual
who became an Employee at the Russellville, Arkansas, facility on or after
October 1, 1987, and before January 1, 1989:
(a) 1/4th of the maximum taxable Social Security wage bases for 1988 and
1987 shall be assumed to be $11,250 and $2,737 (3/12ths of $10,950),
respectively, and
(b) the credit as of December 31, 1988, in accordance with Section 3.01
C. shall be at the rate of 7%.
3. SUPPLEMENTAL BENEFIT; SUPPLEMENTAL BENEFIT ACCOUNT; ANCILLARY BENEFIT
ACCOUNT
No Employee shall have a Supplemental Benefit, a Supplemental Benefit
Account, or an Ancillary Benefit Account under this Subpart II(K).
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115
SUBPART II(L): PROVISIONS APPLICABLE TO PARTICIPANTS IN THE
WEATHERHEAD GENERAL PLAN
1. ELIGIBLE EMPLOYEES
The special provisions in this Subpart II(L) shall apply to any individual
who had an undistributed accrued benefit under the Weatherhead General
Plan (041) as of December 31, 1988, and who is an Employee on January 1,
1989. If an individual had an undistributed accrued benefit under the
Weatherhead General Plan as of December 31, 1988, and the individual is
employed by the Company on or after January 1, 1989, but is not an
Employee on January 1, 1989, the special provisions in this Subpart II(L)
shall apply to such individual in the manner prescribed by Section 9 A. or
Section 9 B. of Subpart II(A), whichever is applicable. An individual
shall not be eligible for any benefit under this Subpart II(L) unless he
is described in one of the two preceding sentences.
2. ACCRUED BENEFIT; ACCRUED BENEFIT ACCOUNT
Each Employee's Accrued Benefit Account as of January 1, 1989, shall equal
190 times the Employee's Accrued Benefit. Each Employee's Accrued Benefit
shall equal $16.00, multiplied by the number of years and fractional parts
thereof of his Credited Service at December 31, 1988, where Credited
Service is as defined in the Weatherhead General Plan as in effect on
December 30, 1988, such amount then discounted 7% per year (compounded
annually) for each year that January 1, 1989, precedes the Employee's
Normal Retirement Date, and multiplied by 86.037/190ths.
3. SUPPLEMENTAL BENEFIT; SUPPLEMENTAL BENEFIT ACCOUNT
No Employee shall have a Supplemental Benefit or a Supplemental Benefit
Account under this Subpart II(L).
4. ANCILLARY BENEFIT ACCOUNT
An Ancillary Benefit Account shall be established for each Participant who
is an Employee as of January 1, 1989, equal to $1,093 discounted by 7% per
year (compounded annually) for each year that January 1, 1989, precedes
the Participant's Normal Retirement Date. Such Ancillary Benefit Account
shall be increased at the end of each Plan Year in the manner described in
Section 3.01 C.
A Participant's Ancillary Benefit Account shall be paid only as provided
in Section 8 of Subpart II(A).
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5. NO REDUCTION IN BENEFITS
If a Participant's benefit is paid in the form of a level annuity or
lump-sum payment, such benefit shall not be less than the benefit that
would have been paid under the terms of the Weatherhead General Plan as in
effect on December 30, 1988 (as though the provisions of the Weatherhead
General Plan had remained unchanged after December 30, 1988), based on the
Participant's Credited Service as of December 31, 1988, and his Vesting
Service as of the date of termination or retirement.
If a Participant retires before January 1, 1994, and his benefit is paid
in the form of a level annuity or lump-sum payment, such benefit shall not
be less than the level annuity or lump-sum benefit that would have been
paid under the terms of the Weatherhead General Plan as in effect on
December 30, 1988, based on the Participant's Credited Service as of his
retirement date. Such amount shall be determined as though the provisions
of the Weatherhead General Plan had remained unchanged after December 30,
1988.
If the Participant's level annuity benefit would be increased by the
preceding portions of this Section 4, the Participant's increasing annuity
benefit shall be increased by the same percentage.
If a Participant is eligible to retire on December 31, 1993, but retires
on or after January 1, 1994, the lump-sum payment to which the Participant
will be entitled when he retires shall equal at least the sum of (a) the
lump-sum benefit to which he would have been entitled had he retired on
December 31, 1993, plus (b) increases thereon from January 1, 1994, at the
rate described in Section 3.01 C. If the Participant's lump-sum payment
would be increased by this paragraph, the Participant's level annuity and
increasing annuity benefit shall be increased by the same percentage.
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SUBPART II(M): PROVISIONS APPLICABLE TO PARTICIPANTS IN THE
WEATHERHEAD SALARIED PLAN
1. ELIGIBLE EMPLOYEES
The special provisions in this Subpart II(M) shall apply to any individual
who had an undistributed accrued benefit under the Weatherhead Salaried
Plan (037) as of December 31, 1988, and who is an Employee on January 1,
1989. If an individual had an undistributed accrued benefit under the
Weatherhead Salaried Plan as of December 31, 1988, and the individual is
employed by the Company on or after January 1, 1989, but is not an
Employee on January 1, 1989, the special provisions in this Subpart II(M)
shall apply to such individual in the manner prescribed by Section 9 A. or
Section 9 B. of Subpart II(A), whichever is applicable. An individual
shall not be eligible for any benefit under this Subpart II(M) unless he
is described in one of the two preceding sentences.
2. ACCRUED BENEFIT; ACCRUED BENEFIT ACCOUNT
Each Employee's Accrued Benefit Account as of January 1, 1989, shall equal
190 times the Employee's Accrued Benefit. Each Employee's Accrued Benefit
shall equal the greater of (a) or (b), where Final Average Earnings,
monthly compensation covered by the Federal Social Security Act, and
Credited Service are as defined in the Weatherhead Salaried Plan as in
effect on December 30, 1988, such amount then discounted 7% per year
(compounded annually) for each year that January 1, 1989, precedes the
Employee's Normal Retirement Date, and multiplied by 86.037/190ths:
(a) The sum of (i), (ii), and (iii):
(i) 1% of the Employee's Final Average Earnings at
December 31, 1988, to a maximum of his monthly
compensation covered by the Federal Social
Security Act at December 31, 1988, multiplied by
the number of years and fractional parts thereof
of his Credited Service at December 31, 1988, to a
maximum of 35 such years.
(ii) 1.2% of the excess, if any, of the Employee's
Final Average Earnings at December 31, 1988, over
his monthly compensation covered by the Federal
Social Security Act at December 31, 1988,
multiplied by the number of years and fractional
parts thereof of his Credited Service at December
31, 1988, to a maximum of 35 such years.
(iii) 0.25% of the Employee's Final Average Earnings at
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December 31, 1988, multiplied by the number of
years and fractional parts thereof of the excess,
if any, of his Credited Service at December 31,
1988, over 35 years.
(b) $13.00, multiplied by the number of years and fractional parts
thereof of the excess, if any, of his Credited Service at December
31, 1988.
3. SUPPLEMENTAL BENEFIT; SUPPLEMENTAL BENEFIT ACCOUNT
Each Employee's Supplemental Benefit Account as of January 1, 1989, shall
equal the greater of (1) the excess of (a) over the sum of (b) and (c), or
(2) the excess of (d) over (b).
(a) 190 times the First Objective Benefit described below.
(b) the Accrued Benefit Account as of January 1, 1989.
(c) the sum of the credits expected to be made in accordance with
Section 3.01 B. from January 1, 1989, until three years before the
Employee's Normal Retirement Date, plus related credits under
Section 3.01 C., discounted 7% per year (compounded annually) for
each year that January 1, 1992, precedes the Employee's Normal
Retirement Date, using the assumptions described in Section 4 of
this Subpart II(M).
(d) 190 times the Second Objective Benefit described below.
Each Employee's Supplemental Benefit shall equal 1/190th of the Employee's
Supplemental Benefit Account, times the ratio, not to exceed 1.0, of the
Employee's Credited Service after January 1, 1989, to the number of years
and months from January 1, 1992, to the Employee's Normal Retirement Date.
If an Employee has reached age 62 on or before January 1, 1989, the
Employee shall not have a Supplemental Benefit or a Supplemental Benefit
Account.
4. FIRST OBJECTIVE BENEFIT
A. DEFINITIONS
Each Employee's First Objective Benefit shall equal the greater of (a) or
(b), where Final Average Earnings, monthly compensation covered by the
Federal Social Security Act, and Credited Service are as defined in the
Weatherhead Salaried Plan as in effect on December 30, 1988, such amount
then discounted 7% per year (compounded annually) for each year that
January 1, 1992, precedes the Employee's Normal Retirement Date, and
multiplied by
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91.553/190ths and by 89.2%:
(a) The sum of (i), (ii), and (iii):
(i) 1% of the Employee's projected Final Average
Earnings three years before his Normal Retirement
Date, to a maximum of his projected monthly
compensation covered by the Federal Social
Security Act three years before his Normal
Retirement Date, multiplied by the projected
number of years and fractional parts thereof of
his Credited Service three years before his Normal
Retirement Date, to a maximum of 35 such years.
(ii) 1.2% of the excess, if any, of the Employee's
projected Final Average Earnings three years
before his Normal Retirement Date over his
projected monthly compensation covered by the
Federal Social Security Act three years before his
Normal Retirement Date, multiplied by the
projected number of years and fractional parts
thereof of his Credited Service three years before
his Normal Retirement Date, to a maximum of 35
such years.
(iii) 0.25% of the Employee's projected Final Average
Earnings three years before his Normal Retirement
Date, multiplied by the projected number of years
and fractional parts thereof of the excess, if any,
of his projected Credited Service three years
before his Normal Retirement Date over 35 years.
(b) $13.00, multiplied by the projected number of years and fractional
parts thereof of his Credited Service three years before his Normal
Retirement Date.
B. ASSUMPTIONS
For purposes of determining the Employee's First Objective Benefit, the
Employee's projected Final Average Earnings and projected monthly
compensation covered by the Federal Social Security Act shall be
determined assuming:
(a) The Employee's Base Pay and Commissions for 1989 will equal 105% of
the greatest of (1) his 1988 Base Pay and Commissions, (2) 105% of
his 1987 Base Pay and Commissions, and (3) 110% of his 1986 Base Pay
and Commissions.
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(b) his Base Pay and Commissions for subsequent years will increase at
the rate of 5% per year.
(c) Base Pay and Commissions for any part of a year will be a pro rata
part of the projected Base Pay and Commissions for the entire year.
(d) the maximum taxable Social Security wage bases after 1988 will
increase at the rate of 4% per year.
5. SECOND OBJECTIVE BENEFIT
Each Employee's Second Objective Benefit shall be the same as his First
Objective Benefit, except that:
(a) his Credited Service shall be as of December 31, 1988, rather than
projected to three years before his Normal Retirement Date.
(b) it shall be based on his projected Final Average Earnings and
projected monthly compensation covered by the Federal Social
Security Act at Normal Retirement Date.
(c) his Base Pay and Commissions for years after 1988 shall be assumed
to increase at the rate of 4.5% per year.
(d) the maximum taxable Social Security wage bases after 1988 shall be
assumed to increase at the rate of 3.5% per year.
(e) the 7% discount shall be applied for each year that January 1, 1989,
precedes his Normal Retirement Date.
(f) the fraction 86.037/190ths shall be substituted for the fraction
91.553/190ths and 100% shall be substituted for 89.2%.
6. ANCILLARY BENEFIT ACCOUNT
An Ancillary Benefit Account shall be established for each Participant who
is an Employee as of January 1, 1989, equal to $1,721 discounted by 7% per
year (compounded annually) for each year that January 1, 1989, precedes
the Participant's Normal Retirement Date. Such Ancillary Benefit Account
shall be increased at the end of each Plan Year in the manner described in
Section 3.01 C.
A Participant's Ancillary Benefit Account shall be paid only as provided
in Section 8 of Subpart II(A).
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7. NO REDUCTION IN BENEFITS
If a Participant's benefit is paid in the form of a level annuity or
lump-sum payment, such benefit shall not be less than the benefit that
would have been paid under the terms of the Weatherhead Salaried Plan as
in effect on December 30, 1988 (as though the provisions of the
Weatherhead Salaried Plan had remained unchanged after December 30, 1988),
based on the Participant's Credited Service, Final Average Earnings, and
monthly compensation covered by the Federal Social Security Act as of
December 31, 1988, and his Vesting Service as of the date of termination
or retirement.
If a Participant retires before January 1, 1994, and his benefit is paid
in the form of a level annuity or lump-sum payment, such benefit shall not
be less than the level annuity or lump-sum benefit that would have been
paid under the terms of the Weatherhead Salaried Plan as in effect on
December 30, 1988, based on the Participant's Credited Service, Final
Average Earnings, and monthly compensation covered by the Federal Social
Security Act as of his retirement date. Such amount shall be determined as
though the provisions of the Weatherhead Salaried Plan had remained
unchanged after December 30, 1988, except that no Base Pay and Commissions
in excess of $200,000 (or such greater amount as shall be permitted
pursuant to Section 401(a)(17) of the Code) shall be taken into account.
If the Participant's level annuity benefit would be increased by the
preceding portions of this Section 7, the Participant's increasing annuity
benefit shall be increased by the same percentage.
If a Participant is eligible to retire on December 31, 1993, but retires
on or after January 1, 1994, the lump-sum payment to which the Participant
will be entitled when he retires shall equal at least the sum of (a) the
lump-sum benefit to which he would have been entitled had he retired on
December 31, 1993, plus (b) increases thereon from January 1, 1994, at the
rate described in Section 3.01 C. If the Participant's lump-sum payment
would be increased by this paragraph, the Participant's level annuity
benefit and increasing annuity benefit shall be increased by the same
percentage.
8. PERIOD CERTAIN ANNUITY
In addition to any form of distribution under Section 3.04 for which he is
eligible, a Participant may receive his vested Accrued Benefit described
in Section 2 of this Subpart II(M) in the form of a life annuity with a
fifteen-year or twenty-year period certain, as described in Section 4.6.2
of the Weatherhead Salaried Plan. A Participant who elects this form of
distribution must satisfy the applicable requirements of the Plan,
including the consent and minimum
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distribution requirements of Sections 3.05 and 7.04.
A Participant may not elect this form of distribution for any benefit that
accrues under the Plan after the Adoption Date. A Participant who elects
this form of distribution shall receive the automatic form of payment
described in Section 3.05 A. or B. (whichever is applicable) for the
portion of his benefit that accrues after the Adoption Date, and shall not
be eligible to elect any optional form of distribution for such portion of
his accrued benefit.
9. CERTAIN TRANSFERRED EMPLOYEES
If an individual transferred out of employment covered by the Weatherhead
Salaried Plan to employment covered by another qualified defined benefit
plan sponsored by the Company (regardless of whether the transfer took
place before or after July 1, 1988), the individual's Base Pay and Final
Average Earnings under the Weatherhead Salaried Plan, as in effect on
December 30, 1988, shall be deemed to include the individual's
compensation paid after the transfer by any other employer that is part of
the Company, but only to the extent that (i) such compensation would have
been treated as Base Pay or Final Average Earnings under the Weatherhead
Salaried Plan if it had been paid by a sponsor of that plan, and (ii) such
compensation does not exceed the applicable limit under Section 401(a)(17)
of the Code.
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SUBPART II(N): PROVISIONS APPLICABLE TO PARTICIPANTS IN THE
SARASOTA HOURLY PLAN
1. ELIGIBLE EMPLOYEES
The special provisions in this Subpart II(N) shall apply to any individual
who had an undistributed accrued benefit under the Sarasota Hourly Plan
(055) as of December 31, 1988, and who is an Employee on January 1, 1989.
If an individual had an undistributed accrued benefit under the Sarasota
Hourly Plan as of December 31, 1988, and the individual is employed by the
Company on or after January 1, 1989, but is not an Employee on January 1,
1989, the special provisions in this Subpart II(N) shall apply to such
individual in the manner prescribed by Section 9 A. or Section 9 B. of
Subpart II(A), whichever is applicable. An individual shall not be
eligible for any benefit under this Subpart II(N) unless he is described
in one of the two preceding sentences.
2. ACCRUED BENEFIT; ACCRUED BENEFIT ACCOUNT
Each Employee's Accrued Benefit Account as of January 1, 1989, shall equal
190 times the Employee's Accrued Benefit. Each Employee's Accrued Benefit
as of January 1, 1989, shall equal the Accrued Benefit determined in
accordance with Section 2 of Subpart II(B) as though the Employee had been
a participant in the Racine Salaried Plan during the period in which he
was a participant in the Sarasota Hourly Plan, except that the amounts
described in (a) and (b) of such Section 2 shall not be less than the
monthly benefit accrued under the Sarasota Hourly Plan as of December 31,
1988.
3. SUPPLEMENTAL BENEFIT; SUPPLEMENTAL BENEFIT ACCOUNT
Each Employee's Supplemental Benefit and Supplemental Benefit Account as
of January 1, 1989, shall equal an amount determined in accordance with
Section 3 of Subpart II(B) as though the Employee had been a participant
in the Racine Salaried Plan during the period in which he was a
participant in the Sarasota Hourly Plan.
4. ANCILLARY BENEFIT ACCOUNT
No Employee shall have an Ancillary Benefit Account under this Subpart
II(N) or under Subpart II(B).
5. NO REDUCTION IN BENEFITS
If a Participant's benefit is paid in the form of a level annuity or
lump-sum payment, such benefit shall not be less than the benefit that
would have been
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paid under the terms of the Sarasota Hourly Plan as in effect on December
30, 1988 (as though the provisions of the Sarasota Hourly Plan had
remained unchanged after December 30, 1988), based on the Participant's
Credited Service, Monthly Compensation, and Social Security Benefit as of
December 30, 1988, and his Vesting Service as of the date of termination
or retirement.
If a Participant retires before January 1, 1994, and his benefit is paid
in the form of a level annuity or lump-sum payment, such benefit shall not
be less than the level annuity or lump-sum benefit that would have been
paid under the terms of the Racine Salaried Plan as in effect on December
30, 1988, based on the Participant's Credited Service, Monthly
Compensation, and Social Security Benefit as of his retirement date. Such
amount shall be determined as though the provisions of the Racine Salaried
Plan had remained unchanged after December 30, 1988, except that no
Compensation in excess of $200,000 (or such greater amount as shall be
permitted pursuant to Section 401(a)(17) of the Code) shall be taken into
account.
If the Participant's level annuity benefit would be increased by the
preceding portions of this Section 5, the Participant's increasing annuity
benefit shall be increased by the same percentage.
If a Participant is eligible to retire on December 31, 1993, but retires
on or after January 1, 1994, the lump-sum payment to which the Participant
will be entitled when he retires shall equal at least the sum of (a) the
lump-sum benefit to which he would have been entitled had he retired on
December 31, 1993, plus (b) increases thereon from January 1, 1994, at the
rate described in Section 3.01 C. If the Participant's lump-sum payment
would be increased by this paragraph, the Participant's level annuity and
increasing annuity benefit shall be increased by the same percentage.
6. NO DUPLICATION OF BENEFITS
In no event shall a Participant be entitled to receive duplicate benefits
under the Sarasota Hourly Plan and under this Subpart II(N) for the period
of service from January 1, 1989, through March 31, 1989.
7. CERTAIN TRANSFERRED EMPLOYEES
If an individual transferred out of employment covered by the Sarasota
Hourly Plan to employment covered by another qualified defined benefit
plan sponsored by the Company (regardless of whether the transfer took
place before or after July 1, 1988), the individual's Compensation or
Monthly Compensation under the Sarasota Hourly Plan, as in effect on
December 30, 1988, shall be deemed to include the individual's
compensation paid after the transfer by any other
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employer that is part of the Company, but only to the extent that (i) such
compensation would have been treated as Compensation or Monthly
Compensation under the Sarasota Hourly Plan if it had been paid by a
sponsor of that plan, and (ii) such compensation does not exceed the
applicable limit under Section 401(a)(17) of the Code.
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SUBPART II(O): PROVISIONS APPLICABLE TO PARTICIPANTS IN THE TYRONE
SALARIED PLAN
1. ELIGIBLE EMPLOYEES
The special provisions in this Subpart II(O) shall apply to any individual
who had an undistributed accrued benefit under the Tyrone Salaried Plan
(059) as of December 31, 1989, and who is an Employee on January 1, 1990.
If an individual had an undistributed accrued benefit under the Tyrone
Salaried Plan as of December 31, 1989, and the individual is employed by
the Company on or after January 1, 1990, but is not an Employee on January
1, 1990, the special provisions in this Subpart II(O) shall apply to such
individual in the manner prescribed by Section 9 A. or Section 9 B. of
Subpart II(A), whichever is applicable. An individual shall not be
eligible for any benefit under this Subpart II(O) unless he is described
in one of the two preceding sentences.
2. ACCRUED BENEFIT; ACCRUED BENEFIT ACCOUNT
Each Employee's Accrued Benefit Account as of January 1, 1990, shall equal
190 times the Employee's Accrued Benefit. Each Employee's Accrued Benefit
shall equal the amount specified below, where Average Monthly
Compensation, Primary Insurance Amount, and Credited Service are as
defined in the Tyrone Salaried Plan as in effect on December 30, 1989,
such amount then discounted 7% per year (compounded annually) for each
year that January 1, 1990, precedes the Employee's Normal Retirement Date,
and multiplied by 88.960/190ths:
57% of the Employee's Final Monthly Earnings at December 31, 1989,
less 65% of the Employee's Primary Social Security Benefit at
December 31, 1989, multiplied by the number of years and fractional
parts thereof of his Credited Service at December 31, 1989, to a
maximum of 30 such years, and divided by 30, less the monthly
benefit that is provided under Aetna Group Annuity Contract GA 2744,
or that would have been provided under such contract had the
Employee not received payment of the lump-sum value thereof.
3. SUPPLEMENTAL BENEFIT; SUPPLEMENTAL BENEFIT ACCOUNT
Each Employee's Supplemental Benefit Account as of January 1, 1990, shall
equal the greater of (1) the excess of (a) over the sum of (b) and (c), or
(2) the excess of (d) over (b):
(a) 190 times the First Objective Benefit described below.
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(b) the Accrued Benefit Account as of January 1, 1990.
(c) the sum of the credits expected to be made in accordance with
Section 3.01 B. from January 1, 1990, until three years before the
Employee's Normal Retirement Date, plus related credits under
Section 3.01 C., discounted 7% per year (compounded annually) for
each year that January 1, 1993, precedes the Employee's Normal
Retirement Date, using the assumptions described in Section 4 of
this Subpart II(O).
(d) 190 times the Second Objective Benefit described below.
Each Employee's Supplemental Benefit shall equal 1/190th of the Employee's
Supplemental Benefit Account, times the ratio, not to exceed 1.0, of the
Employee's Credited Service after January 1, 1990, to the number of years
and months from January 1, 1993, to the Employee's Normal Retirement Date.
If an Employee has reached age 62 on or before January 1, 1990, the
Employee shall not have a Supplemental Benefit or a Supplemental Benefit
Account.
4. FIRST OBJECTIVE BENEFIT
A. DEFINITIONS
Each Employee's First Objective Benefit shall equal the amount specified
below, where Final Monthly Earnings, Primary Social Security Benefit, and
Credited Service are as defined in the Tyrone Salaried Plan as in effect
on December 30, 1989, such amount then discounted 7% per year (compounded
annually) for each year that January 1, 1993, precedes the Employee's
Normal Retirement Date, and multiplied by 94.893/190ths and by 71.127%:
57% of the Employee's projected Final Monthly Earnings three years
before his Normal Retirement Date, less 65% of the Employee's
projected Primary Social Security Benefit three years before his
Normal Retirement Date, multiplied by the projected number of years
and fractional parts thereof of his Credited Service three years
before his Normal Retirement Date, to a maximum of 30 such years,
and divided by 30, less the monthly benefit that is provided under
Aetna Group Annuity Contract GA 2744, or that would have been
provided under such contract had the Employee not received payment
of the lump-sum value thereof.
B. ASSUMPTIONS
For purposes of determining the Employee's First Objective Benefit, the
Employee's projected Final Monthly Earnings and projected Primary Social
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Security Benefit shall be determined assuming:
(a) The Employee's Earnings for 1990 will equal 105% of the greatest of
(1) his 1989 Earnings, (2) 105% of his 1988 Earnings, and (3) 110%
of his 1987 Earnings.
(b) his Earnings for subsequent years will increase at the rate of 5%
per year.
(c) Earnings for any part of a year will be a pro rata part of the
projected Earnings for the entire year.
(d) his previous Earnings increased at a rate of 6% per year, and were
of such amounts that the Employee's average monthly Earnings for
1987 through 1989 equal his Final Monthly Earnings as of December
31, 1989; the maximum taxable Social Security wage bases after 1988
will increase at the rate of 4% per year; and increases in Social
Security benefits on account of changes in the Consumer Price Index
will be at the rate of 3.5% per year.
5. SECOND OBJECTIVE BENEFIT
Each Employee's Second Objective Benefit shall be the same as his First
Objective Benefit, except that:
(a) his Credited Service shall be as of December 31, 1989, rather than
projected to three years before his Normal Retirement Date.
(b) it shall be based on his projected Final Monthly Earning and
projected Primary Social Security Benefit at Normal Retirement Date.
(c) his Earnings for years after 1989 shall be assumed to increase at
the rate of 4.5% per year.
(d) the maximum taxable Social Security wage bases after 1989 shall be
assumed to increase at the rate of 3.5% per year; and increases in
Social Security benefits on account of changes in the Consumer Price
Index shall be at the rate of 3.0% per year.
(e) the 7% discount shall be applied for each year that January 1, 1990,
precedes his Normal Retirement Date.
(f) the fraction 88.960/190ths shall be substituted for the fraction
94.893/190ths and the factor 100% shall be substituted for the
factor 71.127%.
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6. ANCILLARY BENEFIT ACCOUNT
No Employee shall have an Ancillary Benefit Account under this Subpart
II(O).
7. NO REDUCTION IN BENEFITS
If a Participant's benefit is paid in the form of a level annuity or
lump-sum payment, such benefit shall not be less than the benefit that
would have been paid under the terms of the Tyrone Salaried Plan as in
effect on December 30, 1989 (as though the provisions of the Tyrone
Salaried Plan had remained unchanged after December 30, 1989), based on
the Participant's Credited Service, Average Monthly Compensation, and
Primary Insurance Amount as of December 31, 1989, and his Vesting Service
as of the date of termination or retirement.
If a Participant retires before January 1, 1995, and his benefit is paid
in the form of a level annuity or lump-sum payment, such benefit shall not
be less than the level annuity or lump-sum payment that would have been
paid under the terms of the Tyrone Salaried Plan as in effect on December
30, 1989, based on the Participant's Credited Service, Average Monthly
Compensation, and Primary Insurance Amount as of his retirement date. Such
amount shall be determined as though the provisions of the Tyrone Salaried
Plan had remained unchanged after December 30, 1989, except as provided
below with respect to (i) the $150,000 compensation limit, and (ii) the
joint and 66 2/3% survivor annuity.
If the Participant's level annuity benefit would be increased by the
preceding portions of this Section 7, the Participant's increasing annuity
benefit shall be increased by the same percentage.
If a Participant is eligible to retire on December 31, 1994, but retires
on or after January 1, 1995, the lump-sum payment to which the Participant
will be entitled when he retires shall equal at least the sum of (a) the
lump-sum benefit to which he would have been entitled had he retired on
December 31, 1994, plus (b) increases thereon from January 1, 1995, at the
rate described in Section 3.01 C. If the Participant's lump-sum payment
would be increased by this paragraph, the Participant's level annuity
benefit and increasing annuity benefit shall be increased by the same
percentage.
A Participant's five-year grandfather benefit under this Section 7 shall
be determined, on and after January 1, 1994, without taking into account
monthly compensation for any year (including years before 1994) that
exceeds $12,500 (one twelfth of $150,000). In no event shall the
recalculation of the Participant's Average Monthly Compensation to reflect
the $150,000
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compensation limit reduce the Participant's five-year grandfather benefit
below the amount that the Participant had accrued as of December 31, 1993,
under this Section 7.
8. JOINT AND 66 2/3% SURVIVOR ANNUITY
Under the terms of the Tyrone Salaried Plan as in effect on December 30,
1989, certain participants were eligible to receive their benefits in the
form of a joint and 66 2/3% survivor annuity. The Tyrone Salaried Plan
also offered actuarially equivalent joint and survivor annuities with
smaller and larger survivor payment percentages. Effective December 31,
1989, no individual who is covered by this Subpart II(O) shall be eligible
to receive any portion of his benefit in the form of a joint and 66 2/3%
survivor annuity (regardless of whether the benefit accrued before or
after December 31, 1989). An individual who is covered by this Subpart
II(O) shall be eligible to receive his benefit in any of the regular forms
of distribution under the Plan, including the joint and 50%, 75%, and 100%
survivor annuities described in Section 3.04 B. 2.
9. CERTAIN TRANSFERRED EMPLOYEES
If an individual transferred out of employment covered by the Tyrone
Salaried Plan to employment covered by another qualified defined benefit
plan sponsored by the Company (regardless of whether the transfer took
place before or after July 1, 1988), the individual's Average Monthly
Compensation under the Tyrone Salaried Plan, as in effect on December 30,
1989, shall be deemed to include the individual's compensation paid after
the transfer by any other employer that is part of the Company, but only
to the extent that (i) such compensation would have been treated as
Average Monthly Compensation under the Tyrone Salaried Plan if it had been
paid by a sponsor of that plan, and (ii) such compensation does not exceed
the applicable limit under Section 401(a)(17) of the Code.
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SUBPART II(P): PROVISIONS APPLICABLE TO PARTICIPANTS IN THE GRESEN
SALARIED PLAN
1. ELIGIBLE EMPLOYEES
The special provisions in this Subpart II(P) shall apply to any individual
who had an undistributed accrued benefit under the Gresen Salaried Plan
(046) as of December 31, 1989, and who is an Employee on January 1, 1990.
If an individual had an undistributed accrued benefit under the Gresen
Salaried Plan as of December 31, 1989, and the individual is employed by
the Company on or after January 1, 1990, but is not an Employee on January
1, 1990, the special provisions in this Subpart II(P) shall apply to such
individual in the manner prescribed by Section 9 A. or Section 9 B. of
Subpart II(A), whichever is applicable. An individual shall not be
eligible for any benefit under this Subpart II(P) unless he is described
in one of the two preceding sentences.
2. ACCRUED BENEFIT; ACCRUED BENEFIT ACCOUNT
Each Employee's Accrued Benefit Account as of January 1, 1990, shall equal
190 times the Employee's Accrued Benefit. Each Employee's Accrued Benefit
shall equal the excess of (a) over (b), where Average Monthly
Compensation, Primary Social Security Benefit, and Benefit Accrual Service
are as defined in the Gresen Salaried Plan as in effect on December 30,
1989, such amount then discounted 7% per year (compounded annually) for
each year that January 1, 1990, precedes the Employee's Normal Retirement
Date, and multiplied by 88.960/190ths:
(a) 1.6% of the Employee's Average Monthly Compensation at December 31,
1989, multiplied by the number of years and fractional parts thereof
of his Benefit Accrual Service at December 31, 1989.
(b) 2.0% of the Employee's Primary Social Security Benefit at December
31, 1989, multiplied by the number of years and fractional parts
thereof of his Benefit Accrual Service at December 31, 1989, to a
maximum of 25 such years.
3. SUPPLEMENTAL BENEFIT; SUPPLEMENTAL BENEFIT ACCOUNT
Each Employee's Supplemental Benefit Account as of January 1, 1990, shall
equal the greater of (1) the excess of (a) over the sum of (b) and (c), or
(2) the excess of (d) over (b):
(a) 190 times the First Objective Benefit described below.
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(b) the Accrued Benefit Account as of January 1, 1990.
(c) the sum of the credits expected to be made in accordance with
Section 3.01 B. from January 1, 1990, until three years before the
Employee's Normal Retirement Date, plus related credits under
Section 3.01 C., discounted 7% per year (compounded annually) for
each year that January 1, 1993, precedes the Employee's Normal
Retirement Date, using the assumptions described in Section 4 of
this Subpart II(P).
(d) 190 times the Second Objective Benefit described below.
Each Employee's Supplemental Benefit shall equal 1/190th of the Employee's
Supplemental Benefit Account, times the ratio, not to exceed 1.0, of the
Employee's Benefit Accrual Service after January 1, 1990, to the number of
years and months from January 1, 1993, to the Employee's Normal Retirement
Date.
If an employee has reached age 62 on or before January 1, 1990, the
Employee shall not have a Supplemental Benefit or a Supplemental Benefit
Account.
4. FIRST OBJECTIVE BENEFIT
A. DEFINITIONS
Each Employee's First Objective Benefit shall equal the excess of (a) over
(b), where Average Monthly Compensation, Primary Social Security Benefit,
and Benefit Accrual Service are as defined in the Gresen Salaried Plan as
in effect on December 30, 1989, such amount then discounted 7% per year
(compounded annually) for each year that January 1, 1993, precedes the
Employee's Normal Retirement Date, and multiplied by 94.893/190ths and by
77.37%:
(a) 1.6% of the Employee's projected Average Monthly Compensation three
years before his Normal Retirement Date, multiplied by the projected
number of years and fractional parts thereof of his Benefit Accrual
Service three years before his Normal Retirement Date.
(b) 2.0% of the Employee's projected Primary Social Security Benefit
three years before his Normal Retirement Date, multiplied by the
projected number of years and fractional parts thereof of his
Benefit Accrual Service three years before his Normal Retirement
Date, to a maximum of 25 such years.
B. ASSUMPTIONS
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For purposes of determining the Employee's First Objective Benefit, the
Employee's projected Average Monthly Compensation and projected Primary
Social Security Benefit shall be determined assuming:
(a) The Employee's Earnings for 1990 will equal 105% of the greater of
(1) his 1989 Earnings, (2) 105% of his 1988 Earnings, and (3) 110%
of his 1987 Earnings.
(b) his Earnings for subsequent years will increase at the rate of 5%
per year.
(c) Earnings for any part of a year will be a pro rata part of the
projected Earnings for the entire year.
(d) his previous Earnings increased at a rate of 6% per year, and were
of such amounts that the Employee's average monthly Earnings for
1987 through 1989 equal his Average Monthly Compensation as of
December 31, 1989; the maximum taxable Social Security wage bases
after 1988 will increase at the rate of 4% per year; and increases
in Social Security benefits on account of changes in the Consumer
Price Index will be at the rate of 3.5% per year.
5. SECOND OBJECTIVE BENEFIT
Each Employee's Second Objective Benefit shall be the same as his First
Objective Benefit, except that:
(a) his Benefit Accrual Service shall be as of December 31, 1989, rather
than projected to three years before his Normal Retirement Date.
(b) it shall be based on his projected Average Monthly Compensation and
projected Primary Social Security Benefit at Normal Retirement Date.
(c) his Earnings for years after 1989 shall be assumed to increase at
the rate of 4.5% per year.
