1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
- ------- Quarterly Report Pursuant to Section 13 or 15(d)
| / | Of the Securities Exchange Act of 1934
| \/ |
- ------- Commission
For the Quarterly Period Ended June 30, 1995 File Number 1-1063
------------- ------
Dana Corporation
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Virginia 34-4361040
- ------------------------------- ----------------------
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification Number)
4500 Dorr Street, Toledo, Ohio 43615
- --------------------------------------- ----------------------
(Address of Principal Executive Offices) (Zip Code)
(419) 535-4500
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
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 the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding at June 30, 1995
- ---------------------------- ----------------------------
Common stock of $1 par value 101,275,874
2
DANA CORPORATION AND CONSOLIDATED SUBSIDIARIES
INDEX
Page Number
-----------
Cover 1
Index 2
Part I. Financial Information
Item 1. Financial Statements
Condensed Balance Sheet
December 31, 1994 and
June 30, 1995 3
Statement of Income
Three Months and Six Months Ended
June 30, 1994 and 1995 4
Condensed Statement of Cash Flows
Six Months Ended
June 30, 1994 and 1995 5
Notes to Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 7 - 12
Part II. Other Information
Item 1. Legal Proceedings 13 - 14
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
Exhibit Index 17
2
3
PART I. FINANCIAL INFORMATION
ITEM 1. DANA CORPORATION
CONDENSED BALANCE SHEET (Unaudited)
(in Millions)
Assets December 31, 1994 June 30, 1995
------ ------------------ ---------------
Cash and Cash Equivalents $ 112.2 $ 77.7
Accounts Receivable, Less
Allowance for Doubtful Accounts 960.4 1,162.0
Inventories
Raw Materials 186.4 202.9
Work in Process and Finished Goods 553.8 613.5
Lease Financing 931.0 945.3
Investments and Other Assets 793.2 791.7
Deferred Income Tax Benefits 226.6 235.8
Property, Plant and Equipment 2,797.0 3,072.4
Less - Accumulated Depreciation (1,449.8) (1,594.1)
-------------- --------------
Total Assets $ 5,110.8 $ 5,507.2
============== ==============
Liabilities and Shareholders' Equity
------------------------------------
Short-Term Debt $ 583.1 $ 691.5
Accounts Payable 390.2 421.4
Other Liabilities 749.1 774.2
Deferred Employee Benefits 1,109.9 1,121.5
Long-Term Debt 1,186.5 1,294.5
Minority Interest 152.2 157.2
Shareholders' Equity 939.8 1,046.9
-------------- --------------
Total Liabilities and
Shareholders' Equity $ 5,110.8 $ 5,507.2
============== ==============
3
4
ITEM 1. (Continued)
DANA CORPORATION
STATEMENT OF INCOME (Unaudited)
(in Millions Except Per Share Amounts)
Three Months Ended June 30 Six Months Ended June 30
-------------------------- ------------------------
1994 1995 1994 1995
---- ---- ---- ----
Net Sales $1,712.6 $1,968.8 $3,309.3 $3,893.2
Revenue from Lease Financing
and Other Income 37.5 46.4 71.3 90.9
Foreign Currency Adjustments (15.8) .6 (23.5) 3.7
-------- --------- -------- --------
1,734.3 2,015.8 3,357.1 3,987.8
-------- --------- -------- --------
Cost of Sales 1,431.8 1,654.2 2,794.7 3.288.4
Selling, General and
Administrative Expenses 161.3 173.1 306.9 336.0
Interest Expense 26.7 36.0 54.7 69.1
-------- --------- -------- --------
1,619.8 1,863.3 3,156.3 3,693.5
-------- --------- -------- --------
Income Before Income Taxes 114.5 152.5 200.8 294.3
Estimated Taxes on Income 46.4 58.0 86.5 116.5
-------- --------- -------- --------
Income Before Minority Interest and
Equity in Net Earnings (Loss) of Affiliates 68.1 94.5 114.3 177.8
Minority Interest (7.3) (11.0) (10.5) (20.4)
Equity in Net Earnings (Loss) of Affiliate 7.2 5.6 11.9 (9.1)
-------- --------- -------- --------
Net Income $ 68.0 $ 89.1 $ 115.7 $ 148.3
======== ========= ======== ========
Net Income Per Common Share $ .69 $ .88 1.17 $ 1.47
======== ========= ======== ========
Dividends Declared and Paid Per
Common Share $ .21 $ .23 .41 $ .44
======== ========= ======== ========
Average Number of Shares Outstanding 98.6 101.2 98.6 101.2
4
5
ITEM 1. (Continued)
DANA CORPORATION
CONDENSED STATEMENT OF CASH FLOWS (Unaudited)
(in Millions)
Six Months Ended June 30
-----------------------------------
1994 1995
---- ----
Net Income $ 115.7 $ 148.3
Depreciation and Amortization 102.1 114.9
Net Change in Receivables, Inventory and Payables (99.3) (212.3)
Other 25.1 27.9
----------- ----------
Net Cash Flows from Operating Activities 143.6 78.8
----------- ----------
Purchases of Property, Plant and Equipment (128.1) (168.2)
Purchases of Assets to be Leased (129.1) (168.8)
Payments Received on Leases and Loans 106.8 124.6
Purchase of Minority Interest of Subsidiary (92.4)
Proceeds from Sales of Leased Assets 16.7 42.1
Other (2.7) (7.1)
----------- ----------
Net Cash Flows-Investing Activities (136.4) (269.8)
----------- ----------
Net Change in Short-Term Debt 161.1 104.5
Proceeds from Long-Term Debt 135.7 270.3
Payments on Long-Term Debt (261.7) (175.5)
Dividends Paid (40.4) (44.5)
Other 4.5 1.7
----------- ----------
Net Cash Flows-Financing Activities (.8) 156.5
----------- ----------
Net Change in Cash and Cash Equivalents $ 6.4 $ (34.5)
Cash and Cash Equivalents-beginning of year 77.6 112.2
----------- ----------
Cash and Cash Equivalents-end of period $ 84.0 77.7
----------- ----------
5
6
ITEM 1 (Continued)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(in Millions Except Per Share Amounts)
1. In the opinion of management, all normal recurring adjustments necessary
to a fair presentation of the results for the unaudited interim periods
have been included.
2. In accordance with generally accepted accounting principles, Dana's
wholly-owned financial subsidiary, Diamond Financial Holdings, Inc.
(DFHI), is included in the consolidated financial statements. The
following is a recap of the revenue, net income, total assets, total
liabilities and shareholder's equity of this subsidiary (unaudited):
DIAMOND FINANCIAL HOLDINGS, INC.
Three Months Ended June 30 Six Months Ended June 30
-------------------------- ------------------------
1994 1995 1994 1995
---- ---- ---- ----
Revenue $ 44.1 $ 53.0 $ 86.0 $ 103.8
Net Income 4.3 6.4 8.1 11.3
December 31, 1994 June 30, 1995
----------------- -------------
Total Assets $ 1,387.5 $ 1,360.3
Total Liabilities 1,295.5 1,260.6
========== ==========
Shareholder's Equity $ 92.0 $ 99.7
========== ==========
3. In the first quarter of 1995, Dana acquired Plumley Companies, Inc.
(Plumley), a manufacturer of rubber and silicone sealing products,
primarily for automotive applications. Plumley is being accounted for as a
pooling of interests. Prior years' financial statements have not been
restated since the amounts are not material to the consolidated financial
statements.
4. In the first quarter of 1995, Dana recorded a non-operating charge of
approximately $18 ($.17 per share) for its proportionate share of
translation losses incurred by its Mexican affiliate, Spicer S.A. de C.V.,
due to the devaluation of the Mexican peso.
5. In the first quarter of 1995, Dana made a tender offer for all of the
outstanding shares of Hayes-Dana Inc. that it did not own. At June 30,
1995, Dana had increased its ownership in Hayes-Dana from 57 percent to
100 percent.
6
7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
- ------ ---------------------------------------
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
Liquidity and Capital Resources
- -------------------------------
(in Millions)
Capital expenditures for property, plant and equipment were $168 for the
first six months of 1995, compared to $128 for the first six months of 1994;
however, capital expenditures for all of 1995 are currently projected to be
approximately the same as 1994's expenditures of $337.
