UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): JULY 22, 2003
DANA CORPORATION
(Exact Name of Registrant as Specified in its Charter)
VIRGINIA
(State or Other Jurisdiction of Incorporation)
1-1063 34-4361040
(Commission File Number) (IRS Employer Identification Number)
4500 DORR STREET, TOLEDO, OHIO, 43615
(Address of Principal Executive Offices, Including Zip Code)
(419) 535-4500
(Registrant's Telephone Number, Including Area Code)
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits
99.1 Press Release of Dana Corporation.
ITEM 9. OTHER EVENTS AND REGULATION FD DISCLOSURE.
This Current Report on Form 8-K and the attached earnings release are
being furnished by Dana Corporation (Dana) pursuant to (i) Item 9 of Form 8-K in
satisfaction of the public disclosure requirements of Regulation FD and (ii)
Item 12 of Form 8-K, in accordance with Securities and Exchange Commission
Release No. 33-8216, insofar as they disclose historical information regarding
Dana's results of operations and financial condition for the fiscal quarter and
the six months ended June 30, 2003.
On July 22, 2003, Dana issued a news release regarding its earnings
for the second quarter of 2003 and for the first half of 2003. A copy of that
release is being furnished as Exhibit 99.1 to this Current Report.
The earnings release includes tables showing: (i) Dana Corporation
(Including Dana Credit Corporation on an Equity Basis), Condensed Statement of
Income (Unaudited) - Three Months Ended June 30, 2003 and 2002 and Six Months
Ended June 30, 2003 and 2002; (ii) Dana Corporation (Including Dana Credit
Corporation on an Equity Basis), Condensed Balance Sheet (Unaudited) - June 30,
2003 and December 31, 2002; and (iii) Dana Corporation (Including Dana Credit
Corporation on an Equity Basis), Cash Flow Impact on Net Debt - Three Months
Ended June 30, 2003 and 2002 and Six Months Ended June 30, 2003 and 2002. As
Generally Accepted Accounting Principles (GAAP) require Dana Credit Corporation
(DCC) to be included on a consolidated basis, these tables including DCC on an
equity basis contain non-GAAP financial measures. In accordance with Instruction
2 to Item 12 of Form 8-K, the earnings release also includes, for each of these
tables: (i) a presentation of the most directly comparable financial measures
calculated and presented in accordance with GAAP and (ii) a quantitative
reconciliation of the differences between the non-GAAP financial measures
disclosed and the most directly comparable GAAP financial measures. Management
believes that the presentation of the non-GAAP financial measures provides
useful information to investors regarding Dana's financial condition and results
of operations because management evaluates Dana's operating segments and regions
as if DCC were accounted for on the equity method of accounting. This is done
because DCC is not homogenous with Dana's manufacturing operations, its
financing activities do not support the sales of the other operating segments
and its financial and performance measures are inconsistent with those of the
other operating segments.
In accordance with General Instructions B.2 and B.6 of Form 8-K, the
information in this Current Report, including Exhibit 99.1, shall not be deemed
"filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as
amended, or otherwise subject to the liability of that section, nor shall it be
deemed incorporated by reference in any filing under the Securities Act of 1933,
as amended, except as expressly set forth by specific reference in such a
filing.
-2-
SIGNATURES
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
(Registrant)
Date: July 22, 2003 By: /s/ Michael L. DeBacker
----------------------------------
Name: Michael L. DeBacker
Title: Vice President, General Counsel
and Secretary
-3-
EXHIBIT INDEX
99.1 Press Release of Dana Corporation.
-4-
Exhibit 99.1
News Release
[Dana Logo]
Contact: Michelle Hards
(419) 535-4636
michelle.hards@dana.com
DANA CORPORATION REPORTS SECOND-QUARTER EARNINGS
ANNOUNCES CONFERENCE CALL AT 8:30 A.M. ON WEDNESDAY, JULY 23
TOLEDO, Ohio, July 22, 2003 - Dana Corporation (NYSE: DCN) today announced
second-quarter sales of $2.5 billion and net income of $52 million, or 35 cents
per share. This compares to sales of $2.6 billion and net income of $52 million
during the same period last year.
"We entered the quarter knowing that we faced ongoing challenges within our
Automotive Aftermarket Group and start-up costs associated with program launches
in our Structural Solutions group," said Dana Chairman and CEO Joe Magliochetti.