(d) the maximum taxable Social Security wage bases after 1989 shall be
assumed to increase at the rate of 3.5% per year; and increases in
Social Security benefits on account of changes in the Consumer Price
Index shall be at the rate of 3.0% per year.
(e) the 7% discount shall be applied for each year that January 1, 1990,
precedes his Normal Retirement Date.
(f) the fraction 88.960/190ths shall be substituted for the fraction
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94.893/190ths and the factor 100% shall be substituted for the
factor 77.37%.
6. ANCILLARY BENEFIT ACCOUNT
No Employee shall have an Ancillary Benefit Account under this Subpart
II(P).
7. NO REDUCTION IN BENEFITS
If a Participant's benefit is paid in the form of a level annuity or
lump-sum payment, such benefit shall not be less than the benefit that
would have been paid under the terms of the Gresen Salaried Plan as in
effect on December 30, 1989 (as though the provisions of the Gresen
Salaried Plan had remained unchanged after December 30, 1989), based on
the Participant's Benefit Accrual Service, Average Monthly Compensation,
and Primary Social Security Benefit as of December 31, 1989, and his
Vesting Service as of the date of termination or retirement.
If a Participant retires before January 1, 1995, and his benefit is paid
in the form of a level annuity or lump-sum payment, such benefit shall not
be less than the level annuity or lump-sum payment that would have been
paid under the terms of the Gresen Salaried Plan as in effect on December
30, 1989, based on the Participant's Benefit Accrual Service, Average
Monthly Compensation, and Primary Social Security Benefit as of his
retirement date. Such amount shall be determined as though the provisions
of the Gresen Salaried Plan had remained unchanged after December 30,
1989, except as provided below with respect to the $150,000 compensation
limit.
If the Participant's level annuity benefit would be increased by the
preceding portions of this Section 7, the Participant's increasing annuity
benefit shall be increased by the same percentage.
If a Participant is eligible to retire on December 31, 1994, but retires
on or after January 1, 1995, the lump-sum payment to which the Participant
will be entitled when he retires shall equal at least the sum of (a) the
lump-sum benefit to which he would have been entitled had he retired on
December 31, 1994, plus (b) increases thereon from January 1, 1995, at the
rate described in Section 3.01 C. If the Participant's lump-sum payment
would be increased by this paragraph, the Participant's level annuity
benefit and increasing annuity benefit shall be increased by the same
percentage.
A Participant's five-year grandfather benefit under this Section 7 shall
be determined, on and after January 1, 1994, without taking into account
monthly compensation for any year (including years before 1994) that
exceeds $12,500
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(one twelfth of $150,000). In no event shall the recalculation of the
Participant's Average Monthly Compensation to reflect the $150,000
compensation limit reduce the Participant's five-year grandfather benefit
below the amount that the Participant had accrued as of December 31, 1993,
under this Section 7.
8. PERIOD CERTAIN ANNUITY
In addition to any form of distribution under Section 3.04 for which he is
eligible, a Participant may receive his vested Accrued Benefit described
in Section 2 of this Subpart II(P) in the form of a life annuity with a
stipulated guaranteed number of payments to his designated beneficiary, as
described in Section 4.7.1 of the Gresen Salaried Plan. A Participant who
elects this form of distribution must satisfy the applicable requirements
of the Plan, including the consent and minimum distribution requirements
of Sections 3.05 and 7.04.
A Participant may not elect this form of distribution for any benefit that
accrues under the Plan after the Adoption Date. A Participant who elects
this form of distribution shall receive the automatic form of payment
described in Section 3.05 A. or B. (whichever is applicable) for the
portion of his benefit that accrues after the Adoption Date, and shall not
be eligible to elect any optional form of distribution for such portion of
his accrued benefit.
9. CERTAIN TRANSFERRED EMPLOYEES
If an individual transferred out of employment covered by the Gresen
Salaried Plan to employment covered by another qualified defined benefit
plan sponsored by the Company (regardless of whether the transfer took
place before or after July 1, 1988), the individual's Average Monthly
Compensation under the Gresen Salaried Plan, as in effect on December 30,
1989, shall be deemed to include the individual's compensation paid after
the transfer by any other employer that is part of the Company, but only
to the extent that (i) such compensation would have been treated as
Average Monthly Compensation under the Gresen Salaried Plan if it had been
paid by a sponsor of that plan, and (ii) such compensation does not exceed
the applicable limit under Section 401(a)(17) of the Code.
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SUBPART II(Q): PROVISIONS APPLICABLE TO PARTICIPANTS IN THE HEIL
SALARIED PLAN
1. ELIGIBLE EMPLOYEES
The special provisions in this Subpart II(Q) shall apply to any individual
who had an undistributed accrued benefit under The Heil Company Salaried
Employees Pension Plan (the "Heil Salaried Plan") as of January 31, 1985;
who is an Employee on July 1, 1989; and whose undistributed accrued
benefit under the Heil Salaried Plan has been transferred to the Dana
Corporation Retirement and Thrift Plan (017). An individual shall not be
eligible for any benefit under this Subpart II(Q) unless he is described
in the first sentence of this paragraph.
2. ACCRUED BENEFIT; ACCRUED BENEFIT ACCOUNT
No Employee shall have an Accrued Benefit or Accrued Benefit Account under
this Subpart II(Q).
3. SUPPLEMENTAL BENEFIT; SUPPLEMENTAL BENEFIT ACCOUNT
Each Employee's Supplemental Benefit Account as of July 1, 1989, shall
equal the excess of (a) over the sum of (b) and (c), or, if greater, the
amount determined in accordance with Subpart II(R):
(a) 190 times the First Objective Benefit described below.
(b) the Employee's account balance as of July 1, 1989, under the Dana
Corporation Savings and Investment Plan, which consists of:
(i) the value of the Company's Basic Contributions
under that plan as of July 1, 1989, and
(ii) the amount that was transferred from the Heil
Salaried Plan to the Dana Corporation Retirement
and Thrift Plan on April 1, 1986, with interest at
the rate of 7% from April 1, 1986, to July 1, 1989.
(c) the sum of the credits expected to be made in accordance with
Section 3.01 B. from July 1, 1989, until three years before the
Employee's Normal Retirement Date, plus related credits under
Section 3.01 C., discounted 7% per year (compounded annually) for
each year that July 1, 1992, precedes the Employee's Normal
Retirement Date, using the assumptions described in Section 4 of
this Subpart II(Q). The credit for the 1989 Plan Year shall be equal
to the percentage, determined in
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accordance with Section 3.01 B., of the Employee's Earnings during
the period July 1 through December 31, 1989, except that (i) the
percentage in the second column shall apply to Earnings up to $6,000
(1/8th of the maximum Social Security wage base for 1989), and (ii)
the percentage in the third column shall apply to Earnings in excess
of $6,000.
Each Employee's Supplemental Benefit shall equal 1/190th of the Employee's
Supplemental Benefit Account, times the ratio, not to exceed 1.0, of the
Employee's Credited Service after July 1, 1989, to the number of years and
months from July 1, 1992, to the Employee's Normal Retirement Date.
If an employee has reached age 62 on or before July 1, 1989, the Employee
shall not have a Supplemental Benefit or a Supplemental Benefit Account.
4. FIRST OBJECTIVE BENEFIT
A. DEFINITIONS
Each Employee's First Objective Benefit shall equal the sum of (a) and
(b), where Final Monthly Earnings and Credited Service are as defined in
the Heil Salaried Plan as last in effect prior to its termination, such
amount then discounted 7% per year (compounded annually) for each year
that July 1, 1992, precedes the Employee's Normal Retirement Date, and
multiplied by 94.893/190ths:
(a) 30% of the Employee's projected Final Monthly Earnings three years
before his Normal Retirement Date, less $82, multiplied by the
projected number of years and fractional parts thereof of his
Credited Service three years before his Normal Retirement Date, if
less than 15, divided by 15.
(b) 0.5% of the Employee's projected Final Monthly Earnings three years
before his Normal Retirement Date, multiplied by the projected
number of years and fractional parts thereof of his Credited Service
three years before his Normal Retirement Date.
B. ASSUMPTIONS
For purposes of determining the Employee's First Objective Benefit and
Supplemental Benefit, the following assumptions shall be made:
(a) The Employee's Earnings for 1989 will equal 105% of the greatest of
(1) his 1988 Earnings, (2) 105% of his 1987 Earnings, or (3) 110% of
his 1986 Earnings.
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(b) His Earnings for subsequent years will increase at the rate of 5%
per year.
(c) Earnings for any part of a year will be a pro rata part of the
projected Earnings for the entire year.
(d) The maximum taxable Social Security wage bases after 1989 will
increase at the rate of 4% per year.
(e) Credited Service shall include the individual's service with the
Heil Company through the date on which Dana Corporation purchased
the facility at which the individual was employed.
5. ANCILLARY BENEFIT ACCOUNT
No Employee shall have an Ancillary Benefit Account under this Subpart
II(Q).
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SUBPART II(R): PROVISIONS APPLICABLE TO ARAB, ALABAMA, EMPLOYEES
1. ELIGIBLE EMPLOYEES
The special provisions in this Subpart II(R) shall apply to any individual
employed at the Arab, Alabama, facility as of July 1, 1989, who is an
Employee on July 1, 1989, and who has completed at least one year of
Vesting Service on that date. An individual shall not be eligible for any
benefit under this Subpart II(R) unless he is described in the preceding
sentence.
2. SUPPLEMENTAL BENEFIT; SUPPLEMENTAL BENEFIT ACCOUNT
Each Employee's Supplemental Benefit Account as of July 1, 1989, shall
equal the excess of the First Objective Benefit over the Second Objective
Benefit.
Each Employee's Supplemental Benefit shall equal 1/190th of the Employee's
Supplemental Benefit Account, times the ratio, not to exceed 1.0, of the
Employee's Credited Service after July 1, 1989, to the number of years and
months from July 1, 1992, to the Employee's Normal Retirement Date.
If an Employee has reached age 62 on or before July 1, 1989, the Employee
shall not have a Supplemental Benefit or a Supplemental Benefit Account.
3. FIRST AND SECOND OBJECTIVE BENEFITS
A. DEFINITIONS
Each Employee's First Objective Benefit shall equal the sum of the
employer contributions expected to be made under the Dana Corporation
Savings and Investment Plan (had it continued unchanged) after July 1,
1989, and before the Employee's Normal Retirement Date, accumulated with
interest at the rate of 7% per year (compounded annually) from the date
each such contribution is expected to have been made to the date three
years before Normal Retirement Date, such amount then discounted 7% per
year (compounded annually) for each year that July 1, 1992, precedes the
Employee's Normal Retirement Date.
Each Employee's Second Objective Benefit shall equal the sum of the
credits expected to be made in accordance with Section 3.01 B., from July
1, 1989, until the date that is three years before the Employee's Normal
Retirement Date, accumulated with interest at the rate of 7% per year
(compounded annually) from the date each such credit is expected to have
been made to Normal Retirement Date, such amount then discounted 7% per
year (compounded annually) for each year that July 1, 1992, precedes the
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Employee's Normal Retirement Date. The credit for the 1989 Plan Year shall
be equal to the percentage, determined in accordance with Section 3.01 B.,
of the Employee's Earnings during the period July 1 through December 31,
1989, except that (i) the percentage in the second column shall apply to
Earnings up to $6,000 (1/8th of the maximum Social Security wage base for
1989), and (ii) the percentage in the third column shall apply to Earnings
in excess of $6,000.
B. ASSUMPTIONS
For purposes of determining the Employee's First and Second Objective
Benefit, the following assumptions shall be made:
(a) each year's employer contributions under the Dana Corporation
Savings and Investment Plan would have equaled 4% of Earnings for
the year.
(b) The Employee's 1989 Earnings will equal 105% of the greatest of (1)
his 1988 Earnings, (2) 105% of his 1987 Earnings, or (3) 110% of his
1986 Earnings.
(c) his Earnings for subsequent years will increase at the rate of 5%
per year.
(d) Earnings for any part of a year will be a pro rata part of the
projected Earnings for the entire year.
(e) the maximum taxable Social Security wage bases after 1989 will
increase at the rate of 4% per year.
(f) Credited Service shall include the individual's service with the
Heil Company through the date on which Dana Corporation purchased
the facility at which the individual was employed.
4. ACCRUED BENEFIT; ACCRUED BENEFIT ACCOUNT; ANCILLARY BENEFIT ACCOUNT
No Employee shall have an Accrued Benefit, Accrued Benefit Account, or
Ancillary Benefit Account under this Subpart II(R).
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SUBPART II(S): PROVISIONS APPLICABLE TO CERTAIN EMPLOYEES OF THE
MOBILE FLUID PRODUCTS DIVISION
1. ELIGIBLE EMPLOYEES
The special provisions in this Subpart II(S) shall apply to any individual
who is an Employee on January 1, 1990; who has completed at least one year
of Vesting Service on that date; and who was employed at one of the
following locations of the Mobile Fluid Products Division as of January 1,
1990: the Division Office; the Greenville, South Carolina, plant; the
Lancaster, Texas, facility; the Santa Ana, California, facility; or the
Summerville, South Carolina, facility. An individual shall not be eligible
for any benefit under this Subpart II(S) unless he is described in the
preceding sentence.
2. SUPPLEMENTAL BENEFIT; SUPPLEMENTAL BENEFIT ACCOUNT
Each Employee's Supplemental Benefit Account as of January 1, 1990, shall
equal the excess of the First Objective Benefit over the Second Objective
Benefit.
Each Employee's Supplemental Benefit shall equal 1/190th of the Employee's
Supplemental Benefit Account, times the ratio, not to exceed 1.0, of the
Employee's Credited Service after January 1, 1990, to the number of years
and months from January 1, 1993, to the Employee's Normal Retirement Date.
If an Employee has reached age 62 on or before January 1, 1990, the
Employee shall not have a Supplemental Benefit or a Supplemental Benefit
Account.
3. FIRST AND SECOND OBJECTIVE BENEFITS
A. DEFINITIONS
Each Employee's First Objective Benefit shall equal the sum of the
employer contributions expected to be made under the Dana Corporation
Savings and Investment Plan (had it continued unchanged) after January 1,
1990, and before the Employee's Normal Retirement Date, accumulated with
interest at the rate of 7% per year (compounded annually) from the date
each such contribution is expected to have been made to the date three
years before Normal Retirement Date, such amount then discounted 7% per
year (compounded annually) for each year that January 1, 1993, precedes
the Employee's Normal Retirement Date.
Each Employee's Second Objective Benefit shall equal the sum of the
credits expected to be made in accordance with Section 3.01 B., from
January 1, 1990,
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until the date that is three years before the Employee's Normal Retirement
Date, accumulated with interest at the rate of 7% per year (compounded
annually) from the date each such credit is expected to have been made to
Normal Retirement Date, such amount then discounted 7% per year
(compounded annually) for each year that January 1, 1993, precedes the
Employee's Normal Retirement Date.
B. ASSUMPTIONS
For purposes of determining the Employee's First and Second Objective
Benefit, the following assumptions shall be made:
(a) Each year's employer contributions under the Dana Corporation
Savings and Investment Plan would have equaled 4% of Earnings for
the year.
(b) The Employee's 1990 Earnings will equal 105% of the greatest of (1)
his 1989 Earnings, (2) 105% of his 1988 Earnings, and (3) 110% of
his 1987 Earnings.
(c) His Earnings for subsequent years will increase at the rate of 5%
per year.
(d) Earnings for any part of a year will be a pro rata part of the
projected Earnings for the entire year.
(e) The maximum taxable Social Security wage bases after 1990 will
increase at the rate of 4% per year.
4. ACCRUED BENEFIT; ACCRUED BENEFIT ACCOUNT; ANCILLARY BENEFIT ACCOUNT
No Employee shall have an Accrued Benefit, Accrued Benefit Account, or
Ancillary Benefit Account under this Subpart II(S).
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SUBPART II(T): PROVISIONS APPLICABLE TO PARTICIPANTS IN THE WARNER
UNIFORM SALARIED PLAN
1. ELIGIBLE EMPLOYEES
The special provisions in this Subpart II(T) shall apply to any individual
who had an undistributed accrued benefit under the Warner Uniform Salaried
Plan (065) as of December 31, 1989, and who is an Employee on January 1,
1990. If an individual had an undistributed accrued benefit under the
Warner Uniform Salaried Plan as of December 31, 1989, and the individual
is employed by the Company on or after January 1, 1990, but is not an
Employee on January 1, 1990, the special provisions in this Subpart II(T)
shall apply to such individual in the manner prescribed by Section 9 A. or
Section 9 B. of Subpart II(A), whichever is applicable. An individual
shall not be eligible for any benefit under this Subpart II(T) unless he
is described in one of the two preceding sentences.
2. ACCRUED BENEFIT; ACCRUED BENEFIT ACCOUNT
Each Employee's Accrued Benefit Account as of January 1, 1990, shall equal
190 times the Employee's Accrued Benefit. Each Employee's Accrued Benefit
shall equal the excess of (a) over the sum of (b), (c), and (d), where
Effective Monthly Compensation and Years of Benefit Accrual are as defined
in the Warner Uniform Salaried Plan as in effect on December 30, 1989
(except that the Employee's fractional Years of Benefit Accrual for his
year of hire shall equal two times his actual period of employment in such
year, but shall not exceed one year), such amount then discounted 7% per
year (compounded annually) for each year that January 1, 1990, precedes
the Employee's Normal Retirement Date, and multiplied by 88.960/190ths:
(a) 1 2/3% of the Employee's Effective Monthly Compensation at December
31, 1989, multiplied by the number of years and fractional parts
thereof of his Years of Benefit Accrual at December 31, 1989, to a
maximum of 30 such years.
(b) 1 2/3% of the Employee's Social Security benefit at December 31,
1989, determined under the 100% table of Appendix A of the Plan,
multiplied by the number of years and fractional parts thereof of
his Years of Benefit Accrual at December 31, 1989, to a maximum of
30 such years.
(c) any monthly benefit payable to the Employee at age 65 under either
(i) the Pension Agreement (in effect as of the date of the
Employee's transfer on or after October 1, 1976) between the Beaver
Aerospace Division of Dana Corporation and the International Union
U.A.W. Local 540 (063), or (ii)
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the Pension Agreement between Warner Electric Brake & Clutch Company
and the United Steelworkers of America Local Union No. 3245 (064),
determined, in each case, using the benefit rate in effect at the
time of the Employee's transfer out of covered employment under Plan
063 or Plan 064.
(d) the annuitized equivalent (as determined by reference to Table A-1
of the Warner Uniform Salaried Plan (065)) of any prior
distributions made to the Employee from the Warner Electric Brake &
Clutch Company Salaried Employees' Retirement Plan, provided that
such Employee's Benefit Accrual Service attributable to such prior
distributions was taken into account for purposes of calculating
the amount to be credited to his account (the "Retirement Plan
Account") under the Warner Electric Brake & Clutch Company Salaried
Employees' Retirement Plan.
If the Employee has a Retirement Plan Account under the Warner Electric
Brake & Clutch Company Salaried Employees' Retirement Plan, his Accrued
Benefit Account as of January 1, 1990, shall equal the amount determined
in the preceding paragraphs, reduced by (e):
(e) the value of the Employee's Retirement Plan Account as of December
31, 1989, that is not attributable to the Employee's own
contributions.
If an Employee has reached age 62 on or before January 1, 1990, his
Accrued Benefit Account as of January 1, 1990, shall be increased by (f):
(f) the amount that would have been the Employee's Supplemental Benefit
Account, calculated as described in Section 3.
If an Employee's Accrued Benefit Account is adjusted as provided in
paragraph (e) or (f), the amount of the Employee's Accrued Benefit shall
equal 1/190th of his Accrued Benefit Account.
3. SUPPLEMENTAL BENEFIT; SUPPLEMENTAL BENEFIT ACCOUNT
Each Employee's Supplemental Benefit Account as of January 1, 1990, shall
equal the excess of (a) over the sum of (b) and (c):
(a) 190 times the First Objective Benefit described in Section 4.
(b) the Employee's Accrued Benefit Account as of January 1, 1990,
determined before the adjustment in paragraph (f) of Section 2; or,
if the Employee had a Retirement Plan Account on December 31, 1989,
that was not attributable to the Employee's own contributions, the
greater of
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(i) the Employee's Accrued Benefit Account as of January 1, 1990,
determined before the adjustments in paragraphs (e) and (f) of
Section 2, or (ii) the value of the Employee's Retirement Plan
Account as of December 31, 1989, that was not attributable to the
Employee's own contributions.
(c) the sum of the credits, based on the total elapsed time worked for
the Company, expected to be made in accordance with Section 3.01 B.
from January 1, 1990, until the Employee's Normal Retirement Date,
plus related credits under Section 3.01 C., discounted 7% per year
(compounded annually) for each year that January 1, 1990, precedes
the Employee's Normal Retirement Date, using the assumptions
described in Section 4 of this Subpart II(T).
Each Employee's Supplemental Benefit shall equal 1/190th of the Employee's
Supplemental Benefit Account, times the ratio, not to exceed 1.0, of the
Employee's Credited Service after January 1, 1990, to the number of years
and months from January 1, 1993, to the Employee's Normal Retirement Date.
If an Employee has reached age 62 on or before January 1, 1990, the
Employee shall not have a Supplemental Benefit or a Supplemental Benefit
Account. Instead, the amount that would have been the Employee's
Supplemental Benefit Account, determined in accordance with this Section
3, shall be added to the Employee's Accrued Benefit Account.
4. FIRST OBJECTIVE BENEFIT
A. DEFINITIONS
Each Employee's First Objective Benefit shall equal the excess of (a) over
the sum of (b), (c), and (d), where Effective Monthly Compensation, Social
Security Benefit, and Years of Benefit Accrual are as defined in the
Warner Uniform Salaried Plan as in effect on December 30, 1989 (except
that the Employee's fractional Years of Benefit Accrual for his year of
hire shall equal two times his actual period of employment in such year,
but shall not exceed one year), such amount then discounted 7% per year
(compounded annually) for each year that January 1, 1990, precedes the
Employee's Normal Retirement Date, and multiplied by 88.960/190ths:
(a) 1 2/3% of the Employee's projected Effective Monthly Compensation at
his Normal Retirement Date, multiplied by the projected number of
years and fractional parts thereof of his Years of Benefit Accrual
three years before his Normal Retirement Date plus three additional
Years of Benefit Accrual, to a maximum of 30 Years of Benefit
Accrual.
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(b) 1 2/3% of the Employee's projected Social Security Benefit at Normal
Retirement Date, multiplied by the projected number of years and
fractional parts thereof of his Years of Benefit Accrual three years
before his Normal Retirement Date plus three additional Years of
Benefit Accrual, to a maximum of 30 Years of Benefit Accrual.
(c) any monthly benefit payable to the Employee at age 65 under either
(i) the Pension Agreement (in effect as of the date of the
Employee's transfer on or after October 1, 1976) between the Beaver
Aerospace Division of Dana Corporation and the International Union
U.A.W. Local 540 (063), or (ii) the Pension Agreement between
Warner Electric Brake & Clutch Company and the United Steelworkers
of America Local Union No. 3245 (064), determined, in each case,
using the benefit rate in effect at the time of the Employee's
transfer out of covered employment under Plan 063 or Plan 064.
(d) the annuitized equivalent (as determined by reference to Table A-1
of the Warner Uniform Salaried Plan (065)) of any prior
distributions made to the Employee from the Warner Electric Brake &
Clutch Company Salaried Employees' Retirement Plan, provided that
such Employee's Benefit Accrual Service attributable to such prior
distributions was taken into account for purposes of calculating the
amount to be credited to his Retirement Plan Account.
B. ASSUMPTIONS
For purposes of determining the Employee's First Objective Benefit, the
Employee's projected Effective Monthly Compensation and projected Social
Security Benefit shall be determined assuming:
(a) The Employee's Compensation for 1990 will equal 105% of the greatest
of (1) his 1989 Earnings, (2) 105% of his 1988 Earnings, and (3)
110% of his 1987 Earnings.
(b) his Compensation for subsequent years will increase at the rate of
5% per year.
(c) Compensation for any part of a year will be a pro rata part of the
projected Compensation for the entire year.
(d) his previous Compensation increased at a rate of 6% per year, and
was of such amount that the Employee's average monthly Compensation
for 1987 through 1989 equals his Effective Monthly Compensation as
of December 31, 1989; the maximum taxable Social Security wage bases
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after 1989 will increase at the rate of 4% per year; and increases
in Social Security benefits on account of changes in the Consumer
Price Index will be at the rate of 3.5% per year.
(e) The Social Security Benefit will be determined by applying (i) the
ratio that the Social Security Benefit determined under Section
2(b), above, bears to $899 (which ratio shall not exceed 1.0) to
(ii) the projected Social Security Benefit determined under Section
4 B(d), above.
5. ANCILLARY BENEFIT ACCOUNT
No Employee shall have an Ancillary Benefit Account under this Subpart
II(T).
6. NO REDUCTION IN BENEFITS
If a Participant's benefit is paid in the form of a level annuity or
lump-sum payment, such benefit shall not be less than the benefit that
would have been paid under the terms of the Warner Uniform Salaried Plan
as in effect on December 30, 1989 (as though the provisions of the Warner
Uniform Salaried Plan had remained unchanged after December 30, 1989),
based on the Participant's Years of Benefit Accrual, Effective Monthly
Compensation, and Social Security Benefit as of December 31, 1989, and his
Vesting Service as of the date of termination or retirement.
If a Participant retires before January 1, 1995, and his benefit is paid
in the form of a level annuity or lump-sum payment, such benefit shall not
be less than the level annuity or lump-sum benefit that would have been
paid under the terms of the Warner Uniform Salaried Plan as in effect on
December 30, 1989, based on the Participant's Years of Benefit Accrual,
Effective Monthly Compensation, and Social Security Benefit as of his
retirement date. Such amount shall be determined as though the provisions
of the Warner Uniform Salaried Plan had remained unchanged after December
30, 1989, except as provided below with respect to the $150,000
compensation limit.
If the Participant's level annuity benefit would be increased by the
preceding portions of this Section 6, the Participant's increasing annuity
benefit shall be increased by the same percentage.
If a Participant is eligible to retire on December 31, 1994, but retires
on or after January 1, 1995, the lump-sum payment to which the Participant
will be entitled when he retires shall equal at least the sum of (a) the
lump-sum benefit to which he would have been entitled had he retired on
December 31, 1994, plus (b) increases thereon from January 1, 1995, at the
rate described in Section 3.01 C. If the Participant's lump-sum payment
would be increased by this
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paragraph, the Participant's level annuity benefit and increasing annuity
benefit shall be increased by the same percentage.
A Participant's five-year grandfather benefit under this Section 6 shall
be determined, on and after January 1, 1994, without taking into account
monthly compensation for any year (including years before 1994) that
exceeds $12,500 (one twelfth of $150,000). In no event shall the
recalculation of the Participant's Effective Monthly Compensation to
reflect the $150,000 compensation limit reduce the Participant's five-year
grandfather benefit below the amount that the Participant had accrued as
of December 31, 1993, under this Section 6.
If a Participant was a participant in the Beaver Precision Products Inc.
Employees' Retirement Income Plan as in effect on September 30, 1976, and
was employed in the office at Troy, Michigan, as of October 1, 1976, and
if the Participant's benefit is paid in the form of a level annuity or
lump-sum payment, such benefit shall not be less than the benefit that
would have been paid under the terms of the Beaver Precision Products Inc.
Employees' Retirement Income Plan at the benefit level in effect as of his
retirement date, and assuming his service had continued under that plan
until his retirement date (but determined without taking into account
compensation in excess of the applicable limit under Section 401(a)(17) of
the Code).
7. CREDITED SERVICE
A Participant's Credited Service under the Plan as of January 1, 1990,
shall equal his Years of Benefit Accrual under the Warner Uniform Salaried
Plan as of December 31, 1989.
8. CERTAIN TRANSFERRED EMPLOYEES
If an individual transferred out of employment covered by the Warner
Uniform Salaried Plan to employment covered by another qualified defined
benefit plan sponsored by the Company (regardless of whether the transfer
took place before or after July 1, 1988), the individual's Effective
Monthly Compensation under the Warner Uniform Salaried Plan, as in effect
on December 30, 1989, shall be deemed to include the individual's
compensation paid after the transfer by any other employer that is part of
the Company, but only to the extent that (i) such compensation would have
been treated as Effective Monthly Compensation under the Warner Uniform
Salaried Plan if it had been paid by a sponsor of that plan, and (ii) such
compensation does not exceed the applicable limit under Section 401(a)(17)
of the Code.
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SUBPART II(U): PROVISIONS APPLICABLE TO PARTICIPANTS IN THE PSI
HOURLY PLAN
1. ELIGIBLE EMPLOYEES
The special provisions in this Subpart II(U) shall apply to any individual
who had an undistributed accrued benefit under the PSI Hourly Plan (067)
as of December 31, 1989, and who is an Employee on January 1, 1990. If an
individual had an undistributed accrued benefit under the PSI Hourly Plan
as of December 31, 1989, and the individual is employed by the Company on
or after January 1, 1990, but is not an Employee on January 1, 1990, the
special provisions in this Subpart II(U) shall apply to such individual in
the manner prescribed by Section 9 A. or Section 9 B. of Subpart II(A),
whichever is applicable. An individual shall not be eligible for any
benefit under this Subpart II(U) unless he is described in one of the two
preceding sentences.
2. ACCRUED BENEFIT; ACCRUED BENEFIT ACCOUNT
Each Employee's Accrued Benefit Account as of January 1, 1990, shall equal
190 times the Employee's Accrued Benefit.
Each Employee's Accrued Benefit shall equal $12.00 multiplied by the
number of years and fractional parts thereof of his Years of Benefit
Accrual at December 31, 1989, to a maximum of 35 such years, where Years
of Benefit Accrual are as defined in the PSI Hourly Plan as in effect on
December 30, 1989 (except that the Employee's fractional Years of Benefit
Accrual for his year of hire shall equal two times his actual period of
employment in such year, but shall not exceed one year), such amount then
discounted 7% per year (compounded annually) for each year that January 1,
1990, precedes the Employee's Normal Retirement Date, and multiplied by
88.960/190ths.
If an Employee has reached age 62 on or before January 1, 1990, his
Accrued Benefit Account as of January 1, 1990, shall be increased by the
amount that would have been the Employee's Supplemental Benefit Account,
calculated as described in Section 3.
3. SUPPLEMENTAL BENEFIT; SUPPLEMENTAL BENEFIT ACCOUNT
Each Employee's Supplemental Benefit Account as of January 1, 1990, shall
equal the excess of (a) over the sum of (b) and (c):
(a) 190 times the First Objective Benefit described in Section 4.
(b) the Employee's Accrued Benefit Account as of January 1, 1990,
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determined before the adjustment in the last paragraph of Section 2.
(c) the sum of the credits, based on the total elapsed time worked for
the Company, expected to be made in accordance with Section 3.01 B.
from January 1, 1990, until the Employee's Normal Retirement Date,
plus related credits under Section 3.01 C., discounted 7% per year
(compounded annually) for each year that January 1, 1990, precedes
the Employee's Normal Retirement Date, using the assumptions
described in Section 4 of this Subpart II(U).
Each Employee's Supplemental Benefit shall equal 1/190th of the Employee's
Supplemental Benefit Account, times the ratio, not to exceed 1.0, of the
Employee's Credited Service after January 1, 1990, to the number of years
and months from January 1, 1993, to the Employee's Normal Retirement Date.
If an Employee has reached age 62 on or before January 1, 1990, the
Employee shall not have a Supplemental Benefit or a Supplemental Benefit
Account. Instead, the amount that would have been the Employee's
Supplemental Benefit Account, determined in accordance with this Section
3, shall be added to the Employee's Accrued Benefit Account.
4. FIRST OBJECTIVE BENEFIT
A. DEFINITIONS
Each Employee's First Objective Benefit shall equal $12.00, multiplied by
the projected number of years and fractional parts thereof of his Years of
Benefit Accrual three years before his Normal Retirement Date plus three
additional Years of Benefit Accrual, to a maximum of 35 Years of Benefit
Accrual, where Years of Benefit Accrual are as defined in the PSI Hourly
Plan as in effect on December 30, 1989 (except that the Employee's
fractional Years of Benefit Accrual for his year of hire shall equal two
times his actual period of employment in such year, but shall not exceed
one year), such amount then discounted 7% per year (compounded annually)
for each year that January 1, 1990, precedes the Employee's Normal
Retirement Date, and multiplied by 88.960/190ths.
B. ASSUMPTIONS
For purposes of determining the Employee's First Objective Benefit, the
Employee's projected Compensation shall be determined assuming:
(a) the Employee's Compensation for 1990 will equal 105% of the greatest
of (1) his 1989 Earnings, (2) 105% of his 1988 Earnings, and (3)
110% of
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his 1987 Earnings.
(b) his Compensation for subsequent years will increase at the rate of
5% per year.
(c) Compensation for any part of a year will be a pro rata part of the
projected Compensation for the entire year.
(d) the maximum taxable Social Security wage bases after 1989 will
increase at the rate of 4% per year.
5. ANCILLARY BENEFIT ACCOUNT
No Employee shall have an Ancillary Benefit Account under this Subpart
II(U).
6. NO REDUCTION IN BENEFITS
If a Participant's benefit is paid in the form of a level annuity or
lump-sum payment, such benefit shall not be less than the benefit that
would have been paid under the terms of the PSI Hourly Plan as in effect
on December 30, 1989 (as though the provisions of the PSI Hourly Plan had
remained unchanged after December 30, 1989), based on the Participant's
Years of Benefit Accrual as of December 31, 1989, and his Vesting Service
as of the date of termination or retirement.
If a Participant retires before January 1, 1995, and his benefit is paid
in the form of a level annuity or lump-sum payment, such benefit shall not
be less than the level annuity or lump-sum benefit that would have been
paid under the terms of the PSI Hourly Plan as in effect on December 30,
1989, based on the Participant's Years of Benefit Accrual as of his
retirement date. Such amount shall be determined as though the provisions
of the PSI Hourly Plan had remained unchanged after December 30, 1989.
If the Participant's level annuity benefit would be increased by the
preceding portions of this Section 6, the Participant's increasing annuity
benefit shall be increased by the same percentage.
If a Participant is eligible to retire on December 31, 1994, but retires
on or after January 1, 1995, the lump-sum payment to which the Participant
will be entitled when he retires shall equal at least the sum of (a) the
lump-sum benefit to which he would have been entitled had he retired on
December 31, 1994, plus (b) increases thereon from January 1, 1995, at the
rate described in Section 3.01 C. If the Participant's lump-sum payment
would be increased by this paragraph, the Participant's level annuity
benefit would be increased by this
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paragraph, the Participant's level annuity benefit and increasing annuity
benefit shall be increased by the same percentage.
7. TRANSFERRED EMPLOYEES
If an individual is entitled to benefits in accordance with this Subpart
II(U), but ceased to accrue Years of Benefit Accrual prior to December 31,
1989, on account of his transfer out of covered employment, his Accrued
Benefit and Accrued Benefit Account shall be determined based on the
benefit rate in effect as of the date of the last such transfer rather
than $12.00, and he shall not be entitled to a Supplemental Benefit or
Supplemental Benefit Account under this Subpart II(U).
