1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 11-K [ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1998 ---------------------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to ________ Commission file number 1-4651 ------- A. Full title of the plan and the address of the plan, if different from that of the issuer named below: Echlin Incentive and Savings Investment Plan B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: Dana Corporation 4500 Dorr Street Toledo, Ohio 43615 2 ECHLIN INCENTIVE AND SAVINGS INVESTMENT PLAN FINANCIAL STATEMENTS AND ADDITIONAL INFORMATION DECEMBER 31, 1998 AND 1997 2 3 ECHLIN INCENTIVE AND SAVINGS INVESTMENT PLAN INDEX TO FINANCIAL STATEMENTS AND ADDITIONAL INFORMATION - -------------------------------------------------------------------------------- *Other schedules required by Section 2520.103-10 of the Department of Labor Rules and Regulations for Reporting and Disclosure under ERISA have been omitted because they are not applicable. 3
Page Report of Independent Accountants 4 Financial Statements: Statement of Net Assets Available for Benefits as of December 31, 1998 and 1997 5 Statement of Changes In Net Assets Available for Benefits, With Fund Information for the Years Ended December 31, 1998 And 1997 6-7 Notes to Financial Statements 8-11 Additional Information*: Line 27 a - Schedule of Assets Held for Investment Purposes Schedule I Line 27d - Schedule of Reportable Transactions Schedule II 4 REPORT OF INDEPENDENT ACCOUNTANTS To the Participants and Administrator of the Echlin Incentive and Savings Investment Plan In our opinion, the accompanying statements of net assets available for benefits and the related statements of changes in net assets available for benefits with fund information present fairly, in all material respects, the net assets available for benefits of the Echlin Incentive and Savings Investment Plan (the "Plan") at December 31, 1998 and 1997, and the changes in net assets available for benefits for the two years ended December 31, 1998 in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Plan's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules of Assets Held for Investment Purposes and Reportable Transactions are presented for the purpose of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The fund information in the statement of changes in net assets available for benefits is presented for purposes of additional analysis rather than to present the changes in net assets available for benefits of each fund. These supplemental schedules and fund information are the responsibility of the Plan's management. The supplemental schedules and fund information have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. June 25, 1999 4 5 ECHLIN INCENTIVE AND SAVINGS INVESTMENT PLAN 5 STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS (AMOUNTS IN THOUSANDS) - -------------------------------------------------------------------------------- The accompanying notes are an integral part of the financial statements.
DECEMBER 31, 1998 1997 Assets Investments, At fair value: Putnam New Opportunities Fund $ 18,278 $ 15,813 Putnam Voyager Fund 30,807 29,340 Dodge & Cox Balanced Fund 6,298 6,400 Vanguard Index Trust 500 Fund 14,367 10,093 AIM Constellation Fund 9,568 9,655 Templeton Foreign Equity Fund 2,858 4,054 Dana Corporation common stock 29,992 Massachusetts Mutual Life Insurance Company Mutual Fund 2,956 Prudential Insurance Company of America Mutual Fund 3,655 Principal Mutual Life Insurance Company Mutual Fund 6,251 Echlin Inc. common stock 30,005 At contract value: New York Life Insurance Company Annuity 6,740 6,231 INVESCO Stable Value Fund 30,963 23,641 ------------- ------------- Total investments 149,871 148,094 Receivables: Employee loans 7,566 8,528 Other receivables 114 ------------- ------------- Total Assets 157,551 156,622 ------------- ------------- Liabilities Employee withdrawals payable 903 Other payables 212 262 ------------- ------------- Total liabilities 212 1,165 ------------- ------------- Net assets available for benefits $ 157,339 $ 155,457 ============= ============= 6 6 ECHLIN INCENTIVE AND SAVINGS INVESTMENT PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION FOR THE YEAR ENDED DECEMBER 31, 1998 (AMOUNTS IN THOUSANDS) - -------------------------------------------------------------------------------- The accompanying notes are an integral part of the financial statements.