Dana Corporation and its consolidated subsidiaries' (Dana) 1995 debt as
of June 30, totaled $1,986, an increase of $216 from year end 1994. This
increase is primarily due to the higher level of capital expenditures, the
purchase of the minorities' shares of Hayes-Dana, and the working capital
requirements resulting from strong sales growth. Dana, excluding Diamond
Financial Holdings, Inc. (DFHI) and Dana Credit Corporation (DCC), finances its
short-term debt through the issuance of commercial paper and bank borrowings.
To fund its working capital requirements, Dana (excluding DFHI and DCC) has
$370 in committed credit facilities available to back up the issuance of
commercial paper obligations and $959 in uncommitted lines with banks for bank
borrowings. At June 30, 1995, Dana (excluding DFHI and DCC) had domestic and
international short-term borrowings of $309, as compared to $261 at December
31, 1994. DFHI obtains its short-term funds through bank borrowings. As of
June 30, 1995, DFHI's bank lines totaled $120, all of which was then
outstanding. DCC finances its short-term U.S. and international debt
requirements through the issuance of commercial paper and bank direct
borrowings. DCC had committed credit facilities for commercial paper issuance
in the amount of $250, committed bank lines of $19, and uncommitted bank lines
of $389. Against these credit lines, DCC had borrowed $262 at June 30, 1995,
compared to $177 at December 31, 1994. Dana's consolidated long-term debt
increased to $1,295 at June 30, 1995, from $1,187 at December 31, 1994. This
increase includes the effect of ongoing debt and interest rate management which
involves the periodic replacement of short-term debt with long-term debt.
Dana's (excluding DFHI and DCC) long-term debt position at June 30, 1995 was
$701, up from $542 at year end 1994. DCC's long-term debt at the end of the
first six months of 1995 was $594 as compared to $640 at December 31, 1994.
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 operations. Upon approval of
these plans, estimated costs of implementation (including employee benefits and
other expenses incidental to the actions) are charged to cost of sales. The
Company had remaining accrued liabilities of $16 at June 30, 1995, compared to
$26 as of December 31, 1994. Of the $16 liability accrued at June 30, 1995,
it is anticipated $11 will be paid in 1995 and $5 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 proceedings
to which the Company and its subsidiaries were parties as of June 30, 1995
(including, among others, those involving product liability claims and alleged
violations of environmental laws) and concluded that neither the liabilities
that may result from these legal proceedings nor the timing of the cash flows
for these liabilities are likely to have a material adverse effect on its
liquidity, financial condition or results of operations. The Company estimates
its contingent environmental and product liabilities based upon the most
probable method of remediation or outcome considering currently enacted laws
and regulations and existing technology. Measurement of liabilities is made on
an undiscounted basis and excludes the effects of inflation and other societal
and economic factors. In those cases where there is a range of equally
probable remediation
7
8
ITEM 2. Liquidity and Capital Resources (continued)
- ---------------------------------------
(in Millions)
methods or outcomes, the Company accrues at the lower end of the range, which
at June 30, 1995, was $67 for product liability costs (products) and $51 for
environmental liability costs (environmental), compared to $77 for products and
$48 for environmental at December 31, 1994. The difference between minimum and
maximum contingent liabilities, while not considered material, was $11 for
products and $6 for environmental at June 30, 1995 compared to $11 for products
and $5 for environmental at December 31, 1994. Probable recoveries of $47 for
products and $10 for environmental from insurance or third parties have been
recorded as assets at June 30, 1995, compared to $61 for products and $6 for
environmental at December 31, 1994.
The Company is also a defendant in a lawsuit, described in Part II,
Item 1 of this report, brought by the Department of Justice alleging that a
former operation, which was a subsidiary of a company purchased by Dana in
January 1985, had overcharged the U.S. government on contracts or subcontracts
awarded during the late 1970s and the 1980s. The complaint, amended in July
1995, includes claims for statutory civil penalties and for damages in an
unspecified amount. The government has indicated that the damages are
approximately $25, some of which may be subject to doubling or trebling or, in
the alternate, to the accrual of interest. The Company is continuing to defend
this case vigorously and to engage in settlement negotiations with the
government. Dana believes that it will be able to resolve this ligitation for
an amount substantially less than the potential double or treble damages and
therefore does not anticipate that the outcome of this lawsuit will have a
material adverse effect on its liquidity, 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.
8
9
ITEM 2. (Continued)
- -------
Results of Operations (Second Quarter 1995 vs Second Quarter 1994)
- ------------------------------------------------------------------
(in Millions)
Dana's second quarter sales were $1,969, an increase of 15% over 1994's
second quarter of $1,713. Factors influencing Dana's growth included continued
strong demand for the Company's highway vehicle original equipment products in
the U.S., strength in the worldwide construction equipment markets, improving
international markets and effects of recent acquisitions. These acquisitions
and the effect of fully consolidating an affiliate, previously accounted for on
an equity basis, contributed $80 to the sales increase, $32 in the U.S. and $48
internationally. Dana's mix of original equipment and aftermarket sales,
international presence and prominence in truck components have helped sustain
the Company's growth even while passenger car sales in the U.S. have softened.
Dana's second quarter 1995 sales to U.S. light truck manufacturers were up
more than 18% over 1994's second quarter as a result of the ongoing popularity
of light trucks and sport utility vehicles. The Company's U.S. medium and heavy
truck OE sales each increased 14% in the second quarter 1995 over the same
period in 1994. Dana sales to the worldwide highway vehicle market, both U.S.
and international, were up 20% this quarter over the 1994 quarter. The
Company's second quarter sales to the mobile off-highway OE market increased
26% in 1995 over 1994, reflecting strength in the construction and agricultural
machinery markets worldwide as well as the impact of a European acquisition.
Dana's industrial OE component sales increased 6% on a worldwide basis,
comprised of a 6% increase in the U.S. and 5% internationally. The Company's
overall distribution sales grew 5% in the second quarter of 1995 over the same
period of 1994 in part due to acquisitions and increases in international
aftermarket operations, with automotive distribution increasing 3%, truck parts
8% and mobile off-highway/industrial 7%.
Dana's U.S. sales increased 11% while international sales increased 26% in
the second quarter 1995 versus second quarter 1994. On a regional basis, the
Company's second quarter 1995 sales increased 11% in North America, 19% in
South America, 30% in Europe and 117% in Asia Pacific over second quarter 1994
sales. After adjusting for the effect on sales of recent acquisitions and
obtaining majority ownership and consolidation of a Taiwanese affiliate that
was accounted for on the equity method in 1994, North American sales increased
9%, South American 17%, European 18% and Asia Pacific 12%.
Revenue from lease financing and other income increased $9 in the second
quarter of 1995 over 1994 due principally to higher 1995 interest income and
gains on sales of leased assets.
Adjustments for translation of foreign currency resulted in a gain of less
than $1 for the second quarter of 1995 compared to a loss of $16 in 1994. This
$17 difference is almost exclusively related to the translation from local
currency to U.S. dollars of the Company's Brazilian operations. The new
Brazilian currency (real) was introduced at parity with the U.S. dollar during
the third quarter of 1994. The translation of the real has resulted in a
second quarter 1995 gain compared to a loss incurred in the second quarter of
1994 from the translation of the old currency (cruzeiros) to U.S. dollars.
9
10
ITEM 2. Results of Operations (Second Quarter 1995 vs Second Quarter 1994)
- --------------------------------------------------------------------------
(continued)
(in Millions)
Dana's consolidated gross margin decreased to 16.0% for the second quarter
of 1995 from 16.4% for the same period in 1994 due in part to costs incurred in
1995 for the startup of a U.S. manufacturing facility and the effect of the
change in Brazilian currency. The gross margin for Dana's consolidated
international operations in the second quarter of 1995 was unchanged from the
same period in 1994 prior to adjusting for the Brazilian currency change.
Selling, general and administrative expenses (SG&A) were $173 in the second
quarter of 1995 compared to $161 for the same period in 1994, an increase of
$12. After adjusting for a $6 increase associated with acquisitions made in the
latter half of 1994 and early in 1995, SG&A increased approximately 4%
principally due to higher business levels. Improvement in the Company's ratio
of SG&A expense to sales continues and was 8.8% in 1995's second quarter
compared to 9.4% in the second quarter of 1994 reflecting benefits derived from
expanded sales volumes, technological improvements, increased productivity, and
cost control efforts throughout Dana.
Interest expense increased to $36 for the second three months of 1995 from
$27 for the same period in 1994 due to an increase in the average debt level
and an increase in the overall weighted average interest rate quarter over
quarter. The average debt level increased in 1995 over 1994 primarily due to
the higher level of capital expenditures, the purchase of the minorities'
shares of Hayes-Dana, and the working capital requirements resulting from
strong sales growth.