8. CREDITED SERVICE
A Participant's Credited Service under the Plan as of January 1, 1990,
shall equal his Years of Benefit Accrual under the PSI Hourly Plan as of
December 31, 1989.
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SUBPART II(V): PROVISIONS APPLICABLE TO PARTICIPANTS IN THE
ALCOILS HOURLY PLAN
1. ELIGIBLE EMPLOYEES
The special provisions in this Subpart II(V) shall apply to any individual
who had an undistributed accrued benefit under the Alcoils Hourly Plan
(068) as of December 31, 1989, and who is an Employee on January 1, 1990.
If an individual had an undistributed accrued benefit under the Alcoils
Hourly Plan as of December 31, 1989, and the individual is employed by the
Company on or after January 1, 1990, but is not an Employee on January 1,
1990, the special provisions in this Subpart II(V) shall apply to such
individual in the manner prescribed by Section 9 A. or Section 9 B. of
Subpart II(A), whichever is applicable. An individual shall not be
eligible for any benefit under this Subpart II(V) unless he is described
in one of the two preceding sentences.
2. ACCRUED BENEFIT; ACCRUED BENEFIT ACCOUNT
Each Employee's Accrued Benefit Account as of January 1, 1990, shall equal
190 times the Employee's Accrued Benefit.
Each Employee's Accrued Benefit shall equal $12.00 multiplied by the
number of years and fractional parts thereof of his Years of Benefit
Accrual at December 31, 1989, to a maximum of 35 such years, where Years
of Benefit Accrual are as defined in the Alcoils Hourly Plan as in effect
on December 30, 1989 (except that the Employee's fractional Years of
Benefit Accrual for his year of hire shall equal two times his actual
period of employment in such year, but shall not exceed one year), such
amount then discounted 7% per year (compounded annually) for each year
that January 1, 1990, precedes the Employee's Normal Retirement Date, and
multiplied by 88.960/190ths.
If an Employee has reached age 62 on or before January 1, 1990, his
Accrued Benefit Account as of January 1, 1990, shall be increased by the
amount that would have been the Employee's Supplemental Benefit Account,
calculated as described in Section 3.
3. SUPPLEMENTAL BENEFIT; SUPPLEMENTAL BENEFIT ACCOUNT
Each Employees' Supplemental Benefit Account as of January 1, 1990, shall
equal the excess of (a) over the sum of (b) and (c):
(a) 190 times the First Objective Benefit described in Section 4.
(b) the Employee's Accrued Benefit Account as of January 1, 1990,
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determined before the adjustment in the last paragraph of Section 2.
(c) the sum of the credits, based on the total elapsed time worked for
the Company, expected to be made in accordance with Section 3.01 B.
from January 1, 1990, until the Employee's Normal Retirement Date,
plus related credits under Section 3.01 C., discounted 7% per year
(compounded annually) for each year that January 1, 1990, precedes
the Employee's Normal Retirement Date, using the assumptions
described in Section 4 of this Subpart II(V).
Each Employee's Supplemental Benefit shall equal 1/190th of the Employee's
Supplemental Benefit Account, times the ratio, not to exceed 1.0, of the
Employee's Credited Service after January 1, 1990, to the number of years
and months from January 1, 1993, to the Employee's Normal Retirement Date.
If an Employee has reached age 62 on or before January 1, 1990, the
Employee shall not have a Supplemental Benefit or a Supplemental Benefit
Account. Instead, the amount that would have been the Employee's
Supplemental Benefit Account, determined in accordance with this Section
3, shall be added to the Employee's Accrued Benefit Account.
4. FIRST OBJECTIVE BENEFIT
A. DEFINITIONS
Each Employee's First Objective Benefit shall equal $12.00, multiplied by
the projected number of years and fractional parts thereof of his Years of
Benefit Accrual three years before his Normal Retirement Date plus three
additional Years of Benefit Accrual, to a maximum of 35 Years of Benefit
Accrual, where Years of Benefit Accrual are as defined in the Alcoils
Hourly Plan as in effect on December 30, 1989 (except that the Employee's
fractional Years of Benefit Accrual for his year of hire shall equal two
times his actual period of employment in such year, but shall not exceed
one year), such amount then discounted 7% per year (compounded annually)
for each year that January 1, 1990, precedes the Employee's Normal
Retirement Date, and multiplied by 88.960/190ths.
B. ASSUMPTIONS
For purposes of determining the Employee's First Objective Benefit, the
Employee's projected Compensation shall be determined assuming:
(a) the Employee's Compensation for 1990 will equal 105% of the greatest
of (1) his 1989 Earnings, (2) 105% of his 1988 Earnings, and (3)
110% of
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his 1987 Earnings.
(b) his Compensation for subsequent years will increase at the rate of
5% per year.
(c) Compensation for any part of a year will be a pro rata part of the
projected Compensation for the entire year.
(d) the maximum taxable Social Security wage bases after 1989 will
increase at the rate of 4% per year.
5. ANCILLARY BENEFIT ACCOUNT
No Employee shall have an Ancillary Benefit Account under this Subpart
II(V).
6. NO REDUCTION IN BENEFITS
If a Participant's benefit is paid in the form of a level annuity or
lump-sum payment, such benefit shall not be less than the benefit that
would have been paid under the terms of the Alcoils Hourly Plan as in
effect on December 30, 1989 (as though the provisions of the Alcoils
Hourly Plan had remained unchanged after December 30, 1989), based on the
Participant's Years of Benefit Accrual as of December 31, 1989, and his
Vesting Service as of the date of termination or retirement.
If a Participant retires before January 1, 1995, and his benefit is paid
in the form of a level annuity or lump-sum payment, such benefit shall not
be less than the level annuity or lump-sum benefit that would have been
paid under the terms of the Alcoils Hourly Plan as in effect on December
30, 1989, based on the Participant's Years of Benefit Accrual as of his
retirement date. Such amount shall be determined as though the provisions
of the Alcoils Hourly Plan had remained unchanged after December 30, 1989.
If the Participant's level annuity benefit would be increased by the
preceding portions of this Section 6, the Participant's increasing annuity
benefit shall be increased by the same percentage.
If a Participant is eligible to retire on December 31, 1994, but retires
on or after January 1, 1995, the lump-sum payment to which the Participant
will be entitled when he retires shall equal at least the sum of (a) the
lump-sum benefit to which he would have been entitled had he retired on
December 31, 1994, plus (b) increases thereon from January 1, 1995, at the
rate described in Section 3.01 C. If the Participant's lump-sum payment
would be increased by this paragraph, the Participant's level annuity
benefit would be increased by this
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paragraph, the Participant's level annuity benefit and increasing annuity
benefit shall be increased by the same percentage.
7. TRANSFERRED EMPLOYEES
If an individual is entitled to benefits in accordance with this Subpart
II(V), but ceased to accrue Years of Benefit Accrual prior to December 31,
1989, on account of his transfer out of covered employment, his Accrued
Benefit and Accrued Benefit Account shall be determined based on the
benefit rate in effect as of the date of the last such transfer rather
than $12.00, and he shall not be entitled to a Supplemental Benefit or
Supplemental Benefit Account under this Subpart II(V).
8. CREDITED SERVICE
A Participant's Credited Service under the Plan as of January 1, 1990,
shall equal his Years of Benefit Accrual under the Alcoils Hourly Plan as
of December 31, 1989.
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SUBPART II(W): PROVISIONS APPLICABLE TO PARTICIPANTS IN THE
MARENGO HOURLY PLAN
1. ELIGIBLE EMPLOYEES
The special provisions in this Subpart II(W) shall apply to any individual
who had an undistributed accrued benefit under the Marengo Hourly Plan
(069) as of December 31, 1989, and who is an Employee on January 1, 1990.
If an individual had an undistributed accrued benefit under the Marengo
Hourly Plan as of December 31, 1989, and the individual is employed by the
Company on or after January 1, 1990, but is not an Employee on January 1,
1990, the special provisions in this Subpart II(W) shall apply to such
individual in the manner prescribed by Section 9 A. or Section 9 B. of
Subpart II(A), whichever is applicable. An individual shall not be
eligible for any benefit under this Subpart II(W) unless he is described
in one of the two preceding sentences.
2. ACCRUED BENEFIT; ACCRUED BENEFIT ACCOUNT
Each Employee's Accrued Benefit Account as of January 1, 1990, shall equal
190 times the Employee's Accrued Benefit.
Each Employee's Accrued Benefit shall equal $12.00 multiplied by the
number of years and fractional parts thereof of his Years of Benefit
Accrual at December 31, 1989, to a maximum of 35 such years, where Years
of Benefit Accrual are as defined in the Marengo Hourly Plan as in effect
on December 30, 1989 (except that the Employee's fractional Years of
Benefit Accrual for his year of hire shall equal two times his actual
period of employment in such year, but shall not exceed one year), such
amount then discounted 7% per year (compounded annually) for each year
that January 1, 1990, precedes the Employee's Normal Retirement Date, and
multiplied by 88.960/190ths.
If an Employee has reached age 62 on or before January 1, 1990, his
Accrued Benefit Account as of January 1, 1990, shall be increased by the
amount that would have been the Employee's Supplemental Benefit Account,
calculated as described in Section 3.
3. SUPPLEMENTAL BENEFIT; SUPPLEMENTAL BENEFIT ACCOUNT
Each Employees' Supplemental Benefit Account as of January 1, 1990, shall
equal the excess of (a) over the sum of (b) and (c):
(a) 190 times the First Objective Benefit described in Section 4.
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(b) the Employee's Accrued Benefit Account as of January 1, 1990,
determined before the adjustment in the last paragraph of Section 2.
(c) the sum of the credits, based on the total elapsed time worked for
the Company, expected to be made in accordance with Section 3.01 B.
from January 1, 1990, until the Employee's Normal Retirement Date,
plus related credits under Section 3.01 C., discounted 7% per year
(compounded annually) for each year that January 1, 1990, precedes
the Employee's Normal Retirement Date, using the assumptions
described in Section 4 of this Subpart II(W).
Each Employee's Supplemental Benefit shall equal 1/190th of the Employee's
Supplemental Benefit Account, times the ratio, not to exceed 1.0, of the
Employee's Credited Service after January 1, 1990, to the number of years
and months from January 1, 1993, to the Employee's Normal Retirement Date.
If an Employee has reached age 62 on or before January 1, 1990, the
Employee shall not have a Supplemental Benefit or a Supplemental Benefit
Account. Instead, the amount that would have been the Employee's
Supplemental Benefit Account, determined in accordance with this Section
3, shall be added to the Employee's Accrued Benefit Account.
4. FIRST OBJECTIVE BENEFIT
A. DEFINITIONS
Each Employee's First Objective Benefit shall equal $12.00, multiplied by
the projected number of years and fractional parts thereof of his Years of
Benefit Accrual three years before his Normal Retirement Date plus three
additional Years of Benefit Accrual, to a maximum of 35 Years of Benefit
Accrual, where Years of Benefit Accrual are as defined in the Marengo
Hourly Plan as in effect on December 30, 1989 (except that the Employee's
fractional Years of Benefit Accrual for his year of hire shall equal two
times his actual period of employment in such year, but shall not exceed
one year), such amount then discounted 7% per year (compounded annually)
for each year that January 1, 1990, precedes the Employee's Normal
Retirement Date, and multiplied by 88.960/190ths.
B. ASSUMPTIONS
For purposes of determining the Employee's First Objective Benefit, the
Employee's projected Compensation shall be determined assuming:
(a) the Employee's Compensation for 1990 will equal 105% of the greatest
of
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(1) his 1989 Earnings, (2) 105% of his 1988 Earnings, and (3) 110%
of his 1987 Earnings.
(b) his Compensation for subsequent years will increase at the rate of
5% per year.
(c) Compensation for any part of a year will be a pro rata part of the
projected Compensation for the entire year.
(d) the maximum taxable Social Security wage bases after 1989 will
increase at the rate of 4% per year.
5. ANCILLARY BENEFIT ACCOUNT
No Employee shall have an Ancillary Benefit Account under this Subpart
II(W).
6. NO REDUCTION IN BENEFITS
If a Participant's benefit is paid in the form of a level annuity or
lump-sum payment, such benefit shall not be less than the benefit that
would have been paid under the terms of the Marengo Hourly Plan as in
effect on December 30, 1989 (as though the provisions of the Marengo
Hourly Plan had remained unchanged after December 30, 1989), based on the
Participant's Years of Benefit Accrual as of December 31, 1989, and his
Vesting Service as of the date of termination or retirement.
If a Participant retires before January 1, 1995, and his benefit is paid
in the form of a level annuity or lump-sum payment, such benefit shall not
be less than the level annuity or lump-sum benefit that would have been
paid under the terms of the Marengo Hourly Plan as in effect on December
30, 1989, based on the Participant's Years of Benefit Accrual as of his
retirement date. Such amount shall be determined as though the provisions
of the Marengo Hourly Plan had remained unchanged after December 30, 1989.
If the Participant's level annuity benefit would be increased by the
preceding portions of this Section 6, the Participant's increasing annuity
benefit shall be increased by the same percentage.
If a Participant is eligible to retire on December 31, 1994, but retires
on or after January 1, 1995, the lump-sum payment to which the Participant
will be entitled when he retires shall equal at least the sum of (a) the
lump-sum benefit to which he would have been entitled had he retired on
December 31, 1994, plus (b) increases thereon from January 1, 1995, at the
rate described in Section 3.01
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C. If the Participant's lump-sum payment would be increased by this
paragraph, the Participant's level annuity benefit would be increased by
this paragraph, the Participant's level annuity benefit and increasing
annuity benefit shall be increased by the same percentage.
7. TRANSFERRED EMPLOYEES
If an individual is entitled to benefits in accordance with this Subpart
II(W), but ceased to accrue Years of Benefit Accrual prior to December 31,
1989, on account of his transfer out of covered employment, his Accrued
Benefit and Accrued Benefit Account shall be determined based on the
benefit rate in effect as of the date of the last such transfer rather
than $12.00, and he shall not be entitled to a Supplemental Benefit or
Supplemental Benefit Account under this Subpart II(W).
8. CREDITED SERVICE
A Participant's Credited Service under the Plan as of January 1, 1990,
shall equal his Years of Benefit Accrual under the Marengo Hourly Plan as
of December 31, 1989.
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SUBPART II(X): PROVISIONS APPLICABLE TO PARTICIPANTS IN THE IPTD
PENSION PLAN
1. ELIGIBLE EMPLOYEES
The special provisions in this Subpart II(X) shall apply to any individual
who had an undistributed accrued benefit under the IPTD Pension Plan (031)
as of December 31, 1989, and who is an Employee on January 1, 1990. If an
individual had an undistributed accrued benefit under the IPTD Pension
Plan as of December 31, 1989, and the individual is employed by the
Company on or after January 1, 1990, but is not an Employee on January 1,
1990, the special provisions in this Subpart II(X) shall apply to such
individual in the manner prescribed by Section 9 A. or Section 9 B. of
Subpart II(A), whichever is applicable. An individual shall not be
eligible for any benefit under this Subpart II(X) unless he is described
in one of the two preceding sentences.
2. ACCRUED BENEFIT; ACCRUED BENEFIT ACCOUNT
Each Employee's Accrued Benefit Account as of January 1, 1990, shall equal
190 times the Employee's Accrued Benefit.
Each Employee's Accrued Benefit shall equal $12.00 multiplied by the
number of years and fractional parts thereof of his Credited Service at
December 31, 1989, where Credited Service is as defined in the IPTD
Pension Plan as in effect on December 30, 1989, such amount then
discounted 7% per year (compounded annually) for each year that January 1,
1990, precedes the Employee's Normal Retirement Date, and multiplied by
88.960/190ths.
3. SUPPLEMENTAL BENEFIT; SUPPLEMENTAL BENEFIT ACCOUNT
Each Employees' Supplemental Benefit Account as of January 1, 1990, shall
equal the excess of (a) 190 times the First Objective Benefit described in
Section 4 over the sum of (b) his Accrued Benefit Account as of January 1,
1990, plus (c) the sum of the credits expected to be made in accordance
with Section 3.01 B. from January 1, 1990, until the Employee's Normal
Retirement Date, plus related credits under Section 3.01 C., discounted 7%
per year (compounded annually) for each year that January 1, 1990,
precedes the Employee's Normal Retirement Date, using the assumptions
described in Section 4 of this Subpart II(X).
Each Employee's Supplemental Benefit shall equal 1/190th of the Employee's
Supplemental Benefit Account, times the ratio, not to exceed 1.0, of the
Employee's Credited Service after January 1, 1990, to the number of years
and months from January 1, 1993, to the Employee's Normal Retirement Date.
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If an Employee has reached age 62 on or before January 1, 1990, the
Employee shall not have a Supplemental Benefit or a Supplemental Benefit
Account.
4. FIRST OBJECTIVE BENEFIT
A. DEFINITIONS
Each Employee's First Objective Benefit shall equal $12.00, multiplied by
the projected number of years and fractional parts thereof of his Credited
Service at Normal Retirement Date, where Credited Service is as defined in
the IPTD Pension Plan as in effect on December 30, 1989, such amount then
discounted 7% per year (compounded annually) for each year that January 1,
1990, precedes the Employee's Normal Retirement Date, and multiplied by
88.960/190ths.
B. ASSUMPTIONS
For purposes of determining the Employee's First Objective Benefit, the
Employee's projected Compensation shall be determined assuming:
(a) the Employee's Compensation for 1990 will equal 105% of the greatest
of (1) his 1989 Earnings, (2) 105% of his 1988 Earnings, and (3)
110% of his 1987 Earnings.
(b) his Compensation for subsequent years will increase at the rate of
5% per year.
(c) Compensation for any part of a year will be a pro rata part of the
projected Compensation for the entire year.
(d) the maximum taxable Social Security wage bases after 1989 will
increase at the rate of 4% per year.
5. ANCILLARY BENEFIT ACCOUNT
No Employee shall have an Ancillary Benefit Account under this Subpart
II(X).
6. NO REDUCTION IN BENEFITS
If a Participant's benefit is paid in the form of a level annuity or
lump-sum payment, such benefit shall not be less than the benefit that
would have been paid under the terms of the IPTD Pension Plan as in effect
on December 30, 1989 (as though the provisions of the IPTD Pension Plan
had remained unchanged after December 30, 1989), based on the
Participant's Credited
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Service as of December 31, 1989, and his Vesting Service as of the date of
termination or retirement.
If a Participant retires before January 1, 1995, and his benefit is paid
in the form of a level annuity or lump-sum payment, such benefit shall not
be less than the level annuity or lump-sum benefit that would have been
paid under the terms of the IPTD Pension Plan as in effect on December 30,
1989, based on the Participant's Credited Service as of his retirement
date. Such amount shall be determined as though the provisions of the IPTD
Pension Plan had remained unchanged after December 30, 1989, except that
the benefit level for purposes of this Section 6 shall be $12.00 per year
of Credited Service.
If the Participant's level annuity benefit would be increased by the
preceding portions of this Section 6, the Participant's increasing annuity
benefit shall be increased by the same percentage.
If a Participant is eligible to retire on December 31, 1994, but retires
on or after January 1, 1995, the lump-sum payment to which the Participant
will be entitled when he retires shall equal at least the sum of (a) the
lump-sum benefit to which he would have been entitled had he retired on
December 31, 1994, plus (b) increases thereon from January 1, 1995, at the
rate described in Section 3.01 C. If the Participant's lump-sum payment
would be increased by this paragraph, the Participant's level annuity
benefit would be increased by this paragraph, the Participant's level
annuity benefit and increasing annuity benefit shall be increased by the
same percentage.
7. TRANSFERRED EMPLOYEES
If an individual is entitled to benefits in accordance with this Subpart
II(X), but ceased to accrue Credited Service prior to December 31, 1989,
on account of his transfer out of covered employment, his Accrued Benefit
and Accrued Benefit Account shall be determined based on the benefit rate
in effect at the time of such transfer rather than $12.00, and he shall
not be entitled to a Supplemental Benefit or Supplemental Benefit Account
under this Subpart II(X).
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SUBPART II(Y): PROVISIONS APPLICABLE TO PARTICIPANTS IN THE WCT
RETIREMENT PLAN
1. ELIGIBLE EMPLOYEES
The special provisions in Section 2 of this Subpart II(Y) shall apply to
any individual who had an undistributed accrued benefit under the WCT
Retirement Plan (098) as of December 31, 1991, and who is an Employee on
January 1, 1992. If an individual had an undistributed accrued benefit
under the WCT Retirement Plan as of December 31, 1991, and the individual
is not an Employee on January 1, 1992, the special provisions in Section 3
of this Subpart II(Y) shall apply to such individual, without regard to
Section 9 A. or Section 9 B. of Subpart II(A). An individual shall not be
eligible for any benefit under this Subpart II(Y) unless he is described
in one of the two preceding sentences.
2. ACCOUNTS FOR CURRENT PARTICIPANTS
When the merger of the WCT Retirement Plan with this Plan has been
completed, any Accrued Benefit Account, Supplemental Benefit Account,
Future Service Account, or Ancillary Benefit Account that was credited to
an Employee under the WCT Retirement Plan as of the date of the merger
shall be treated for all purposes after the date of the merger as if it
had been earned under this Plan. Any additional benefits that the Employee
earns under this Plan after the date of the merger shall be added to the
appropriate accounts, if any, that have been credited to the Employee
under this Subpart II(Y).
3. ACCOUNTS FOR FORMER PARTICIPANTS
When the merger of the WCT Retirement Plan with this Plan has been
completed, any Accrued Benefit Account, Supplemental Benefit Account,
Future Service Account, or Ancillary Benefit Account that was credited to
an individual under the WCT Retirement Plan as of the date of the merger
shall be treated for all purposes after the date of the merger as if it
had been earned under this Plan.
If the individual is employed by the Company on or after January 1, 1992,
but the individual is not an Employee on January 1, 1992, the individual
shall be treated as if he had transferred to a position in which he is no
longer covered by this Plan as of the date on which he ceased to be
covered by the WCT Retirement Plan, and the provisions of this Plan that
apply to transferred employees shall apply to the individual from that
date.
If the individual is not employed by the Company on or after January 1,
1992, the individual shall be treated as if he had terminated his
employment with the
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Company as of the date on which he terminated his employment with Warner
Control Techniques, and the provisions of this Plan that apply to former
employees shall apply to the individual from that date.
An individual who is not an Employee on or after January 1, 1992, shall
earn additional benefits under this Plan only pursuant to the provisions
of this Plan, if any, that expressly provide additional benefits to
transferred employees or former employees.
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SUBPART II(Z): PROVISIONS APPLICABLE TO HOPKINSVILLE, KENTUCKY,
EMPLOYEES
1. ELIGIBLE EMPLOYEES
The special provisions in this Subpart II(Z) shall apply to all Employees
who were employed at the Hopkinsville, Kentucky, facility on January 1,
1991. An individual shall not be eligible for any benefit under this
Subpart II(Z) unless he is described in the preceding sentence.
2. ACCRUED BENEFIT: ACCRUED BENEFIT ACCOUNT
Each Employee's Accrued Benefit Account as of January 1, 1991, shall equal
the Future Service Account that the Employee would have had as of January
1, 1991, had this Plan (i) been effective as of August 1, 1989, (ii)
covered Employees at the Hopkinsville, Kentucky, facility as of such date;
and (iii) stated that an Employee hired at the Hopkinsville, Kentucky,
facility on or after that date and before January 1, 1991, would become a
Participant in the Plan on the first of January following his year of
hire.
For purposes of computing such Future Service Account for an individual
who became an Employee at the Hopkinsville, Kentucky, facility on or after
August 1, 1989, and before January 1, 1991:
(a) 1/4th of the maximum taxable Social Security wage
base for 1990 shall be assumed to be $12,825.
3. SUPPLEMENTAL BENEFIT; SUPPLEMENTAL BENEFIT ACCOUNT; ANCILLARY BENEFIT
ACCOUNT
No Employee shall have a Supplemental Benefit, a Supplemental Benefit
Account, or an Ancillary Benefit Account under this Subpart II(Z).
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SUBPART II(AA): PROVISIONS APPLICABLE TO LUGOFF, SOUTH CAROLINA,
EMPLOYEES
1. ELIGIBLE EMPLOYEES
The special provisions in this Subpart II(AA) shall apply to all Employees
who were employed at the Lugoff, South Carolina, facility on January 1,
1990. An individual shall not be eligible for any benefit under this
Subpart II(AA) unless he is described in the preceding sentence.
2. ACCRUED BENEFIT: ACCRUED BENEFIT ACCOUNT
Each Employee's Accrued Benefit Account as of January 1, 1990, shall equal
the Future Service Account the Employee would have had as of January 1,
1990, had this Plan (i) been effective as of May 1, 1987; (ii) covered
employees at the Lugoff, South Carolina, facility as of such date; and
(iii) stated that an Employee hired at the Lugoff, South Carolina,
facility on or after that date and before January 1, 1990, would become a
Participant in the Plan on his date of hire.
For purposes of computing such Future Service Account for an individual
who became an Employee at the Lugoff, South Carolina, facility on or after
May 1, 1987, and before January 1, 1990:
(a) 1/4th of the maximum taxable Social Security wage bases for 1989,
1988, and 1987 shall be assumed to be $12,000, $11,250, and $7,300
(8/12ths of $10,950), respectively, and
(b) the credit as of December 31, 1988, and December 31, 1989, in
accordance with Section 3.01 C. shall be at the rate of 7%.
3. SUPPLEMENTAL BENEFIT; SUPPLEMENTAL BENEFIT ACCOUNT; ANCILLARY BENEFIT
ACCOUNT
No Employee shall have a Supplemental Benefit, a Supplemental Benefit
Account, or an Ancillary Benefit Account under this Subpart II(AA).
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SUBPART II(BB): PROVISIONS APPLICABLE TO CERTAIN EMPLOYEES OF THE
PERFECT CIRCLE DIVISION'S HASTINGS, NEBRASKA,
FACILITY
1. ELIGIBLE EMPLOYEES
The special provisions in this Subpart II(BB) shall apply to any
individual who was eligible to receive a "company basic contribution"
under the Dana Corporation Savings and Investment Plan on December 31,
1993, and who is a full-time Employee at the Perfect Circle Division's
Hastings, Nebraska, facility on January 1, 1994. An individual shall not
be eligible for any benefit under this Subpart II(BB) unless he is
described in the preceding sentence.
2. SUPPLEMENTAL BENEFIT; SUPPLEMENTAL BENEFIT ACCOUNT
Each Employee's Supplemental Benefit Account as of January 1, 1994, shall
equal the excess of the First Objective Benefit over the Second Objective
Benefit.
Each Employee's Supplemental Benefit shall equal 1/190th of the Employee's
Supplemental Benefit Account, times the ratio, not to exceed 1.0, of the
Employee's Credited Service after January 1, 1994, to the number of years
and months from January 1, 1997, to the Employee's Normal Retirement Date.
If an Employee has reached age 62 on or before January 1, 1994, the
Employee shall not have a Supplemental Benefit or a Supplemental Benefit
Account.
3. FIRST AND SECOND OBJECTIVE BENEFITS
A. DEFINITIONS
Each Employee's First Objective Benefit shall equal the sum of the
employer contributions expected to be made under the Dana Corporation
Savings and Investment Plan (had it continued unchanged) after January 1,
1994, and before the Employee's Normal Retirement Date, accumulated with
interest at the rate of 7% per year (compounded annually) from the date
each such contribution is expected to have been made to the date three
years before the Employee's Normal Retirement Date, such amount then
discounted 7% per year (compounded annually) for each year that January 1,
1997, precedes the Employee's Normal Retirement Date.
Each Employee's Second Objective Benefit shall equal the sum of the
credits expected to be made in accordance with Section 3.01 B., from
January 1, 1994, until the date that is three years before the Employee's
Normal Retirement
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Date, accumulated with interest at the rate of 7% per year (compounded
annually) from the date each such credit is expected to have been made to
the Employee's Normal Retirement Date, such amount then discounted 7% per
year (compounded annually) for each year that January 1, 1997, precedes
the Employee's Normal Retirement Date.
B. ASSUMPTIONS
For purposes of determining the Employee's First and Second Objective
Benefit, the following assumptions shall be made:
(a) Each year's employer contributions under the Dana Corporation
Savings and Investment Plan would have equaled 5% of Earnings for
the year.
(b) The Employee's 1994 Earnings will equal 103.5% of the greatest of
(1) his 1993 Earnings, (2) 103.5% of his 1992 Earnings, and (3) 107%
of his 1991 Earnings.
(c) His Earnings for subsequent years will increase at the rate of 5%
per year.
(d) Earnings for any part of a year will be a pro rata part of the
projected Earnings for the entire year.
(e) The maximum taxable Social Security wage bases after 1994 will
increase at the rate of 4% per year.
4. ACCRUED BENEFIT; ACCRUED BENEFIT ACCOUNT; ANCILLARY BENEFIT ACCOUNT
No Employee shall have an Accrued Benefit, Accrued Benefit Account, or
Ancillary Benefit Account under this Subpart II(BB).
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PART III: PROVISIONS APPLICABLE TO PARTICIPANTS AFFECTED BY THE SALE OF
WILLIAMS AIR CONTROLS
1. PURPOSE
On December 1, 1988, Dana Corporation sold its Williams Air Controls
division to Williams Controls, Inc. ("WCI"). Under the terms of the asset
purchase agreement, WCI assumed the assets and liabilities of the Dana
Corporation Williams Air Controls Division Retirement Income Plan (038)
(the "Williams Air Controls Plan").
Certain individuals who had participated in the Williams Air Controls Plan
before December 1, 1988, transferred to employment with the Mobile Fluid
Products Division of Dana Corporation on or before the date of the sale.
These individuals have become participants in this Plan as a result of
their employment with Employers that have adopted the Plan.
Any individual who had a vested accrued benefit under the Williams Air
Controls Plan on December 1, 1988, will receive that benefit from the
Williams Air Controls Plan (as assumed and maintained by WCI or any
successor to WCI). In the case of individuals who continued to work for
Dana Corporation and its affiliates after the sale, however, the benefit
under the Williams Air Controls Plan will not reflect increases in their
compensation after December 1, 1988.
The purpose of this Part III of Appendix E is to allow each eligible
former participant to earn an additional benefit, with respect to his
period of participation in the Williams Air Controls Plan, that reflects
projected increases in his compensation from the date of his transfer out
of the Williams Air Controls Plan (his "Transfer Date") to his retirement
date.
2. ELIGIBLE EMPLOYEES
The special provisions in this Part III shall apply to any individual (i)
who had an undistributed accrued benefit under the Williams Air Controls
Plan on November 30, 1988, (ii) who transferred from employment with
Williams Air Controls to employment with any division of Dana Corporation
on or before December 1, 1988, and (iii) who is an Employee under this
Plan without regard to the special provisions in this Part III. An
individual shall not be eligible for any benefit under this Part III
unless he is described in the preceding sentence.
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3. COMPENSATION LIMIT
A. $200,000 COMPENSATION LIMIT. If an Employee's compensation taken
into account under the Plan exceeds $200,000 (or such greater
amount as shall be permitted pursuant to Section 401(a)(17) of the
Code) for any Plan Year (including Plan Years commencing before
December 1, 1988), his Williams Air Controls Accrued Benefit,
Accrued Benefit Account, Additional Compensation Benefit, and
Additional Compensation Benefit Account shall be determined without
regard to any compensation or projected compensation in excess of
$200,000 (or such greater amount as shall be permitted pursuant to
Section 401(a)(17) of the Code).
B. $150,000 COMPENSATION LIMIT.
(a) If an Employee's Additional Compensation Benefit
and Additional Compensation Benefit Account at
December 31, 1993, are based on monthly earnings
(for any year before 1989) that exceeded $12,500
(one twelfth of $150,000), the Employee's
Additional Compensation Benefit and Additional
Compensation Benefit Account shall be recalculated
as if his monthly earnings for each year before
1989 had been limited to $12,500. On and after
January 1, 1994, the Employee's Credited Service
ratio shall be applied to his recalculated
Additional Compensation Benefit and Additional
Compensation Benefit Account in order to determine
the portion of his Additional Compensation Benefit
and Additional Compensation Benefit Account that
the Employee earns in Plan Years beginning after
1993.
(b) In no event shall the recalculation of the
Employee's Additional Compensation Benefit and
Additional Compensation Benefit Account to reflect
the $150,000 compensation limit reduce the
Employee's Earned Benefit and Earned Benefit
Account below the amount that the Employee had
accrued as of December 31, 1993.
(c) The recalculated Additional Compensation Benefit
and Additional Compensation Benefit Account
described in paragraph (a) shall be credited with
percentage increases under the regular provisions
of Appendix H. The Additional Compensation
Benefit and Additional Compensation Benefit
Account that the Employee had earned at the end of
1993 shall be credited with percentage
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increases under the two-tier method described in
Appendix H for benefits affected by the $150,000
limit. The Employee's Additional Compensation
Benefit and Additional Compensation Benefit Account
shall be the larger of the two amounts calculated
in accordance with the preceding two sentences.
(d) If an Employee's Additional Compensation Benefit
and Additional Compensation Benefit Account at
December 31, 1993, are not based on monthly
earnings (for any year before 1989) that exceeded
$12,500, the Employee's Additional Compensation
Benefit and Additional Compensation Benefit
Account shall continue to be calculated under the
regular provisions of the Plan and Part III of
Appendix E, without regard to this Section 3. B.
4. WILLIAMS AIR CONTROLS ACCRUED BENEFIT ACCOUNT
An Employee's Williams Air Controls Accrued Benefit and Williams Air
Controls Accrued Benefit Account, as determined under this Section 4,
shall be used solely in calculating the amount of the Employee's
Additional Compensation Benefit. Because the Williams Air Controls Plan
was never merged with this Plan, an Employee shall not be eligible to
receive his Williams Air Controls Accrued Benefit or his Williams Air
Controls Accrued Benefit Account under this Plan. (By contrast, in the
case of a plan that was merged with this Plan, an Employee's Accrued
Benefit and Accrued Benefit Account, as determined under the provisions of
the merged plan, shall be payable from this Plan to the extent provided in
the applicable subpart of this Appendix E.)
Each Employee's Williams Air Controls Accrued Benefit Account as of
December 1, 1988, shall equal 190 times the Employee's Williams Air
Controls Accrued Benefit. Each Employee's Williams Air Controls Accrued
Benefit shall be determined as of his Transfer Date, and shall equal the
greater of (a) or (b), where Final Monthly Earnings, Primary Social
Security Benefit, and Credited Service are as defined in the Williams Air
Controls Plan as in effect on November 30, 1988, such amount then
discounted 7% per year (compounded annually) for each year that December
1, 1988, precedes the Employee's Normal Retirement Date, and multiplied by
86.037/190ths:
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(a) The excess of (i) over (ii):
(i) 1.6% of the Employee's Final Monthly Earnings at
November 30, 1988, multiplied by the number of
years and fractional parts thereof of his actual
Credited Service at November 30, 1988.