PUTNAM DODGE VANGUARD TEMPLETON DANA PUTNAM NEW & COX INDEX AIM FOREIGN STOCK VOYAGER OPPORTUNITIES BALANCED TRUST 500 CONSTELLATION EQUITY FUND FUND FUND FUND FUND FUND FUND Investment income (loss): Net appreciation (depreciation) of investments $ 3,898 $ 4,408 $ 3,195 $ (175) $ 2,810 $ 1,441 $ (387) Interest and dividends 959 2,063 571 566 208 237 314 --------- --------- ----------- ---------- --------- ----------- ----------- Total investment income 4,857 6,471 3,766 391 3,018 1,678 (73) Employees' contributions 1,399 2,290 1,930 844 1,586 1,154 476 Employees' rollovers 74 67 158 155 248 48 59 Employer incentive match contribution 998 - - - - - - Interest on employee loans - - - - - - - --------- --------- ----------- ---------- --------- ----------- ----------- Total additions 7,328 8,828 5,854 1,390 4,852 2,880 462 --------- --------- ----------- ---------- --------- ----------- ----------- Benefit payments (8,426) (5,514) (3,218) (1,929) (3,034) (1,961) (799) --------- --------- ----------- ---------- --------- ----------- ----------- Interfund transfers 1,167 (1,851) (146) 439 2,455 (990) (851) --------- --------- ----------- ---------- --------- ----------- ----------- Net increase (decrease) in net assets available for benefits 69 1,463 2,490 (100) 4,273 (71) (1,188) Net assets available for benefits at beginning of year 29,912 29,322 15,777 6,394 10,084 9,632 4,044 --------- --------- ----------- ---------- --------- ----------- ----------- Net assets available for benefits at end of year $ 29,981 $ 30,785 $ 18,267 $ 6,294 $ 14,357 $ 9,561 $ 2,856 ========= ========= =========== ========== ========= =========== =========== STABLE EMPLOYEE VALUE LOAN FUND FUND TOTAL Investment income (loss): Net appreciation (depreciation) of investments $ - $ - $ 15,190 Interest and dividends 2,414 - 7,332 -------- -------- ----------- Total investment income 2,414 - 22,522 Employees' contributions 4,191 - 13,870 Employees' rollovers 191 - 1,000 Employer incentive match contribution - - 998 Interest on employee loans - 471 471 -------- -------- ----------- Total additions 6,796 471 38,861 -------- -------- ----------- Benefit payments (12,098) - (36,979) -------- -------- ----------- Interfund transfers 1,179 (1,402) - -------- -------- ----------- Net increase (decrease) in net assets available for benefits (4,123) (931) 1,882 Net assets available for benefits at beginning of year 41,795 8,497 155,457 -------- -------- ----------- Net assets available for benefits at end of year $ 37,672 $ 7,566 $ 157,339 ======== ======== =========== 7 ECHLIN INCENTIVE AND SAVINGS INVESTMENT PLAN 7 STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION FOR THE YEAR ENDED DECEMBER 31, 1997 (AMOUNTS IN THOUSANDS) - -------------------------------------------------------------------------------- The accompanying notes are an integral part of the financial statements.