Minority interest in net income of consolidated subsidiaries increased in
1995's second quarter to $11 from $7 reported in 1994's second quarter due
principally to increased earnings of Dana's subsidiary in Brazil. Other
factors contributing to this change in minority interest were an increase
resulting from the consolidation of the Company's Taiwanese affiliate in 1995
and a reduction due to Dana's purchase of the minorities' shares of Hayes-Dana
during the first and second quarters of 1995.
Income of approximately $6 was reported for equity in net earnings (loss)
of affiliates for the second three months of 1995 compared to approximately $7
for the same period in 1994. Increased earnings for second quarter 1995 over
1994's second quarter by Dana's affiliates in Korea and Venezuela were offset
by lower earnings of the Company's Mexican affiliate and the effect of the
consolidation of its Taiwanese affiliate in 1995 previously accounted for on an
equity basis.
Taxes on income totaled $58 in the second quarter of 1995 compared to $46
in 1994. The effective rate decreased to 38% in the second quarter of 1995 from
41% for 1994's second quarter due in part to a lower effective state tax rate
in 1995 compared to 1994. Due to the increased profitability of the Company in
1995, the fixed portion of state taxes was spread over a larger base resulting
in the lower effective rate than in 1994. A lower effective tax rate
associated with Dana Credit Corporation also contributed to the lower overall
rate in 1995.
10
11
ITEM 2. Results of Operations (Six Months 1995 vs Six Months 1994)
- -------------------------------------------------------------------
(in Millions)
Dana's sales for the first six months of 1995 were $3,893, up nearly
18% over 1994's first six month results of $3,309. The sales growth can be
attributed to unit volume increases experienced by most of the Company's
products supplied to various markets throughout the world and the effect of
recent acquisitions. These acquisitions and the effect of fully consolidating
an affiliate previously accounted for on an equity basis, contributed $156 to
the sales increase, $65 in the U.S. and $91 internationally. Dana has also
benefited from the ongoing strength of the U.S. highway vehicle original
equipment market, worldwide agricultural and construction equipment markets and
the overall improvement of international markets. Dana's mix of original
equipment and aftermarket sales, international presence and prominence in truck
components have helped sustain the Company's growth even while passenger car
sales in the U.S. have softened.
Dana's 1995 year to date sales to U.S. light truck manufacturers were up
19% over 1994's sales for the same six month period as a result of the
continued demand for light trucks and sport utility vehicles. The Company's
U.S. medium and heavy truck OE sales increased 34% and 16%, respectively, for
the first six months of 1995 over 1994's first six months. Dana sales to the
worldwide highway vehicle market, both U.S. and international, were up 23% in
the first six months of 1995 compared to the first six months of 1994. The
Company's 1995 year to date sales to the mobile off-highway OE market increased
29% over the same period in 1994, reflecting strength in the construction and
agricultural machinery markets worldwide as well as the impact of a European
acquisition. Dana's industrial OE component sales increased 14% on a worldwide
basis, comprised of a 19% increase in the U.S. and 8% internationally. The
Company's overall distribution sales grew 7% during the first six months of
1995 compared to the same period of 1994 in part due to acquisitions and
increases in international aftermarket operations, with automotive distribution
increasing 6%, truck parts 7% and mobile off-highway/industrial 9%.
Dana sales from U.S. operations were $2,897 for 1995 year to date, an
increase of 15% over the same period in 1994 while international sales were
$996, an increase of 27% over 1994. On a regional basis, the Company's sales
for the first six months of 1995 increased 14% in North America, 25% in South
America, 28% in Europe and 119% in Asia Pacific over the sales for the same
period in 1994. After adjusting for the effect on sales of recent acquisitions
and the obtaining of majority ownership and consolidation of a Taiwanese
affiliate that was accounted for on the equity method in 1994, North American
sales increased 12%, South American 23%, European 20% and Asia Pacific 16%.
Revenue from lease financing and other income increased $20 for the six
months ended June 30, 1995 compared to the same six month period in 1994 due to
higher interest and lease financing income and higher gains on sales of leased
assets.
Adjustments for translation of foreign currency resulted in a gain of $4
for the first six months of 1995 compared to a loss of $23 in 1994. This $27
difference is almost exclusively related to the translation from local currency
to U.S. dollars of the Company's Brazilian operations. The new Brazilian
currency (real) was introduced at parity with the U.S. dollar during the third
quarter of 1994. The translation of the real has resulted in a gain for year
to date June 1995 compared to a loss incurred in the first six months of 1994
from the translation of the old currency (cruzeiros) to U.S. dollars.
11
12
ITEM 2. Results of Operations (Six Months 1995 vs Six Months 1994) (continued)
- -------------------------------------------------------------------
(in Millions)
Dana's consolidated gross margin for the first six months of 1995 was level
with the same period in 1994 at 15.5%. After adjusting for the impact on 1995's
gross margin of the Brazilian currency change and costs incurred for the start
up of a manufacturing facility in the U.S., June 30, 1995 year to date margin
improved over 1994's gross margin. The gross margin of Dana's consolidated
international operations for the first six months of 1995 was improved over the
same period in 1994.
Selling, general and administrative expenses (SG&A) were $336 for year
to date 1995 compared to $307 for the same period in 1994, an increase of $29.
After adjusting for an increase of $13 associated with acquisitions made in the
latter half of 1994 and early in 1995, SG&A increased approximately 5%
principally due to higher business levels. Improvement in the Company's ratio
of SG&A expense to sales continues and was 8.6% for the first six months of
1995 compared to 9.3% for the same period in 1994 reflecting benefits derived
from expanded sales volumes, technological improvements, increased
productivity, and cost control efforts throughout Dana.
Interest expense increased to $69 for the first six months of 1995 from $55
for the same period in 1994 due to an increase in the average debt level and an
increase in the overall weighted average interest rate period over period. The
average debt level increased in 1995 over 1994 due to the higher level of
capital expenditures, the purchase of the minorities' shares of Hayes-Dana,
and the working capital requirements resulting from strong sales growth.
Minority interest in net income of consolidated subsidiaries increased
for the year to date period ended June 30, 1995 to $20 from $11 for the same
period in 1994 principally to increased earnings of Dana's subsidiary in
Brazil. Other factors contributing to this change in minority interest were an
increase resulting from the consolidation of the Company's Taiwanese affiliate
in 1995 and a reduction due to Dana's purchase of the minorities' shares of
Hayes-Dana during the first and second quarters of 1995.
A loss of approximately $9 was reported for equity in net earnings
(loss) of affiliates for the first six months of 1995 compared to income of
approximately $12 for the same period in 1994. The 1995 loss resulted as the
Company recorded a non-operating charge of approximately $18 for Dana's
proportionate share of translation losses incurred by its Mexican affiliate,
Spicer S.A. de C.V., due to the devaluation of the Mexican peso. The value of
the Mexican peso has stabilized at approximately 6 pesos to the U.S. dollar.
Although future movement is difficult to predict, if the peso to dollar value
remains at its current level, additional translation losses will not be
incurred.
Taxes on income totaled $117 for the first six months of 1995 compared to
$87 in 1994. The effective rate for year to date 1995 was 40%, down from 43%
for same period in 1994 due in part to a lower effective state tax rate in 1995
compared to 1994. Due to the increased profitability of the Company in 1995,
the fixed portion of state taxes was spread over a larger base resulting in the
lower effective rate than in 1994. A lower effective tax rate associated with
Dana Credit Corporation also contributed to the lower overall rate in 1995.
While the economies of certain countries, such as the U.S., are showing
signs of slower growth, Dana expects sales of its vehicular components to
sustain moderate growth levels in the coming months. North American light
trucks and sport utility vehicles and the mobile off-highway markets continue
to be relatively strong while heavy truck orders have begun to soften and
aftermarket sales are becoming increasingly competitive and are not expected to
grow appreciably in the second half of 1995. The non-U.S. vehicular OE,
aftermarket and industrial markets are expected to sustain moderate growth and
this will provide strength for Dana's international operations.
12
13
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company and its consolidated subsidiaries are parties to various
pending judicial and administrative proceedings arising in the ordinary course
of business, including, among others, those involving product liability claims
and those involving alleged violations of various federal, state and local
environmental laws. Management has reviewed with legal counsel the probable
outcome of these pending legal 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 these proceedings cannot be predicted with certainty,
management believes that the 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. These
include the following:
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. Thereafter, the Company engaged in discussions with IDEM
about the sampling plan and Notice of Deficiency and with USEPA 5 about the
proposed penalties. In 1994, BRC was, in effect, dismissed from the case and
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 acceptable to IDEM will commence in the third quarter 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 second quarter of 1995.