(ii) 2.0% of the Employee's Primary Social Security
Benefit at November 30, 1988, multiplied by the
number of years and fractional parts thereof of his
actual Credited Service at November 30, 1988, to a
maximum of 25 such years.
(b) $15.00 multiplied by the number of years and fractional parts
thereof of his actual Credited Service at November 30, 1988.
5. ADDITIONAL COMPENSATION BENEFIT
Each Employee's Additional Compensation Benefit Account as of December 1,
1988, shall equal the excess of (a) over (b):
(a) 190 times the Williams Air Controls Objective Benefit described
below.
(b) the Williams Air Controls Accrued Benefit Account as of December 1,
1988.
Each Employee's Additional Compensation Benefit shall equal 1/190th of the
Employee's Additional Compensation Benefit Account, times the ratio, not
to exceed 1.0, of the Employee's Credited Service after December 1, 1988,
to the number of years and months from December 1, 1991, to the Employee's
Normal Retirement Date. (The same Credited Service ratio shall be used to
determine the portion of the Employee's Additional Compensation Benefit
Account that he has earned as of any date.)
If an Employee has reached age 62 on or before December 1, 1988, the
Employee shall not have an Additional Compensation Benefit or an
Additional Compensation Benefit Account.
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6. WILLIAMS AIR CONTROLS OBJECTIVE BENEFIT
A. DEFINITIONS
Each Employee's Williams Air Controls Objective Benefit shall equal the
excess of (a) over (b), where Final Monthly Earnings, Primary Social
Security Benefit, and Credited Service are as defined in the Williams Air
Controls Plan as in effect on November 30, 1988 (except as noted below),
such amount then discounted 7% per year (compounded annually) for each
year that December 1, 1988, precedes the Employee's Normal Retirement
Date, and multiplied by 86.037/190ths:
(a) 1.6% of the Employee's projected Final Monthly Earnings at his
Normal Retirement Date, multiplied by the number of years and
fractional parts thereof of his actual Credited Service at November
30, 1988.
(b) 2.0% of the Employee's projected Primary Social Security Benefit at
his Normal Retirement Date, multiplied by the number of years and
fractional parts thereof of his actual Credited Service at November
30, 1988, to a maximum of 25 such years.
Solely for purposes of this Section 6, an Employee's Final Monthly
Earnings shall be calculated as if the Williams Air Controls Plan, at all
times on and after the Employee's Transfer Date, had defined "Final
Monthly Earnings" to include compensation earned with any member of Dana
Corporation's controlled group, regardless of whether the Employee was
covered by the Williams Air Controls Plan when he earned such
compensation.
B. ASSUMPTIONS
For purposes of determining the Employee's Williams Air Controls Objective
Benefit, the Employee's projected Final Monthly Earnings and projected
Primary Social Security Benefit shall be determined assuming:
(a) The Employee's earnings taken into account under the Williams Air
Controls Plan for 1988 will be the greatest of (i) his 1988
earnings, (ii) 105% of his 1987 earnings, and (iii) 110% of his 1986
earnings.
(b) His earnings taken into account under the Williams Air Controls Plan
for years after 1988 will be assumed to increase at the rate of 4.5%
per year.
(c) His previous earnings increased at a rate of 6% per year, and were
of such amounts that the Employee's average monthly earnings for
1986 through 1988 equaled his Final Monthly Earnings as of December
1, 1988; the
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maximum taxable Social Security wage bases after 1988 will increase
at the rate of 3.5% per year; and increases in Social Security
benefits on account of changes in the Consumer Price Index will be
at the rate of 3.0% per year.
(d) The Primary Social Security Benefit will be determined by applying
(i) the ratio that the Primary Social Security Benefit determined
under Section 4(a)(ii), above, bears to $670 (which ratio shall not
exceed 1.0) to (ii) the projected Primary Social Security Benefit
determined under Section 6 B(c), above.
7. INTEREST CREDITS DURING TRANSITION PERIOD
For purposes of this Part III, the "Transition Period" shall be the period
from December 1, 1988, through December 31, 1988. An Employee's Additional
Compensation Benefit Account at December 1, 1988, shall be increased by
.583% at December 31, 1988. For Plan Years ending after December 31, 1988,
an Employee's Additional Compensation Benefit Account shall be increased
as described in Section 3.01 C. of the Plan.
8. PAYMENT OF ADDITIONAL COMPENSATION BENEFIT
An Employee's Additional Compensation Benefit and Additional Compensation
Benefit Account, computed in accordance with this Part III, shall be
treated for all purposes under the Plan as if they were part of the
Employee's Supplemental Benefit and Supplemental Benefit Account,
respectively, and shall be paid at the same time and in the same manner as
the Employee's Supplemental Benefit or Supplemental Benefit Account.
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APPENDIX F
EMPLOYEES OF FOREIGN AFFILIATES
WHO PARTICIPATE IN THE PLAN
1. FOREIGN AFFILIATES COVERED BY CODE SECTION 3121(L) AGREEMENTS
The Company has entered into agreements under Section 3121(l) of
the Code with the foreign affiliates listed below:
Dana Equipamentos Limitada (Brazil)
Hayes-Dana
An individual employed by a foreign affiliate listed above shall
be deemed to be an "Employee" for purposes of the Plan, provided
that (1) such individual is a United States citizen, and (2)
contributions under a funded plan of deferred compensation are not
made by any other person with respect to the remuneration paid to
such individual by the foreign affiliate, and (3) such individual
otherwise satisfies the definition of "Employee" in Section 1.11
of the Plan.
2. KEY LOCAL NATIONALS AND THIRD COUNTRY NATIONALS
The Plan Administrator may designate certain "Key Local Nationals"
or "Third Country Nationals" who are eligible to participate in
the Plan. A list of individuals so designated shall be maintained
by the Plan Administrator or his designee. The list shall contain
each eligible Employee's pension Credited Service and Vesting
Service date(s), as well as his compensation history, expressed in
U.S. dollars. Notwithstanding Sections 1.09, 1.10, and 1.27 of the
Plan, the Credited Service, Earnings, and Vesting Service of an
Employee who is a "Key Local National" or "Third Country National"
shall be determined in accordance with the list maintained by the
Plan Administrator or his designee.
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APPENDIX G
ACTUARIAL EQUIVALENTS
(UP84 + 1 : 7%)
UNREDUCED UNREDUCED
BENEFIT BENEFIT
AGE AT AGE 62 AT AGE 65
----------- ------------- ------------
50 0.31189 0.22184
51 0.34063 0.24228
52 0.37251 0.26496
53 0.40794 0.29015
54 0.44739 0.31821
55 0.49142 0.34953
56 0.54069 0.38457
57 0.59595 0.42388
58 0.65810 0.46809
59 0.72821 0.51795
60 0.80751 0.57436
61 0.89752 0.63838
62 1.00000 0.71127
63 1.00000 0.79456
64 1.00000 0.89007
65 1.00000 1.00000
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APPENDIX H
INTEREST CREDITS AND
ESCALATOR PERCENTAGES
AS AMENDED AND RESTATED
EFFECTIVE JANUARY 1, 1994
I. INTEREST CREDITS UNDER SECTION 3.01 C.
For any Plan Year ending after the Transition Period, the applicable percentage
increase in an Employee's or Former Employee's Accounts under Section 3.01 C.
shall be determined in accordance with the following rules:
1. GUARANTEED MINIMUM PERCENTAGE INCREASE. For any Plan Year, the
guaranteed minimum percentage increase in an Employee's or Former
Employee's Accounts shall be determined under subparagraph a. or
b., whichever is applicable:
a. Except as provided in subparagraph b., below, the
percentage increase in an Employee's or Former Employee's
Accounts shall be the smaller of (i) 5%, or (ii) the
percentage increase in the Consumer Price Index for Urban
Wage Earners and Clerical Workers ("CPI-W") during the
preceding Plan Year (measured by comparing the CPI-W for
December of the preceding Plan Year with the CPI-W for
December a year earlier).
b. For any Plan Year in which the Employee's or Former
Employee's Credited Service, determined as of the end of
such Plan Year, is less than 32 full years of Credited
Service, the percentage increase in the Employee's or
Former Employee's Future Service Account shall not be less
than 5%.
2. AD HOC PERCENTAGE INCREASE. The Funds Committee of the Board of
Directors of Dana Corporation may increase the applicable
percentage for any Plan Year by adopting a written resolution
that adds the increased percentage to Column A of Table H. Any
ad hoc percentage increase adopted pursuant to this paragraph 2.
shall apply only for the Plan Year with res pect to which it is
adopted: it shall not become a permanent feature of the Plan.
Except as
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provided in paragraphs 3. and 4., below, if the ad hoc percentage
increase is greater than the applicable guaranteed minimum
percentage increase specified in paragraph 1., above, the ad hoc
percentage increase shall apply to the Employee's or Former
Employee's Accounts instead of the applicable guaranteed minimum
percentage increase.
3. BENEFITS AFFECTED BY $150,000 LIMIT. If an Employee's or Former
Employee's Accounts include the value of benefits that accrued
before January 1, 1994, based on actual earnings for any year
before 1994 that exceeded $150,000, the Employee's or Former
Employee's Accounts shall be recalculated as of December 31,
1993, as if his actual earnings for each year before 1994 had not
exceeded $150,000. The accounts determined in accordance with
the preceding sentence shall be the Employee's or Former
Employee's "Limited 1993 Accounts"; the accounts determined as of
December 31, 1993, under the regular provisions of the Plan and
Appendix E, without regard to the preceding sentence, shall be
the Employee's or Former Employee's "Regular 1993 Accounts." The
applicable percentage increase shall be determined as follows for
any Employee or Former Employee whose Accounts are recalculated
as described in the first sentence of this paragraph:
a. The applicable percentage for the Employee's or Former
Employee's Limited 1993 Accounts, and for any portion of
the Employee's or Former Employee's Accounts that accrues
after 1993, shall be the greater of the applicable
guaranteed minimum percentage increase specified in
paragraph 1. or the ad hoc percentage increase specified in
paragraph 2.
b. The Employee's or Former Employee's Limited 1993 Accounts
shall be subtracted from his Regular 1993 Accounts, and the
applicable percentage for the remainder shall be the
guaranteed minimum percentage increase specified in
paragraph 1. Any ad hoc percentage increase specified in
paragraph 2. shall not apply to this portion of the
Employee's or Former Employee's Accounts.
c. Any percentage increase in an Employee's or Former
Employee's Accounts that is determined under subparagraph
a., above, shall be added to the portion of the Employee's
or Former Employee's Accounts for which the percentage
increase in subsequent years is determined under
subparagraph a. Any percentage increase in an Employee's
or Former Employee's Accounts that is determined under
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subparagraph b., above, shall be added to the portion of
the Employee's or Former Employee's Accounts for which the
percentage increase in subsequent years is determined
under subparagraph b.
4. FIVE-YEAR GRANDFATHER BENEFIT. Under Section 14 of Part I of
Appendix E, a Participant who is eligible to retire on July 1,
1993, but who retires after that date, may receive the lump-sum
payment to which he would have been entitled had he retired on
July 1, 1993 (determined under the terms of the Plan as in effect
immediately before the Adoption Date, with certain modifications
specified in Section 14 of Part I of Appendix E). This lump-sum
amount is treated under the Plan as a guaranteed minimum Earned
Benefit Account, and is credited with interest from July 1, 1993,
until the Participant's benefit commencement date at the rate
specified in Section 3.01 C. If the Participant's lump-sum payment
is larger under the five-year grandfather provision than it is
under the other provisions of the Plan and Appendix E, the
Participant's level annuity benefit and increasing annuity benefit
are increased by the same percentage. The Participants in certain
Merged Plans are eligible to receive comparable five-year
grandfather benefits under the applicable subparts of Part II of
Appendix E.
If any five-year grandfather benefit that accrued before January
1, 1994, was based on compensation for any year that exceeded
$150,000, the five-year grandfather benefit shall be recalculated,
and the recalculated benefit shall be credited with interest, in
the manner described in paragraph 3., above.
II. ESCALATOR PERCENTAGES UNDER SECTION 12.01 B.
For any Plan Year ending after the Transition Period, the applicable percentage
increase in an Employee's or Former Employee's Earned Benefit (and in the
Supplemental Benefit that could accrue in the future) under Section 12.01 B.
shall be determined in accordance with the following rules:
1. GUARANTEED MINIMUM PERCENTAGE INCREASE. For any Plan Year, the
guaranteed minimum percentage increase in an Employee's or Former
Employee's Earned Benefit (and in the Supplemental Benefit that
could accrue in the future) shall be determined under
subparagraph a. or b., whichever is applicable:
a. Except as provided in subparagraph b., below, the
percentage increase
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in an Employee's or Former Employee's Earned Benefit (and
in the Supplemental Benefit that could accrue in the
future) shall be the smaller of (i) 5%, or (ii) the
percentage increase in the Consumer Price Index for Urban
Wage Earners and Clerical Workers ("CPI-W") during the
preceding Plan Year (measured by comparing the CPI-W for
December of the preceding Plan Year with the CPI-W for
December a year earlier).
b. For any Plan Year in which the Employee or Former Employee
has neither attained at least age 66 nor completed at
least 32 full years of Credited Service (assuming
continuous employment by the Company after the Plan Year
in which such benefit accrued), no guaranteed minimum
percentage increase shall apply to the Employee's or
Former Employee's future service benefit described in
Section 12.01 A.
2. AD HOC PERCENTAGE INCREASE. The Funds Committee of the Board of
Directors of Dana Corporation may increase the applicable
escalator percentages for any Plan Year by adopting a written
resolution that adds the increased percentages to Table H. Any
increased escalator percentages shall apply to the Employee's or
Former Employee's Earned Benefit (and to the Supplemental Benefit
that could accrue in the future) as set forth in subparagraph a.
or b., whichever is applicable:
a. Except as provided in subparagraph b., below, the increased
escalator percentage indicated in Column A of Table H shall
apply to the Employee's or Former Employee's Earned Benefit
(and to the Supplemental Benefit that could accrue in the
future).
b. For any Plan Year in which the Employee or Former Employee
has neither attained at least age 66 nor completed at
least 32 full years of Credited Service (assuming
continuous employment by the Company after the Plan Year
in which such benefit accrued), the increased escalator
percentage indicated in Column B of Table H shall apply to
the Employee's or Former Employee's future service benefit
described in Section 12.01 A.
Any ad hoc percentage increase adopted pursuant to this paragraph
2. shall apply only for the Plan Year with respect to which it is
adopted: it shall not become a permanent feature of the Plan.
Except as provided in paragraph 3., below, if the ad hoc
percentage increase is greater than the applicable
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guaranteed minimum percentage increase specified in paragraph 1.,
above, the ad hoc percentage increase shall apply to the
Employee's or Former Employee's Accounts instead of the applicable
guaranteed minimum percentage increase.
3. BENEFITS AFFECTED BY $150,000 LIMIT. If an Employee's or Former
Employee's Earned Benefit (and the value of any Supplemental
Benefit that could accrue in the future) includes the value of
benefits that accrued before January 1, 1994, based on actual
earnings for any year that exceeded $150,000, the Employee's or
Former Employee's Earned Benefit and unearned Supplemental Benefit
shall be recalculated as of December 31, 1993, as if his actual
earnings for each year before 1994 had not exceeded $150,000. The
amounts determined in accordance with the preceding sentence shall
be the Employee's or Former Employee's "Limited 1993 Benefits";
the amounts determined as of December 31, 1993, under the regular
provisions of the Plan and Appendix E, without regard to the
preceding sentence, shall be the Employee's or Former Employee's
"Regular 1993 Benefits." The applicable percentage increase shall
be determined as follows for any Employee or Former Employee whose
Earned Benefit and unearned Supplemental Benefit are recalculated
as described in the first sentence of this paragraph:
a. The applicable percentage for the Employee's or Former
Employee's Limited 1993 Benefits, and for any portion of
the Employee's or Former Employee's benefit that accrues
after 1993, shall be the greater of the applicable
guaranteed minimum percentage increase specified in
paragraph 1. or the ad hoc percentage increase specified in
paragraph 2.
b. The Employee's or Former Employee's Limited 1993 Benefits
shall be subtracted from his Regular 1993 Benefits, and the
applicable percentage for the remainder shall be the
guaranteed minimum percentage increase specified in
paragraph 1. Any ad hoc percentage increase specified in
paragraph 2. shall not apply to this portion of the
Employee's or Former Employee's benefit.
c. Any percentage increase in an Employee's or Former
Employee's benefit that is determined under subparagraph
a., above, shall be added to the portion of the Employee's
or Former Employee's benefit for which the percentage
increase in subsequent years is determined under
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183
subparagraph a. Any percentage increase in an Employee's or
Former Employee's benefit that is determined under
subparagraph b., above, shall be added to the portion of
the Employee's or Former Employee's benefit for which the
percentage increase in subsequent years is determined under
subparagraph b.
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184
TABLE H
INTEREST CREDITS AND
ESCALATOR PERCENTAGES
PRIOR YEAR'S
PLAN YEAR COLUMN A COLUMN B CPI-W INCREASE
- --------- -------- -------- --------------
1990 7% 1.90476% 4.5%
1991 7% 1.90476% 6.1%
1992 7% 1.90476% 2.8%
1993 7% 1.90476% 2.9%
1994 7% 1.90476% 2.5%
1995 7% 1.90476%
H-120
185
APPENDIX I
SPECIAL SERVICE-CREDITING
AND VESTING PROVISIONS
EFFECTIVE JANUARY 1, 1994
1. CREDIT FOR SERVICE WITH PREDECESSOR EMPLOYERS
Pursuant to Section 1.27, the Company may choose to treat service
with certain predecessor employers as Vesting Service under the
Plan. The Company will credit Vesting Service with any "affiliate"
of the Company to the extent provided below. An entity is an
"affiliate" of the Company during any period in which Dana
Corporation has, directly or indirectly, any ownership interest
greater than 0% and less than 80% in the entity (provided that an
ownership interest shall not be taken into account for this
purpose to the extent that it results from Dana Corporation's
passive investment, directly or indirectly, in the securities of
another publicly-traded company).
If an individual becomes a Participant in the Plan, he shall be
eligible to receive credit for service with an affiliate of the
Company under the rules set forth below:
A. An individual shall be eligible to receive credit for any
period of service that he performed for an entity while
the entity was an affiliate of the Company.
B. In addition, if an individual was actively employed by an
entity on the date when the entity became an affiliate of
the Company, the individual shall be eligible to receive
credit for any period of service with the entity that
preceded the date on which the entity became an affiliate
of the Company.
C. In no event shall an individual be eligible to receive
credit for service with a former affiliate of the Company
for any period of service with the entity that follows the
date on which the entity ceased to be an affiliate of the
Company.
D. An Employee's or Part-Time Employee's service with an
affiliate during the crediting period identified in
subparagraph A. or B., above, shall be treated as Vesting
Service to the same extent as if the service
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186
had been performed for the Company.
E. Service with an affiliate that is treated as "Vesting
Service" under this Appendix I shall be treated as
"Credited Service" under the Plan solely for the purpose of
determining the percentage of Earnings allocated to a
Participant's Future Service Account under Section 3.01 B.
(and the corresponding rate of benefit accrual under
Section 12.01 A.) Service with an affiliate that is treated
as Vesting Service under this Appendix I shall not be
treated as Credited Service, or taken into account in
calculating a Participant's accrued benefit, for any other
purpose under the Plan.
F. The Plan Administrator may require an Employee or Part-Time
Employee to produce evidence acceptable to the Plan
Administrator of the Employee's or Part-Time Employee's
service record with the affiliate as a condition of
receiving service credit under this Appendix I.
2. FULL AND IMMEDIATE VESTING
Pursuant to Section 2.06, the Company may provide for the full and
immediate vesting of designated groups of Employees or Former
Employees. The Employees or Former Employees designated below
shall be fully vested in their Earned Benefit Accounts as of the
date indicated below.
Designated Employees Vesting Date
-------------------- ------------
All Employees who were The closing date of the sale of
actively employed at the Warner Electric Division's
the Warner Electric Walterboro, South Carolina,
Division's Walterboro, facility.
South Carolina, facility
on the Vesting Date.
I-122
187
APPENDIX J
SCHEDULE OF EFFECTIVE DATES
TO ACCOMPANY JANUARY 1, 1994, RESTATEMENT
The Plan, as in effect on June 30, 1988, received a
favorable IRS determination letter on May 7, 1990, that considered the
provisions required by the Tax Equity and Fiscal Responsibility Act of 1982
("TEFRA"), the Deficit Reduction Act of 1984 ("DEFRA"), the Retirement Equity
Act of 1984 ("REA"), and the temporary REA regulations. The Plan has been
amended and restated from time to time since that date to incorporate provisions
required by the Tax Reform Act of 1986 and subsequent legislation and
regulations.
This schedule sets forth the effective dates of those
provisions of the Plan that have been amended since June 30, 1988, to reflect
changes in applicable law. The schedule shall be considered to be a part of the
Plan. Amendments to the Plan that are not identified in this schedule (including
amendments that are not legally required) shall be effective as of the dates set
forth in the instruments adopting the amendments or in the particular provisions
of the Plan that are affected by the amendments.
PROVISIONS ADDED OR AMENDED EFFECTIVE JANUARY 1, 1987
Plan Section 11.06 Definition of "key employee" amended to
I.R.C. Section 416(i) incorporate the cross reference to the
defined benefit dollar limit.
PROVISIONS ADDED OR AMENDED EFFECTIVE JULY 1, 1988
Plan Section 1.10 Definition of compensation amended to
Appendix E Section Section I.9, incorporate the $200,000 limit. (These
I.14 I.R.C. Section 401(a)(17) provisions of the Plan incorporated the
$200,000 limit six months before its
statutory effective date.)
PROVISIONS ADDED OR AMENDED EFFECTIVE DECEMBER 1, 1988
Appendix E Section III.3 Special benefit provision adopted for
I.R.C. Section 401(a)(17) individuals affected by the sale of the
Williams Air Controls division on
December 1, 1988. This provision
incorporated the $200,000 limit on
compensation.
J-123
188
PROVISIONS ADDED OR AMENDED EFFECTIVE JANUARY 1, 1989
Appendix E Section Section Transition provisions adopted for
II(A).4, II(B), II(I), II(M), II(N) participants in other defined benefit
I.R.C. Section 401(a)(17) plans that were merged with the Plan as
of December 31, 1988. These transition
provisions (and the provisions adopted
for subsequent plan mergers) incorporated
the $200,000 limit on compensation.
PROVISIONS ADDED OR AMENDED EFFECTIVE MARCH 31, 1989
Former Plan Section 14.01 Model Amendment I adopted to prevent any
IRS Notice 88-131 in excess of $200,000 until the Plan is
amended to reflect the annual
compensation limit.
Former Plan Section 14.02 Alternative IID adopted to prevent
I.R.C. Section 401(a)(4) super-highly-compensated & employees from
IRS Notice 88-131 accruing additional benefits until the
Plan is amended to comply with the Tax
Reform Act of 1986.
PROVISIONS ADDED OR AMENDED EFFECTIVE JANUARY 1, 1993
Plan Section 3.09 New section added to provide for the
I.R.C. Section 401(a)(31) direct rollover of eligible rollover
distributions from the Plan to an
eligible retirement plan.
PROVISIONS ADDED OR AMENDED EFFECTIVE AUGUST 5, 1993
Plan Section Section 1.05, 1.11, Provisions governing eligibility and the
1.16, 1.27 29 C.F.R. Section crediting of service amended to provide
825.215 credit for family and medical leave.
J-124
189
PROVISIONS ADDED OR AMENDED EFFECTIVE JANUARY 1, 1994
Plan Section 1.10, former Plan Definition of compensation amended to
Section 14.03, Appendix E, reflect the reduction in the annual
Appendix H I.R.C. Section 401(a)(17) limit from $200,000 (indexed) to
$150,000 (indexed).
Plan Section 9.03 Distribution restrictions revised to
Treas. Reg. Section 1.401(a)(4)-5(b) reflect the new rules governing
distributions to the Company's top 25
employees and certain other
highly-compensated employees.
Former Plan Section Section 14.01, Provisions reflecting Model Amendment I,
14.02, 14.03 IRS Notice 88-131 Alternative IID, and temporary adoption
of $150,000 limit deleted to reflect the
fully into compliance with applicable
legal requirements.
J-125
1
Exhibit 10-I(1)
10/28/92
DANA CORPORATION
DIRECTOR DEFERRED FEE PLAN
1. Introduction
This Director Deferred Fee Plan is designed to provide Directors
of the Corporation with the opportunity to defer to a future date the receipt of
their compensation as Directors.
Each Director may elect to have any portion or all of his Fees as
a Director deferred by filing a written election with the Corporation prior to
January 1 of each Year for which deferral is to be made.
2. Definitions
The following words and phrases shall have the meanings set forth
below:
(A) "Accounts" shall mean a Director's Stock Account and Interest
Equivalent Account.
(B) "Committee" shall mean the Advisory Committee of the Board of
Directors of the Corporation.
(C) "Corporation" shall mean the Dana Corporation.
(D) "Director" shall mean a member of the Board of Directors of the
Corporation.
(E) "Fees" shall mean any retainer fees or meeting fees which a
Director
2
receives or is entitled to receive as a Director of the
Corporation. "Fees" shall also include fees that accrue on account
of service on any committee of the Board of Directors and fees
that are payable for services over and above those normally
expected from Directors and performed at the request of the
Chairman of the Board of Directors.
(F) "Plan" shall mean the Dana Corporation Director Deferred Fee Plan.
(G) "Year" shall mean a calendar year.
3. Director's Accounts
At the time a Director elects to defer Fees, he shall also designate
whether such deferred Fees are to be credited to a Stock Account, an Interest
Equivalent Account, or to a combination of both Accounts.
A. Stock Account
For each Director who determines that all or a portion of his
deferred Fees should be converted into Units equal to shares of the
Corporation's common stock, the Corporation shall establish a Stock
Account for that Director and shall credit that Account with any Fees
deferred at the time payment would have otherwise been made to the
Director. Any accrued dollar balance in such Account shall be converted
four times each Year, effective March 31, June 30, September 30, and
December 31, into a number of Units equal to the maximum number of
whole shares of the Corporation's common stock which could have been
purchased with the dollar amount credited to the Account, assuming a
purchase price per share equal to the average of the last reported
daily sales prices for shares of such common stock on the New York
Stock Exchange-Composite Transactions on each
2
3
trading day during the last full month preceding the date of
conversion, and the dollar amount then credited to such Account shall
be appropriately reduced. Any dollar amount not credited to the Stock
Account of a Director as whole Units shall be accrued as a dollar
balance in that Account.
When cash dividends are declared and paid on the Corporation's
common stock, the Stock Account of each Director shall be credited as
of the dividend payment date with an amount equal to the cash which
would have been paid if each Unit in such Account, as of the dividend
record date, had been one share of the Corporation's outstanding common
stock.
If the Corporation increases or decreases the number of shares
of its outstanding common stock as a result of a stock dividend, stock
split, or stock combination, a corresponding proportionate adjustment
shall be made in the number of Units then credited to each Director's
Stock Account.
Each Director may convert 25%, 50%, 75% or 100% of the Units
credited to his Stock Account as of April 30, 1991 into an equivalent
dollar balance in the Interest Equivalent Account. These election(s)
can be made at any time before or after retirement, provided that the
election is made prior to the second anniversary of his retirement or
termination of service as a Director and it shall be effective on the
day the election is received by the Corporation. Each Director shall
also have the right to convert 25%, 50%, 75% or 100% of the Units
credited to his Stock Account after April 30, 1991 into an equivalent
dollar balance in the Interest Equivalent Account. These election(s) to
convert post-April 30, 1991 Units shall
3
4
be made during the period that commences on the first day of the
seventh calendar month following the Director's retirement or
termination of service and ends on the second anniversary of his
retirement or termination of service. Any such election shall be
effective on the day the election is received by the Corporation. Any
election made under this paragraph shall be given in writing to the
Chief Financial Officer of the Corporation. For valuation purposes,
each Unit so converted shall have an assumed value equal to the average
of the last reported daily sales prices for shares of the Corporation's
common stock on the New York Stock Exchange-Composite Transactions on
each trading day during the last full calendar month preceding the
effective date of conversion, and the Units credited to such Stock
Account shall be reduced by the number of Units so converted.
In the event a Director dies prior to the latest date on which
he could have made an election to convert Units into Interest
Equivalent amounts, as provided above, without having made such an
election, his spouse (or in the event the spouse has predeceased him,
his estate), shall be permitted to make such an election within the
same period during which the election would have been available to the
Director had he lived. Units which the spouse or estate elect to
convert shall be valued according to the formula described in this
Section 3A.
B. Interest Equivalent Account
A Director may also elect to have all or a portion of his
deferred Fees credited to an Interest Equivalent Account established
for him by the Corporation. Any accrued dollar balance in such Account
shall be credited four times each Year,
4
5
effective March 31, June 30, September 30 and December 31, with amounts
equivalent to interest. Amounts credited to a Director's Interest
Equivalent Account, including amounts equivalent to interest, shall
continue to accrue amounts equivalent to interest until distributed in
accordance with Section 4.
The rate of interest credited to funds allocated to a
Director's Interest Equivalent Account during any given Year shall be
the quoted and published interest rate for prime commercial loans by
Chemical Bank, or its successor, on the last business day of the
immediately preceding Year.
No person shall, by virtue of his participation in the Plan, have or
acquire any interest whatsoever in property or assets of the Corporation or in
any share of the Corporation's common stock, or have or acquire any rights
whatsoever as a stockholder of the Corporation.
Following a Director's death, retirement from the Board of Directors,
or termination of service as a Director, amounts held in his Accounts will be
distributed in accordance with Section 4.
4. Distributions to Directors
Prior to the time a Director who has elected to defer Fees under the
Plan retires from the Board of Directors, or his services are terminated as a
Director, the Committee shall establish a distribution schedule specifying (i)
that distributions be made to the Director out of his Accounts in a specified
number of annual installments (not exceeding
5
6
10), with the first distribution to be made at the sole discretion of the
Committee, either (a) in the month following retirement, termination of
services, or the effective date of any post-retirement election to convert Units
pursuant to Section 3A, or (b) in January of the first, second, or third year
following retirement or termination of services (all subsequent distributions
shall be made in January), and (ii) the proportion which each such installment
shall bear to the dollar amount or Units credited to his Accounts at the time of
distribution of such installment, subject to adjustment to the next higher whole
Unit in the case of distributions from the Stock Account.
In the event of the death of a Director either before or after
retirement or termination of services, the amount then credited to his Accounts
shall be paid in cash in such manner as the Committee may determine regardless
of the manner in which such payments would have been made to the Director had he
lived.
Each distribution in respect of a Director's Accounts shall be made in
cash. To the extent that a distribution is to be made from a Director's Stock
Account, the value of each Unit in that Account shall be deemed to be equal to
the average of the last reported daily sales prices for shares of the
Corporation's common stock on the New York Stock Exchange-Composite Transactions
on each trading day during the calendar month preceding the month of making such
payment. Following a distribution from a Director's Stock Account, the Units
credited to such Stock Account shall be reduced by the number of
6
7
Units equal in value to the cash distributed. To the extent that a cash
distribution is made from a Director's Interest Equivalent Account, a
corresponding reduction in the balance of that Account will be made.
All distributions under the Plan shall be made to the Director, except
that in the event of the death of a Director, distributions shall be made to
such person or persons as such Director shall have designated by written notice
to the Committee prior to his death. In the event the designated beneficiary
fails to survive the Director, or if the Director fails to designate a
beneficiary in writing, the Corporation shall distribute the balance in the
Director's Accounts to the legal representative of such deceased Director.
Anything in this Section 4 or elsewhere in the Plan to the contrary
notwithstanding, in the event of a Change in Control of the Corporation there
shall promptly be paid to each Director and each former Director, who had
deferred Fees under the Plan, a lump sum cash amount equal to all amounts and
Units credited to his Stock Account and his Interest Equivalent Account as of
April 30, 1991. For purposes of converting any Units in the Stock Account into a
cash equivalent, the value of the Units credited to a Director's Stock Account
as of April 30, 1991 shall be deemed to be the higher of (a) the average of the
reported closing prices of the Corporation's common stock, as reported on the
New York Stock Exchange-Composite Transactions, for the last trading day prior
to the Change in Control of the Corporation and for the last trading day of each
of the two preceding thirty-day periods, and (b) in the event that a Change in
Control of the Corporation shall have taken place as the result of a tender or
exchange offer, an amount equal to the per share consideration paid for a
majority of the common stock of the Corporation acquired in the course of such
tender or exchange offer. For purposes of this paragraph, "Change in Control of
the Corporation" shall mean a change in control of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of Regulation
14A
7
8
promulgated under the Securities Exchange Act of 1934 as in effect on the
effective date of this Plan; provided that, without limitation, such a change in
control shall be deemed to have occurred if and when (a) any "person" (as such
term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of
1934) is or becomes a beneficial owner, directly or indirectly, of securities of
the Corporation representing twenty percent (20%) or more of the combined voting
power of the Corporation's then outstanding securities or (b) during any period
of twenty-four (24) consecutive months, commencing before or after the effective
date of this Plan, individuals who at the beginning of such twenty-four month
period were directors of the Corporation cease for any reason to constitute at
least a majority of the Board of Directors of the Corporation. Notwithstanding
anything to the contrary in this Section 4 or elsewhere in this Plan, the term
"person" referred to in clause (a) above in the next preceding sentence shall
not include within its meaning, and shall not be deemed to include for any
purpose of this Plan, any employee benefit plan (or related trust) sponsored or
maintained by the Corporation or any corporation controlled by the Corporation.
5. Non-Assignment of Interest
No interest in any undistributed Unit or Interest Equivalent Account
amount shall be transferable or assignable by any Director, and any purported
transfer or assignment of any such interest, and any purported lien on or pledge
of any such interest, made or created by any Director, shall be void and of no
force or effect as against the Corporation. Any payment due under this Plan
shall not in any manner be subject to the debts or liabilities of any Director
or beneficiary. Units will represent shares of the Corporation's common
8
9
stock for accounting purposes only, and shall not be convertible to, or
considered to be, actual shares of stock for any reason.
6. Amendment, Termination and Interpretation of Plan
The Board of Directors of the Corporation shall have the right at any
time, and from time to time, to modify, amend, suspend or terminate the Plan;
provided, however, that no such action shall be taken which would affect Fees
deferred prior to the action taken without the consent of the Director (or his
personal representative) who elected deferral of the Fees.
The Committee shall have the power to interpret the Plan and to decide
any and all matters arising hereunder, including but not limited to the right to
remedy possible ambiguities, inconsistencies or omissions by general rule or
particular decision; provided, that all such interpretations and decisions shall
be applied in a uniform and nondiscriminatory manner to all participants
similarly situated. In addition, any interpretations and decisions made by the
Committee shall be final, conclusive and binding upon all persons who have or
who claim to have any interest in or under the Plan.