"Nevertheless, the benefits of the company's restructuring program helped us
meet consensus earnings estimates for the quarter.
"During the second quarter, we achieved several important milestones. The
divestiture of our Engine Management operations was significant as we further
sharpened our focus on our core disciplines," he said. "We also continued our
strong growth with global vehicle manufacturers by securing strategically
important new light-axle and driveshaft business with Toyota in South Africa."
Net income for the second quarter of 2003 included a $7.5 million after-tax
gain from the continuing divestiture of assets by Dana Credit Corporation (DCC).
This gain was partially offset by a $2.5 million additional after-tax charge
associated with the sale of a significant portion of Dana's Engine Management
operations to Standard Motor Products, Inc.
The company also realized an after-tax profit of approximately $8 million
associated with the sale of its Parish Structural Products (Thailand) Ltd.
operation to AAPICO Hitech Public Co., Ltd. This amount represents the recovery
of development costs previously expensed during the start-up of an operation
that supported an Isuzu light-truck program in Thailand.
(more)
(Page Two)
First-Half Results Improved
- ---------------------------
Dana's six-month consolidated sales were $5 billion, up from $4.9 billion
during the same period last year. Net income was $93 million, or 63 cents per
share, compared to a loss of $177 million, or $1.19 per share, during the first
six months of 2002. Net income in 2002 reflected a charge of $220 million, or
$1.48 per share, associated with the required adoption of FAS 142 related to
accounting for goodwill.
"Our recent divestitures enabled us to reduce non-DCC debt by more than $130
million during the quarter," said Dana Chief Financial Officer Bob Richter.
"This brought our ratio of net debt-to-capital at June 30, exclusive of DCC,
down to 52.8 percent from 57.0 percent at the beginning of the year.
"The sale of DCC assets also continues to progress well," he added. "DCC has
reduced its portfolio assets by $160 million so far this year and reduced its
total debt outstanding by more than $145 million. As a result, DCC now has cash
on hand in excess of its bank debt."
Looking Ahead: Restructuring, Transformation Actions Pave Way for Further
- -------------------------------------------------------------------------
Progress
- --------
Mr. Magliochetti said that while a limited number of actions remain to be
completed in conjunction with the company's October 2001 restructuring plan, all
of Dana's restructuring costs from the program have been accounted for and the
company expects to realize the full run-rate of its restructuring benefits by
the end of the year.
"We've made solid progress in reducing costs, and we've generated significant
cash to reduce debt," he said. "As we put our restructuring behind us and shift
our full focus to transforming Dana, we expect to realize even greater benefits
from our sharpened customer focus, reduced cost structure, and
technology-driven growth opportunities.
"Our recent success in securing new business with customers such as BMW, Ford,
Nissan, and Toyota, to name but a few, reflects our commitment to technological
leadership and underscores the progress we're making," he added.
"We look forward to building on the momentum of these achievements. We remain
firmly on track to achieve our projected full-year earnings of $195 million to
$215 million in 2003, and expect that earnings in 2004 will be at least
$300 million, or $2 per share," Mr. Magliochetti said.
(more)
(Page Three)
Quarterly Conference Call Scheduled for 8:30 a.m. Tomorrow
- ----------------------------------------------------------
Dana will discuss its second-quarter results and its response to the
ArvinMeritor tender offer in a conference call at 8:30 a.m. (EDT) tomorrow. The
call may be accessed via Dana's web site (www.dana.com), where it will be
accompanied by a brief slide presentation, or by dialing (800) 275-3210. Please
dial into the conference five minutes prior to the call. An audio recording of
this conference call will be available after 1 p.m. tomorrow. To access this
recording, please dial (800) 537-8823. A webcast replay of the call will also
be available at 1 p.m. tomorrow and will be accessible via the Dana web site.
Dana Corporation is a global leader in the design, engineering, and manufacture
of value-added products and systems for automotive, commercial, and off-highway
vehicle manufacturers and their related aftermarkets. The company employs
approximately 60,000 people worldwide. Founded in 1904 and based in Toledo,
Ohio, Dana operates hundreds of technology, manufacturing, and customer service
facilities in 30 countries. The company reported 2002 sales of $9.5 billion.