13
14
ITEM 1. LEGAL PROCEEDINGS. (Continued)
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. Those negotiations
continued in the second quarter of 1995.
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 and two other
parties that have subsequently been dismissed, Warner Electric Brake and Clutch
Company, Inc. ("Warner Electric") and Beaver Precision Products, Inc.
("Beaver"). Suit was brought in the U.S. District Court, Eastern District of
Michigan under the federal False Claims Act and various common law theories.
The complaint, which was amended in July 1995, alleges overcharging on U.S.
government contracts or subcontracts awarded to Beaver during the late 1970s
and 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. The amended complaint includes claims
for statutory civil penalties and for damages. The amount of damages sought is
not specified in the amended complaint, but the government has indicated that
these damages are approximately $25 million, some of which may be subject to
doubling or trebling or, in the alternate, to the accrual of interest. 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. The Company
believes that it will be able to resolve this litigation for an amount
substantially less than the potential double or treble damages.
14
15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a) The Exhibits listed in the "Exhibit Index" are filed
as a part of this report
b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter
ended June 30, 1995.
15
16
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DANA CORPORATION
----------------
Date: July 28, 1995 \s\ James E. Ayers
------------------- ------------------------------
James E. Ayers
Chief Financial Officer
Vice President Finance and
Treasurer
Duly Authorized Officer and
Principal Financial Officer.
16
17
EXHIBIT INDEX
--------------
Exhibit
-------
10-F Excess Benefits Plan, amended February 13, 1995
10-I(1) Director Deferred Fee Plan, amended February 13, 1995
10-J(14) Amendment No. 1 dated February 13, 1995, to the Employment Agreement
between Registrant and Southwood J. Morcott. Substantially similar
amendments were made to the Employment Agreements of Messrs. Ayers,
Hirsch, Magliochetti, Reimer and Strobel.
10-K Supplemental Benefits Plan, amended February 13, 1995
10-N Supplementary Bonus Plan, effective December 12, 1994
27 Financial Data Schedule
Note: Exhibits 10-F through 10-N are management contracts or
compensatory plans required to be filed as exhibits to
this Form 10-Q pursuant to Part II,Item 6 of this report.
17
1
EXHIBIT 10-F
------------
February 13, 1995
DANA CORPORATION EXCESS BENEFITS PLAN
-------------------------------------
ARTICLE I
---------
DEFINITIONS
-----------
1.1. "Benefit Payment Period" means the one of the following that applies to
the particular Employee or Recipient:
(a) For an Employee or Recipient who is receiving payments for the
remainder of a term certain period, Benefit Payment Period means the
remainder of such term certain period.
(b) For an Employee or Recipient who is receiving payments for his or
her remaining lifetime, the Benefit Payment Period is the Life Expectancy of
the Employee or Recipient.
(c) For an Employee or Recipient who is receiving payments for his or
her remaining lifetime plus payments for the lifetime of a Contingent
Annuitant, the Benefit Payment Period is the Life Expectancy of the Employee
or Recipient plus an additional period to reflect the Life Expectancy of the
Contingent Annuitant after the death of the Employee or Recipient.
1.2. "Board" means the Board of Directors of the Company.
1.3. "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 l4A of Regulation
l4A promulgated under the Securities Exchange Act of 1934 as in effect from
time to time; 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
Company representing twenty percent (20%) or more of the combined voting power
of the Company's then outstanding securities or (b) during any period of 24
consecutive months, commencing before or after the
2
effective date of this Plan, individuals who at the beginning of such
twenty-four month period were directors of the Company cease for any reason to
constitute at least a majority of the Board of Directors of the Company.
Notwithstanding anything to the contrary in this Plan, the term "person"
referred to in clause (a) above of this Section 1.3 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 or any corporation controlled by the Company.
1.4. "Code" means the Internal Revenue Code of 1986, as amended, or as it may
be amended from time to time.
1.5. "Company" means Dana Corporation, a corporation organized under the laws
of the Commonwealth of Virginia.
1.6. "Contingent Annuitant" means the person designated to receive retirement
benefits under this Plan following the death of the Employee or a Recipient.
1.7. "Deferred Awards" means deferred awards, earned under the Dana
Corporation Additional Compensation Plan on account of long- or short- term
award periods --
(a) ending on or after January 1, 1988, except as provided in
paragraph (b), below, and
(b) ending either before January 1, 1988, or on or after January 1,
1988, solely for purposes of determining the amount of the Employee's benefit
under Section 5 of Part I of Appendix E of the Retirement Plan.
1.8. "Effective Date" means September 1, 1988.
1.9. "Employee" means an individual who is a participant (including a retired
participant) in a funded, defined benefit pension plan maintained by the
Company, or any successor plan that may be adopted or substituted for such plan
if, and only if,
(a) the individual's benefits under such defined benefit plan are
limited by reason of the provisions of such plan that are designed to comply
with the limitations imposed by Section 401(a)(17) or Section 415 of the
Code; and/or
3
(b) the individual is actively employed by the Company on or after
September 1, 1988, and the individual's benefits under such defined benefit
plan are limited by reason of the fact that Deferred Awards are not
recognized as earnings for purposes of determining the individual's benefits
under such defined benefit plan.
1.10. "Life Expectancy" means the expected remaining lifetime based on the
Mortality Table and the age at the nearest birthday of the Employee or
Recipient at the date the Lump Sum Payment is made. If a joint and contingent
survivor annuity has been elected, then Life Expectancy shall reflect the joint
Life Expectancies of the Employee or Recipient and Contingent Annuitant.
1.11. "Lump Sum Payment" shall be determined as set forth in paragraph (c) of
Section 4.7 of the Plan.
1.12. "Mortality Table" shall mean the Unisex Pension 1984 Mortality Table
set forward one year in age (or such other pensioner annuity mortality table as
the Company with the written consent of the Employee or Recipient shall
determine) and the associated Uniform Seniority Table for the determination of
joint life expectancies.
1.13. "Net Specified Rate" shall mean the interest rate which will produce
income on a tax free basis that equals the income produced by the Specified
Rate net of the combined highest rates of Federal, state and local income taxes
that are in effect in the jurisdiction of the Employee or Recipient on the date
of payment of the Lump Sum Payment.
1.14. "Pension Plan" means the funded, defined benefit pension plan in which
an Employee was participating at the time of his termination of employment (or
retirement) from the Company.
1.15. "Plan" means the "Dana Corporation Excess Benefits Plan", as set forth
herein.
1.16. "Plan Administrator" means the Plan Administrator appointed under the
Pension Plan.
1.17. "Retirement Plan" means the Dana Corporation Retirement Plan, as
amended from time to time.
4
1.18. "Specified Rate" shall mean an interest rate equal to 85% of a
composite insurance company annuity rate provided by an actuary designated by
the Plan Administrator (and provided by such actuary as of the last month of
the calendar year next preceding the calendar year in which the distribution is
made), subject to the condition that the interest rate in effect for any such
year may not differ from the rate in effect for the prior year by more than
one-half of one percent, and also subject to the condition that any such rate
shall be rounded to the nearest one-tenth of one percent (and if such rate is
equidistant between the next highest and next lowest one-tenth of one percent,
rounded to the next lowest one-tenth of one percent).
ARTICLE II
----------
PURPOSE OF THE PLAN
-------------------
2.1. PURPOSE. This Plan as adopted effective September 1, 1988, is hereby
amended effective February 13, 1995 and is intended to continue the excess
benefits plan of the Company that had previously been set forth in a Resolution
of the Board dated June 9, 1975, as amended and supplemented by Resolutions
dated April 14, 1980, February 14, 1983, December 10, 1984, February 16, 1988,
and January 29, 1993.
ARTICLE III
-----------
ELIGIBILITY
-----------
3.1. ELIGIBILITY. All Employees and beneficiaries of Employees eligible to
receive retirement benefits from a funded, defined benefit pension plan
sponsored by the Company shall be eligible to receive benefits under this Plan
in accordance with Article IV, regardless of when the Employee may have
terminated employment or retired (except as otherwise specified by Article IV).