7. Information
Each person entitled to receive a payment under this Plan, whether a
Director, a duly designated beneficiary of a Director, a guardian or otherwise,
shall provide the Committee with such information as it may from time to time
deem necessary or in its best interests in administering the Plan. Any such
person shall also furnish the Committee with such documents, evidence, data or
other information as the Committee may from time to time deem necessary or
advisable.
9
10
8. Governing Law
The Plan shall be construed, administered and governed in all respects
under and by the applicable internal laws of the State of Ohio, without giving
effect to the principles of conflicts of laws thereof.
9. Effective Date
This Dana Corporation Director Deferred Fee Plan, as amended, became
effective on February 18, 1985. It has since been amended, and was last amended,
effective May 1, 1991, to read as set forth above.
10
1
Exhibit 10-M(1)
4/18/94
FIRST AMENDMENT TO THE DANA CORPORATION DIRECTORS'
STOCK OPTION PLAN
WHEREAS, at the Dana Corporation Board of Directors meeting held on
April 18, 1994, the Board of Directors resolved that the Dana Corporation
Directors' Stock Option Plan ("Plan") should be amended to adjust the number of
shares that will be granted each year in recognition of the two-for-one stock
split that had been authorized by the Board.
NOW THEREFORE, BE IT RESOLVED, that the Plan is amended, effective
April 18, 1994, as follows:
1. Amend Section 6(a) of the Plan by adding the following
sentence at the end of that Section:
"Such number of shares is subject to adjustment upon changes
in capitalization as provided in Section 12 hereof."
Martin J. Strobel
----------------------------------------
Secretary
Mark A. Smith Jr.
- ------------------------------
Witness
1
INTRODUCTION TO FINANCIAL SECTION DANA CORPORATION
- --------------------------------------------------------------------------------
[ILLUSTRATION NO. 1]
James E. Ayers
The following financial statements for 1994 show strong growth and
improvement over 1993. Certain key markets such as North and South America were
strong, but that is only part of the story. Each year, for the past several
years, Dana's people have focused their efforts on rebuilding the financial
performance of their operations. They have introduced new products to the
markets and incorporated new technologies while modernizing and expanding
Dana's global manufacturing base.
The ideas, skills and efforts of Dana people are the engine of Dana's
global growth. This is the reason we are excited about the future opportunities
for many of our products and services. Basic to our future growth is the Dana
style of operations which strongly encourages ideas and participation from all
employees in a free and nonrestrictive working environment. Creating such an
environment develops people who are eager to grow and compete in the global
markets.
Bringing new products and technology to our markets creates a strong
need for training and investment to ensure success. It requires investments in
education, engineering, and new equipment. Such investments have been
accelerating the past few years and more are planned for 1995. Much progress
has been made, and Dana's global sales continue to increase.
Dana has had a successful record of growth over its 90 years by
developing strong products, acquiring new companies, and expanding globally. It
is important that we continue this growth by reinforcing the leadership and
ideas conceived by so many of Dana's people. Over the years, as our operations
embrace the principles of the Dana style, we become more competitive in the
global markets. We achieved solid growth and financial performance in 1994, and
are positioned well for 1995 and future years...
/s/James E. Ayers
James E. Ayers
Chief Financial Officer
17
2
MANAGEMENT AND INDEPENDENT ACCOUNTANTS' REPORT DANA CORPORATION
- --------------------------------------------------------------------------------
RESPONSIBILITY FOR FINANCIAL STATEMENTS
- ---------------------------------------
We have prepared the accompanying consolidated financial statements and
related information included herein for the three years ended December 31,
1994.
The management of Dana Corporation is primarily responsible for the
accuracy of the financial information that is presented in this annual report.
These statements were prepared in accordance with generally accepted accounting
principles and, where appropriate, we used our estimates and judgement with
consideration to materiality.
To meet management's responsibility for financial reporting, we have
established internal control systems which we believe are adequate to provide
reasonable assurance that our assets are protected from loss. These systems
produce data used for the preparation of financial information.
We believe internal control systems should be designed to provide
accurate information at a reasonable cost which is not out of line with the
benefits to be received. These systems and controls are reviewed by our
internal auditors in order to ensure compliance, and by our independent
accountants to support their audit work.
The Audit Committee of the Board of Directors meets regularly with
management, internal auditors and our independent accountants to review
accounting, auditing and financial matters. Our Audit Committee is composed
of only outside directors. This committee and the independent accountants have
free access to each other with or without management being present.
We believe our people are our most important asset and that the proper
selection, training and development of our people is a means of ensuring that
management's objectives of maintaining effective internal accounting controls
and fair, uniform reporting standards are met.
/s/James E. Ayers
James E. Ayers
Chief Financial Officer, Vice President-Finance and
Treasurer
/s/Melvin H. Rothlisberger
Melvin H. Rothlisberger
Vice President and Corporate Controller
REPORT OF INDEPENDENT ACCOUNTANTS
- ---------------------------------
PRICE WATERHOUSE LLP [PRICE WATERHOUSE CORPORATION LOGO]
To the Board of Directors and Shareholders
of Dana Corporation
In our opinion, the accompanying consolidated balance sheet and the
related consolidated statements of income, of shareholders' equity and of cash
flows, including pages 19 through the comments on "Significant Subsidiary" on
page 34, present fairly, in all material respects, the financial position of
Dana Corporation and its subsidiaries at December 31, 1993 and 1994, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1994, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
As discussed in the notes to the consolidated financial statements on
pages 24 and 29, the Company changed its method of accounting for inventories
and postretirement benefits other than pensions effective January 1, 1992 and
for postemployment benefits effective January 1, 1993.
/s/Price Waterhouse LLP
Toledo, Ohio
February 12, 1995
A copy of the Annual Report as filed with the Securities and Exchange
Commission on Form 10-K will be mailed at no charge upon request to the
Secretary, Dana Corporation, P.O. Box 1000, Toledo, Ohio 43697.
18
3
BALANCE SHEET
IN MILLIONS EXCEPT PAR VALUE DANA CORPORATION
- ---------------------------------------------------------------------------------------------------------
December 31
1993 1994
- ---------------------------------------------------------------------------------------------------------
ASSETS
- ---------------------------------------------------------------------------------------------------------
Cash $ 49.5 $ 48.2
- ---------------------------------------------------------------------------------------------------------
Marketable securities, at cost which approximates market 28.1 64.0
- ---------------------------------------------------------------------------------------------------------
Accounts receivable, less allowance for doubtful accounts
of $16.8 - 1993 and $19.6 - 1994 790.5 960.4
- ---------------------------------------------------------------------------------------------------------
Inventories
- ---------------------------------------------------------------------------------------------------------
Raw materials 141.8 186.4
- ---------------------------------------------------------------------------------------------------------
Work in process and finished goods 508.1 553.8
- ---------------------------------------------------------------------------------------------------------
Total inventories 649.9 740.2
- ---------------------------------------------------------------------------------------------------------
Lease financing 849.3 931.0
- ---------------------------------------------------------------------------------------------------------
Investments and other assets 846.3 793.2
- ---------------------------------------------------------------------------------------------------------
Deferred income tax benefits 276.2 226.6
- ---------------------------------------------------------------------------------------------------------
Property, plant and equipment, net 1,142.1 1,347.2
- ---------------------------------------------------------------------------------------------------------
Total Assets $4,631.9 $5,110.8
=========================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
- ---------------------------------------------------------------------------------------------------------
Short-term debt $ 474.1 $ 583.1
- ---------------------------------------------------------------------------------------------------------
Accounts payable 310.6 390.2
- ---------------------------------------------------------------------------------------------------------
Other liabilities 643.7 749.1
- ---------------------------------------------------------------------------------------------------------
Deferred employee benefits 1,052.5 1,109.9
- ---------------------------------------------------------------------------------------------------------
Long-term debt 1,207.4 1,186.5
- ---------------------------------------------------------------------------------------------------------
Total Liabilities 3,688.3 4,018.8
- ---------------------------------------------------------------------------------------------------------
Minority interest in consolidated subsidiaries 142.2 152.2
- ---------------------------------------------------------------------------------------------------------
Shareholders' equity
- ---------------------------------------------------------------------------------------------------------
Common stock, $1 par value,
shares authorized, 120.0 - 1993 and 240.0 - 1994;
shares issued, 67.7 - 1993 and 98.8 - 1994 67.7 98.8
- ---------------------------------------------------------------------------------------------------------
Additional paid-in capital 628.3 61.0
- ---------------------------------------------------------------------------------------------------------
Retained earnings 809.2 887.7
- ---------------------------------------------------------------------------------------------------------
Treasury stock, at cost: 18.5 shares - 1993 (611.3)
- ---------------------------------------------------------------------------------------------------------
Deferred translation adjustments (92.5) (84.9)
- ---------------------------------------------------------------------------------------------------------
Deferred pension expense (22.8)
- ---------------------------------------------------------------------------------------------------------
Total Shareholders' Equity 801.4 939.8
- ---------------------------------------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $4,631.9 $5,110.8
=========================================================================================================
19
4
STATEMENT OF INCOME
IN MILLIONS EXCEPT PER SHARE AMOUNTS DANA CORPORATION
- -----------------------------------------------------------------------------------------------------------------------------
Year Ended December 31
1992 1993 1994
- -----------------------------------------------------------------------------------------------------------------------------
NET SALES $4,872.2 $5,460.1 $6,613.8
- -----------------------------------------------------------------------------------------------------------------------------
Revenue from lease financing and other income 163.9 127.4 148.7
- -----------------------------------------------------------------------------------------------------------------------------
Foreign currency adjustments (24.9) (24.2) (22.0)
- -----------------------------------------------------------------------------------------------------------------------------
5,011.2 5,563.3 6,740.5
- -----------------------------------------------------------------------------------------------------------------------------
Costs and expenses
- -----------------------------------------------------------------------------------------------------------------------------
Cost of sales 4,282.0 4,675.5 5,624.0
- -----------------------------------------------------------------------------------------------------------------------------
Selling, general and administrative expenses 534.8 522.6 611.5
- -----------------------------------------------------------------------------------------------------------------------------
Interest expense 168.1 137.3 113.4
- -----------------------------------------------------------------------------------------------------------------------------
4,984.9 5,335.4 6,348.9
- -----------------------------------------------------------------------------------------------------------------------------
Income before income taxes 26.3 227.9 391.6
- -----------------------------------------------------------------------------------------------------------------------------
Estimated taxes on income (2.1) 89.6 157.4
- -----------------------------------------------------------------------------------------------------------------------------
Income before minority interest and equity in earnings of affiliates 28.4 138.3 234.2
- -----------------------------------------------------------------------------------------------------------------------------
Minority interest in net income of consolidated subsidiaries (16.5) (26.2) (30.2)
- -----------------------------------------------------------------------------------------------------------------------------
Equity in earnings of affiliates 31.2 16.4 24.2
- -----------------------------------------------------------------------------------------------------------------------------
Income before effects of changes in accounting principles 43.1 128.5 228.2
- -----------------------------------------------------------------------------------------------------------------------------
Effect on prior years of the change in accounting for:
- -----------------------------------------------------------------------------------------------------------------------------
Inventories 12.9
- -----------------------------------------------------------------------------------------------------------------------------
Postretirement benefits other than pensions (438.0)
- -----------------------------------------------------------------------------------------------------------------------------
Postemployment benefits (48.9)
- -----------------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) $(382.0) $79.6 $228.2
=============================================================================================================================
Net income per common share before effects of changes
in accounting principles $.49 $1.39 $2.31
- -----------------------------------------------------------------------------------------------------------------------------
Effect on prior years of the change in accounting for:
- -----------------------------------------------------------------------------------------------------------------------------
Inventories .15
- -----------------------------------------------------------------------------------------------------------------------------
Postretirement benefits other than pensions (4.99)
- -----------------------------------------------------------------------------------------------------------------------------
Postemployment benefits (.53)
- -----------------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) PER COMMON SHARE $(4.35) $.86 $2.31
=============================================================================================================================
Cash dividends declared and paid per common share $.80 $.80 $.83
=============================================================================================================================
20
5
STATEMENT OF CASH FLOWS
IN MILLIONS DANA CORPORATION
- -------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31
1992 1993 1994
- -------------------------------------------------------------------------------------------------------------------------------
Net cash flows from operating activities $247.3 $484.6 $465.8
===============================================================================================================================
Cash flows from investing activities:
- -------------------------------------------------------------------------------------------------------------------------------
Purchases of property, plant and equipment (132.0) (204.0) (337.2)
- -------------------------------------------------------------------------------------------------------------------------------
Purchases of assets to be leased (239.8) (277.0) (373.4)
- -------------------------------------------------------------------------------------------------------------------------------
Acquisitions, additions to investments and other assets (51.0) (72.1) (22.6)
- -------------------------------------------------------------------------------------------------------------------------------
Loans made to customers and partnership affiliates (18.2) (22.8) (39.3)
- -------------------------------------------------------------------------------------------------------------------------------
Purchases of investment securities (181.0)
- -------------------------------------------------------------------------------------------------------------------------------
Payments received on leases 189.4 164.1 195.5
- -------------------------------------------------------------------------------------------------------------------------------
Proceeds from sales of certain assets and subsidiaries 105.5 75.3 55.1
- -------------------------------------------------------------------------------------------------------------------------------
Proceeds from sales of leased assets 49.3 31.2 37.0
- -------------------------------------------------------------------------------------------------------------------------------
Payments received on loans 18.5 18.3 38.7
- -------------------------------------------------------------------------------------------------------------------------------
Other (8.4) 20.5 23.3
===============================================================================================================================
Net cash flows - investing activities (267.7) (266.5) (422.9)
===============================================================================================================================
Cash flows from financing activities:
- -------------------------------------------------------------------------------------------------------------------------------
Net change in short-term debt (38.0) 41.5 84.2
- -------------------------------------------------------------------------------------------------------------------------------
Issuance of long-term debt 346.8 578.3 355.4
- -------------------------------------------------------------------------------------------------------------------------------
Payments on long-term debt (414.3) (776.2) (373.2)
- -------------------------------------------------------------------------------------------------------------------------------
Dividends paid (69.8) (73.8) (82.0)
- -------------------------------------------------------------------------------------------------------------------------------
Issuance of common stock 189.1
- -------------------------------------------------------------------------------------------------------------------------------
Other 8.8 14.3 7.3
===============================================================================================================================
Net cash flows - financing activities 22.6 (215.9) (8.3)
===============================================================================================================================
Net increase in cash and cash equivalents $2.2 $2.2 $34.6
===============================================================================================================================
Reconciliation of net income (loss) to net cash
flows from operating activities:
- -------------------------------------------------------------------------------------------------------------------------------
Net income (loss) $(382.0) $79.6 $228.2
- -------------------------------------------------------------------------------------------------------------------------------
Noncash items included in income:
- -------------------------------------------------------------------------------------------------------------------------------
Effect on prior years of the changes in accounting 425.1 48.9
- -------------------------------------------------------------------------------------------------------------------------------
Depreciation and amortization 191.6 195.7 210.6
- -------------------------------------------------------------------------------------------------------------------------------
Unremitted earnings of affiliates 3.9 (1.9) (15.7)
- -------------------------------------------------------------------------------------------------------------------------------
Deferred income taxes (.3) 31.1 59.4
- -------------------------------------------------------------------------------------------------------------------------------
Minority interest 4.6 13.4 12.4
- -------------------------------------------------------------------------------------------------------------------------------
Change in accounts receivable (31.4) (98.7) (106.1)
- -------------------------------------------------------------------------------------------------------------------------------
Change in inventories (2.3) 8.9 (82.8)
- -------------------------------------------------------------------------------------------------------------------------------
Change in other operating assets 12.0 (27.7) (.6)
- -------------------------------------------------------------------------------------------------------------------------------
Change in operating liabilities .3 211.9 132.2
- -------------------------------------------------------------------------------------------------------------------------------
Additions to lease and loan loss reserves
and adjustment of real estate to net realizable value 42.5 23.3 25.5
- -------------------------------------------------------------------------------------------------------------------------------
Other (16.7) .1 2.7
===============================================================================================================================
Net cash flows from operating activities $ 247.3 $484.6 $465.8
===============================================================================================================================
21
6
STATEMENT OF SHAREHOLDERS' EQUITY
IN MILLIONS EXCEPT PAR VALUE DANA CORPORATION
- ------------------------------------------------------------------------------------------------------------------------------------
DEFERRED
$1 PAR VALUE ADDITIONAL PENSION AND
COMMON STOCK PAID-IN RETAINED TRANSLATION SHAREHOLDERS'
ISSUED TREASURY CAPITAL EARNINGS ADJUSTMENTS EQUITY
- ------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1991 $59.6 $(611.0) $ 329.8 $1,255.2 $ (45.0) $988.6
- ------------------------------------------------------------------------------------------------------------------------------------
Net loss for the year (382.0) (382.0)
- ------------------------------------------------------------------------------------------------------------------------------------
Cash dividends declared (69.8) (69.8)
- ------------------------------------------------------------------------------------------------------------------------------------
Issuance of shares for
employee stock plans .3 1.0 7.7 9.0
- ------------------------------------------------------------------------------------------------------------------------------------
Deferred translation adjustments (26.9) (26.9)
- ------------------------------------------------------------------------------------------------------------------------------------
Issuance of common shares 4.5 184.6 189.1
- ------------------------------------------------------------------------------------------------------------------------------------
Cost of shares reacquired (1.0) (1.0)
====================================================================================================================================
Balance, December 31, 1992 64.4 (611.0) 522.1 803.4 (71.9) 707.0
- ------------------------------------------------------------------------------------------------------------------------------------
Net income for the year 79.6 79.6
- ------------------------------------------------------------------------------------------------------------------------------------
Cash dividends declared (73.8) (73.8)
- ------------------------------------------------------------------------------------------------------------------------------------
Issuance of shares for
employee stock plans .4 1.5 14.2 16.1
- ------------------------------------------------------------------------------------------------------------------------------------
Deferred translation adjustments (20.6) (20.6)
- ------------------------------------------------------------------------------------------------------------------------------------
Conversion of 5 7/8%
debentures to common stock 2.9 92.0 94.9
- ------------------------------------------------------------------------------------------------------------------------------------
Cost of shares reacquired (1.8) (1.8)
====================================================================================================================================
Balance, December 31, 1993 67.7 (611.3) 628.3 809.2 (92.5) 801.4
- ------------------------------------------------------------------------------------------------------------------------------------
NET INCOME FOR THE YEAR 228.2 228.2
- ------------------------------------------------------------------------------------------------------------------------------------
CASH DIVIDENDS DECLARED (82.0) (82.0)
- ------------------------------------------------------------------------------------------------------------------------------------
TWO-FOR-ONE COMMON STOCK SPLIT 67.7 (67.7)
- ------------------------------------------------------------------------------------------------------------------------------------
ISSUANCE OF SHARES FOR DIRECTOR
AND EMPLOYEE STOCK PLANS .3 1.6 6.2 8.1
- ------------------------------------------------------------------------------------------------------------------------------------
DEFERRED TRANSLATION ADJUSTMENTS 7.6 7.6
- ------------------------------------------------------------------------------------------------------------------------------------
DEFERRED PENSION EXPENSE ADJUSTMENTS (22.8) (22.8)
- ------------------------------------------------------------------------------------------------------------------------------------
COST OF SHARES REACQUIRED (.7) (.7)
- ------------------------------------------------------------------------------------------------------------------------------------
RETIREMENT OF TREASURY SHARES (36.9) 610.4 (573.5)
====================================================================================================================================
BALANCE, DECEMBER 31, 1994 $98.8 $ - 0 - $ 61.0 $ 887.7 $(107.7) $939.8
====================================================================================================================================
22
7
COMMENTS ON FINANCIAL STATEMENTS
IN MILLIONS EXCEPT SHARE AND PER SHARE AMOUNTS DANA CORPORATION
- --------------------------------------------------------------------------------
RECLASSIFICATIONS
- --------------------------------------------------------------------------------
Where appropriate, certain amounts in 1992 and 1993 have been reclassified
to conform with the 1994 presentation.
COMMON SHARES
- --------------------------------------------------------------------------------
In June 1992, Dana sold 9,087,600 (4,543,800 pre-split) shares of
common stock through a public offering. Proceeds to the Company were
approximately $189.1 which were used primarily to retire debt.
In connection with employee stock plans, Dana reacquired 52,496
shares in 1992, 68,246 shares in 1993 and 23,570 in 1994.
In April 1994, Dana's Board of Directors approved a two-for-one stock
split effective for shareholders of record on June 1, 1994. Share and per
share amounts have been restated to reflect the stock split.
During 1994, Dana retired all of the common shares held in treasury.
The cost of reacquired shares in excess of par value has been charged to
additional paid-in capital.
PREFERRED SHARES
- --------------------------------------------------------------------------------
Dana has authorized 5,000,000 shares of preferred stock, without par
value, including 1,000,000 shares which have been reserved for issuance
under the Rights Agreement discussed below. At December 31, 1994, no
shares of preferred stock had been issued.
PREFERRED SHARE PURCHASE RIGHTS
- --------------------------------------------------------------------------------
The Rights Agreement adopted by Dana's Board in 1986 and amended
in 1988 provides that one preferred Share Purchase Right be issued for
each share of Dana common stock outstanding on and after July 25,
1986. In certain circumstances, the holder of each Right may buy, at an
exercise price of $50, one 1/200th of a share of Junior Participating
Preferred Stock. The Rights are exercisable only if a person or entity
acquires, or announces a tender offer which would result in acquiring,
beneficial ownership of 20% of Dana's common stock. Dana may redeem
the Rights at $.025 each before a 20% position has been acquired. The
Rights expire on July 25, 1996, unless redeemed sooner.
If 30% of Dana's common stock is acquired, or certain transactions
occur which increase a 20% holder's ownership by more than 1%, or a
20% holder engages in certain self-dealing activities, the holder of each
Right may purchase a number of Dana common shares having a market
value equal to twice the Right's current exercise price.
If Dana is acquired in a merger or similar transaction or 50% of its
assets or earning power are transferred, the holder of each Right may
purchase a number of the acquiring company's common shares having a
market value equal to twice the Right's current exercise price.
If 30% (but less than 50%) of Dana's common stock is acquired, the
Board may exchange each Right for one share of Dana's common stock.
In the above situations, the Rights owned by any 20% or more holder
become void and cannot be exercised.
Before a 20% position has been acquired, Dana's Board may reduce
the above percentage thresholds to not less than 15%.
NET INCOME PER COMMON SHARE
- --------------------------------------------------------------------------------
Primary earnings per common share is computed on the basis of the
weighted average number of common shares outstanding of 87,792,126
in 1992, 92,532,938 in 1993 and 98,688,775 in 1994. Shares reserved for
issuance under the Company's stock option and deferred compensation
plans did not have a material dilutive effect on earnings per share. If the
1993 conversion of the 5 7/8% debentures had occurred at the beginning of
the year, it would not have had a material effect on earnings per share.
PRINCIPLES OF CONSOLIDATION
- --------------------------------------------------------------------------------
Dana's consolidated financial statements include all significant United
States (U.S.) and international subsidiaries, including its wholly-owned
financial subsidiary, Diamond Financial Holdings, Inc. (DFHI). Affiliated
companies (20% to 50% Dana ownership) are generally recorded in the
consolidated statements using the equity method of accounting.
Operations of subsidiaries and affiliates outside North America are gen-
erally included for periods ended within two months of Dana's year end
to ensure preparation of consolidated financial statements on a timely
basis. Less than 20% owned companies are included in the consolidated
financial statements at the cost of Dana's investment. Dividends, royal-
ties and fees from these cost basis affiliates are recorded in Dana's con-
solidated financial statements when received.
GOODWILL
- --------------------------------------------------------------------------------
Cost in excess of net assets of companies acquired is generally amor-
tized over the estimated period of expected benefit, ranging from 10 to 40
years.
SALE OF SUBSIDIARY
- --------------------------------------------------------------------------------
In October 1992, Dana sold the business and a majority of the assets,
liabilities, offices and mortgage banking business of Diamond Savings
and Loan Company (DSL), a wholly-owned subsidiary of DFHI. This
sale resulted in an after-tax gain of $3.5 ($.04 per share). As a result of
the transaction, certain assets of DSL (primarily loans receivable and
real estate) were retained by DFHI and are included in investments and
other assets.
ACQUISITIONS
- --------------------------------------------------------------------------------
In 1993, Dana acquired Reinz-Dichtungs GmbH, Hugo Reinz GmbH,
Europecas and ACCAM which are manufacturers and distributors of
automotive parts. Dana also increased its ownership from 50% to 100%
of TI/Interlock, Ltd. and Wichita Company, Ltd. which are manufac-
turers and distributors of industrial products.
During 1994, Dana acquired Sige Brevetti Ing., Columbo S.p.A.,
Stieber Antriebselemente GmbH and Tece Almere B.V. Sige is a man-
ufacturer of axles for agricultural and construction equipment, Stieber
manufactures clutches for industrial applications and Tece is a distribu-
tor of automotive parts.
These acquisitions were accounted for as purchases and the results
of their operations have been included in the consolidated financial
statements since the dates of acquisition. The purchase price and the
results of operations of these companies prior to acquisition were not
material to the consolidated financial statements.
23
8
COMMENTS ON FINANCIAL STATEMENTS
IN MILLIONS EXCEPT SHARE AND PER SHARE AMOUNTS DANA CORPORATION
- --------------------------------------------------------------------------------
MEDICAL CARE AND OTHER BENEFITS
- --------------------------------------------------------------------------------
Dana and certain of its subsidiaries provide medical and life insur-
ance benefits for certain active and retired employees. These benefits
are provided through various insurance carriers whose charges to
Dana are based on the benefits paid during the year. Substantially all of
the retiree medical cost relates to North American retirees since most
international retirees are covered by government-sponsored programs.
Dana adopted Statement of Financial Accounting Standards (SFAS)
No. 106, "Employers' Accounting for Postretirement Benefits Other
than Pensions," effective January 1, 1992. The Company recognized the
transition obligation immediately as the effect of an accounting change,
which resulted in a one-time charge to income in 1992 of $438.0 after-tax
($4.99 per share). In addition, 1992 net income was reduced by $24.0
($.27 per share) as a result of the incremental after-tax increase in
ongoing retiree benefit costs under Dana's benefit plans in effect
during 1992.
Annual net postretirement benefits liability and expense under the
Company's benefit plans are determined on an actuarial basis. Dana's
current policy is to pay these benefits as they become due. Benefits are
determined primarily based upon employees' length of service and
include applicable employee cost sharing.
Net annual postretirement benefit cost is computed as follows:
- --------------------------------------------------------------------------------
Year Ended December 31
1992 1993 1994
- --------------------------------------------------------------------------------
Service cost $16.2 $11.2 $13.6
Interest cost 65.3 59.1 60.2
Net amortization and deferral (3.9) (14.0) (12.3)
- --------------------------------------------------------------------------------
Net annual postretirement benefit cost $77.6 $56.3 $61.5
================================================================================
Postretirement benefit obligations, none of which are funded, are
summarized as follows:
- --------------------------------------------------------------------------------
December 31
1993 1994
- --------------------------------------------------------------------------------
Accumulated postretirement benefit
obligations:
Retirees and dependents $521.5 $490.9
Active participants eligible to
retire and receive benefits 116.9 89.4
Active participants not yet fully
eligible 186.8 125.2
- --------------------------------------------------------------------------------
Total accumulated postretirement benefit
obligation 825.2 705.5
Unamortized plan amendments 108.2 135.2
Unamortized net gain (loss) (96.9) 4.8
- --------------------------------------------------------------------------------
Accrued postretirement benefits other
than pensions $836.5 $845.5
================================================================================
The discount rate used in determining the accumulated post-
retirement benefit obligation was 7.5% in 1993 and 8.25% in 1994. The
assumed medical costs trend rates result in per capita net incurred
medical claims increasing 10.9% under age 65 and 9.4% over age 65.
These rates decrease to 6.0% and 5.6% for under age 65 and over age
65, respectively, by the year 2051. If the assumed medical costs trend
rates were increased by 1%, the accumulated postretirement benefit
obligation as of December 31, 1994, would increase by $43.7 and the
aggregate of the service and interest cost components of the net annual
postretirement benefit cost would be increased by $6.3.
Benefit plan changes enacted during 1993, including cost sharing
and benefit limitations, reduced Dana's postretirement benefit expense
for 1993 and 1994.
Dana adopted SFAS No. 112, "Employers' Accounting for
Postemployment Benefits," effective January 1, 1993. The effect of
adopting SFAS No. 112 in 1993 resulted in a $48.9 after-tax charge to
income ($.53 per share).
Annual net postemployment benefits liability and expense under
the Company's benefit plans are accrued as service is rendered for
those obligations that accumulate or vest and can be reasonably esti-
mated. Obligations that do not accumulate or vest are recorded when
payment of the benefits is probable and the amounts can be reasonably
estimated.
ADDITIONAL COMPENSATION PLANS
- --------------------------------------------------------------------------------
Dana has numerous additional compensation plans, including gain
sharing and group incentive plans, which provide for payments com-
puted under formulas which recognize increased productivity and
improved performance. The total amount earned by Dana employees
from all such plans amounted to $74.7, $81.1 and $106.7 in 1992, 1993
and 1994, respectively.
Under one of these plans, in which certain officers and other key
employees participate, a percentage of participants' compensation is
accrued for additional compensation if certain profit levels are attained.
Awards under the plan are paid in cash and may, at the discretion of
the Board's Compensation Committee, be paid immediately or
deferred. Some awards deferred prior to May 1991 may be paid in
shares of the Company's common stock. Dana awarded (based on prior
period performance) $0 in 1992, $4.2 in 1993 and $4.8 in 1994; 31,646,
20,404 and 16,891 shares of Dana's common stock held in treasury were
issued and amounts equivalent to dividends and interest of $.3, $.4 and
$.4 were credited to deferred awards in 1992, 1993 and 1994, respectively.
Total charges to expense relating to the plan amounted to $5.1 in 1992,
$5.6 in 1993 and $12.1 in 1994.
The Company has a Restricted Stock Plan whereby certain key
employees are granted restricted shares of common stock subject to
forfeiture until the restrictions lapse or terminate. With certain excep-
tions, the employee must remain with the Company for a period of
years after the date of grant to receive the full number of shares grant-
ed. Shares granted in 1992, 1993 and 1994 were 32,000, 58,348, and
28,000, respectively. During 1992, 20,000 shares were forfeited based
upon the provisions of this plan. Total charges to expense for this plan
amounted to $.7, $.6 and $.7, in 1992, 1993 and 1994, respectively. At
December 31, 1994, 689,154 shares were authorized for future issuance
under this plan.
STOCK PURCHASE PLAN
- --------------------------------------------------------------------------------
All full-time U.S. and certain non-U.S. employees are eligible to partic-
ipate in Dana's employee stock purchase plan. The plan provides that
participants may authorize Dana to withhold up to 15% of earnings and
deposit such amounts with an independent custodian. The custodian
causes to be purchased, as nominee for the participants, common stock
of Dana at prevaillng market prices and distributes the shares purchased
to the participants upon request. Under the plan, Dana contributes on
behalf of each participant up to 50% of the participant's contributions.
The Company's contributions will accumulate over a 5-year period,
provided that the shares are left in the plan. If any shares are withdrawn
by a participant before the end of five years, the amount of the Company
match toward those shares will depend on the period of time that the
shares have been in the plan. The custodian has caused to be purchased
816,440 shares in 1992, 687,800 shares in 1993 and 782,225 shares in 1994
of Dana's common stock on behalf of the employees and the Company's
charge to expense amounted to $3.3 in 1992, $4.1 in 1993 and $4.7 in 1994.
24
9
COMMENTS ON FINANCIAL STATEMENTS
IN MILLIONS DANA CORPORATION
================================================================================
PENSION PLANS
================================================================================
Dana provides retirement benefits for substantially all of its employ-
ees under several defined benefit and defined contribution pension
plans.
Annual net periodic pension costs under the Company's defined
benefit pension plans are determined on an actuarial basis. Dana's pol-
icy is to fund these costs as accrued, including amortization of the ini-
tial unrecognized net obligation over 15 years and obligations arising
due to plan amendments over the period benefited, through deposits
with trustees and purchase of group annuity contracts. Benefits are
determined based upon employees' length of service, wages and a
combination of length of service and wages.
Pension expense approximated $56.0 in 1992, $60.3 in 1993 and $65.0
in 1994.
Net periodic pension cost for defined benefit plans is computed as
follows:
- --------------------------------------------------------------------------------
Year Ended December 31
1992 1993 1994
- --------------------------------------------------------------------------------
Service cost $ 30.6 $ 31.3 $ 35.6
Interest cost 100.4 105.1 110.0
Actual return on
plan assets (70.6) (219.9) 45.3
Amortization of
unrecognized prior
service cost 13.1 16.0 14.7
Amortization of
initial unrecognized
net obligation 6.0 6.2 5.7
Unrecognized gain
(loss) (28.3) 117.7 (147.4)
- --------------------------------------------------------------------------------
Net periodic
pension cost $ 51.2 $ 56.4 $ 63.9
================================================================================
The funded status of defined benefit plans at December 31, 1993 was
as follows:
- --------------------------------------------------------------------------------
Accumulated Assets
Benefits Exceed
Exceed Accumulated
Assets Benefits Total
- --------------------------------------------------------------------------------
Actuarial present
value of:
Vested benefits $ 743.6 $ 570.4 $ 1,314.0
Non-vested benefits 73.7 10.5 84.2
- --------------------------------------------------------------------------------
Accumulated
benefit
obligation $ 817.3 $ 580.9 $ 1,398.2
================================================================================
Actuarial present
value of projected
benefit obligation $(821.9) $(624.6) $(1,446.5)
Plan assets at
fair value 753.8 742.3 1,496.1
- --------------------------------------------------------------------------------
Funded status $ (68.1) $ 117.7 $ 49.6
================================================================================
Unrecognized prior
service cost $ (23.3) $ (33.3) $ (56.6)
Unrecognized
net gain 15.8 125.2 141.0
Prepaid (accrued)
pension cost 8.3 (3.9) 4.4
Unrecognized
initial
obligation (68.9) 29.7 (39.2)
- --------------------------------------------------------------------------------
$ (68.1) $ 117.7 $ 49.6
================================================================================
The funded status of defined benefit plans at December 31, 1994 was
as follows:
- --------------------------------------------------------------------------------
Accumulated Assets
Benefits Exceed
Exceed Accumulated
Assets Benefits Total
- --------------------------------------------------------------------------------
Actuarial present
value of:
Vested benefits $ 789.6 $ 581.4 $1,371.0
Non-vested benefits 81.5 9.6 91.1
- --------------------------------------------------------------------------------
Accumulated
benefit
obligation $ 871.1 $ 591.0 $1,462.1
================================================================================
Actuarial present
value of projected
benefit obligation $(883.1) $(629.2) $(1,512.3)
Plan assets at
fair value 712.6 693.1 1,405.7
- --------------------------------------------------------------------------------
Funded status $(170.5) $ 63.9 $ (106.6)
================================================================================
Unrecognized prior
service cost $ (14.7) $ (34.1) $ (48.8)
Unrecognized
net gain (loss) (52.0) 81.6 29.6
Accrued pension
cost (44.0) (10.8) (54.8)
Unrecognized
initial
obligation (59.8) 27.2 (32.6)
- --------------------------------------------------------------------------------
$(170.5) $ 63.9 $ (106.6)
================================================================================
1993 1994
U.S. International U.S. INTERNATIONAL
- --------------------------------------------------------------------------------
Expected long-term
rate of return on
plan assets 7.75% 8%-9% 8.5% 8%-9%
Discount rate 7.25% 7%-9% 8% 7%-9%
Rate of increase in
future compensation
levels 5% 4%-7.5% 5% 3%-7.5%
Plan assets are invested in a diversified portfolio that consists pri-
marily of equity and debt securities.