PUTNAM DODGE VANGUARD TEMPLETON ECHLIN PUTNAM NEW & COX INDEX AIM FOREIGN STOCK VOYAGER OPPORTUNITIES BALANCED TRUST 500 CONSTELLATION EQUITY FUND FUND FUND FUND FUND FUND FUND Investment income: Net appreciation (depreciation) of investments $ 3,734 $ 4,211 $ 2,580 $ 513 $ 1,875 $ 357 $ (249) Interest and dividends 749 1,764 353 477 195 704 444 --------- --------- ----------- ---------- --------- ----------- ----------- Total investment income 4,483 5,975 2,933 990 2,070 1,061 195 Employees' contributions 1,357 2,391 2,027 667 1,054 1,245 514 Employees' rollovers 135 261 325 185 336 199 117 Employer incentive match contribution 916 - - - - - - Interest on employee loans - - - - - - - --------- --------- ----------- ---------- --------- ----------- ----------- Total additions 6,891 8,627 5,285 1,842 3,460 2,505 826 --------- --------- ----------- ---------- --------- ----------- ----------- Benefit payments (2,558) (1,830) (1,888) (428) (614) (694) (236) --------- --------- ----------- ---------- --------- ----------- ----------- Interfund transfers (902) (937) (1,748) 795 2,311 (539) 618 --------- --------- ----------- ---------- --------- ----------- ----------- Net increase in net assets available for benefits 3,431 5,860 1,649 2,209 5,157 1,272 1,208 Net assets available for benefits at beginning of year 26,481 23,462 14,128 4,185 4,927 8,360 2,836 --------- --------- ----------- ---------- --------- ----------- ----------- Net assets available for benefits at end of year $ 29,912 $ 29,322 $ 15,777 $ 6,394 $ 10,084 $ 9,632 $ 4,044 ========= ========= =========== ========== ========= =========== =========== STABLE EMPLOYEE VALUE LOAN FUND FUND TOTAL Investment income: Net appreciation (depreciation) of investments $ - $ - $ 13,021 Interest and dividends 2,670 - 7,356 -------- -------- ----------- Total investment income 2,670 - 20,377 Employees' contributions 4,154 - 13,409 Employees' rollovers 344 - 1,902 Employer incentive match contribution - - 916 Interest on employee loans - 653 653 -------- -------- ----------- Total additions 7,168 653 37,257 -------- -------- ----------- Benefit payments (6,044) - (14,292) -------- -------- ----------- Interfund transfers 737 (335) - -------- -------- ----------- Net increase in net assets available for benefits 1,861 318 22,965 Net assets available for benefits at beginning of year 39,934 8,179 132,492 -------- -------- ----------- Net assets available for benefits at end of year $ 41,795 $ 8,497 $ 155,457 ======== ======== =========== 8 ECHLIN INCENTIVE AND SAVINGS INVESTMENT PLAN 8 NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 1. DESCRIPTION OF THE PLAN GENERAL The Echlin Incentive and Savings Investment Plan (Plan) is a defined contribution employee benefit plan that was established on March 1, 1984 to provide benefits for all eligible employees of the former Echlin Inc. as identified in the Plan agreement. It is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). The following is a brief description of the Plan. Participants should refer to the Plan agreement for more complete information. The Plan is sponsored by Echlin Inc. (Echlin). During 1998, Echlin Inc. was acquired by Dana Corporation (Dana). ADMINISTRATION The Plan is administered by the Employee Benefits Committee of Echlin. On January 1, 1998, the Plan's trustee was changed from Putnam Fiduciary Trust Company to The Chase Manhattan Bank (Trustee). PARTICIPATION Each employee who is in a covered class of employees within a participating division, has attained age 21 and has met the service requirements stipulated in the plan agreement is eligible to participate in the Plan. EMPLOYEE CONTRIBUTIONS An employee may elect to have up to 20 percent of his or her eligible compensation, as defined in the Plan agreement, up to the maximum elective deferral amount as determined under Section 402(g) of the Internal Revenue Code, contributed to his or her account. Contributions for some participants may be further limited as a result of other Internal Revenue Code requirements. EMPLOYER CONTRIBUTIONS Echlin contributes ten percent on the first six percent of the employee's compensation contributed to the Plan. An additional contribution, as defined in the Plan agreement, may be made depending on Echlin's financial performance during the Plan year. Matching contributions made by Echlin will be invested solely in common stock of Dana. VESTING Participants are fully vested at all times in their contributions. Before completing five years of service, participants become vested in Echlin's matching contributions at the end of the third calendar year after the contribution was made. Participants who have attained five years of service are fully vested in Echlin's matching contributions. 