5
ARTICLE IV
----------
BENEFITS
--------
4.1. BASIC BENEFIT.
(a) An Employee who, on or after September 1, 1988, terminates active
employment or retires from active employment with the Company shall be
entitled to receive a lump sum payment equal to the excess (if any) of:
(i) the total of the lump sum benefits that the Employee would
have received from all Company-sponsored, funded, defined benefit pension
plans in which he was a participant, determined without regard to the
limitations on such benefits imposed by such plans in order to comply
with the limitations imposed by Section 401(a)(17) and Section 415 of
the Code and, in the case of an Employee who is actively employed by the
Company on or after September 1, 1988, and solely for purposes of the
benefits payable from the Retirement Plan (but not for purposes of any
benefits payable pursuant to the second paragraph of Section 14 of Part
I of Appendix E of the Retirement Plan), determined without regard to
the provisions of the Retirement Plan that exclude Deferred Awards under
the Dana Corporation Additional Compensation Plan from the definition of
earnings under the Retirement Plan, and determined, except as provided
in Section 4.1(e) hereof, on the basis of the Mortality Table and 120
percent of the interest rate that would be used (as of January 1 of the
calendar year in which the first benefit payment is to be made) by the
Pension Benefit Guaranty Corporation with respect to an immediate
annuity for purposes of determining the present value of a lump sum
distribution on plan termination, over
(ii) the total of the lump sum benefits that he is entitled to
receive from such Company-sponsored, funded, defined benefit pension
plans, determined on the basis of the assumption that the Employee's
benefits under such plans are paid in the form of a lump sum benefit,
payable as of the Employee's date of retirement under the Pension Plan
and determined, except as provided in Section 4.1(e) hereof, on the
basis of the Mortality Table and 120 percent of the interest rate that
would be used (as of January 1 of the calendar year in which the first
benefit payment is to be made) by the Pension Benefit Guaranty
Corporation
6
with respect to an immediate annuity for purposes of determining the
present value of a lump sum distribution on plan termination.
(b) Subject to the provisions of Section 4.2 hereof, the benefit
payable pursuant to paragraph (a) of this Section 4.1, shall be paid in the
form of a lump sum payment, payable as of the Employee's date of retirement
under the Pension Plan.
(c) If an Employee eligible for a benefit under the Plan dies before
the date as of which such benefit is scheduled to be paid hereunder, a lump
sum benefit shall be paid to the Employee's surviving spouse (if any), as of
the month (if any) in which the spouse's benefits commence under the Pension
Plan. The amount of such benefit shall be a lump sum payment equal to the
excess (if any) of:
(i) the total of the lump sum benefits that the spouse would have
received from all Company-sponsored, funded, defined benefit pension
plans in which the Employee was a participant but for the limitations on
benefits imposed by such plans in order to comply with the limitations
imposed by Section 401(a)(17) and Section 415 of the Code and, in the
case of an Employee who is actively employed by the Company on or after
September 1, 1988, and solely for purposes of the benefits payable from
the Retirement Plan (but not for purposes of any benefits payable
pursuant to the second paragraph of Section 14 of Part I of Appendix E
of the Retirement Plan), determined without regard to the provisions of
the Retirement Plan that exclude Deferred Awards under the Dana
Corporation Additional Compensation Plan from the definition of earnings
under the Retirement Plan, and determined on the basis of the Mortality
Table and 120 percent of the interest rate that would be used (as of
January 1 of the calendar year in which the first benefit payment is to
be made) by the Pension Benefit Guaranty Corporation with respect to an
immediate annuity for purposes of determining the present value of a
lump sum distribution on plan termination, over
(ii) the total of the lump sum benefits that the spouse is
entitled to receive from such Company-sponsored, funded, defined benefit
pension plans, determined on the basis of the assumption that the
spouse's benefits under such plans are paid in the form of a lump sum
benefit and determined on the basis of the Mortality Table and 120
percent of the interest rate that would be used (as of
7
January 1 of the calendar year in which the first benefit payment is to
be made) by the Pension Benefit Guaranty Corporation with respect to an
immediate annuity for purposes of determining the present value of a
lump sum distribution on plan termination.
(d) No benefits shall be paid hereunder with respect to an active
Employee who is not married on the date of his death.
(e) Notwithstanding the foregoing provisions of this Section 4.1, if an
active Employee retires and receives a benefit under any of the following
plan provisions:
(i) Section 3.04D of the Dana Corporation Retirement Income Plan,
as amended by the Second Amendment to that Plan;
(ii) Section 3.6D of the Dana Corporation Spicer Axle Salaried
Pension Plan, as amended by the First Amendment to that Plan;
(iii) Section 5.1c.v. of the Retirement Plan for Management
Employees of Racine Hydraulics Division-Dana Corporation, as amended by
the First Amendment to that Plan;
(iv) Section 4.6.5 of the Dana Corporation Weatherhead Division
Pension Plan for Salaried Employees, as amended by the First Amendment
to that Plan;
(v) Section 4.7.1 of the Dana Corporation Gresen Manufacturing
Division Management Pension Plan, as amended by the First Amendment to
that Plan; or
(vi) Option E of Section 6.4 of the Tyrone Salaried Pension Plan,
as amended by the First Amendment to that Plan,
then the benefits described in Section 4.1(a)(i) and (ii), in respect of the
above-described plan benefits, shall be determined on the basis of the
mortality rates, interest assumptions and other factors that would be
applicable to the form of payment selected
8
by the Employee under such other plan.
(f) Notwithstanding the foregoing provisions of this Section 4.1,
benefits under this Plan shall only be based on that portion of an Employee's
1994 and subsequent years' Additional Compensation Plan bonus awards (whether
or not deferred) as do not exceed 125% of the base salary paid to the
Employee by the Company for the applicable year.
4.2. FORM OF BENEFIT PAYMENTS. An Employee eligible for a benefit under this
Plan shall be entitled to receive his benefit in the form of an immediate lump
sum payment. However, upon the written request of the Employee, the Treasurer
of the Company may, in his sole discretion, permit such benefit to be paid
instead pursuant to an optional form of payment that is used for the payment of
the Employee's retirement benefit under the Pension Plan. Any such written
request must be filed by the Employee with the Treasurer of the Company on or
before the Employee's date of retirement under the Pension Plan. If the
Employee is the Treasurer of the Company, the duties of the Treasurer of the
Company under this Section 4.2 shall be discharged by the President of the
Company. The amount of the benefit payable pursuant to any form of payment
under this Plan shall be determined by applying the mortality rates, interest
assumptions and other factors prescribed by the Retirement Plan that would be
applicable to the form of payment applicable to the Employee under this Plan.
Any post-retirement increase in the benefits being paid to an Employee under
the Pension Plan shall also be applied on a comparable basis to any monthly
supplemental benefits being paid under this Plan.
4.3. TIME AND DURATION OF BENEFIT PAYMENTS. Benefits due under the Plan
shall be paid in a lump sum, except as otherwise determined by the Treasurer or
the President of the Company pursuant to Section 4.2 hereof.
4.4. BENEFITS UNFUNDED. The benefits payable under the Plan shall be paid by
the Company each year out of its general assets and shall not be funded in any
manner. The obligations that the Company incurs under this Plan shall be
subject to the claims of the Company's other creditors having priority as to
the Company's assets.
4.5. NONALIENABILITY. Except as to withholding of any tax under the laws of
the United States or any state or locality, no supplemental benefit payable at
any time hereunder shall be subject in any manner to alienation, sale,
transfer, assignment, pledge, attachment or other legal
9
process, or encumbrance of any kind. Any attempt to alienate, sell, transfer,
assign, pledge or otherwise encumber any such supplemental benefit, whether
currently or thereafter payable, shall be void.
4.6. SUCCESSORS TO THE CORPORATION. This Plan shall be binding upon and
inure to the benefit of any successor or assign of the Company, including,
without limitation, any corporation or corporations acquiring directly or
indirectly all or substantially all of the assets of the Company whether by
merger, consolidation, sale or otherwise (and such successor or assign shall
thereafter be deemed embraced within the term "Company" for the purposes of
this Plan).
4.7. CHANGE IN CONTROL. Anything hereinabove in this Article IV or elsewhere
in this Plan to the contrary notwithstanding:
(a) LUMP SUM PAYMENT. Upon the occurrence of a Change in Control, each
Employee and each Employee's spouse or beneficiary following his death who
are receiving benefits under the Plan ("Recipient") shall receive, on account
of future payments of any and all benefits due under the Plan, a Lump Sum
Payment, so that each such Employee or Recipient will receive substantially
the same amount of after-tax income as before the Change in Control,
determined as set forth in paragraph (c) of this Section 4.7.