DEFERRED EMPLOYEE BENEFITS
================================================================================
Deferred employee benefits consisted of the following components:
- --------------------------------------------------------------------------------
December 31
1993 1994
- --------------------------------------------------------------------------------
Postretirement other than pension $ 836.5 $ 845.5
Postemployment 85.8 81.9
Pension 121.5 168.5
Compensation 8.7 14.0
- --------------------------------------------------------------------------------
$1,052.5 $1,109.9
================================================================================
25
10
COMMENTS ON FINANCIAL STATEMENTS
IN MILLIONS EXCEPT SHARE AND PER SHARE AMOUNTS DANA CORPORATION
================================================================================
STOCK OPTION PLANS
================================================================================
The Company's employee stock option plans provide for the granting
of options at prices no less than 85% of the market value at the date of
grant and the options are exercisable for a period not to exceed ten years
from date of grant. The plans provide for the granting of stock appreci-
ation rights separately or in conjunction with all or any part of an option,
either at the time of grant or at any subsequent time during the term of
the option. Whlle the plan provides for grants of options and stock
appreciation rights at 85% of market, to date all grants have been at
market value at date of grant.
The following summarizes the stock option transactions for the years
ended December 31, 1993 and 1994:
- --------------------------------------------------------------------------------
Number Per share
of shares option price
- --------------------------------------------------------------------------------
Outstanding at
December 31, 1992 1,768,239 $22.13-46.88
Granted - 1993 362,750 55.13
Exercised - 1993 (405,368) 22.13-46.88
Cancelled - 1993 (28,362) 22.13-46.88
---------
Outstanding at
December 31, 1993 1,697,259 $22.13-55.13
RESTATED FOR STOCK SPLIT 3,394,518 $11.06-27.56
GRANTED - 1994 1,045,950 29.06
EXERCISED - 1994 (309,915) 11.06-23.44
CANCELLED - 1994 (19,150) 11.06-23.44
---------
OUTSTANDING AT
DECEMBER 31, 1994 4,111,403 $11.06-29.06
=========
EXERCISABLE AT
DECEMBER 31, 1994 1,894,649
=========
At December 31, 1994, there were 5,551,606 shares available for future
grants.
During 1993, the shareholders approved a stock option plan for non-
employee Directors of the Company. The plan provides for the automatic
granting of options at prices equal to the market value at the date of
grant and the options are exercisable after one year for a period not to
exceed ten years from date of grant. In 1993, options were granted
under this plan to purchase 10,500 shares at $48.50 per share (21,000
shares at $24.25 on a post stock split basis). During 1994, options were
granted to purchase 21,000 shares at $28.88 per share and options to
purchase 3,000 shares were exercised at $24.25 per share. At December
31, 1994, there were 39,000 options outstanding at exercise prices of
$24.25 and $28.88 per share, options for 18,000 shares were exercisable
and there were 88,000 options available for future grant under this plan.
INTERNATIONAL OPERATIONS
================================================================================
Dana's consolidated international subsidiaries are located throughout
the world with no individual subsidiary or country accounting for
more than 10% of consolidated sales or assets.
Dana has equity interests (20% to 50% ownership) in a number of
affiliated companies in South America, Asia and other areas of the
world.
The financial statements of the Company's subsidiaries and equity
affiliates outside the U.S., located in non-highly inflationary economies,
are measured using the local currency as the functional currency.
Income and expense items are translated at average monthly rates of
exchange. Gains and losses from currency transactions of these affili-
ates are included in net earnings. Assets and liabilities of these affiliates
are translated at the rates of exchange at the balance sheet date. The
resultant translation adjustments are included as deferred translation
adjustments as a component of shareholders' equity. For affiliates oper-
ating in highly inflationary economies, such as Brazil, non-monetary
assets are translated at historical exchange rates and monetary assets
are translated at current exchange rates. Translation adjustments are
included in the determination of income.
The following is a summary of the significant financial information
of Dana's consolidated international subsidiaries:
- --------------------------------------------------------------------------------
December 31
1992 1993 1994
- --------------------------------------------------------------------------------
Assets $ 987.9 $1,167.9 $1,518.5
Liabilities 424.5 577.4 814.2
Net sales 1,301.2 1,327.8 1,645.5
Net income 29.0 49.3 68.1
Dana's equity in -
Net assets 434.8 448.7 552.5
Net income 13.4 23.1 38.1
Dana's historical cost investment in these international subsidiaries
was $262.8 at December 31, 1994.
Cumulative undistributed earnings of international subsidiaries for
which U.S. income taxes, exclusive of foreign tax credits, have not been
provided approximated $356.8 at December 31, 1994. Management
intends to permanently reinvest undistributed earnings of Dana's
international subsidiaries; accordingly, no U.S. income taxes have been
provided on these undistributed earnings. If the total undistributed
earnings of international subsidiaries had been remitted in 1994, a
significant amount of the additional tax provision would be offset by
foreign tax credits.
The following is a summary of the significant financial information
of affiliated companies accounted for on the equity method:
- --------------------------------------------------------------------------------
December 31
1992 1993 1994
- --------------------------------------------------------------------------------
Current assets $ 452.8 $ 629.0 $ 409.6
Other assets 298.0 323.4 356.4
Current liabilities 338.9 577.7 424.7
Other liabilities 165.9 147.5 136.1
Shareholders' equity 246.0 227.2 205.2
Net sales 1,042.5 972.0 846.8
Gross profit 219.7 193.0 162.3
Net income 81.8 39.6 40.3
Dana's equity in -
Net assets 101.4 92.3 100.5
Net income 26.6 13.2 19.2
Spicer S.A. de C.V., Dana's 49% owned Mexican affiliate, is included
in the consolidated financial statements with a fiscal year end of
October 31 and the peso as the functional currency. Consequently, the
devaluation of the Mexican peso in December 1994, did not affect
Dana's earnings for 1994. Spicer S.A. has approximately $130 in U.S.
dollar denominated debt and it is estimated that the translation of this
debt into pesos will result in Dana recording a charge to first quarter
1993 earnings of approximately $17, or $.17 per share for its propor-
tionate share of the translation loss.
INVESTMENTS IN PARTNERSHIPS
================================================================================
Certain of DFHI's subsidiaries have a number of U.S. investments in
partnerships which are accounted for on the equity method. Dana's
share of earnings of these partnerships is included in income as earned.
The partnerships are engaged primarily in the leasing and financing of
equipment or real estate to commercial entities. Summarized financial
information of the partnerships on a combined basis is as follows:
- --------------------------------------------------------------------------------
December 31
1992 1993 1994
- --------------------------------------------------------------------------------
Assets $ 967.6 $ 956.8 $ 918.9
Liabilities 729.2 733.1 723.1
Partners' capital 238.4 223.7 195.8
Revenue 67.7 115.4 130.1
Net income 6.2 6.8 9.7
Dana's share in -
Net assets 96.1 80.0 58.0
Net income 3.8 3.2 5.3
26
11
COMMENTS ON FINANCIAL STATEMENTS
IN MILLIONS EXCEPT SHARE AMOUNTS DANA CORPORATION
================================================================================
SHORT-TERM DEBT
================================================================================
Short-term funds for certain U.S. and international operations are
obtained through issuance of commercial paper, short-term notes
payable to banks and bank overdrafts.
At December 31, 1994, Dana had $25.0 of commercial paper out-
standing. Dana Credit Corporation (DCC), a wholly-owned subsidiary
of DFHI, had commercial paper issued in the amount of $73.5 at
December 31, 1994. Dana and DCC have committed commercial paper
back-up lines of credit in the amount of $360.0 and $250.0, respectively,
with various U.S. and international banks. Compensating balances and
facility fees are not material and no borrowings were made against
these committed commercial paper back-up lines of credit in 1994.
Committed bank borrowing lines are utilized in addition to the
committed lines of credit that back outstanding commercial paper.
DCC and DFHI had borrowings of $11.0 and $85.0, respectively, against
their committed bank borrowing lines at December 31, 1994. DCC and
DFHI had committed bank borrowing lines of $18.8 and $85.0, respec-
tively, at December 31, 1994.
At December 31, 1994, Dana, DCC and DFHI had borrowings
against their uncommitted bank lines in the amounts of $70.0, $89.0
and $60.0, respectively, for U.S. operations. Dana, including its inter-
national subsidiaries, and DCC had borrowings of $165.8 and $3.7,
respectively, for international operations against uncommitted bank
lines at December 31, 1994. Dana and DCC had uncommitted bank
lines for both U.S. and international borrowings in the amount of
$770.0, and $378.5, respectively, for which no compensating balances
or fees are required.
Selected details of short-term borrowings are as follows:
- --------------------------------------------------------------------------------
Weighted average
Amount interest rate
- --------------------------------------------------------------------------------
Balance at December 31, 1993 $ 474.1 5.1%
Average during 1993 340.0 4.6%
Maximum during 1993 (month end) 474.1 5.1%
BALANCE AT DECEMBER 31, 1994 $ 583.1 6.4%
AVERAGE DURING 1994 585.6 5.2%
MAXIMUM DURING 1994 (MONTH END) 651.3 5.4%
LONG-TERM DEBT
================================================================================
December 31
1993 1994
- --------------------------------------------------------------------------------
Corporate indebtedness -
Unsecured notes payable, fixed rates,
4.90%-9.00%, due 1995 to 1998 $ 609.3 $ 517.0
5 7/8% convertible debentures,
due June 15, 2000 (face amount $3.3) 1.9
Various industrial revenue bonds 9.0 4.2
Other 3.3 3.1
Diamond Financial Holdings, Inc.
indebtedness -
Various notes payable, unsecured,
variable rates, 5.94%-7.22%, due
1995 to 1998 316.7 425.5
Various notes payable, unsecured,
fixed rates, 5.53%-9.99%, due
1995 to 1998 152.2 183.0
Securitized borrowings, 3.26%,
due 1994 36.0
Various notes payable, secured by
first mortgages on real estate 16.6 4.9
Various notes payable, non recourse
to issuer, 7.20%-12.05%, due 1994
to 2007 27.2 31.6
Indebtedness of other consolidated
subsidiaries 35.2 17.2
================================================================================
$1,207.4 $1,186.5
================================================================================
At December 15, 1993, the final day the 5 7/8% debentures could be
converted, holders of $146.7 principal amount of debentures had con-
verted their debentures into 5,818,624 shares of Dana common stock.
The balance of the debentures were redeemed at par on March 1, 1994.
During 1993, DCC obtained financing as part of a lease securitization
facility. Under the facility, an interest in certain lease receivables was
transferred to a third-party investor as support for the financing
received. Financing provided under the facility amortized over the life
of the assets transferred, had variable pricing based on the commercial
paper composite and required payment by DCC of monthly adminis-
tration fees. The securitized borrowing fully amortized in 1994.
lnterest paid on short-term and long-term debt was $178.6, $134.0
and $114.7 during 1992, 1993 and 1994, respectively.
The aggregate amounts of maturities of all long-term debt for each
of the five years succeeding December 31, 1994, are as follows: 1995,
$316.8; 1996, $332.2; 1997, $340.4; 1998, $171.9 and 1999, $5.5.
DERIVATIVE FINANCIAL INSTRUMENTS
================================================================================
The Company enters into various types of interest rate and foreign
currency agreements but does not trade in derivative financial instru-
ments. Gains and losses relating to qualifying hedges of finn commitments
or anticipated transactions are deferred and recognized as adjustments
of carrying amounts when the hedged transaction occurs. lnterest rate
swaps and caps are primarily used to manage exposure to fluctuation
in interest rates. Differentials paid or received on interest rate agree-
ments are accrued and recognized as adjustments to interest expense.
Premiums paid on interest rate caps are amortized to interest expense
over the term of the agreement and unamortized premiums are includ-
ed in other assets.
Under interest rate swap agreements Dana agrees with other parties
to exchange, at specific intervals, the difference between fixed rate and
floating rate interest amounts calculated by reference to an agreed
notional amount. At December 31, 1994, Dana was committed to pay
an average fixed rate of 6.8% and receive a variable rate of 6.4% on
notional amounts of $95.4. The notional amounts of interest rate swaps
expire as follows: 1995, $8.6; 1996, $26.8 and 1998, $60.0.
DCC was committed to pay an average fixed rate of 6.7% and
receive a variable rate of 5.9% on notional amounts of $283.8 and
receive an average fixed rate of 5.2% and pay an average variable rate
of 5.9% on notional amounts of $40.0. DCC's notional amounts of
interest rate swaps expire as follows: 1995, $87.5; 1996, $110.7; 1997,
$40.7; 1998, $15.0 and 2000, $70.0.
DCC also utilizes interest rate cap agreements to reduce the impact
of changes in interest rates. At December 31, 1994, a cap agreement on
$120.0 of LIBOR (London Interbank Offered Rate) - based variable
long-term debt entitles DCC to receive the amounts, if any, by which
actual three month LIBOR rates exceed 7.0% on specified quarterly
dates through 1995.
To reduce its interest rate obligations under an existing swap agree-
ment having a fixed rate of 8.35% and a notional amount of $70.0 while
concurrently reducing its interest rate risk associated with financing
certain longer-term assets, DCC granted the counterparty an option,
expiring in 2000, to extend the original maturity to 2007 at a fixed rate
to DCC of 9.0%.
Certain subsidiaries have transactions in currencies other than their
functional currencies and from time to time enter into forward and
option contracts to hedge the purchase of inventory or to sell non-
functional currency receipts. Currency forward and option contracts in
the aggregate are not material.
27
12
COMMENTS ON FINANCIAL STATEMENTS
IN MILLIONS DANA CORPORATION
================================================================================
LOANS RECEIVABLE
================================================================================
Loans receivable consist primarily of loans secured by first mortgages
on real property.
The components of loans receivable are as follows:
- --------------------------------------------------------------------------------
December 31
1993 1994
- --------------------------------------------------------------------------------
First mortgage loans -
business properties $ 57.4 $ 43.3
Financing to partnership
affiliates 28.4 34.8
First mortgage loans -
residential properties 13.1 9.9
Revolving loans secured by
accounts receivable and
inventory 6.5
Other loans 29.7 32.7
================================================================================
135.1 120.7
Less: Allowance for loan losses 14.5 5.6
- --------------------------------------------------------------------------------
$120.6 $115.1
================================================================================
ALLOWANCE FOR LOSSES ON LOANS RECEIVABLE
================================================================================
Provisions for losses on loans receivable are determined on the basis
of loss experience and assessment of prospective risk. Resulting adjust-
ments to the allowance for losses are made to adjust loans receivable to
an estimated collectible amount. Income recognition is generally dis-
continued on accounts which are contractually past due and where no
payment activity has occurred within 120 days. Accounts are charged
against the allowance for losses when determined to be uncollectible.
SFAS No. 114, "Accounting by Creditors for Impairment of a Loan,"
is effective for fiscal years beginning after December 15, 1994. This
standard requires creditors to evaluate the collectability of both the
contractual interest and contractual principal of receivables when eval-
uating the need for a loss accrual. The Company will adopt this stan-
dard effective January 1, 1995, as required, and does not anticipate that
adoption will have a material effect on the consolidated financial statements.
LEASE FINANCING
================================================================================
Lease financing consists of direct financing leases, leveraged leases
and equipment on operating leases. Income on direct financing leases
is recognized by a method which produces a constant periodic rate of
return on the outstanding investment in the lease. Income on leveraged
leases is recognized by a method which produces a constant rate of
return on the outstanding investment in the lease net of the related
deferred tax liability in the years in which the net investment is positive.
Initial direct costs are deferred and amortized using the interest method
over the lease period. Equipment under operating leases is recorded at
cost, net of accumulated depreciation. Income from operating leases is
recognized ratably over the term of the leases.
Lease financing consisted of the following components:
- --------------------------------------------------------------------------------
December 31
1993 1994
- --------------------------------------------------------------------------------
Direct financing leases $574.0 $544.5
Leveraged leases 283.7 393.9
Property on operating leases, net
of accumulated depreciation 29.9 33.4
Allowance for credit losses (38.3) (40.8)
- --------------------------------------------------------------------------------
$849.3 $931.0
================================================================================
The components of the net investment in direct financing leases are
as follows:
- --------------------------------------------------------------------------------
December 31
1993 1994
- --------------------------------------------------------------------------------
Total minimum lease payments $622.7 $600.7
Residual values 83.2 70.3
Deferred initial direct costs 9.3 10.3
- --------------------------------------------------------------------------------
715.2 681.3
Less: Unearned income 141.2 136.8
- --------------------------------------------------------------------------------
$574.0 $544.5
================================================================================
The following is a schedule by year of total minimum lease payments
receivable on direct financing leases as of December 31, 1994:
- --------------------------------------------------------------------------------
Year Ending December 31:
1995 $248.8
1996 155.8
1997 82.5
1998 44.1
1999 24.7
Later years 44.8
- --------------------------------------------------------------------------------
Total minimum lease payments receivable $600.7
================================================================================
The components of the net investment in leveraged leases are as
follows:
================================================================================
December 31
1993 1994
- --------------------------------------------------------------------------------
Rentals receivable $2,884.3 $4,115.0
Residual values 252.2 301.4
Non recourse debt service (2,401.4) (3,378.9)
Unearned income (439.4) (629.9)
Deferred investment
tax credit (12.0) (13.7)
- --------------------------------------------------------------------------------
283.7 393.9
Less: Deferred taxes arising from
leveraged leases 119.0 157.6
- --------------------------------------------------------------------------------
$ 164.7 $ 236.3
================================================================================
ALLOWANCE FOR LOSSES ON LEASE FINANCING
================================================================================
Provisions for losses on lease financing receivables are determined
on the basis of loss experience and assessment of prospective risk.
Resulting adjustments to the allowance for losses are made to adjust
net investment in lease financing to an estimated collectible amount.
Income recognition is generally discontinued on accounts which are
contractually past due and where no payment activity has occurred
within 120 days. Accounts are charged against the allowance for losses
when determined to be uncollectible. Accounts for which equipment
repossession has commenced as the primary means of recovery are
classified within other assets at their estimated realizable value.
28
13
COMMENTS ON FINANCIAL STATEMENTS
IN MILLIONS EXCEPT PER SHARE AMOUNTS DANA CORPORATION
================================================================================
INVESTMENTS AND OTHER ASSETS
================================================================================
Investments and other assets consisted of the following components:
- --------------------------------------------------------------------------------
December 31
1993 1994
- --------------------------------------------------------------------------------
Investments at equity $194.4 $169.0
Goodwill 168.0 187.3
Real estate held for sale 92.2 49.2
Intangible pension asset 80.1 83.9
Loans receivable 120.6 115.1
Other 191.0 188.7
- --------------------------------------------------------------------------------
$846.3 $793.2
================================================================================
INVENTORIES
================================================================================
Inventories are valued at the lower of cost or market. Cost is
determined generally on the last-in, first-out basis for U.S. inventories
and on the first-in, first-out or average cost basis for international
inventories.
If all inventories were valued at replacement cost, inventories would
be increased by $96.6 and $106.5 at December 31, 1993 and 1994,
respectively.
Dana changed its method of accounting for inventory effective
January 1, 1992, to include in inventory certain production-related costs
previously charged directly to expense. This change in accounting prin-
ciple results in a better matching of costs against related revenues. The
effect of this change in accounting increased inventories by $23.0 and
net income by $12.9 ($.15 per share) in 1992.
PROPERTIES AND DEPRECIATION
================================================================================
Property, plant and equipment is valued at historical costs.
Depreciation is computed over the estimated useful lives of property,
plant and equipment using primarily the straight-line method for
financial reporting purposes and primarily acceIerated depreciation
methods for federal income tax purposes.
Property, plant and equipment consisted of the following:
- --------------------------------------------------------------------------------
December 31
1993 1994
- --------------------------------------------------------------------------------
Land and improvements to land $ 51.6 $ 50.4
Buildings and building fixtures 450.2 510.7
Machinery and equipment 2,027.5 2,235.9
- --------------------------------------------------------------------------------
2,529.3 2,797.0
Less: Accumulated depreciation 1,387.2 1,449.8
- --------------------------------------------------------------------------------
$1,142.1 $1,347.2
================================================================================
STATEMENT OF CASH FLOWS
================================================================================
For purposes of reporting cash flows, the Company considers highly
liquid investments with a maturity of three months or less when pur-
chased to be cash equivalents.
Noncash investing and financing activities in 1992 include the return
of $181.0 face amount U.S. Treasury Notes to satisfy a securities lending
obligation entered into in 1991. During 1993, holders of 5 7/8% deben-
tures converted their debentures into shares of Dana common stock
resulting in a noncash increase to shareholders' equity of $94.9.
ENVIRONMENTAL COMPLIANCE
AND REMEDIATION
================================================================================
Environmental expenditures that relate to current operations are
expensed or capitalized as appropriate. Expenditures that relate to an
existing condition caused by past operations and do not contribute to
current or future revenue generation, are expensed. Liabilities are
recorded when environmental assessments and/or remedial efforts are
probable and the costs can be reasonably estimated. Estimated costs are
based upon enacted laws and regulations, existing technology and the
most probable method of remediation. The costs determined are not
discounted and exclude the effects of inflation and other societal and
economic factors. Where the cost estimates result in a range of equally
probable amounts, the lower end of the range is accrued.
COMMITMENTS AND CONTINGENCIES
================================================================================
At December 31, 1994, the Company had purchase commitments for
building and equipment aggregating approximately $114.6. Future
minimum rental commitments under operating leases aggregate $285.4
with rental payments during the five succeeding years of $46.0, $41.0,
$35.4, $29.0 and $21.9, respectively. Net rental expense amounted to
$53.0, $56.3 and $65.8 for 1992, 1993 and 1994, respectively.
Through option arrangements, DCC has agreed to purchase certain
leased equipment at specified prices representing a portion of the
expected residual value. The holder's exercise of the option to sell the
equipment to DCC is considered by management to be unlikely as the
aggregate option prices at December 31, 1994 of $80.2 are significantly
below the estimated residual value of the equipment on the exercise
dates of $284.1. No additional commitments to purchase leased equip-
ment at specific prices have been undertaken since 1991 and the
remaining options expire in 1995 and 1996.
The Company and its consolidated subsidiaries are parties to vari-
ous pending judicial and administrative proceedings arising in the
ordinary course of business. These include, among others, proceedings
based on product liability claims and alleged violations of various
environmental laws.
The Company is also defending a law suit brought by the U.S.
Department of Justice against Dana, Warner Electric Brake and Clutch
Company, Inc. (Warner) and Beaver Precision Products, Inc. (Beaver) in
U.S. District Court, Eastern District of Michigan alleging overcharging
on government contracts or subcontracts awarded to Beaver during the
1980's. Beaver was a subsidiary of Warner when Dana acquired Warner
in January 1985 and the two companies were later merged into Dana.
Dana sold the Beaver operations in 1991 but retained financial respon-
sibility for the majority of the damages alleged in the complaint. Dana
is defending this suit vigorously and the litigation issues and alleged
damages continue to be actively discussed and evaluated by Dana and
the government.
Management and its legal counsel periodically review the probable
outcome of pending proceedings, the costs and expenses reasonably
expected to be incurred, the availability and limits of the Company's
insurance coverage, and the Company's established accruals for unin-
sured liabilities. While the outcome of pending proceedings cannot be
predicted with certainty, management believes, based on these reviews
and the information currently available, that any liabilities that may
result from these proceedings are not reasonably likely to have a mater-
ial effect on the Company's liquidity, financial condition or results of
operations.
29
14
COMMENTS ON FINANCIAL STATEMENTS
IN MILLIONS DANA CORPORATION
================================================================================
ESTIMATED INCOME TAXES
================================================================================
Effective January 1, 1992, Dana prospectively adopted SFAS No. 109,
"Accounting for Income Taxes," which did not have a material effect on
1992 results of operations.
Current tax liabilities and assets are recognized for the estimated
taxes payable or refundable on the tax returns for the current year.
Deferred tax liabilities or assets are recognized for the estimated future
tax effects attributable to temporary differences and carryforwards that
result from events that have been recognized in the financial statements
or tax returns. The measurement of current and deferred tax liabilities
and assets is based on provisions of enacted tax laws. Deferred tax
assets are reduced, if necessary, by the amount of any tax benefits that
are not expected to be realized. Dana uses the "flow-through" method
of accounting for investment tax credits, except for investment tax
credits arising from leveraged leases and certain direct financing leases
for which the deferred method is used for financial statement purposes.
Income tax expense (benefit) consisted of the following components:
- --------------------------------------------------------------------------------
Year Ended December 31
1992 1993 1994
- --------------------------------------------------------------------------------
Current
U.S. Federal $ 47.2 $ 57.2 $ 69.0
U.S. State and Local 11.2 26.5 39.2
International 9.1 14.2 31.5
- --------------------------------------------------------------------------------
67.5 97.9 139.7
- --------------------------------------------------------------------------------
Deferred
U.S. Federal (69.7) (6.6) 26.3
International .1 (1.7) (8.6)
- --------------------------------------------------------------------------------
(69.6) (8.3) 17.7
- --------------------------------------------------------------------------------
Total expense (benefit) $ (2.1) $ 89.6 $157.4
================================================================================
Deferred income taxes result from temporary differences which arise
as a result of differences between the amounts of reported assets and
liabilities in the financial statements and such amounts as measured by
tax laws and regulations. Deferred tax benefits (liabilities) are comprised
of the following:
- --------------------------------------------------------------------------------
Year Ended December 31
1992 1993 1994
- --------------------------------------------------------------------------------
Postretirement benefits
other than pensions $352.7 $367.2 $360.6
Postemployment benefits 36.9 35.2
Expense accruals 97.9 126.8 120.0
Inventory reserves 6.8 1.1 4.3
Pension accruals 19.5
Other 16.6 22.8 6.8
- --------------------------------------------------------------------------------
Deferred tax benefits 474.0 554.8 546.4
- --------------------------------------------------------------------------------
Depreciation - non-leasing (108.9) (100.1) (105.2)
Leasing activities (177.0) (179.5) (211.5)
Pension prepayments (14.7) (.9)
Other (29.8) (16.7) (3.1)
- --------------------------------------------------------------------------------
Deferred tax liabilities (330.4) (297.2) (319.8)
- --------------------------------------------------------------------------------
Alternative minimum
tax recoverable 57.0 18.6
- --------------------------------------------------------------------------------
Net deferred tax benefits $200.6 $276.2 $226.6
- --------------------------------------------------------------------------------
The Company has a history of earnings and has traditionally been a
taxpayer in the U.S. Consequently, the Company expects to realize the
deferred tax assets in the future and, accordingly, no valuation
allowance has been recorded. As of December 31, 1994, all available
alternative minimum tax recoverable has been utilized to offset the
regular income tax liability. lncome taxes paid during 1992, 1993 and
1994 amounted to $50.5, $46.2 and $104.3, respectively.
The effective tax rates differ from the U.S. Federal income tax rate for the following reasons:
- ------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31
1992 1993 1994
- ------------------------------------------------------------------------------------------------------------------------------
% of % of % OF
pretax pretax PRETAX
Amount loss Amount income AMOUNT INCOME
- ------------------------------------------------------------------------------------------------------------------------------
Computed "expected" tax expense $ 8.9 34.0% $79.8 35.0% $137.0 35.0%
- ------------------------------------------------------------------------------------------------------------------------------
Increase (reductions) in taxes
resulting from:
- ------------------------------------------------------------------------------------------------------------------------------
International income 2.6 9.8 (2.8) (1.2) (4.2) (1.1)
- ------------------------------------------------------------------------------------------------------------------------------
Capital loss carryforward (10.7) (40.6)
- ------------------------------------------------------------------------------------------------------------------------------
Investment tax credits (2.6) (9.9) (1.6) (.7) (1.3) (.3)
- ------------------------------------------------------------------------------------------------------------------------------
Amortization of goodwill 2.7 10.2 2.9 1.2 2.9 .7
- ------------------------------------------------------------------------------------------------------------------------------
Effect of rate change on deferred
taxes (5.2) (2.3)
- ------------------------------------------------------------------------------------------------------------------------------
Disposition of assets held for sale (8.7) (32.9)
- ------------------------------------------------------------------------------------------------------------------------------
State and local income taxes, net
of Federal income tax benefit 7.4 27.9 17.2 7.6 25.5 6.5
- ------------------------------------------------------------------------------------------------------------------------------
Miscellaneous items (1.7) (6.5) (.7) (.3) (2.5) (.6)
- ------------------------------------------------------------------------------------------------------------------------------
Estimated taxes on income $(2.1) (8.0)% $89.6 39.3% $157.4 40.2%
==============================================================================================================================
30
15
COMMENTS ON FINANCIAL STATEMENTS
IN MILLIONS DANA CORPORATION
================================================================================
FINANCIAL INSTRUMENTS
================================================================================
The reported fair values of financial instruments are based on a variety
of factors. In certain cases, fair values represent quoted market prices for
identical or comparable instruments. In other cases, fair values have been
estimated based on assumptions conceming the amount and timing of
estimated future cash flows and assumed discount rates reflecting varying
degrees of credit risk. Accordingly, the fair values may not represent
actual values of the financial instruments that could have been realized
as of December 31, 1993 and 1994, or that will be realized in the future.
The estimated fair values of Dana's financial instruments are as
follows:
- -------------------------------------------------------------------------------------------------------------
December 31
1993 1994
- -------------------------------------------------------------------------------------------------------------
Carrying Fair CARRYING FAIR
Amount Value AMOUNT VALUE
- -------------------------------------------------------------------------------------------------------------
FINANCIAL ASSETS
- -------------------------------------------------------------------------------------------------------------
Cash and marketable securities $ 77.6 $ 77.6 $ 112.2 $ 112.2
- -------------------------------------------------------------------------------------------------------------
Loans receivable 135.1 120.7
- -------------------------------------------------------------------------------------------------------------
Less: Allowance for loan losses 14.5 5.6
- -------------------------------------------------------------------------------------------------------------
Net loans 120.6 120.1 115.1 114.8
- -------------------------------------------------------------------------------------------------------------
FINANCIAL LIABILITIES
- -------------------------------------------------------------------------------------------------------------
Short-term debt 474.1 474.1 583.1 583.1
- -------------------------------------------------------------------------------------------------------------
Long-term debt 1,207.4 1,247.1 1,186.5 1,195.9
- -------------------------------------------------------------------------------------------------------------
Security deposits - leases 21.5 20.3 14.8 13.3
- -------------------------------------------------------------------------------------------------------------
Deferred funding commitments under
leveraged leases 7.6 7.9 7.6 7.5
- -------------------------------------------------------------------------------------------------------------
UNRECOGNIZED FINANCIAL INSTRUMENTS
- -------------------------------------------------------------------------------------------------------------
Interest rate derivatives:
- -------------------------------------------------------------------------------------------------------------
Assets .4 7.5
- -------------------------------------------------------------------------------------------------------------
Liabilities (24.6) (8.5)
- -------------------------------------------------------------------------------------------------------------
BUSINESS SEGMENTS
================================================================================
Dana operates principally in three business segments: Vehicular,
Industrial and Lease Financing. The Vehicular segment consists pri-
marily of the manufacturing and marketing of axles, structural compo-
nents, transmissions, joints and shafts, clutches and engine parts (such
as pistons, piston rings, filters and gaskets). The Industrial segment
manufactures and markets various products, including those for off-
highway motor vehicles. The Lease Financing segment consists of
Diamond Financial Holdings, Inc., a wholly-owned subsidiary whose
primary operating subsidiaries are engaged in leasing and finance
operations.
Lease financing revenue includes lease financing income, fees and
interest. Other income includes dividends and interest. Other expense
includes interest and corporate expenses. Corporate assets include
cash, marketable securities, accounts receivable and investments
(excluding assets which can be identified to lease financing).
The "Other International" geographic area is comprised primarily of
Brazil and Canada, neither of which exceeds 10% of the consolidated
amounts. Interarea transfers between countries are transferred at the
prevailing market price. Export sales from the United States to cus-
tomers outside the United States amounted to $418.9 in 1992, $385.4 in
1993 and $430.7 in 1994. Total export sales (including sales to Dana's
international subsidiaries which are eliminated for financial statement
presentation) were $555.2, $526.2 and $587.6 in 1992, 1993 and 1994,
respectively.
Worldwide sales to Ford Motor Company and subsidiaries amount-
ed to $824.1, $963.7 and $1,082.9 in 1992, 1993 and 1994, respectively,
which represented 17%, 18% and 16% of Dana's consolidated sales.
Sales to Chrysler Corporation and subsidiaries in 1992, 1993 and 1994
amounted to $454.3, $605.9 and $815.7, respectively, representing 9%,
11% and 12% of Dana's consolidated sales. Sales to Ford and Chrysler
were primarily from the Company's Vehicular segment. No other
customer accounted for more than 10% of Dana's consolidated sales.
31
16
COMMENTS ON FINANCIAL STATEMENTS
IN MILLIONS DANA CORPORATION
- ------------------------------------------------------------------------------------------------------------------------------------
BUSINESS SEGMENTS (CONT'D.)