CERTAIN STATEMENTS CONTAINED IN THIS RELEASE CONSTITUTE "FORWARD-LOOKING"
STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995. THESE STATEMENTS REPRESENT DANA'S EXPECTATIONS BASED ON OUR CURRENT
INFORMATION AND ASSUMPTIONS. FORWARD-LOOKING STATEMENTS ARE INHERENTLY SUBJECT
TO RISKS AND UNCERTAINTIES. DANA'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM
THOSE WHICH ARE ANTICIPATED OR PROJECTED DUE TO A NUMBER OF FACTORS. THESE
FACTORS INCLUDE NATIONAL AND INTERNATIONAL ECONOMIC CONDITIONS; ADVERSE EFFECTS
FROM TERRORISM OR HOSTILITIES; THE STRENGTH OF OTHER CURRENCIES RELATIVE TO THE
U.S. DOLLAR; THE CYCLICAL NATURE OF THE GLOBAL VEHICULAR INDUSTRY; THE
PERFORMANCE OF THE GLOBAL AFTERMARKET SECTOR; CHANGES IN BUSINESS RELATIONSHIPS
WITH OUR MAJOR CUSTOMERS AND IN THE TIMING, SIZE AND CONTINUATION OF THEIR AND
OUR PROGRAMS; THE ABILITY OF OUR CUSTOMERS AND SUPPLIERS TO ACHIEVE THEIR
PROJECTED SALES AND PRODUCTION LEVELS; COMPETITIVE PRESSURES ON OUR SALES AND
PRICING; INCREASES IN PRODUCTION OR MATERIAL COSTS THAT CANNOT BE RECOUPED IN
PRODUCT PRICING; THE IMPACT OF OUR COLLECTIVE BARGAINING NEGOTIATIONS AND THOSE
OF OUR CUSTOMERS IN THE NORTH AMERICAN LIGHT VEHICLE SECTOR; THE CONTINUED
SUCCESS OF OUR COST REDUCTION AND CASH MANAGEMENT PROGRAMS AND OF OUR LONG-TERM
TRANSFORMATION STRATEGY FOR THE COMPANY; COSTS ASSOCIATED WITH THE TENDER OFFER
FOR OUR COMMON STOCK THAT WAS COMMENCED ON JULY 9, 2003, BY A SUBSIDIARY OF
ARVINMERITOR, INC.; AND OTHER FACTORS SET OUT IN OUR PUBLIC FILINGS WITH THE
SECURITIES AND EXCHANGE COMMISSION. DANA DOES NOT UNDERTAKE TO UPDATE ANY
FORWARD-LOOKING STATEMENTS CONTAINED IN THIS RELEASE.
# # #
Dana Corporation
Condensed Statement of Income (Unaudited)
(in millions, except per share amounts)
Three Months Ended June 30
--------------------------
2003 2002
------- -------
Net sales $ 2,541 $ 2,576
Revenue from lease financing
and other income 40 75
------- -------
2,581 2,651
------- -------
Costs and expenses
Cost of sales 2,276 2,255
Selling, general and
administrative expenses 208 219
Restructuring charges 51
Interest expense 56 65
------- -------
2,540 2,590
------- -------
Income before income taxes 41 61
Income tax expense (2) (15)
Minority interest (2) (3)
Equity in earnings
of affiliates 18 15
------- ------
Income from continuing operations 55 58
Loss from discontinued operations (3) (6)
------- ------
Net income $ 52 $ 52
======== ======
Basic earnings (loss) per share
Income from continuing operations $ 0.38 $ 0.39
Loss from discontinued operations (0.03) (0.04)
-------- ------
Net income $ 0.35 $ 0.35
======== ======
Diluted earnings (loss) per share
Income from continuing operations $ 0.38 $ 0.39
Loss from discontinued operations (0.03) (0.04)
-------- ------
Net income $ 0.35 $ 0.35
======== ======
Average shares outstanding -
For Basic EPS 148 148
For Diluted EPS 149 149
Page 1
Dana Corporation
Condensed Statement of Income (Unaudited)
(in millions, except per share amounts)
Six Months Ended June 30
------------------------
2003 2002
------- -------
Net sales $ 4,983 $ 4,897
Revenue from lease financing
and other income 70 128
------- -------
5,053 5,025
------- -------
Costs and expenses
Cost of sales 4,459 4,309
Selling, general and
administrative expenses 409 440
Restructuring charges 88
Interest expense 115 132
------- ------
4,983 4,969
------- ------
Income before income taxes 70 56
Income tax expense (35)
Minority interest (4) (9)
Equity in earnings
of affiliates 35 33
------- ------
Income from continuing operations
before effect of change in accounting 101 45
Loss from discontinued operations (8) (2)
-------- ------
Income before effect of change
in accounting 93 43
Effect of change in accounting (220)
-------- ------
Net income (loss) $ 93 $ (177)
======== ======
Basic earnings (loss) per share
Income from continuing operations
before effect of change in accounting $ 0.69 $ 0.30
Loss from discontinued operations (0.06) (0.01)
Effect of change in accounting (1.48)
------- ------
Net income (loss) $ 0.63 $ (1.19)
======= ======
Diluted earnings (loss) per share