(b) CERTAIN MATTERS FOLLOWING A LUMP SUM PAYMENT. An Employee who has
received a Lump Sum Payment pursuant to paragraph (a) of this Section 4.7
shall, thereafter (i) while in the employ of the Company, continue to accrue
benefits under the Plan, and (ii) be eligible to be paid further benefits
under the Plan, after appropriate reduction in respect of the Lump Sum
Payment previously received. For purposes of calculating such reduction, the
Lump Sum Payment shall be accumulated with interest at the Specified Rate in
effect from time to time for the period of time from initial payment date to
the next date on which a computation is to be made (i.e., upon Change in
Control, retirement, or other termination of employment). It shall then be
converted to a straight-life annuity using the current annuity certain
factor. The current annuity certain factor will be determined on the Net
Specified Rate basis if this benefit payment is being made due to a
subsequent Change in Control; otherwise, the Specified Rate shall be used.
10
(c) DETERMINATION OF LUMP SUM PAYMENT. The Lump Sum Payment referred
to in paragraph (a) of this Section 4.7 shall be determined by multiplying the
annuity certain factor (for monthly payments at the beginning of each month)
based on the Benefit Payment Period and the Net Specified Rate by the monthly
benefit (adjusted for assumed future benefit adjustments due to Social Security
and Code Section 415 changes in the Pension Plan) to be paid to the Employee or
Recipient under the Plan.
4.8. TAXATION. Notwithstanding anything in the Plan to the contrary, if the
Internal Revenue Service determines that the Employee is subject to Federal
income taxation on an amount in respect of any benefit provided by the Plan
before the distribution of such amount to him, the Company shall forthwith pay
to the Employee all (or the balance) of such amount as is includible in the
Employee's Federal gross income and shall correspondingly reduce future
payments, if any, of the benefit.
ARTICLE V
---------
AMENDMENT, TERMINATION AND INTERPRETATION
-----------------------------------------
5.1. AMENDMENT AND TERMINATION. The Company reserves the right, by action
of the Board, to amend, modify or terminate, either retroactively or
prospectively, any or all of the provisions of this Plan without the consent of
any Employee or beneficiary; provided, however, that no such action on its
part shall adversely affect the rights of an Employee and his beneficiaries
without the consent of such Employee (or his beneficiaries, if the Employee
is deceased) with respect to any benefits accrued prior to the date of such
amendment, modification, or termination of the Plan if the Employee has at
that time a non-forfeitable right to benefits under a funded, defined benefit
pension plan sponsored by the Company.
5.2. INTERPRETATION. The Plan Administrator 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 Employees similarly situated. In addition, any
interpretations and decisions made by the Plan Administrator shall be final,
conclusive and binding upon the persons who have or who claim to have any
interest in or under the Plan.
1
EXHIBIT 10-I(1)
---------------
2/13/95
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
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.
2
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 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
3
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 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
4
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, 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
5
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 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
6
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 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
7
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) an amount equal to the highest per share
consideration paid for the common stock of the Corporation acquired in the
transaction constituting the Change in Control of the Corporation. 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 promulgated under the Securities
Exchange Act of 1934 as in effect from time to time; 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.
8
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 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.
9
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.
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 February 13, 1995, to read as set forth above.
1
Exhibit 10-J(14)
----------------
2/13/95
Amendment No. 1 Dated February 13, 1995
to Agreement Dated December 14, 1992 Between
Dana Corporation and Southwood J. Morcott
--------------------------------------------
WHEREAS, the parties have entered into an Agreement dated December 14,
1992 (the "Agreement"); and
WHEREAS, the parties have agreed to make an amendment to the Agreement,
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and other good and valuable consideration from each party to the other,
including the agreement on the part of the Company to expand the Executive's
rights under the Agreement in the event of a Change of Control, and the
agreement on the part of the Executive to waive his rights to object to
amendments made to the Dana Corporation Excess Benefits and Supplemental
Benefits Plans that have the effect of limiting benefits under those plans so
that such benefits are only based on that portion of the Executive's 1994 and
subsequent years' short-term incentive plan bonuses as do not exceed 125% of
the Executive's base salary, which waiver and consent is provided in accordance
with Section 3(i) of the Agreement and evidenced by his execution of this
instrument, it is hereby mutually agreed by the parties that, effective
February 13, 1995:
1. Section 3(j)(v) shall be amended to read in its entirety as
follows:
"(v) The term "Highest Average Monthly Compensation"
shall mean the sum of (1) one-twelfth (1/12) of
the Annual Base Salary provided in Section 3(a) at
the rate being paid at the time the Executive's
termination of employment occurred and (2)
one-twelfth (1/12) of the average of the highest
Annual Bonuses payable to the Executive for any
three (3) consecutive full or partial fiscal years
during his employment by the Corporation, PROVIDED,
however, that with respect to 1994 and subsequent
years' Annual Bonuses, only that portion of the
Employee's Annual Bonus as does not exceed 125% of
his Annual Base Salary will be considered."
2. The language in sub-section 5(a)(v)(2) that currently reads as
follows:
"(2) in the event that a Change of Control prior to
Termination shall have taken place as the result of a tender
or exchange offer and the Date of Termination is within twelve
months of the Change of Control Date, an amount equal to the
per share consideration paid for a majority of the Common
Shares of the Corporation acquired in the course of such
tender or exchange offer."
will be amended to read in its entirety as follows:
2
"(2) in the event that a Change of Control prior to
Termination shall have taken place and the Date of Termination
is within twelve months of the Change of Control Date, an
amount equal to the highest per share consideration paid for
the Common Shares of the Corporation acquired in the
transaction constituting the Change of Control."
3. The first clause of Section 12(b) of the Agreement that
precedes the words "PROVIDED that" shall be amended to read as
follows:
"(b) CHANGE OF CONTROL. "Change of Control" shall mean
a change in control of the Corporation 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 as in effect from time to time;"
Except as hereinabove amended, all provisions of the Agreement shall
continue in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this First
Amendment as of February 13, 1995.
ATTEST: DANA CORPORATION
/s/ Sue A. Griffin By: /s/ Martin J. Strobel
- --------------------------------- ------------------------------------
Assistant Secretary Secretary
By: /s/ Roger T. Fridholm
------------------------------------
Chairman - Compensation Committee
/s/ Southwood J. Morcott
----------------------------------------
Southwood J. Morcott
1
Exhibit 10-K
------------
2/13/95
DANA CORPORATION SUPPLEMENTAL BENEFITS PLAN
ARTICLE I
---------
DEFINITIONS
-----------
1.1. "Benefit Payment Period" means the one of the following that
applies to the particular Employee or Recipient:
(a) For an Employee or Recipient who is receiving
payments for the remainder of a term certain period, Benefit Payment
Period means the remainder of such term certain period.
(b) For an Employee or Recipient who is receiving
payments for his or her remaining lifetime, the Benefit Payment Period
is the Life Expectancy of the Employee or Recipient.
(c) For an Employee or Recipient who is receiving
payments for his or her remaining lifetime plus payments for the
lifetime of a Contingent Annuitant, the Benefit Payment Period is the
Life Expectancy of the Employee or Recipient plus an additional period
to reflect the Life Expectancy of the Contingent Annuitant after the
death of the Employee or Recipient.
1.2. "Board" means the Board of Directors of the Company.
1.3. "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 l4A of
Regulation l4A promulgated under the Securities Exchange Act of 1934 as in
effect from time to time; 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 Company representing twenty percent (20%) or more of the combined voting
power of the Company's then outstanding securities or (b) during any period of
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 Company cease for any reason to constitute at least a majority
of the Board of Directors of the Company. Notwithstanding anything to the
contrary in this Plan, the term
2
"person" referred to in clause (a) above of this Section 1.3 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 or any corporation controlled by the Company.
1.4. "Code" means the Internal Revenue Code of 1986, as amended, or
as it may be amended from time to time.
1.5. "Company" means Dana Corporation, a corporation organized
under the laws of the Commonwealth of Virginia.
1.6. "Contingent Annuitant" means the person designated to receive
retirement benefits under this Plan following the death of the Employee or a
Recipient.
1.7. "Credited Service" means "Credited Service" as that term is
defined in the Retirement Income Plan.
1.8. "Effective Date" means September 1, 1988.
1.9. "Employee" means an individual who is a participant (including
a retired participant) in a funded, defined benefit pension plan maintained by
the Company, or any successor plan that may be adopted or substituted for such
plan if, and only if, (a) the individual is actually employed by the Company on
September 1, 1988, and (b) the individual is a U.S.-based member of the
long-term awards group as of September 1, 1988, under the Dana Corporation
Additional Compensation Plan.