====================================================================================================================================
Financial information concerning operations by industry segment is as follows:
- ------------------------------------------------------------------------------------------------------------------------------------
LEASE
VEHICULAR INDUSTRIAL FINANCING CONSOLIDATED
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1992
- ------------------------------------------------------------------------------------------------------------------------------------
Sales to customers $3,923.2 $ 940.0 $ 9.0 $4,872.2
- ------------------------------------------------------------------------------------------------------------------------------------
Lease financing revenue 144.0 144.0
- ------------------------------------------------------------------------------------------------------------------------------------
Total revenue $3,923.2 $ 940.0 $ 153.0 $5,016.2
====================================================================================================================================
Operating income (loss) $ 251.6 $ 34.4 $ (22.3) $ 263.7
=====================================================================================================
Other income 19.9
- ------------------------------------------------------------------------------------------------------------------------------------
Other expense (257.3)
- ------------------------------------------------------------------------------------------------------------------------------------
Income before income taxes $ 26.3
====================================================================================================================================
Assets identified to segments $1,843.7 $ 489.7 $1,271.6 $3,605.0
=====================================================================================================
Corporate assets 737.9
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets $4,342.9
====================================================================================================================================
Depreciation $ 130.5 $ 40.0 $ 3.8
====================================================================================================================================
Capital expenditures $ 100.9 $ 24.1 $ 3.0
====================================================================================================================================
Year Ended December 31, 1993
- ------------------------------------------------------------------------------------------------------------------------------------
Sales to customers $4,499.8 $ 957.1 $ 3.2 $5,460.1
- ------------------------------------------------------------------------------------------------------------------------------------
Lease financing revenue 115.4 115.4
- ------------------------------------------------------------------------------------------------------------------------------------
Total revenue $4,499.8 $ 957.1 $ 118.6 $5,575.5
====================================================================================================================================
Operating income $ 424.0 $ 39.9 $ 4.0 $ 467.9
=====================================================================================================
Other income 12.0
- ------------------------------------------------------------------------------------------------------------------------------------
Other expense (252.0)
- ------------------------------------------------------------------------------------------------------------------------------------
Income before income taxes $ 227.9
====================================================================================================================================
Assets identified to segments $1,823.9 $ 441.7 $1,310.3 $3,575.9
=====================================================================================================
Corporate assets 1,056.0
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets $4,631.9
====================================================================================================================================
Depreciation $ 131.4 $ 33.7 $ 3.0
====================================================================================================================================
Capital expenditures $ 166.5 $ 35.9 $ 2.2
====================================================================================================================================
YEAR ENDED DECEMBER 31, 1994
- ------------------------------------------------------------------------------------------------------------------------------------
SALES TO CUSTOMERS $5,298.5 $1,308.9 $ 6.4 $6,613.8
- ------------------------------------------------------------------------------------------------------------------------------------
LEASE FINANCING REVENUE 139.5 139.5
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL REVENUE $5,298.5 $1,308.9 $ 145.9 $6,753.3
====================================================================================================================================
OPERATING INCOME $ 520.1 $ 56.9 $ 11.6 $ 588.6
=====================================================================================================
OTHER INCOME 9.1
- ------------------------------------------------------------------------------------------------------------------------------------
OTHER EXPENSE (206.1)
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES $ 391.6
====================================================================================================================================
ASSETS IDENTIFIED TO SEGMENTS $1,977.6 $ 572.8 $1,387.4 $3,937.8
=====================================================================================================
CORPORATE ASSETS 1,173.0
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $5,110.8
====================================================================================================================================
DEPRECIATION $ 135.7 $ 37.0 $ 3.0
====================================================================================================================================
CAPITAL EXPENDITURES $ 276.0 $ 53.3 $ 3.4
====================================================================================================================================
32
17
COMMENTS ON FINANCIAL STATEMENTS
IN MILLIONS DANA CORPORATION
====================================================================================================================================
BUSINESS SEGMENTS (CONT'D.)
====================================================================================================================================
Financial information concerning operations by principal geographic area is as follows:
- ------------------------------------------------------------------------------------------------------------------------------------
ADJUSTMENTS
UNITED OTHER AND
STATES EUROPE INTERNATIONAL ELIMINATIONS TOTAL
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1992
- ------------------------------------------------------------------------------------------------------------------------------------
Sales to customers $3,571.0 $ 586.2 $ 715.0 $4,872.2
- ------------------------------------------------------------------------------------------------------------------------------------
Lease financing revenue 124.7 12.9 6.4 144.0
- ------------------------------------------------------------------------------------------------------------------------------------
Interarea transfers 136.3 2.3 82.7 $ (221.3)
- ------------------------------------------------------------------------------------------------------------------------------------
$3,832.0 $ 601.4 $ 804.1 $ (221.3) $5,016.2
====================================================================================================================================
Operating income $ 190.3 $ 14.3 $ 59.1 $ 263.7
- ------------------------------------------------------------------------------------------------------------------------------------
Other income 19.9 19.9
- ------------------------------------------------------------------------------------------------------------------------------------
Other expense (217.6) (10.6) (29.1) (257.3)
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) before income
taxes $ (7.4) $ 3.7 $ 30.0 $ 26.3
====================================================================================================================================
Assets identified $2,881.2 $ 293.4 $ 430.4 $3,605.0
- ------------------------------------------------------------------------------------------------------------------------------------
Corporate assets 400.5 128.3 209.1 737.9
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets $3,281.7 $ 421.7 $ 639.5 $4,342.9
====================================================================================================================================
Year Ended December 31, 1993
- ------------------------------------------------------------------------------------------------------------------------------------
Sales to customers $4,132.3 $ 511.3 $ 816.5 $5,460.1
- ------------------------------------------------------------------------------------------------------------------------------------
Lease financing revenue 93.8 16.3 5.3 115.4
- ------------------------------------------------------------------------------------------------------------------------------------
Interarea transfers 140.8 3.7 81.8 $ (226.3)
- ------------------------------------------------------------------------------------------------------------------------------------
$4,366.9 $ 531.3 $ 903.6 $ (226.3) $5,575.5
====================================================================================================================================
Operating income $ 370.9 $ 1.8 $ 95.2 $ 467.9
- ------------------------------------------------------------------------------------------------------------------------------------
Other income 12.0 12.0
- ------------------------------------------------------------------------------------------------------------------------------------
Other expense (216.3) (8.7) (27.0) (252.0)
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) before income
taxes $ 166.6 $ (6.9) $ 68.2 $ 227.9
====================================================================================================================================
Assets identified $2,717.1 $ 403.3 $ 455.5 $3,575.9
- ------------------------------------------------------------------------------------------------------------------------------------
Corporate assets 697.0 140.5 218.5 1,056.0
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets $3,414.1 $ 543.8 $ 674.0 $4,631.9
====================================================================================================================================
YEAR ENDED DECEMBER 31, 1994
- ------------------------------------------------------------------------------------------------------------------------------------
SALES TO CUSTOMERS $4,968.3 $ 713.0 $ 932.5 $6,613.8
- ------------------------------------------------------------------------------------------------------------------------------------
LEASE FINANCING REVENUE 104.2 26.7 8.6 139.5
- ------------------------------------------------------------------------------------------------------------------------------------
INTERAREA TRANSFERS 156.8 7.5 104.6 $ (268.9)
- ------------------------------------------------------------------------------------------------------------------------------------
$5,229.3 $ 747.2 $1,045.7 $ (268.9) $6,753.3
====================================================================================================================================
OPERATING INCOME $ 462.0 $ 14.0 $ 112.6 $ 588.6
- ------------------------------------------------------------------------------------------------------------------------------------
OTHER INCOME 9.1 9.1
- ------------------------------------------------------------------------------------------------------------------------------------
OTHER EXPENSE (170.6) (13.2) (22.3) (206.1)
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES $ 300.5 $ .8 $ 90.3 $ 391.6
====================================================================================================================================
ASSETS IDENTIFIED $2,836.5 $ 577.5 $ 523.8 $3,937.8
- ------------------------------------------------------------------------------------------------------------------------------------
CORPORATE ASSETS 792.2 96.5 284.3 1,173.0
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $3,628.7 $ 674.0 $ 808.1 $5,110.8
====================================================================================================================================
33
18
Comments on Financial Statements
in millions DANA CORPORATION
- --------------------------------------------------------------------------------
SIGNIFICANT SUBSIDIARY
- --------------------------------------------------------------------------------
DFHI is a wholly-owned subsidiary whose primary operating subsidiaries are
engaged in leasing and finance operations. DFHI is included in
Dana's consolidated financial statements.
The majority of the assets, liabilities and offices of DSL and its mortgage
banking business were sold in 1992. Certain assets (primarily commercial loans
and real estate) were retained by DFHI and are included in the consolidated
financial statements.
A summary of DFHI's financial position and a summary of results of
operations are as follows:
- --------------------------------------------------------------------------------
December 31
FINANCIAL POSITION 1993 1994
- --------------------------------------------------------------------------------
ASSETS
- --------------------------------------------------------------------------------
Cash $ 10.5 $ 5.2
Loans receivable 120.6 115.1
Lease financing 924.5 1,061.3
Other assets 254.7 205.9
- --------------------------------------------------------------------------------
Total Assets $1,310.3 $1,387.5
- --------------------------------------------------------------------------------
LIABILITIES AND
SHAREHOLDER'S EQUITY
- --------------------------------------------------------------------------------
Notes payable $ 867.5 $ 967.2
Other liabilities 347.8 328.3
Shareholder's equity 95.0 92.0
- --------------------------------------------------------------------------------
Total Liabilities and
Shareholder's Equity $1,310.3 $1,387.5
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Year Ended December 31
RESULTS OF OPERATIONS 1992 1993 1994
- --------------------------------------------------------------------------------
Revenue from products
and services $185.1 $156.8 $184.4
- --------------------------------------------------------------------------------
Interest expense 71.8 56.8 59.4
Cost of sales 11.9 3.3 10.2
General and administrative
expenses 123.7 92.7 103.2
- --------------------------------------------------------------------------------
207.4 152.8 172.8
- --------------------------------------------------------------------------------
Income (loss) before income
taxes (22.3) 4.0 11.6
Estimated income tax
benefit (provision) 28.5 (.3) (2.5)
- --------------------------------------------------------------------------------
Income before equity in
earnings of affiliates 6.2 3.7 9.1
Equity in earnings of
affiliates 3.9 3.2 5.3
- --------------------------------------------------------------------------------
NET INCOME $10.1 $ 6.9 $14.4
- --------------------------------------------------------------------------------
19
Management's Discussion and Analysis of Results
in millions
- --------------------------------------------------------------------------------
LIQUIDITY AND CAPITAL RESOURCES
- --------------------------------------------------------------------------------
Net cash flows from operating activities amounted to $466 in 1994.
This cash flow has allowed Dana to support its strong sales growth by
providing a substantial portion of the funds required for working capital
and capital spending.
Capital expenditures for property, plant and equipment totaled $337 in
1994, compared to $204 in 1993. 1995 capital expenditures are projected
to be comparable to 1994 and the majority was uncommitted at
December 31, 1994. The higher levels of capital spending in 1994 and
1995 are directed in part towards increasing production capacity of cer-
tain products to meet customer demand. ln addition, the Company con-
tinues to commit capital for the increased use of advanced technology to
improve manufacturing processes and the quality of existing products as
well as for the development of new products.
Dana Corporation and its consolidated subsidiaries (Dana) had year
end 1994 short-term debt of $583, which is up from $474 in 1993. This
$109 increase in short-term debt, which was partially offset by a decrease
in long-term debt, is due to the substantial increase in 1994 sales and the
related growth in accounts receivable, inventory and capital investment.
U.S. and international consolidated short-term borrowings averaged $586
at an average rate of 5.2% during 1994, compared to $340 at 4.6% during
1993. Dana, excluding financial subsidiaries Diamond Financial
Holdings, Inc. (DFHI) and Dana Credit Corporation (DCC), finances its
short-term debt through the issuance of commercial paper and bank bor-
rowings. To fund its working capital requirements, Dana (excluding
DFHI and DCC) had $360 in committed credit facilities available to back
up the issuance of commercial paper obligations and $770 in uncommit-
ted lines with banks for bank borrowings. At December 31, 1994, Dana
(excluding DFHI and DCC) had U.S. and international short-term bor-
rowings of $261 compared to $155 at year end 1993. This increase is
mainly due to long-term debt being replaced by short-term debt at more
favorable interest rates. DFHI obtains its short-term funds through bank
borrowings. DFHI's bank lines totaled $145 and at year end 1994 these
lines were fully utilized. DCC finances its short-term U.S. and interna-
tional debt requirements through the issuance of commercial paper and
bank direct borrowings. DCC had committed credit facilities for commer-
cial paper issuance in the amount of $250, committed bank lines of $19,
and uncommitted bank lines of $379. Against these credit lines, DCC had
$177 outstanding at December 31, 1994, a decrease of $107 from year end
1993. This short-term debt reduction at DCC was offset by an equivalent
increase in long-term debt.
Dana's consolidated long-term debt decreased $21 to $1,186 at year end
1994 from $1,207 in 1993. This debt reduction was offset by an increase in
short-term debt, as a portion of the maturities of long-term debt were
replaced by short-term debt. Dana's (excluding DFHI and DCC) long-
term debt at December 31, 1994, was $542 compared to $659 in 1993.
DFHI's long-term debt at December 31, 1994 was $5 which was down
from $17 in 1993. DCC's long-term debt at year end 1994 increased $108
to $640 as compared to $532 in 1993, with a corresponding reduction in
short-term debt.
In the normal course of business, management identifies operations
which are non-strategic and under-performing. Action Plans are then
developed for the downsizing, consolidation or closure of these opera-
tions. Upon approval of these plans, estimated costs of implementation
(inciuding employee benefits and other expenses incidental to the actions)
are charged to cost of sales. Of these charges recorded in 1992, 1993 and
1994, the Company had remaining accrued liabilities of $26 at December
31, 1994, compared to $57 as of December 31, 1993. Of the $26 liability
accrued at December 31, 1994, it is anticipated that $20 will be paid in
1995 and $6 in 1996. Dana expects that operations over the long term will
benefit from these realignment actions.
Dana's management and legal counsel have reviewed the legal pro-
ceedings arising in the ordinary course of business to which the Company
and its subsidiaries were parties as of December 31, 1994, including,
among others, those involving product liability claims and alleged viola-
tions of environmental laws. The Company estimates its contingent envi-
ronmental and product liabilities based upon the most probable method
of remediation or outcome considering currently enacted laws and
34
20
Management's Discussion and Analysis of Results
in millions DANA CORPORATION
- --------------------------------------------------------------------------------
LIQUIDITY AND CAPITAL RESOURCES (Cont'd.)
- --------------------------------------------------------------------------------
regulations and existing technology. Measurement of liabilities is made on
an undiscounted basis and excludes the effects of inflation and other soci-
etal and economic factors. In those cases where there is a range of equally
probable remediation methods or outcomes, the Company accrues at the
lower end of the range, which at December 31, 1994, was $77 for product
liability claims costs (products) and $48 for environmental liability costs
(environmental), compared to $72 for products and $39 for environmental
at December 31, 1993. The difference between minimum and maximum
contingent liabilities, while not considered material, was $11 for products
and $5 for environmental at December 31, 1994 compared to $17 for prod-
ucts and $5 for environmental at December 31, 1993. Probable recoveries
of $61 for products and $6 for environmental from insurance or other
third parties have been recorded as assets at December 31, 1994, com-
pared to $54 for products and $6 for environmental at December 31, 1993.
The Company has concluded that any liabilities that may result from
these legal proceedings or the timing of the cash flows for these liabilities
will not have a material adverse effect on its liquidity, financial condition
or results of operations.
The Company is also a defendant in a 1992 lawsuit brought by the
Department of Justice alleging that a former Dana operation overcharged
the U.S. government on eighteen contracts or subcontracts awarded dur-
ing the 1980s. The complaint in the suit includes claims both for statutory
civil penalties and for damages. The damages, if proven, may be subject
either to doubling or trebling or to the accrual of interest. The govern-
ment has recently advised the Company that it intends to amend the
complaint to increase the damage demand from approximately $9 to
approximately $18. The Company is defending this case vigorously,
while continuing to engage in ongoing settlement negotiations with the
government in which the litigation issues and alleged damages are being
actively discussed and evaluated. It is not anticipated that the outcome of
this lawsuit will have a material adverse effect on the Company's liquidi-
ty, financial condition or results of operations.
Dana anticipates that net cash flows from operating activities, along
with currently available financing sources, will be sufficient to meet the
Company's funding requirements for 1995.
RESULTS OF OPERATIONS 1994 vs 1993
- --------------------------------------------------------------------------------
Dana Corporation achieved record sales of $6,610 in 1994, up $1,150
compared to $5,460 in 1993. This 21% growth was primarily the result of
unit volume increases experienced throughout the Company's worldwide
markets, particularly from the strength of its Vehicular segment's original
equipment (OE) markets and the effect of European acquisitions.
Dana's worldwide sales of Vehicular segment components and parts
used on automobiles, trucks, trailers, vans and sport utility vehicles
increased 18% in 1994 compared to 1993. The OE portion of this increase
was $652 (21%) in 1994 over 1993 while the aftermarket portion increased
$147 (10%). Dana's sales to the light truck OE market (its largest sales
contributor) increased $292 (18%) over 1993 levels primarily due to U.S.
demand for pickup trucks and sport utility vehicles. The Company's
1994 heavy truck OE component sales rose $225 (36%) over 1993 sales
reflecting higher U.S. production. Acquisitions made in the latter half of
1993 and early 1994 accounted for $142 of the sales increase in the
Vehicular segment.
Worldwide sales from Dana's Industrial segment, which includes sales
to the mobile off-highway equipment market, increased 37% in 1994 or
$352 over 1993, partially due to European acquisitions and continued
strength in the U.S. construction and agricultural machinery markets.
OE sales from the mobile off-highway portion of this segment increased
46% or $141 in 1994 over 1993 with acquisitions accounting for $22.
Industrial OE sales in 1994 improved 4% over 1993 with increases in the
U.S. partially offset by weakness for most of the year in Europe, although
improvements occurred in Europe's industrial markets in the latter
months of 1994. Mobile off-highway/industrial aftermarket sales
increased 12% in 1994 compared to 1993.
Dana sales from U.S. operations were $4,970 in 1994, an increase of 20%
from the $4,130 reported for 1993. The Company's sales to the U.S. light
truck OE market improved 21% over 1993 levels due to the increased
demand for pickup trucks, vans and sport utility vehicles for which Dana
supplies many key components. Dana's heavy truck component sales to
the U.S. OE market increased 41% in 1994 as North American production
reached its highest level in 15 years. Service parts sales to the U.S. after-
market grew 8% in 1994 over 1993 consisting of increases in auto distribu-
tion (5%), truck parts (10%) and mobile off-highway/industrial distribu-
tion (9%).
Dana sales from international operations were $1,640 in 1994, an
increase of 24% over the $1,330 of 1993. The $310 year on year increase is
principally due to the contribution of European acquisitions and vehicu-
lar unit volume improvements in South America and Canada. Sales from
Dana's South American operations increased 22% in 1994 over 1993 due
to higher export activities and a strong regional (Mercosur) economy.
Sales from the Company's Canadian subsidiary improved 8% over 1993
principally due to the strength of U.S. based OE customers. European
acquisitions accounted for $169 of the sales increase in 1994 as Dana seeks
to achieve 50% of its total sales through international markets by the year
2000. Exclusive of the effect of acquisitions, sales from the Company's
European operations increased 6% in 1994 over 1993. International
Vehicular aftermarket sales increased $135 or 25%, including $73 due to
acquisitions. Industrial OE sales, especially from Dana's German facili-
ties, decreased $3, or 3% below 1993 levels due in large part to the weak
European economy for most of 1994. Mobile off-highway OE sales of
Dana's international operations increased $71 over 1993 in part due to
acquisitions.
Revenue from lease financing and other income increased $21 in 1994
or 17% over 1993 due to an increase in new business recorded by DCC in
1994. DCC experienced a 12% growth in its lease financing assets in 1994.
Leveraged lease assets increased 39% and the direct financing assets of
the United Kingdom operation grew 56%, both of which contributed to
the $18 increase in lease financing revenue during 1994. In 1994, other
income also includes an insurance settlement of $4.
Foreign currency translation losses were $22 for 1994 as compared to
$24 in 1993. The losses were almost exclusively related to the Company's
Brazilian operations and the translation of the cruzeiro to U.S. dollars. A
$26 loss was incurred in the first eight months of the year offset by a gain
of $4 in the final four months as Brazil's new currency (real) was intro-
duced at parity with the U.S. dollar. To the extent the value of the real
remains at its current rate of exchange with the U.S. dollar, future foreign
currency translation adjustments relating to Brazil are expected to be min-
imal. Despite the anticipated reduction in translation losses, Dana's over-
all profit will not be effected due to offsetting effects on sales and cost of
sales.
Dana's consolidated gross margin for 1994 improved to 15.0% from
14.4% in 1993. The margin improvement is the result of higher sales vol-
umes being experienced by the Company's U.S. operations as well as ben-
efits derived through productivity and cost containment initiatives. U.S.
gross margins improved to 13.2% in 1994 compared to 12.5% in 1993.
Non U.S. operations' 1994 margins were comparable to 1993. If Dana's
1993 margins were adjusted for the impact of the Brazilian currency
realignment, making the comparison more meaningful, 1994's gross mar-
gin would show an even greater overall improvement when compared to
1993. During 1994 and 1993, the Company recorded $28 and $40 for the
downsizing, consolidation and closure of certain non-strategic and under-
performing operations. Gross margins in 1994 and 1993 were reduced by
.4% and .7%, respectively, due to the recognition of these costs. It is
anticipated that Dana's operations will benefit from these realignment
actions over the long term.
Operating income in the Vehicular segment increased 23% in 1994,
while the Industrial segment operating income increased 43%. Both seg-
ments benefited from higher sales volume in 1994, Vehicular principally
in the North American light and heavy truck markets, Industrial in the
U.S. construction equipment and agricultural machinery markets.
Operating income of both segments also benefited from productivity and
margin improvements.
Operating income of the Lease Financing segment increased to $12 in
35
21
Management's Discussion and Analysis of Results
in millions DANA CORPORATION
- --------------------------------------------------------------------------------
RESULTS OF OPERATIONS 1994 vs 1993 (Cont'd.)
- --------------------------------------------------------------------------------
1994 from $4 in 1993. This improved operating income relates almost exclu-
sively to the leasing activities of DCC and resulted from a reduction in
interest expense as a percent of revenue (31% in 1994, 34% in 1993), an
increase in lease financing and related revenue of 11% in 1994 over 1993 and
income from the receipt of an insurance settlement in 1994.
Selling, general and administrative expenses (SG&A) were $612 in 1994
compared to $523 for 1993, an increase of $89. Acquisitions made in the lat-
ter half of 1993 and early in 1994 accounted for $36 of the increase. After
adjusting for the effect of acquisitions, SG&A increased 10%, primarily due
to higher business levels. The ratio of expense to sales continued to
improve and was 9.2% in 1994 compared to 9.6% in 1993, due to continuing
cost containment and productivity efforts.
Interest expense decreased to $113 in 1994 from $137 in 1993 due to the
overall lower average interest rates achieved through the replacement of
higher rate notes and debentures with lower rate debt and the conversion
of the 5 7/8% convertible debentures to stock. Average debt levels were com-
parable in 1994 and 1993.
Dana's international operations had operating income of $127 in 1994, an
increase of $30 from the $97 reported in 1993. The profitability of the
Company's operations in Canada and the Asia pacific region improved sig-
nificantly over the prior year. Additional operating income improvements
were contributed by Dana's European acquisitions as well as DCC's
European operations.
Equity in earnings of affiliates increased to $24 in 1994 from $16 in 1993
due to improved performance by Dana's affiliates in Korea and Venezuela
and by DCC's leasing partnerships. The improved performance of the
Korean affiliate related to the turnaround in the local economy, while
Dana's affiliate operation in Venezuela has benefited from strong export
sales volume. Certain DCC Ieasing partnerships contributed higher earn-
ings in 1994 compared to 1993. Dana's Mexican affiIiate, whose functional
currency is the peso, also had an improved operating performance in 1994
over 1993. Because this affiliate is included in the consolidated financial
statements with a fiscal year end of October 31, the devaluation of the
Mexican peso did not affect Dana's earnings in 1994. The affiliate has
approximately $130 in U.S. dollar denominated debt and it is estimated that
the translation of this debt into pesos will result in Dana recording a charge
to first quarter 1995 earnings of approximately $17, or $.17 per share for its
proportionate share of the translation loss. Near term movement in the
value of the Mexican peso is currently difficult to predict and is partially
dependent upon the results of the economic support efforts of the U.S. and
international economic organizations.
Minority interest in net income of consolidated subsidiaries increased in
1994 to $30 from $26 in 1993 due to increased earnings of Dana's subsidiary
in Canada.
Taxes on income increased to $157 in 1994 from $90 in 1993 due to higher
pre-tax income. The effective tax rate increased to 40% in 1994 compared to
39% in 1993. A $3 reduction in income tax expense in 1993 was recorded to
recognize the effect that the 1% U.S. corporate income tax rate increase had
on the Company's previously recorded income tax benefits.
Based on the current demand for light trucks, sport utility vehicles and
heavy trucks, Dana expects sales of its vehicular products to the North and
South American markets to remain strong in the coming months. The
recent growth experienced in Dana's mobile off-highway sales is also fore-
casted to continue, reflecting strong demand from the Company's construc-
tion and agricultural machinery customers. Dana anticipates sales increases
of its industrial products due to a strong U.S. market and an improving
European economy. The Company projects steady growth in its worldwide
aftermarket sales. Dana will continue, as opportunities become evident, to
pursue further growth by expansion or acquisition in all of its global markets.
RESULTS OF OPERATIONS 1993 vs 1992
- --------------------------------------------------------------------------------
Dana's 1993 worldwide sales were $5,460, up 12% from $4,870 in 1992.
The sales growth was paced by the Vehicular OE and distribution markets
of North and South America, with the largest increases occurring in the
Company's light truck OE business.
The Company's sales of vehicular components and parts for use on
automobiles, trucks and trailers were $4,500, an increase of 15% over
1992. Dana's sales to the U.S. light truck OE portion of this market (i.e.
equipment for pickup trucks, vans, and sport utility vehicles)
increased 28% over 1992, while sales of components to the U.S. medi-
um and heavy truck segment were up 17%. Also contributing to the
increase to vehicular sales were increases of 23% and 7% in South
America and Canada, respectively.
The Company's worldwide distribution sales were $2,000 in 1993,
an increase of 3% over 1992. Dana's U.S. distribution business
increased 7%, of which 3% is attributable to a recent acquisition, while
international distribution business declined 4% from 1992 levels.
Dana's worldwide sales to distribution markets represented 37% of
consolidated 1993 sales.
Dana's sales of products to the Industrial segment in 1993 were
$957, up 2% over 1992. Sales to this segment on a regional basis for
1993 showed increases in all areas of the world except Europe.
Consolidated international sales in 1993 were $1,328, up 2% over
1992. Increases in South America, Canada and Asia Pacific were par-
tially offset by a decline in Europe.
Revenue from lease financing and other income decreased from
$164 in 1992 to $127 in 1993. This decrease is attributable to lower leas-
ing-related revenue and property sales in 1993, and the inclusion in
1992 of a small gain on the sales of investments. Leasing revenues
decreased due to lower average lease rates, reduced gains from the
disposition of assets at the end of the lease term and a change in the
portfolio mix of direct finance and leveraged leases.
Operating income in the Vehicular segment increased 69%, while
the Industrial segment income increased 16%. Higher unit sales in
North America, combined with emphasis on cost control, asset man-
agement and productivity improvement, contributed to the increase in
the Vehicular operating income. The increase in the Industrial segment
operating income resuIted primarily from productivity and margin
improvements in the U.S. and Brazil offset by the effect of slow sales in
Europe due to the downturn in the European economy.
Operating income of the Lease Financing segment was $4 in 1993,
an increase of $26 over 1992's loss of $22. This increase was primarily
due to continued asset and credit quality improvements in the lease,
loan and real estate portfolios, resuIting in the recording of lower loss
provisions in 1993.
Dana's international operations had operating income of $97 in
1993, an increase of $24 from 1992. This increase was primarily the
result of improvements in Dana's Canadian and South American oper-
ations, partially offset by decreases in Europe.
Equity in earnings of affiliates decreased from $31 in 1992 to $16 in
1993, primarily due to lower earnings from the Company's Mexican
affiliate. Foreign currency adjustments of $24 in 1993 were level with
1992 and related almost exclusively to Dana's Brazilian operations.
Selling, general and administrative (SG&A) expenses were $523 in
1993, a decrease of 2% from 1992. The decrease was principally the
result of lower lease, loan and real estate provisions in the Lease
Financing segment, partially offset by increases attributable to acquisi-
tions and improved business levels in North and South America.
SG&A as a percent of sales improved to 9.6% in 1993 from 11.0% in
1992 due to the Company's emphasis on productivity improvement
and cost containment. Reduced debt levels and lower rates decreased
interest expense from $168 in 1992 to $137 in 1993.
Taxes on income amounted to $90 in 1993 compared to a benefit of
$2 in 1992. The change was attributable to higher taxable income in
1993 and realization of capital loss carryforward benefits in 1992. The
increase in the U.S. corporate income tax rate resulted in a small
increase in deferred income tax benefits. Minority interest in net
income of consolidated subsidiaries increased to $26 from 1992's $17,
due principally to increased earnings of Dana's subsidiaries in Canada
and Brazil.
36
22
Additional Information DANA CORPORATION
- --------------------------------------------------------------------------------
Beginning in 1988, Diamond Financial Holdings, Inc. our wholly-
owned financial subsidiary which had previously been accounted for
on the equity method, was fully consolidated to reflect adoption of
SFAS No. 94, "Consolidation of All Majority-owned Subsidiaries."
The additional information on pages 37-39 shows Dana's balance sheet,
income statement and cash flows as if DFHI were accounted for on the
equity method and DFHI (on pages 40-41) on a stand alone basis. The
Company believes this separate financial data will help the reader
better understand the consolidated statements and related comments
on pages 19-34.
Additional Information -- Balance Sheet DANA CORPORATION
in millions (INCLUDING DIAMOND FINANCIAL HOLDINGS, INC. ON AN EQUITY BASIS)
- -------------------------------------------------------------------------------------------------------
December 31
1993 1994
- ----------------------------------------------------------------------------------------------------
ASSETS
- ----------------------------------------------------------------------------------------------------
Current assets
- ----------------------------------------------------------------------------------------------------
Cash $ 39.0 $ 43.0
- ----------------------------------------------------------------------------------------------------
Marketable securities, at cost which approximates market 28.0 64.0
- ----------------------------------------------------------------------------------------------------
Accounts receivable, less allowance for doubtful accounts of
$16.8 - 1993 and $19.6 - 1994 923.0 1,009.6
- ----------------------------------------------------------------------------------------------------
Inventories
- ----------------------------------------------------------------------------------------------------
Raw materials 141.8 186.4
- ----------------------------------------------------------------------------------------------------
Work in process and finished goods 508.1 553.8
- ----------------------------------------------------------------------------------------------------
Total inventories 649.9 740.2
- ----------------------------------------------------------------------------------------------------
Other current assets 138.8 132.3
- ----------------------------------------------------------------------------------------------------
Total current assets 1,778.7 1,989.1
- ----------------------------------------------------------------------------------------------------
Investments and other assets
- ----------------------------------------------------------------------------------------------------
Investments at cost 9.9 8.4
- ----------------------------------------------------------------------------------------------------
Investments at equity 209.3 202.9
- ----------------------------------------------------------------------------------------------------
Goodwill 168.0 187.3
- ----------------------------------------------------------------------------------------------------
Intangible pension asset 80.1 83.9
- ----------------------------------------------------------------------------------------------------
Other 64.3 88.1
- ----------------------------------------------------------------------------------------------------
Total investments and other assets 531.6 570.6
- ----------------------------------------------------------------------------------------------------
Deferred income tax benefits 312.5 316.2
- ----------------------------------------------------------------------------------------------------
Property, plant and equipment, net 1,061.3 1,210.4
- ----------------------------------------------------------------------------------------------------
Total Assets $3,684.1 $4,086.3
- ----------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
- ----------------------------------------------------------------------------------------------------
Current liabilities
- ----------------------------------------------------------------------------------------------------
Notes payable $ 318.0 $ 413.1
- ----------------------------------------------------------------------------------------------------
Accounts payable 309.1 387.1
- ----------------------------------------------------------------------------------------------------
Accrued payroll and employee benefits 179.5 221.8
- ----------------------------------------------------------------------------------------------------
Other accrued liabilities 247.8 287.9
- ----------------------------------------------------------------------------------------------------
Taxes other than taxes on income 33.5 38.5
- ----------------------------------------------------------------------------------------------------
Taxes on income 121.6 107.4
- ----------------------------------------------------------------------------------------------------
Total current liabilities 1,209.5 1,455.8
- ----------------------------------------------------------------------------------------------------
Deferred employee benefits and other noncurrent liabilities 1,035.0 1,149.2
- ----------------------------------------------------------------------------------------------------
Long-term debt 496.0 389.3
- ----------------------------------------------------------------------------------------------------
Minority interest in consolidated subsidiaries 142.2 152.2
- ----------------------------------------------------------------------------------------------------
Shareholders' equity 801.4 939.8
- ----------------------------------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $3,684.1 $4,086.3
- ----------------------------------------------------------------------------------------------------
37
23
AdditionaI Information -- Statement of Income DANA CORPORATION
in millions (INCLUDING DIAMOND FINANCIAL HOLDINGS, INC. ON AN EQUITY BASIS)
- --------------------------------------------------------------------------------------------------
Year Ended December 31
1992 1993 1994
- --------------------------------------------------------------------------------------------------
NET SALES $4,863.2 $5,456.9 $6,607.4
- --------------------------------------------------------------------------------------------------
Other income 19.9 11.9 9.2
- --------------------------------------------------------------------------------------------------
Foreign currency adjustments (24.9) (24.2) (22.0)
- --------------------------------------------------------------------------------------------------
4,858.2 5,444.6 6,594.6
- --------------------------------------------------------------------------------------------------
Costs and expenses
- --------------------------------------------------------------------------------------------------
Cost of sales 4,281.2 4,687.8 5,630.5
- --------------------------------------------------------------------------------------------------
Selling, general and administrative
expenses 430.3 449.7 529.8
- --------------------------------------------------------------------------------------------------
Interest expense 98.9 83.2 54.3
- --------------------------------------------------------------------------------------------------
4,810.4 5,220.7 6,214.6
- --------------------------------------------------------------------------------------------------
Income before income taxes 47.8 223.9 380.0
- --------------------------------------------------------------------------------------------------
Estimated taxes on income 26.4 89.3 154.9
- --------------------------------------------------------------------------------------------------
Income before minority interest and
equity in earnings of affiliates 21.4 134.6 225.1
- --------------------------------------------------------------------------------------------------
Minority interest in net income of
consolidated subsidiaries (15.7) (26.2) (30.2)
- --------------------------------------------------------------------------------------------------
Equity in earnings of affiliates 37.4 20.1 33.3
- --------------------------------------------------------------------------------------------------
Income before effects of changes in
accounting principles 43.1 128.5 228.2
- --------------------------------------------------------------------------------------------------
Effect on prior years of the change
in accounting for:
- --------------------------------------------------------------------------------------------------
Inventories 12.9
- --------------------------------------------------------------------------------------------------
Postretirement benefits other than
pensions (438.0)
- --------------------------------------------------------------------------------------------------
Postemployment benefits (48.9)
- --------------------------------------------------------------------------------------------------
NET INCOME (LOSS) $ (382.0) $ 79.6 $ 228.2
- --------------------------------------------------------------------------------------------------
38
24
AdditionaI Information -- Statement of Cash Flows DANA CORPORATION
in millions (INCLUDING DIAMOND FINANCIAL HOLDINGS, INC. ON AN EQUITY BASIS)
- --------------------------------------------------------------------------------------------------------------------------
Year Ended December 31
1992 1993 1994
- --------------------------------------------------------------------------------------------------------------------------
Net cash flows from operating activities $ 199.1 $ 391.0 $ 435.4
- --------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
- --------------------------------------------------------------------------------------------------------------------------
Purchases of property, plant and equipment (111.0) (175.8) (278.2)
- --------------------------------------------------------------------------------------------------------------------------
Acquisitions and additions to investments (48.4) (44.9) (21.6)
- --------------------------------------------------------------------------------------------------------------------------
Other 5.2 40.1 14.8
- --------------------------------------------------------------------------------------------------------------------------
Net cash flows - investing activities (154.2) (180.6) (285.0)
- --------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
- --------------------------------------------------------------------------------------------------------------------------
Net change in short-term debt (111.3) 4.4 80.8
- --------------------------------------------------------------------------------------------------------------------------
Issuance of long-term debt 136.5 224.1 50.0
- --------------------------------------------------------------------------------------------------------------------------
Payments on long-term debt (201.4) (375.0) (166.6)
- --------------------------------------------------------------------------------------------------------------------------
Issuance of common stock 189.1
- --------------------------------------------------------------------------------------------------------------------------
Dividends paid (69.8) (73.8) (82.0)
- --------------------------------------------------------------------------------------------------------------------------
Other 8.9 14.3 7.4
- --------------------------------------------------------------------------------------------------------------------------
Net cash flows - financing activities (48.0) (206.0) (110.4)
- --------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents $ (3.1) $ 4.4 $ 40.0
- --------------------------------------------------------------------------------------------------------------------------
Reconciliation of net income (loss) to net
cash flows from operating activities:
- --------------------------------------------------------------------------------------------------------------------------
Net income (loss) $(382.0) $ 79.6 $ 228.2
- --------------------------------------------------------------------------------------------------------------------------
Noncash items included in income:
- --------------------------------------------------------------------------------------------------------------------------
Effect on prior years of the changes in accounting 425.1 48.9
- --------------------------------------------------------------------------------------------------------------------------
Depreciation and amortization 154.5 154.3 163.6
- --------------------------------------------------------------------------------------------------------------------------
Deferred income taxes .2 9.4 13.0
- --------------------------------------------------------------------------------------------------------------------------
Minority interest 3.7 13.4 12.3
- --------------------------------------------------------------------------------------------------------------------------
Net change in receivables, inventory and payables 1.0 67.4 18.0
- --------------------------------------------------------------------------------------------------------------------------
Unremitted earnings of affiliates 1.0 8.8 (7.0)
- --------------------------------------------------------------------------------------------------------------------------
Other (4.4) 9.2 7.3
- --------------------------------------------------------------------------------------------------------------------------
Net cash flows from operating activities $ 199.1 $ 391.0 $ 435.4
- --------------------------------------------------------------------------------------------------------------------------
39
25
Additional Information -- Balance Sheet DIAMOND FINANCIAL HOLDINGS, INC.