Income from continuing operations
before effect of change in accounting $ 0.69 $ 0.30
Loss from discontinued operations (0.06) (0.01)
Effect of change in accounting (1.48)
-------- ------
Net income (loss) $ 0.63 $ (1.19)
======= ======
Average shares outstanding -
For Basic EPS 148 148
For Diluted EPS 149 149
Page 2
Dana Corporation
Condensed Balance Sheet (Unaudited)
(in millions)
June 30 December 31
Assets 2003 2002
------ --------- ------------
Current assets
Cash and cash equivalents $ 632 $ 571
Accounts receivable
Trade 1,537 1,348
Other 283 320
Inventories 1,155 1,116
Other current assets 692 763
--------- ----------
Total current assets 4,299 4,118
--------- ----------
Property, plant and equipment, net 2,492 2,556
Investment in leases 697 827
Investments and other assets 2,122 2,052
--------- ----------
Total assets $ 9,610 $ 9,553
========= ==========
Liabilities and Shareholders' Equity
------------------------------------
Current liabilities
Notes payable $ 463 $ 287
Accounts payable 1,132 1,004
Other current liabilities 1,244 1,533
-------- ----------
Total current liabilities 2,839 2,824
-------- ----------
Long-term debt 2,924 3,215
Deferred employee benefits
and other noncurrent liabilities 1,969 1,925
Minority interest 93 107
Shareholders' equity 1,785 1,482
-------- ----------
Total liabilities and
shareholders' equity $ 9,610 $ 9,553
======== ==========
Page 3
Dana Corporation
Condensed Statement of Cash Flows (Unaudited)
(in millions)
Three Months Ended June 30
---------------------------
2003 2002
---------- ----------
Net income $ 52 $ 52
Depreciation and amortization 99 121
Asset impairment 3 9
Gain on divestitures and asset sales (11) (35)
Working capital decrease (increase) (47) 59
Other (17) (2)
--------- ----------
Net cash flows - operating activities 79 204
--------- ----------
Purchases of property, plant and equipment (66) (90)
Payments received on leases 7 16
Net loans to customers 9 17
Divestitures 145 62
Asset sales 75 43
Other 3 (12)
--------- -----------
Net cash flows - investing activities 173 36
--------- -----------
Net change in short-term debt (184) (199)
Proceeds from long-term debt 35
Payments on long-term debt (37) (33)
Dividends paid (2) (2)
Other 18 2
--------- -----------
Net cash flows - financing activities (205) (197)
--------- -----------
Net change in cash and cash equivalents 47 43
Net change in cash - discontinued
operations 1
Cash and cash equivalents - beginning of
period 584 275
---------- -----------
Cash and cash equivalents - end of period $ 632 $ 318
========== ===========
Page 4
Dana Corporation
Condensed Statement of Cash Flows (Unaudited)
(in millions)
Six Months Ended June 30
---------------------------
2003 2002
---------- ----------
Net income (loss) $ 93 $ (177)
Depreciation and amortization 202 242
Asset impairment 9 30
Change in accounting for goodwill 220
Gain on divestitures and asset sales (22) (34)
Working capital decrease (increase) (284) 24
Other (30) (30)
---------- ----------
Net cash flows - operating activities (32) 275
---------- ----------
Purchases of property, plant and equipment (142) (165)
Purchases of assets to be leased (26)
Payments received on leases 16 25
Net loans to customers 11 14
Divestitures 145 72
Asset sales 179 59
Other 9 15
---------- ---------
Net cash flows - investing activities 218 (6)
---------- ---------
Net change in short-term debt (97) (211)
Proceeds from long-term debt 285
Payments on long-term debt (43) (224)
Dividends paid (3) (3)
Other 17 3
---------- ---------
Net cash flows - financing activities (126) (150)
---------- ---------
Net change in cash and cash equivalents 60 119
Net change in cash - discontinued
operations 1
Cash and cash equivalents -
beginning of period 571 199
---------- ---------
Cash and cash equivalents - end of period $ 632 $ 318
========== =========
Page 5
Dana Corporation
(Including Dana Credit Corporation on an Equity Basis)
Condensed Statement of Income (Unaudited)
(in millions)
Three Months Ended June 30
-------------------------------
2003 2002
------------- --------------
Net sales $ 2,541 $ 2,576
Other income 25 13