9 ECHLIN INCENTIVE AND SAVINGS INVESTMENT PLAN 9 NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 1. DESCRIPTION OF THE PLAN (CONTINUED) NORMAL RETIREMENT, DISABILITY, TERMINATION OR DEATH In accordance with the Plan provisions, participating employees who retire upon attaining age sixty-five or become totally and permanently disabled and whose accounts balance is greater than $5,000 are eligible to receive the full value of their account in either a lump sum payment or in an annuity payment. Retiring and disabled participants whose account balance is less than $5,000 receive the full value of their account in a lump sum payment. Upon termination, the vested portion of the participant's account will be payable in a lump sum if the account balance is less than $5,000. Otherwise, the participant's account may remain in the Plan until the participant attains the age of 65. Upon a participant's death, the participant's account balance will be paid to the beneficiary in one lump sum. LOANS The Trustee may extend loans to participants with the approval of the Plan administrator. Participant loans shall not be made for less than $1,000 or exceed the lesser of 50% of the participant's account balance or $50,000 minus the highest amount of outstanding balance of loans to the participant for the previous 12 month period. The loan term shall not be longer than 60 months unless the loan is used to acquire a principal residence. Interest shall be charged on the loan based on rates currently being charged by financial institutions lending money under similar circumstances. As participant loans are repaid, the amounts are allocated to the investment fund according to the participant's most recent election with respect to current contributions. INVESTMENT OPTIONS The following investment options are available to Plan participants: a. Dana Stock Fund - Funds are invested in common stock of Dana Corporation. b. Stable Value Fund - Funds are invested in a mutual fund which invests in pooled fixed income contracts. c. Dodge and Cox Balanced Fund - Funds are invested in a mutual fund which invests approximately 60% in large, well-established companies and the remainder in high quality bonds and cash. d. Vanguard Index Trust 500 Fund - Funds are invested in a mutual fund which invests in common stocks listed on the Standard & Poor's 500 Composite Index. e. AIM Constellation Fund - Funds are invested in a mutual fund which invests in common stock of medium-sized and smaller emerging growth companies. 10 ECHLIN INCENTIVE AND SAVINGS INVESTMENT PLAN 10 NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 1. DESCRIPTION OF THE PLAN (CONTINUED) INVESTMENT OPTIONS (CONTINUED) f. Putnam New Opportunities Fund - Funds are primarily invested a mutual fund which invests in common stock of small to medium-sized emerging growth companies. g. Putnam Voyager Fund - Funds are invested in a mutual fund which invests in a range of common stock of small, midsize and large companies. h. Templeton Foreign Equity Fund - Funds are invested in a mutual fund which invests in stocks and debt obligations of companies and governments outside of the United States. The Dana Stock Fund also invests in the VISTA Money Market Fund for temporary cash management purposes. PLAN TERMINATION Although it has not expressed any intention to do so, Echlin has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to ERISA. In the event of Plan termination, participants will become vested in their accounts. 2. SIGNIFICANT ACCOUNTING POLICIES BASIS OF ACCOUNTING The financial statements of the Plan have been prepared on the accrual basis of accounting in accordance with generally accepted accounting principles. EXPENSES OF THE PLAN Generally, Echlin pays all expenses associated with the administration of the Plan. VALUATION OF INVESTMENTS The Plan's investments in common stocks and mutual funds are stated at quoted market value. Investments in guaranteed investment contracts are stated at contract value, which approximates market value. Net appreciation or depreciation includes realized gains and losses and net unrealized appreciation and depreciation. Realized gains and losses on investment transactions are recorded as the difference between proceeds received and the fair market value at the beginning of the year of the respective investments sold or cost if acquired during the year. Net unrealized appreciation or depreciation in the fair market value of investments is recorded as the change between the fair market value of investments at the end of the year and the beginning of the year, or cost if acquired during the year. 11 ECHLIN INCENTIVE AND SAVINGS INVESTMENT PLAN 11 NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of net assets available for benefits at the date of the financial statements and reported changes in net assets available for benefits during the reporting period. Actual results could differ from those estimates. 