in millions (A WHOLLY-OWNED SUBSIDIARY OF DANA CORPORATION)
- -------------------------------------------------------------------------------------------
December 31
1993 1994
- -------------------------------------------------------------------------------------------
ASSETS
- -------------------------------------------------------------------------------------------
Cash $ 10.5 $ 5.2
- -------------------------------------------------------------------------------------------
Loans receivable 120.6 115.1
- -------------------------------------------------------------------------------------------
Lease financing 924.5 1,061.3
- -------------------------------------------------------------------------------------------
Real estate held for sale 92.2 49.2
- -------------------------------------------------------------------------------------------
Investments 80.0 58.0
- -------------------------------------------------------------------------------------------
Other assets 82.5 98.7
- -------------------------------------------------------------------------------------------
Total Assets $1,310.3 $1,387.5
- -------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDER'S EQUITY
- -------------------------------------------------------------------------------------------
Short-term debt $ 318.9 $ 322.2
- -------------------------------------------------------------------------------------------
Accounts payable and other liabilities 204.6 134.8
- -------------------------------------------------------------------------------------------
Long-term debt 548.6 645.0
- -------------------------------------------------------------------------------------------
Deferred income taxes 143.2 193.5
- -------------------------------------------------------------------------------------------
Shareholder's equity 95.0 92.0
- -------------------------------------------------------------------------------------------
Total Liabilities and Shareholder's Equity $1,310.3 $1,387.5
- -------------------------------------------------------------------------------------------
Additional Information -- Statement of Income DIAMOND FINANCIAL HOLDINGS, INC.
in millions (A WHOLLY-OWNED SUBSIDIARY OF DANA CORPORATION)
- ----------------------------------------------------------------------------------
Year Ended December 31
1992 1993 1994
- ----------------------------------------------------------------------------------
Net sales $ 9.0 $ 3.2 $ 6.4
- ----------------------------------------------------------------------------------
Interest and fees on loans 7.0 6.9 9.4
- ----------------------------------------------------------------------------------
Lease financing 133.2 123.0 135.1
- ----------------------------------------------------------------------------------
Other income 35.9 23.7 33.5
- ----------------------------------------------------------------------------------
185.1 156.8 184.4
- ----------------------------------------------------------------------------------
Cost and expenses
- ----------------------------------------------------------------------------------
Cost of sales 11.9 3.3 10.2
- ----------------------------------------------------------------------------------
Interest expense 71.8 56.8 59.4
- ----------------------------------------------------------------------------------
General and administrative expenses 123.7 92.7 103.2
- ----------------------------------------------------------------------------------
207.4 152.8 172.8
- ----------------------------------------------------------------------------------
Income (loss) before income taxes (22.3) 4.0 11.6
- ----------------------------------------------------------------------------------
Estimated income tax benefit
(provision) 28.5 (.3) (2.5)
- ----------------------------------------------------------------------------------
Income before equity in earnings of
affiliates 6.2 3.7 9.1
- ----------------------------------------------------------------------------------
Equity in earnings of affiliates 3.9 3.2 5.3
- ----------------------------------------------------------------------------------
NET INCOME $ 10.1 $ 6.9 $ 14.4
- ----------------------------------------------------------------------------------
40
26
Additional Information -- Statement of Cash Flows DIAMOND FINANCIAL HOLDINGS, INC.
in millions (A WHOLLY-OWNED SUBSIDIARY OF DANA CORPORATION)
- --------------------------------------------------------------------------------------------------
Year Ended December 31
1992 1993 1994
- --------------------------------------------------------------------------------------------------
Net cash flows from operating
activities $ 48.2 $ 108.0 $ 48.2
- --------------------------------------------------------------------------------------------------
Cash flows from investing
activities:
- --------------------------------------------------------------------------------------------------
Purchases of assets to be leased (257.9) (303.1) (429.0)
- --------------------------------------------------------------------------------------------------
Loans made to customers and
partnership affiliates (18.2) (22.8) (39.3)
- --------------------------------------------------------------------------------------------------
Purchases of investment
securities (181.0)
- --------------------------------------------------------------------------------------------------
Loans purchased (25.1) (.2)
- --------------------------------------------------------------------------------------------------
Payments received on leases 189.4 164.1 195.5
- --------------------------------------------------------------------------------------------------
Proceeds from sales of leased
assets 64.1 37.8 39.8
- --------------------------------------------------------------------------------------------------
Proceeds from sales of real
estate 25.7 24.1 36.8
- --------------------------------------------------------------------------------------------------
Payments received on loans 18.5 18.3 38.7
- --------------------------------------------------------------------------------------------------
Proceeds from sales of certain assets
and subsidiaries 34.6
- --------------------------------------------------------------------------------------------------
Other 11.3 20.9 19.8
- --------------------------------------------------------------------------------------------------
Net cash flows - investing activities (113.5) (85.8) (137.9)
- --------------------------------------------------------------------------------------------------
Cash flows from financing activities:
- --------------------------------------------------------------------------------------------------
Net change in short-term debt 73.2 37.1 3.3
- --------------------------------------------------------------------------------------------------
Issuance of long-term debt 210.3 354.3 305.4
- --------------------------------------------------------------------------------------------------
Payments on long-term debt (212.9) (401.3) (206.6)
- --------------------------------------------------------------------------------------------------
Dividend paid (14.5) (17.7)
- --------------------------------------------------------------------------------------------------
Net cash flows - financing
activities 70.6 (24.4) 84.4
- --------------------------------------------------------------------------------------------------
Net increase (decrease) in cash $ 5.3 $ (2.2) $ (5.3)
- --------------------------------------------------------------------------------------------------
Reconciliation of net income to net
cash flows from operating activities:
- --------------------------------------------------------------------------------------------------
Net income $ 10.1 $ 6.9 $ 14.4
- --------------------------------------------------------------------------------------------------
Noncash items included in income:
- --------------------------------------------------------------------------------------------------
Depreciation and amortization 37.1 41.4 47.0
- --------------------------------------------------------------------------------------------------
Deferred income taxes (.6) 21.7 46.4
- --------------------------------------------------------------------------------------------------
Additions to lease and loan loss
reserves and adjustment of real
estate to net realizable value 42.5 23.3 25.5
- --------------------------------------------------------------------------------------------------
Change in other assets, other
liabilities and accrued expenses (40.9) 14.7 (85.1)
- --------------------------------------------------------------------------------------------------
Net cash flows from operating
activities $ 48.2 $ 108.0 $ 48.2
- --------------------------------------------------------------------------------------------------
41
27
Additional Comments IN MILLIONS EXCEPT PER SHARE AMOUNTS
DANA CORPORATION
- --------------------------------------------------------------------------------
SHAREHOLDERS' INVESTMENT
- --------------------------------------------------------------------------------
The following table shows the range of market prices of Dana Corporation common
stock on the New York Stock Exchange and the cash dividends declared and paid
for each quarter during 1993 and 1994. At December 31, 1994, the closing price
of Dana common stock was $23 1/2.
- ------------------------------------------------------------------------------------------------------------------------------------
CASH DIVIDENDS
STOCK PRICE DECLARED AND PAID
- ------------------------------------------------------------------------------------------------------------------------------------
1993 1994 1993 1994
- ------------------------------------------------------------------------------------------------------------------------------------
Quarter Ended HI LO CLOSE HI LO CLOSE
- ------------------------------------------------------------------------------------------------------------------------------------
March 31 $24 13/16 $22 $23 7/16 $30 11/16 $27 1/4 $28 5/8 $.20 $.20
June 30 27 1/8 22 5/8 27 1/8 30 5/8 25 1/2 28 1/2 .20 .21
September 30 29 1/8 25 3/4 28 7/8 29 3/4 26 1/4 27 3/4 .20 .21
December 31 30 1/8 26 1/2 29 15/16 27 7/8 19 5/8 23 1/2 .20 .21
- ------------------------------------------------------------------------------------------------------------------------------------
UNAUDITED QUARTERLY FINANCIAL INFORMATION
- ------------------------------------------------------------------------------------------------------------------------------------
NET GROSS NET INCOME NET INCOME (LOSS)
QUARTER ENDED SALES PROFIT (LOSS) PER SHARE
- ------------------------------------------------------------------------------------------------------------------------------------
For the year ended
December 31, 1992
March 31 $1,186 $114 $(429.6) $(5.22)
June 30 1,240 160 13.7 .16
September 30 1,187 160 12.4 .14
December 31 1,259 156 21.5 .24
- ------------------------------------------------------------------------------------------------------------------------------------
For the year ended
December 31, 1993
March 31 $1,324 $181 $(25.4) $ (.27)
June 30 1,418 214 36.6 .39
September 30 1,291 194 33.2 .36
December 31 1,427 196 35.2 .38
- ------------------------------------------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED
DECEMBER 31, 1994
MARCH 31 $1,597 $234 $47.7 $ .48
JUNE 30 1,712 281 68.0 .69
SEPTEMBER 30 1,610 234 52.9 .54
DECEMBER 31 1,695 241 59.6 .60
- ------------------------------------------------------------------------------------------------------------------------------------
The Company changed its method of accounting for inventories
effective January 1, 1992, to include in inventory certain production-
related costs previously charged directly to expense. This change in
accounting principle results in a better matching of costs against related
revenues. The effect of this change in accounting increased net income
in the first quarter of 1992 by $12.9 ($.16 per share). During the first
quarter of 1992, net income was increased by $5.0 ($.06 per share) due
to settlement of litigation. In March 1992, Dana announced its intention
to close one of its U.S. manufacturing facilities and merge its operations
into another existing facility. Estimated closing and relocation costs for
this facility reduced first quarter 1992 net income by $18.0 ($.22 per
share). Dana adopted SFAS No. 106 "Employers' Accounting for
Postretirement Benefits Other than Pensions," effective January 1, 1992.
The Company recognized the transition obligation immediately as the
effect of an accounting change, which resulted in a one-time charge to
income in 1992 of $438.0 after-tax ($4.99 per share). In addition, 1992
net income was reduced by $24.0 ($.27 per share) as a result of the
incremental after-tax increase in ongoing retiree benefit costs under
Dana's benefit plans in effect during 1992.
During the second quarter of 1992, net income was increased by $4.0
($.05 per share) due to the sale of an investment.
During the fourth quarter of 1992, net income was increased by $3.5
($.04 per share) due to the sale of the business and a majority of the
assets, liabilities and offices of DSL and its mortgage banking business.
Dana adopted SFAS No. 112, "Employers' Accounting for
Postemployment Benefits," effective January 1, 1993. The effect of
adopting SFAS No. 112 in 1993 resulted in a $48.9 after-tax charge to
income ($.53 per share).
Dana's third quarter 1993 net income included approximately $3.0
($.03 per share) of income tax benefit attributable primarily to the effect
of the change in the U.S. corporate income tax rate on deferred income
tax benefits.
42
28
Eleven Year History
IN MILLIONS EXCEPT SHARE AND PER SHARE AMOUNTS DANA CORPORATION
- -----------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -----------------------------------------------------------------------------------------------------------------
For the Years 1984 1985 1986 1987 1988 1989
- -----------------------------------------------------------------------------------------------------------------
Net Sales $3,649 $3,797 $3,738 $4,180 $4,936 $4,865
- -----------------------------------------------------------------------------------------------------------------
Net Income (Loss) 191 165 84 142 162 132
- -----------------------------------------------------------------------------------------------------------------
Net Income (Loss) per
Common Share 1.70 1.48 .82 1.62 1.99 1.62
- -----------------------------------------------------------------------------------------------------------------
Dividends Declared per
Common Share .60 .64 .64 .70 .77 .80
- -----------------------------------------------------------------------------------------------------------------
Total Assets 3,778 4,174 4,578 4,914 4,786 5,225
- -----------------------------------------------------------------------------------------------------------------
Long-Term Debt 580 663 1,027 1,322 1,324 1,522
- -----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
For the Years 1990 1991 1992 1993 1994
- ----------------------------------------------------------------------------------------------------
Net Sales $4,952 $4,398 $4,872 $5,460 $6,614
- ----------------------------------------------------------------------------------------------------
Net Income (Loss) 76 13 (382) 80 228
- ----------------------------------------------------------------------------------------------------
Net Income (Loss) per
Common Share .92 .16 (4.35) .86 2.31
- ----------------------------------------------------------------------------------------------------
Dividends Declared per
Common Share .80 .80 .80 .80 .83
- ----------------------------------------------------------------------------------------------------
Total Assets 4,513 4,179 4,343 4,632 5,111
- ----------------------------------------------------------------------------------------------------
Long-Term Debt 1,486 1,541 1,467 1,207 1,187
- ----------------------------------------------------------------------------------------------------
DANA CORPORATION
(INCLUDING DIAMOND FINANCIAL HOLDINGS, INC. ON AN EQUITY BASIS)
- ---------------------------------------------------------------------------------------------------------------------------
FOR THE YEARS 1984 1985 1986 1987 1988 1989
- ---------------------------------------------------------------------------------------------------------------------------
Net Income per
Share of Common
Stock+ $1.70 $1.48 $.82 $1.62 $1.99 $1.62
- ---------------------------------------------------------------------------------------------------------------------------
Cash Dividends
per Share of
Common Stock
Declared and Paid .60 .64 .64 .70 .77 .80
- ---------------------------------------------------------------------------------------------------------------------------
SUMMARY OF OPERATIONS
- ---------------------------------------------------------------------------------------------------------------------------
NET SALES $3,575 $3,754 $3,695 $4,142 $4,896 $4,857
- ---------------------------------------------------------------------------------------------------------------------------
Cost of Sales 2,838 3,054 3,075 3,480 4,133 4,104
- ---------------------------------------------------------------------------------------------------------------------------
Income (Loss)
before Income
Taxes 414 342 201 203 238 217
- ---------------------------------------------------------------------------------------------------------------------------
Income Taxes* 205 169 96 84 109 95
- ---------------------------------------------------------------------------------------------------------------------------
NET INCOME+ 191 165 84 142 162 132
- ---------------------------------------------------------------------------------------------------------------------------
Net Income for the
Year Retained
for Growth 124 93 19 81 100 67
- ---------------------------------------------------------------------------------------------------------------------------
Interest Expense 42 51 63 91 103 118
- ---------------------------------------------------------------------------------------------------------------------------
YEAR END FINANCIAL POSITION
- ---------------------------------------------------------------------------------------------------------------------------
Liquid Assets** $615 $533 $563 $733 $801 $763
- ---------------------------------------------------------------------------------------------------------------------------
Working Capital 787 612 590 484 509 508
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of Current
Assets to Current
Liabilities 2.4-1 1.9-1 1.8-1 1.5-1 1.5-1 1.5-1
- ---------------------------------------------------------------------------------------------------------------------------
Total Shareholders'
Equity 1,223 1,195 944 865 960 1,020
- ---------------------------------------------------------------------------------------------------------------------------
Long-Term Debt 317 354 618 690 681 759
- ---------------------------------------------------------------------------------------------------------------------------
Net Property, Plant
and Equipment 612 737 765 820 905 985
- ---------------------------------------------------------------------------------------------------------------------------
Total Assets 2,257 2,424 2,514 2,788 2,916 3,102
- ---------------------------------------------------------------------------------------------------------------------------
Average Number
of Shares
Outstanding
(in thousands) 112,658 112,020 102,196 87,430 81,353 81,658
- ---------------------------------------------------------------------------------------------------------------------------
Stock Price High 15 9/16 15 3/16 18 1/4 27 1/8 20 1/4 21 7/16
----------------------------------------------------------------------------------------------------
Low 10 9/16 11 1/8 12 3/4 13 3/4 16 1/4 16 1/2
----------------------------------------------------------------------------------------------------
Close 13 5/16 13 5/8 17 7/16 17 1/16 19 7/16 17 5/16
- ---------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
FOR THE YEARS 1990 1991 1992 1993 1994
- ----------------------------------------------------------------------------------------------------
Net Income per
Share of Common
Stock+ $.92 $.16 $.64 $1.39 $2.31
- ----------------------------------------------------------------------------------------------------
Cash Dividends
per Share of
Common Stock
Declared and Paid .80 .80 .80 .80 .83
- ----------------------------------------------------------------------------------------------------
SUMMARY OF OPERATIONS
- ----------------------------------------------------------------------------------------------------
NET SALES $4,948 $4,385 $4,863 $5,457 $6,607
- ----------------------------------------------------------------------------------------------------
Cost of Sales 4,129 3,841 4,282 4,688 5,631
- ----------------------------------------------------------------------------------------------------
Income (Loss)
before Income
Taxes 187 (24) 48 224 380
- ----------------------------------------------------------------------------------------------------
Income Taxes* 97 3 26 89 155
- ----------------------------------------------------------------------------------------------------
NET INCOME+ 76 13 56 129 228
- ----------------------------------------------------------------------------------------------------
Net Income for the
Year Retained
for Growth 10 -- -- 6 146
- ----------------------------------------------------------------------------------------------------
Interest Expense 120 111 99 83 54
- ----------------------------------------------------------------------------------------------------
YEAR END FINANCIAL
POSITION
- ----------------------------------------------------------------------------------------------------
Liquid Assets** $764 $746 $837 $990 $1,117
- ----------------------------------------------------------------------------------------------------
Working Capital 487 423 562 569 533
- ----------------------------------------------------------------------------------------------------
Ratio of Current
Assets to Current
Liabilities 1.5-1 1.4-1 1.6-1 1.5-1 1.4-1
- ----------------------------------------------------------------------------------------------------
Total Shareholders'
Equity 1,049 989 707 801 940
- ----------------------------------------------------------------------------------------------------
Long-Term Debt 766 786 687 496 389
- ----------------------------------------------------------------------------------------------------
Net Property, Plant
and Equipment 1,107 1,077 1,029 1,061 1,210
- ----------------------------------------------------------------------------------------------------
Total Assets 3,196 2,959 3,349 3,684 4,086
- ----------------------------------------------------------------------------------------------------
Average Number
of Shares
Outstanding
(in thousands) 81,954 82,171 87,792 92,533 98,689
- ----------------------------------------------------------------------------------------------------
Stock Price High 19 1/16 18 1/4 24 1/8 30 1/8 30 11/16
----------------------------------------------------------------------------------
Low 9 15/16 12 5/16 13 3/8 22 19 5/8
----------------------------------------------------------------------------------
Close 14 15/16 13 7/8 23 1/2 29 15/16 23 1/2
- ----------------------------------------------------------------------------------------------------
* Net of the cumulative effect of the change in accounting for income taxes in 1987.
** Cash, Marketable Securities and Accounts Receivable
+ Excludes one-time SFAS No. 106 charge of $438 ($4.99 per share) in 1992 and SFAS No. 112 charge of $4.99 ($.53 per share) in
1993.
43
1
DANA CORPORATION EXHIBIT 21
Subsidiaries
as of December 31, 1994
Name Jurisdiction
- ---- ------------
Albarus Inc. Delaware
DTF Trucking, Inc. Delaware
Dana Distribution, Inc. Delaware
Dana International Finance, Inc. Delaware
Dana International Limited Delaware
Dana World Trade Corporation Delaware
Flight Operations, Inc. Delaware
Gemstone Gasket Company Delaware
Precision Specialties, Inc. Delaware
Swanton Air Three, Inc. Delaware
Results Unlimited, Inc. Delaware
Warner Sensors Corporation Delaware
Undercar International, Inc. Delaware
Krizman International, Inc. Delaware
Reinz Wisconsin Gasket Co. Delaware
Diamond Financial Holdings, Inc. Delaware
Summey Building Systems, Inc. North Carolina
PRO-DEL Properties, Inc. North Carolina
Admiral's Harbour, Inc. Ohio
Dana Credit Corporation Delaware
Dana Commercial Credit Corporation Delaware
Camotop Two Corporation Delaware
Comprehensive Asset Services, Inc. Delaware
Dana Business Credit Corp. Delaware
Dana Commercial Finance Corporation Delaware
Dana Fleet Leasing, Inc. Delaware
CCD Air Ten, Inc. Delaware
CCD Air Eleven, Inc. Delaware
2
EXHIBIT 21 (continued)
Name Jurisdiction
- ---- ------------
CCD Air Twelve, Inc. Delaware
CCD Air Thirteen, Inc. Delaware
CCD Air Fourteen, Inc. Delaware
CCD Air Twenty, Inc. Delaware
CCD Air Twenty-One, Inc. Delaware
CCD Air Twenty-Two, Inc. Delaware
CCD Air Twenty-Three, Inc. Delaware
CCD Air Thirty, Inc. Delaware
CCD Air Thirty-One, Inc. Delaware
CCD Air Thirty-Two, Inc. Delaware
CCD Air Thirty-Three, Inc. Delaware
CCD Air Thirty-Four, Inc. Delaware
CCD Air Thirty-Five, Inc. Delaware
CCD Air Thirty-Six, Inc. Delaware
CCD Air Thirty-Seven, Inc. Delaware
CCD Air Thirty-Eight Delaware
CCD Air Thirty-Nine Delaware
CCD Air Forty, Inc. Delaware
CCD Air Forty-One, Inc. Delaware
CCD Air Forty-Two, Inc. Delaware
CCD Air Forty-Four, Inc. Delaware
CCD Rail Two, Inc. Delaware
CCD Rail Three, Inc. Delaware
DCC Project Finance One, Inc. Delaware
DCC Project Finance Two, Inc. Delaware
DCC Project Finance Three, Inc. Delaware
DCC Linden, Inc. Delaware
DCC Project Finance Four, Inc. Delaware
DCC Project Finance Five, Inc. Delaware
DCC Project Finance Six, Inc. Delaware
DCC Servicing, Inc. Delaware
REBAC, Inc. Delaware
REBNEC Three, Inc. Delaware
REBNEC Five, Inc. Delaware
REBNEC Nine, Inc. Delaware
REBNEC Eleven, Inc. Delaware
REED, Inc. Delaware
REFIRST, Inc. Delaware
RETRAM, Inc. Delaware
TNUH, Inc. Delaware
Dana Lease Finance Corporation Delaware
Camotop One Corporation Delaware
Dana Leasing, Inc. Delaware
CCD Air One, Inc. Delaware
CCD Air Two, Inc. Delaware
CCD Air Three, Inc. Delaware
CCD Air Four, Inc. Delaware
CCD Air Five, Inc. Delaware
CCD Air Seven, Inc. Delaware
CCD Air Eight, Inc. Delaware
CCD Air Nine, Inc. Delaware
CCD Air Forty-Three, Inc. Delaware
CCD Rail One, Inc. Delaware
3
EXHIBIT 21 (continued)
Name Jurisdiction
- ---- ------------
CCD Rail Four, Inc. Delaware
DCC Project Finance Seven, Inc. Delaware
DCC Project Finance Eight, Inc. Delaware
DCC Spacecom Two, Inc. Delaware
DCC Vendercom, Inc. Delaware
JVQ Capital One, Inc. Delaware
REBNEC One, Inc. Delaware
REBNEC Two, Inc. Delaware
REBNEC Four, Inc. Delaware
REBNEC Six, Inc. Delaware
REBNEC Ten, Inc. Delaware
REBNEC Twelve, Inc. Delaware
RECONN, Inc. Delaware
RESAMM, Inc. Delaware
REVA, Inc. Delaware
DCC Project Nine, Inc. Delaware
Dana Risk Management Services, Inc. Ohio
Dana Venture Capital Corporation Ohio
Rosetta Technologies, Inc. Delaware
Findlay Properties, Inc. Ohio
Glendale Investment Company Ohio
Ottawa Properties, Inc. Michigan
Shannon Properties, Inc. Delaware
First Shannon Realty of North Carolina, Inc. North Carolina
Lenox I-4 Lakeland Associates Florida
Region Center Associates Florida
Sunforest Communications Group Florida
Avalon Partners Two Delaware
Bethesda-BOB Limited Partnership Delaware
Blue Diamond Limited Partnership Delaware
D.C.L. Leasing Partners Limited Partnership,Ltd.-IV Delaware
D.C.L. Leasing Partners Limited Partnership,Ltd.-VI Delaware
Farnborough Properties Partners I Limited Delaware
Farnborough Properties Partners II Limited Delaware
Farnborough Properties Partners III Limited Delaware
Farnborough Properties Partners IV Limited Delaware
Federal Southfield Limited Partnership Delaware
Home Improvement Leasing Limited Partnership Delaware
SAM Terabac Limited Partnership Delaware
Terabac Investors Limited Partnership Delaware
Hayes-Dana Inc. Canada
Hayes-Dana (Quebec), Inc. Canada
St. Catharines Financial Inc. Canada
Dana Commercial Credit, Canada Inc. Canada
Krizman Canada, Inc. Canada
Shenyang Spicer Driveshaft Co. Ltd. China
Dana Japan, Ltd. Japan
Dantean Co., Ltd Thailand
Dana Asia (Thailand) Ltd. Thailand
Spicer Asia (Thailand) Ltd. Thailand
Dana Industrial Co., Ltd. Thailand
4
EXHIBIT 21 (continued)
Name Jurisdiction
- ---- ------------
Dana Asia (Singapore) Pte. Ltd. Singapore
Dana Asia (Taiwan) Ltd. Taiwan
Dana Asia (Taiwan) APD Co., Ltd. Taiwan
Spicer Asia Engineering Ltd. Taiwan
Taiyiu Warner Industrial Ltd. Taiwan
Dana Australia (Holdings) Limited Australia
Dana Australia Pty Limited Australia
Truckline Parts Centres Pty. Ltd. Australia
Spicer Drive Train Pty. Ltd. Australia
Warner Electric Australia Pty. Ltd. Australia
Dana Europe Holdings B.V. Netherlands
Dana Distribution (Holland) B.V. Netherlands
Technisch Bureau Hoevelaken B.V. Netherlands
Warner Electric B.V. Netherlands
Spicer Netherland B.V. Netherlands
Superior Electric Nederland B.V. Netherlands
Tece Almere B.V. Netherlands
Europecas S.A. Portugal
Europecas (Porto) Comercio de Pecas Veiculos Lda. Portugal
Warner Electric SA Belgium
Dana Holdings Limited United Kingdom
Dana Limited United Kingdom
Brown Brothers Corporation Ltd. United Kingdom
Brown Brothers Engineering Limited United Kingdom
Steiber Formsprag Ltd. United Kingdom
Posidata Ltd. United Kingdom
B. Equipment Ltd. United Kingdom
Warner Electric Limited United Kingdom
Wichita Company Limited United Kingdom
Steiber Ltd. United Kingdom
Superior Electric Engineering Services, Ltd. United Kingdom
Shannon Properties UK, Ltd. United Kingdom
Shannon Finance Ltd. United Kingdom
Dana Commercial Credit Ltd. United Kingdom
Dana Commercial Credit (UK) Ltd. United Kingdom
Farnborough Properties Company United Kingdom
Farnborough Airport Properties Company United Kingdom
Dana S.A. France
Floquet Monopole S.A. France
Societe Industrielle de Precision Marti, S.A. France
S.R.I.M. France
Spicer France S.A.R.L. France
Warner France S.A. France
Collins & Tournadre "Tourco" France
GIE Warner & Tourco France
Steiber S.A.R.L. France
Superior Electric S.A.R.L. France
Dana Finance S.A. France
5
EXHIBIT 21 (continued)
Name Jurisdiction
- ---- ------------
Spicer India Limited India
Dana Italia SPA Italy
Sige Brevetti. Ing. Columbo SpA Italy
Metaltechno SpA Italy
Warner Electric Ltd. Spain
Dana Equipamientos, S.A. Spain
Dana AB Sweden
Warner-Tollo AB Sweden
Warner Electric (International) S.A. Switzerland
Warner Electric S.A. Switzerland
Dana GmbH Fed. Republic of Germany
Dana Holding GmbH Fed. Republic of Germany
Stieber Formsprag GmbH Fed. Republic of Germany
The Weatherhead GmbH Fed. Republic of Germany
Warner Electric GmbH Fed. Republic of Germany
Erwin Hengstler Hydraulic GmbH Fed. Republic of Germany
Spicer GmbH Fed. Republic of Germany
Dana Beteilgungs Fed. Republic of Germany
Reinz Dichtungs Fed. Republic of Germany
Euro Reinz GmbH Fed. Republic of Germany
Stieber Antriebselemente GmbH Fed. Republic of Germany
Dana Equipamentos Ltda. Brazil
Albarus, S.A. Industrial E Comercio Brazil
Albarus Corretora de Seguros Ltda. Brazil
Pellegrino Autopecas Industrial e Comercio Ltda. Brazil
Albarus Sistemas Hidraulicos Ltda. Brazil
Induscromo Industria e Comercio de Cromo Ltda. Brazil
Albarus S.A. Comercial e Exportadora Brazil
Cirane Industria e Comercio Ltda. Brazil
International Machinery S.A. Brazil
Warner Electric do Brasil Ltda. Brazil
Previalbarus Societe de Providencia Brazil
Simese Parish Ltda. Brazil
Solar Insurance Company Limited Bermuda
Astro Insurance Company Ltd. Bermuda
Dana Foreign Sales Corp. Virgin Islands
Fairway Captive Services Limited Virgin Islands
DCC Spacecom Ltd. Virgin Islands
Dana Asia (Hong Kong) Limited Hong Kong
Shui Hing Manufacturing Company Limited Hong Kong
Shenyang Spicer Limited Hong Kong
Technologia de Mocion Controlada S.A. de C.V. Mexico
UBALI S.A. Uruguay
Talesol S.A. Uruguay
6
EXHIBIT 21 (continued)
Name Jurisdiction
- ---- ------------
E. Daneri, I.C.S.A. Argentina
Aros Daneri, S.A. Argentina
Danargen, S.A.I.C. Argentina
Dana Asia Pacific (Malaysia) Sdn. Bhd. Malaysia
Dana Asia (Korea) Co., Ltd Korea
Industria De Ejes y Transmissiones S.A. Colombia
Transejes C.D. Ltda. Columbia
Transpart Ltda. Columbia
Transcar Ltda. Columbia
Transmotor Ltda. Columbia
1
Exhibit 23
----------
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 33-64198) of Dana Corporation of our report dated
February 12, 1995 appearing on page 18 of the Annual Report to Shareholders
which is incorporated in this Annual Report on Form 10-K. We also consent to
the incorporation by reference of our report on the Financial Statement
Schedules, whcih appears on page 18 of this Form 10-K.
PRICE WATERHOUSE LLP
Toledo, Ohio
March 10, 1995
1
Exhibit 24
POWER OF ATTORNEY
The undersigned directors and/or officers of DANA CORPORATION hereby
constitute and appoint SOUTHWOOD J. MORCOTT, JAMES E. AYERS, CHARLES W. HINDE,
SUE A. GRIFFIN and MARTIN J. STROBEL, and each of them, severally, their true
and lawful attorneys-in-fact with full power for and on their behalf to execute
the Corporation's Annual Report on Form 10-K for the fiscal year ended December
31, 1994, including any and all amendments thereto, in their names, places and
stead in their capacity as directors and/or officers of the Corporation, and to
file the same with the Securities and Exchange Commission on behalf of the
Corporation under the Securities and Exchange Act of 1934, as amended.
This Power of Attorney automatically ends as to each appointee upon the
termination of his or her service with the Corporation.
IN WITNESS WHEREOF, the undersigned have executed this instrument the
12th day of December, 1994.
B. F. Bailar J. D. Stevenson
- -------------------------------- -------------------------------
B. F. Bailar J. D. Stevenson
E. M. Carpenter T. B. Sumner
- -------------------------------- -------------------------------
E. M. Carpenter T. B. Sumner
R. T. Fridholm J. E. Ayers
- -------------------------------- -------------------------------
E. Clark J. E. Ayers
E. Clark C. W. Hinde
- -------------------------------- -------------------------------
R. T. Fridholm C. W. Hinde
G. H. Hiner S. A. Griffin
- -------------------------------- -------------------------------
G. H. Hiner S. A. Griffin
M. A. Marks M. J. Strobel
- -------------------------------- -------------------------------
M. A. Marks M. J. Strobel
S. J. Morcott
- --------------------------------
S. J. Morcott
5
1,000
YEAR
DEC-31-1994
JAN-01-1994
DEC-31-1994
48,200
64,000
960,400
19,600
740,200
0
2,797,000
1,449,800
5,110,800
0
1,186,500
98,800
0
0
841,000
5,110,800
6,613,800
6,740,500
5,624,000
5,624,000
0
0
113,400
391,600
151,400
0
0
0
0
228,200
2.31
0