------------- --------------
2,566 2,589
------------- --------------
Costs and expenses
Cost of sales 2,286 2,270
Selling, general and
administrative expenses 192 189
Restructuring charges 51
Interest expense 41 44
------------ --------------
2,519 2,554
------------ --------------
Income before income taxes 47 35
Income tax expense (18) (18)
Minority interest (2) (3)
Equity in earnings
of affiliates 28 44
------------ --------------
Income from continuing operations 55 58
Loss from discontinued operations (3) (6)
------------ --------------
Net income $ 52 $ 52
============ ==============
Page 6
Dana Corporation
(Including Dana Credit Corporation on an Equity Basis)
Condensed Statement of Income (Unaudited)
(in millions)
Six Months Ended June 30
------------------------------
2003 2002
-------------- ------------
Net sales $ 4,983 $ 4,897
Other income 38 27
-------------- ------------
5,021 4,924
------------- ------------
Costs and expenses
Cost of sales 4,482 4,339
Selling, general and
administrative expenses 373 384
Restructuring charges 88
Interest expense 83 89
------------- ------------
4,938 4,900
------------- ------------
Income before income taxes 83 24
Income tax expense (33) (34)
Minority interest (4) (9)
Equity in earnings
of affiliates 55 64
------------- -----------
Income from continuing operations
before effect of change in accounting 101 45
Loss from discontinued operations (8) (2)
------------- -----------
Income before effect of change
in accounting 93 43
Effect of change in accounting (220)
------------- -----------
Net income (loss) $ 93 $ (177)
============= ===========
Page 7
Dana Corporation
(Including Dana Credit Corporation on an Equity Basis)
Condensed Balance Sheet (Unaudited)
(in millions)
June 30 December 31
Assets 2003 2002
------ ----------- ---------------
Current assets
Cash and cash equivalents $ 546 $ 551
Accounts receivable
Trade 1,537 1,348
Other 279 209
Inventories 1,155 1,116
Other current assets 644 716
------------ ---------------
Total current assets 4,161 3,940
------------ ---------------
Property, plant and equipment, net 2,252 2,253
Investments and other assets 2,484 2,375
------------ ---------------
Total assets $ 8,897 $ 8,568
============ ===============
Liabilities and Shareholders' Equity
------------------------------------
Current liabilities
Notes payable $ 283 $ 53
Accounts payable 1,132 1,004
Other current liabilities 1,382 1,555
------------ ---------------
Total current liabilities 2,797 2,612
------------ ---------------
Long-term debt 2,263 2,462
Deferred employee benefits
and other noncurrent liabilities 1,960 1,906
Minority interest 92 106
Shareholders' equity 1,785 1,482
------------ ---------------
Total liabilities and
shareholders' equity $ 8,897 $ 8,568
============ ===============
Page 8
Dana Corporation
(Including Dana Credit Corporation on an Equity Basis)
Cash Flow Impact on Net Debt
(in millions)
Three Months Ended June 30
-------------------------------
2003 2002
---------------- ------------
Sources
Net income $ 52 $ 52
Depreciation 85 97
Asset sales 2 11
Divestitures 145
Working capital decrease (increase) (30) 34
----------------- ------------
254 194
----------------- ------------
Uses
Capital spend (61) (70)
Dividends (2) (2)
Net changes in other accounts (22) 6
---------------- ------------
(85) (66)
---------------- ------------
October 2001 restructuring cash impact
After-tax charges 42
Cash payments (20) (39)
Proceeds from asset sales 17 17
---------------- ------------
(3) 20
---------------- ------------
Cash change in net debt $ 166 $ 148
================ ============
Page 9
Dana Corporation
(Including Dana Credit Corporation on an Equity Basis)
Cash Flow Impact on Net Debt
(in millions)
Six Months Ended June 30
--------------------------------
2003 2002
---------------- -------------
Sources
Net income (loss) $ 93 $ (177)
Change in accounting for goodwill 220
---------------- ------------
Net income before goodwill change 93 43
Depreciation 171 195
Asset sales 6 11
Divestitures 145 10
Working capital decrease (increase) (222) 24
---------------- ------------