1.10. "Excess Plan" means the Dana Corporation Excess Benefits Plan,
as amended from time to time.
1.11. "Highest Average Monthly Earnings" means the sum of
(a) the Employee's basic salary (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), and
(b) bonuses and incentive payments paid (or that would
have been paid, but for a deferral arrangement) to the Employee
(provided, however, that with respect to 1994 and subsequent years'
bonus awards under the Company's Additional Compensation Plan, only
that portion of the Employee's bonus award as does not exceed 125% of
his base salary will be considered)
during any 3 calendar years out of the last 10 calendar years of active
employment with the Company prior to retirement in which such sum was the
highest, divided by 36.
1.12. "Life Expectancy" means the expected remaining lifetime based
on the Mortality Table and the age at the nearest birthday of the Employee or
Recipient at the date the Lump Sum Payment is made. If a joint and contingent
survivor annuity has been elected, then Life Expectancy shall reflect the joint
Life Expectancies of the Employee or Recipient and Contingent
3
Annuitant.
1.13. "Lump Sum Payment" shall be determined as set forth in
paragraph (c) of Section 4.7 of the Plan.
1.14. "Mortality Table" shall mean the Unisex Pension 1984 Mortality
Table set forward one year in age (or such other pensioner annuity mortality
table as the Company with the written consent of the Employee or Recipient
shall determine) and the associated Uniform Seniority Table for the
determination of joint life expectancies.
1.15. "Net Specified Rate" shall mean the interest rate which will
produce income on a tax free basis that equals the income produced by the
Specified Rate net of the combined highest rates of Federal, state and local
income taxes that are in effect in the jurisdiction of the Employee or
Recipient on the date of payment of the Lump Sum Payment.
1.16. "Pension Plan" means the funded, defined benefit pension plan
in which an Employee was participating at the time of his termination of
employment (or retirement) from the Company.
1.17. "Plan" means the "Dana Corporation Supplemental Benefits
Plan", as set forth herein.
1.18. "Plan Administrator" means the Plan Administrator appointed
under the Pension Plan.
1.19. "Primary Social Security Benefit" means "Primary Social
Security Benefit" as that term is defined by the Retirement Income Plan.
1.20. "Retirement Income Plan" means The Dana Corporation Retirement
Income Plan, as in effect on June 30, 1988.
1.21. "Specified Rate" means an interest rate equal to 85% of a
composite insurance company annuity rate provided by an actuary designated by
the Plan Administrator (and provided by such actuary as of the last month of
the calendar year next preceding the calendar year in which the distribution is
made), subject to the condition that the interest rate in effect for any such
year may not differ from the rate in effect for the prior year by more than
one-half of one percent, and also subject to the conditionthat any such rate
shall be rounded to the nearest one-tenth of one percent (and if such rate is
equidistant between the next highest and next lowest one-tenth of one percent,
rounded to the next lowest one-tenth of one percent).
1.22. "Temporary Retirement Benefit" means the benefit described in
Section 4.1(b)(i)(B) hereof.
1.23. "Vesting Service" means "Vesting Service" as that term is
defined by the Retirement Income Plan.
4
ARTICLE II
----------
PURPOSE OF THE PLAN
-------------------
2.1. PURPOSE. This Plan is adopted effective September 1, 1988,
and amended effective February 13, 1995, and is intended to provide
supplemental benefits to Employees and their beneficiaries in addition to any
benefits to which such Employees and beneficiaries may be entitled under other
Company-sponsored, funded, defined benefit pension plans and the Excess Plan.
ARTICLE III
-----------
ELIGIBILITY
-----------
3.1. ELIGIBILITY. All Employees and beneficiaries of Employees
eligible to receive retirement benefits from a Pension Plan shall be eligible
to receive benefits under this Plan in accordance with Article IV, regardless
of when the Employee may have terminated employment or retired (except as
otherwise specified by Article IV).
ARTICLE IV
----------
BENEFITS
--------
4.1. BASIC BENEFITS.
(a) An Employee who, on or after September 1, 1988,
retires from active employment with the Company on or after his 65th
birthday, shall be entitled to receive a lump sum benefit that is the
actuarial equivalent (determined in accordance with Section 4.2 hereof)
of a monthly supplemental benefit equal to the excess (if any) of
(i) (A) 1.6 percent of the Employee's Highest
Average Monthly Earnings multiplied by the number of
years and fractional parts thereof of his Credited
Service at the time of retirement, less
(B) 2 percent of the Employee's Primary Social
Security Benefit multiplied by the number of years
and fractional parts thereof of his Credited Service
but not more than 50 percent of the Employee's
Primary Social Security Benefit, over
(ii) the sum of the monthly benefits
he is entitled to receive from all Company-sponsored,
funded, defined benefit pension plans, and the Excess
Plan, determined in each case on the basis of the
assumption that the Employee's benefits under such
plans are paid in the form of a single life annuity
for the life of the Employee, commencing as of the
Employee's date of retirement under the Pension Plan.
5
(b) An Employee who, on or after September 1, 1988,
retires from employment with the Company on or after his 50th birthday,
after completing 10 years of Vesting Service, after the sum of his age
and years of Vesting Service, both calculated to the nearest month,
equal 70 or more, and before his 65th birthday, shall be entitled to
receive a lump sum benefit that is the actuarial equivalent (determined
in accordance with Section 4.2 hereof) of a monthly supplemental
benefit equal to the excess (if any) of
(i) (A) the retirement benefit described in Section
4.01(a)(i) hereof, plus
(B) a Temporary Retirement Benefit equal to the
Employee's Primary Social Security Benefit, reduced,
if applicable, by the actual amount of any unreduced
Social Security benefit paid to the Employee, payable
through the month in which the Employee attains age
62, provided that if the Employee has less than 25
years of Credited Service, the Temporary Retirement
Benefit shall be prorated based on the proportion of
25 years of Credited Service that has been credited
to the Employee at the time of his retirement; and
provided further that
(C) retirement benefits prescribed by paragraph
(A), above, and Temporary Retirement Benefits
prescribed by paragraph (B), above, shall not exceed
the following limitations:
I. Temporary Retirement Benefits
payable to all Employees, and
retirement benefits payable to all
Employees who participated in the
Retirement Income Plan as of
December 31, 1983, and who had attained
age 45 as of that date, shall not
exceed the percentage of such benefits
prescribed by the following schedule,
based on the Employee's age on the date
of retirement:
Age Percentage
--- ----------
64 100%
63 100%
62 100%
61 95%
60 90%
59 85%
6
58 80%
57 75%
56 70%
55 65%
54 60%
53 55%
52 50%
51 45%
50 40%
II. Retirement benefits payable to
all Employees who did not participate
in the Retirement Income Plan on
December 31, 1983, or who had not
attained age 45 as of that date, shall
not exceed the percentage of such
benefits prescribed by the following
schedule, based on the Employee's age
on the date of retirement:
Age Percentage
--- ----------
65 100%
64 95%
63 90%
62 85%
61 80%
60 75%
59 70%
58 65%
57 60%
56 55%
55 50%
54 45%
53 40%
7
52 35%
51 30%
50 25%
over
(ii) the sum of the monthly benefits he is
entitled to receive from all Company-sponsored, funded,
defined benefit pension plans and the Excess Plan, determined
in each case on the basis of the assumption that the
Employee's benefits under such plans are paid in the form of a
single life annuity for the life of the Employee, commencing
as of the Employee's date of retirement under the Pension
Plan.
(c) Subject to the provisions of Section 4.2 hereof, the
benefit payable pursuant to paragraph (a) or (b) of this Section 4.1,
shall be paid in the form of a lump sum, payable as of the Employee's
date of retirement under the Pension Plan.
(d) If an Employee dies before the date as of which
benefits are scheduled to be paid or to commence hereunder, the
Employee's surviving spouse (if any) shall be entitled to receive a
lump sum benefit equal to 100 percent of the benefit to which the
Employee would have been entitled under paragraph (c), above, if the
Employee had retired on the date of his death.
(e) No benefits shall be paid hereunder with respect to
an active Employee who is not married on the date of his death.