3. INCOME TAX STATUS The Internal Revenue Service has ruled that the Plan, as amended through January 1, 1994, qualifies under Section 401(a) of the Internal Revenue Code of 1986 (IRC) and therefore the related plan trust is not subject to tax under present tax laws. The Plan has been amended since receiving the determination letter. However, the Plan's administrator believes that the Plan is currently designed and being operated in compliance with the IRC. 4. PARTIES-IN-INTEREST Investments in the Dana Stock Fund consist of 722,000 shares of Dana Corporation common stock at December 31, 1998. Investments in the Echlin Stock Fund consisted of 835,000 shares of Echlin Inc. common stock at December 31, 1997. Shares of the Dana Stock Fund are purchased in the open market at fair market value. Consequently, such transactions are permitted under the provisions of the Plan and are exempt from prohibition of party-in-interest transactions under the IRS code and ERISA. 12 ECHLIN INCENTIVE AND SAVINGS INVESTMENT PLAN Schedule I LINE 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES DECEMBER 31, 1998 (AMOUNTS IN THOUSANDS) - -------------------------------------------------------------------------------- *Dana Corporation and participants are known parties-in-interest to the Plan. This schedule was prepared from data certified by The Chase Manhattan Bank, the trustee of the Plan. 12
CURRENT IDENTITY OF ISSUE DESCRIPTION OF INVESTMENT COST VALUE Putnam Investments Putnam New Opportunities Fund $ 13,206 $ 18,278 Putnam Investments Putnam Voyager Equity Fund 19,677 30,807 Dodge & Cox Dodge & Cox Balanced Fund 6,033 6,298 The Vanguard Group Vanguard Index Trust 500 Fund 10,379 14,367 AIM Funds AIM Constellation Fund 7,775 9,568 Franklin Templeton Templeton Foreign Equity Fund 3,353 2,858 New York Life Insurance Company New York Life Insurance Company Annuity 6,740 6,740 AIM Funds INVESCO Stable Value Fund 30,963 30,963 *Dana Common Stock Common stock 21,809 29,992 *Participant Notes Receivable Various interest rates/various maturities - 7,566 ------------- ------------- $ 119,935 $ 157,437 ============= ============= 13 ECHLIN INCENTIVE AND SAVINGS INVESTMENT PLAN Schedule II LINE 27d - SCHEDULE OF REPORTABLE TRANSACTIONS* FOR THE YEAR ENDED DECEMBER 31, 1998 (AMOUNTS IN THOUSANDS) - -------------------------------------------------------------------------------- *Transactions or series of transactions in excess of 5 percent of the current value of the Plan's assets as of December 31, 1997 as defined in section 2520.103-6 of the Department of Labor Rules and Regulations for Reporting and Disclosure under ERISA. This schedule was prepared from data certified by The Chase Manhattan Bank, the trustee of the Plan. 13
CURRENT VALUE DESCRIPTION OF ASSET ON PARTY OF PURCHASE SELLING COST OF TRANSACTION INVOLVED ASSET PRICE PRICE ASSET DATE NET GAIN Echlin Inc. Echlin Inc. Common Stock $ 1,959 $ 1,959 $ 1,959 Echlin Inc. Echlin Inc. Common Stock $ 10,363 5,007 10,363 $ 5,356 AIM Funds INVESCO Stable Value Fund 21,957 21,957 21,957 AIM Funds INVESCO Stable Value Fund 14,633 14,633 14,633 Putnam Investments Putnam New Opportunities Fund 3,358 3,358 3,358 Putnam Investments Putnam New Opportunities Fund 4,088 3,090 4,088 998 Putnam Investments Putnam Voyager Fund 4,838 4,838 4,838 Putnam Investments Putnam Voyager Fund 7,779 4,859 7,779 2,920 The Vanguard Group, Vanguard Index Trust 500 Fund 5,994 5,994 5,994 Inc. The Vanguard Group, Vanguard Index Trust 500 Fund 4,530 3,400 4,530 1,130 Inc. Chase Manhattan Bank VISTA Money Market Fund 15,195 15,195 15,195 Chase Manhattan Bank VISTA Money Market Fund 14,705 14,705 14,705 14 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan Administrator of the Echlin Incentive and Savings Investment Plan has duly caused this annual report to be signed by the undersigned thereunto duly authorized. Echlin Incentive and Savings Investment Plan Date: June 30, 1999 /s/ Armand T. Flynn --------------------------------- Armand T. Flynn Plan Administrator 14 15 INDEX TO EXHIBITS EXHIBIT NO. - ----------- 23. Consent of Independent Auditors 15
1 Exhibit 23 CONSENT OF INDEPENDENT ACCOUNTANTS ---------------------------------- We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 333-69449) of Dana Corporation of our report dated June 25, 1999 relating to the financial statements of the Echlin Incentive and Savings Investment Plan which appears in this Form 11-K. PricewaterhouseCoopers LLP Toledo, Ohio June 30, 1999 16