4.2. FORM OF BENEFIT PAYMENTS. An Employee eligible for a benefit
under this Plan shall be entitled to receive his benefit in the form of an
immediate lump sum payment. However, upon the written request of the Employee,
the Treasurer of the Company may, in his sole discretion, permit such benefit
to be paid instead, concurrently with any benefit that the Employee is
entitled to receive under the Excess Plan, pursuant to an optional form of
payment that is used for the payment of the Employee's retirement
8
benefit under the Pension Plan. Any such written request must be filed by the
Employee with the Treasurer of the Company on or before the Employee's date of
retirement under the Pension Plan. If the Employee is the Treasurer of the
Company, the duties of the Treasurer of the Company under this Section 4.2
shall be discharged by the President of the Company. The amount of the benefit
payable pursuant to any form of payment under this Plan shall be determined by
applying the mortality rates, interest assumptions and other factors contained
in the Retirement Income Plan that would be applicable to the form of payment
payable under this Plan; provided, that if a lump sum distribution is made
hereunder, the amount of the lump sum distribution shall be equal to the excess
of
(a) the total lump sum amount that is actuarially
equivalent to the monthly supplemental benefit prescribed by Section
4.1(a)(i) or Section 4.1(b)(i), whichever is applicable, calculated on
the basis of an interest rate equal to 85% of a composite insurance
company annuity rate provided by an actuary designated by the Plan
Administrator (and provided by such actuary as of the last month of the
calendar year next preceding the calendar year in which the
distribution is made), subject to the condition that the interest rate
in effect for any such year may not differ from the rate in effect for
the prior year by more than one-half of one percent, and also subject
to the condition that any such rate shall be rounded to the nearest
one-tenth of one percent (and if such rate is equidistant between the
next highest and next lowest one-tenth of one percent, rounded to the
next lowest one-tenth of one percent), and on the basis of the
applicable mortality assumption for males under the 1971 Group Annuity
Mortality Table, over
(b) the total lump sum distribution that he is entitled to
receive under all Company-sponsored, funded, defined benefit pension
plans and the Excess Plan, determined on the basis of the interest rate
and mortality assumptions required by the terms of those plans. Any
post-retirement increase in the benefits being paid to an Employee
under the Pension Plan shall also be applied on a comparable basis to
any monthly supplemental benefits under this Plan.
9
4.3. TIME AND DURATION OF BENEFIT PAYMENTS. Benefits due under the
Plan shall be paid coincident with the payment date of benefits under the
Pension Plan, or at such other time or times as the Plan Administrator in his
discretion determines. All supplemental benefits payable under this Plan shall
cease as of the first day of the month following the Employee's death, except
that payments may continue to the Employee's spouse or beneficiary following
his death pursuant to an optional form of payment selected under Section 4.2.
4.4 BENEFITS UNFUNDED. The benefits payable under the Plan shall
be paid by the Company each year out of its general assets and shall not be
funded in any manner. The obligations that the Company incurs under this Plan
shall be subject to the claims of the Company's other creditors having priority
as to the Company's assets.
4.5 NONALIENABILITY. Except as to withholding of any tax under
the laws of the United States or any state or locality, no supplemental benefit
payable at any time hereunder shall be subject in any manner to alienation,
sale, transfer, assignment, pledge, attachment or other legal process, or
encumbrance of any kind. Any attempt to alienate, sell, transfer, assign,
pledge or otherwise encumber any such supplemental benefit, whether currently
or thereafter payable, shall be void.
4.6 SUCCESSORS TO THE CORPORATION. This Plan shall be binding
upon and inure to the benefit of any successor or assign of the Company,
including, without limitation, any corporation or corporations acquiring
directly or indirectly all or substantially all of the assets of the Company
whether by merger, consolidation, sale or otherwise (and such successor or
assign shall thereafter be deemed embraced within the term "Company" for the
purposes of this Plan).
4.7. CHANGE IN CONTROL. Anything hereinabove in this Article IV or
elsewhere in this Plan to the contrary notwithstanding:
(a) LUMP SUM PAYMENT. Upon the occurrence of a Change in
Control, each Employee and each Employee's spouse or beneficiary
following his death who are receiving benefits under the Plan
("Recipient") shall receive, on account
10
of future payments of any and all benefits due under the Plan, a Lump
Sum Payment, so that each such Employee or Recipient will receive
substantially the same amount of after-tax income as before the Change
in Control, determined as set forth in paragraph (c) of this Section
4.7.
(b) CERTAIN MATTERS FOLLOWING A LUMP SUM PAYMENT. An
Employee who has received a Lump Sum Payment pursuant to paragraph (a)
of this Section 4.7 shall, thereafter (i) while in the employ of the
Company, continue to accrue benefits under the Plan, and (ii) be
eligible to be paid further benefits under the Plan, after appropriate
reduction in respect of the Lump Sum Payment previously received. For
purposes of calculating such reduction, the Lump Sum Payment shall be
accumulated with interest at the Specified Rate in effect from time to
time for the period of time from initial payment date to the next date
on which a computation is to be made (i.e., upon Change in Control,
retirement, or other termination of employment). It shall then be
converted to a straight-life annuity using the current annuity certain
factor. The current annuity certain factor will be determined on the
Net Specified Rate basis if this benefit payment is being made due to a
subsequent Change in Control; otherwise, the Specified Rate shall be
used.
(c) DETERMINATION OF LUMP SUM PAYMENT. The Lump Sum
Payment referred to in paragraph (a) of this Section 4.7 shall be
determined by multiplying the annuity certain factor (for monthly
payments at the beginning of each month) based on the Benefit Payment
Period and the Net Specified Rate by the monthly benefit (adjusted for
assumed future benefit adjustments due to Social Security and Code
Section 415 changes in the Pension Plan) to be paid to the Employee or
Recipient under the Plan.
4.8. TAXATION. Notwithstanding anything in the Plan to the
contrary, if the Internal Revenue Service determines that the
Participant is subject to Federal income taxation on an amount in
respect of any benefit provided by the Plan before the
11
distribution of such amount to him, the Company shall forthwith pay to
the Participant all (or the balance) of such amount as is includible in
the Participant's Federal gross income and shall correspondingly reduce
future payments, if any, of the benefit.
ARTICLE V
---------
AMENDMENT, TERMINATION AND INTERPRETATION
-----------------------------------------
5.1. AMENDMENT AND TERMINATION. The Company reserves the right, by
action of the Board, to amend, modify or terminate, either retroactively or
prospectively, any or all of the provisions of this Plan without the consent of
any Employee or beneficiary; provided, however, that no such action on its part
shall adversely affect the rights of an Employee and his beneficiaries without
the consent of such Employee (or his beneficiaries, if the Employee is
deceased) with respect to any benefits accrued prior to the date of such
amendment, modification, or termination of the Plan if the Employee has at that
time a non-forfeitable right to benefits under a funded, defined benefit
pension plan sponsored by the Company.
5.2. INTERPRETATION. The Plan Administrator 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 Employees similarly situated. In addition, any
interpretations and decisions made by the Plan Administrator shall be final,
conclusive and binding upon the persons who have or who claim to have any
interest in or under the Plan.
1
Exhibit 10-N
------------
December 12, 1994
DANA CORPORATION
SUPPLEMENTARY BONUS PLAN
1. PURPOSE.
The purpose of the Dana Corporation Supplementary Bonus Plan (the "Plan") is to
provide additional incentive for selected employees of Dana Corporation (the
"Corporation") who, individually or as members of a group, contribute in a
substantial degree to the success of the Corporation.
2. AWARDS.
The Compensation Committee of the Corporation's Board of Directors (the
"Committee") shall have the right to award cash bonuses hereunder in whatever
circumstances it shall deem appropriate consistent with its existing authority
under the By-Laws of the Corporation and applicable law. The Committee shall
have the exclusive power to select the employees to be granted awards under
this Plan, to determine the amount of any such award granted to each employee
selected, and to determine the time, or times, and any conditions subject to
which awards may become payable, including, but not limited to, the right to
defer payment of any such award to a future date which may be subsequent to an
employee's termination of employment with the Corporation. All decisions and
interpretations of the Committee shall be final, conclusive and binding in all
respects.
3. MISCELLANEOUS.
Awards granted hereunder are not assignable or transferable and are not subject
to attachment, garnishment, execution or other creditors' processes. The Plan
does not constitute a contract of employment, and participation in the Plan
does not give any employee the right to be retained in the service of the
Corporation. This 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 principle of conflicts of laws thereof.
5
1,000
6-MOS
DEC-31-1995
JAN-01-1995
JUN-30-1995
77,700
0
1,162,000
0
816,400
0
3,072,400
1,594,100
5,507,200
0
1,294,500
101,300
0
0
945,600
5,507,200
3,893,200
3,987,800
3,288,400
3,288,400
0
0
69,100
294,300
116,500
0
0
0
0
148,300
1.47
0