193 283
--------------- ------------
Uses
Capital spend (133) (134)
Dividends (3) (3)
Net changes in other accounts (30) (26)
---------------- ------------
(166) (163)
---------------- ------------
October 2001 restructuring cash impact
After-tax charges 79
Cash payments (64) (78)
Proceeds from asset sales 37 19
---------------- ------------
(27) 20
---------------- ------------
Cash change in net debt $ - $ 140
================ =============
Page 10
Dana Corporation
Condensed Consolidating Statement of Income (Unaudited)
(in millions)
Three Months Ended June 30, 2003
------------------------------------------------------
Dana
with DCC on Elimination Dana
Equity Basis DCC Entries Consolidated
-------------- ------- ----------- ------------
Net sales $ 2,541 $ $ $ 2,541
Other income 25 36 (21) 40
--------------- ------- ----------- ------------
2,566 36 (21) 2,581
--------------- ------- ----------- ------------
Costs and expenses
Cost of sales 2,286 (10) 2,276
Selling, general and
administrative
expenses 192 26 (10) 208
Interest expense 41 15 56
--------------- ------- ----------- ------------
2,519 41 (20) 2,540
--------------- ------- ----------- ------------
Income (loss) before
income taxes 47 (5) (1) 41
Income tax benefit
(expense) (18) 16 (2)
Minority interest (2) (2)
Equity in earnings of
affiliates 28 4 (14) 18
--------------- ------- ----------- ------------
Income from continuing
operations 55 15 (15) 55
Loss from discontinued
operations (3) (3)
--------------- ------- ----------- ------------
Net income $ 52 $ 15 $ (15) $ 52
=============== ======= =========== ============
This consolidating statement provides a reconciliation of the amounts
presented for Dana with Dana Credit Corporation (DCC) on an equity
basis to amounts reported for Dana Corporation on a fully consolidated
basis.
Page 11
Dana Corporation
Condensed Consolidating Statement of Income (Unaudited)
(in millions)
Six Months Ended June 30, 2003
------------------------------------------------------
Dana
with DCC on Elimination Dana
Equity Basis DCC Entries Consolidated
-------------- ------- ----------- ------------
Net sales $ 4,983 $ $ $ 4,983
Other income 38 74 (42) 70
--------------- ------- ----------- ------------
5,021 74 (42) 5,053
--------------- ------- ----------- ------------
Costs and expenses
Cost of sales 4,482 (23) 4,459
Selling, general and
administrative
expenses 373 55 (19) 409
Interest expense 83 32 115
--------------- ------- ----------- ------------
4,938 87 (42) 4,983
--------------- ------- ----------- ------------
Income (loss) before
income taxes 83 (13) - 70
Income tax benefit
(expense) (33) 33 -
Minority interest (4) (4)
Equity in earnings of
affiliates 55 11 (31) 35
--------------- ------- ----------- ------------
Income from continuing
operations 101 31 (31) 101
Loss from discontinued
operations (8) (8)
--------------- ------- ----------- ------------
Net income $ 93 $ 31 $ (31) $ 93
=============== ======= =========== ============
This consolidating statement provides a reconciliation of the amounts
presented for Dana with Dana Credit Corporation (DCC) on an equity
basis to amounts reported for Dana Corporation on a fully consolidated
basis.
Page 12
Dana Corporation
Condensed Consolidating Statement of Income (Unaudited)
(in millions)
Three Months Ended June 30, 2002
------------------------------------------------------
Dana
with DCC on Elimination Dana
Equity Basis DCC Entries Consolidated
-------------- ------- ----------- ------------
Net sales $ 2,576 $ $ $ 2,576
Other income 13 96 (34) 75
--------------- ------- ----------- ------------
2,589 96 (34) 2,651
--------------- ------- ----------- ------------
Costs and expenses
Cost of sales 2,270 (15) 2,255
Selling, general and
administrative
expenses 189 44 (14) 219
Restructuring
charges 51 51
Interest expense 44 21 65
--------------- ------- ----------- ------------
2,554 65 (29) 2,590
--------------- ------- ----------- ------------
Income before
income taxes 35 31 (5) 61
Income tax benefit
(expense) (18) 1 2 (15)
Minority interest (3) (3)
Equity in earnings of
affiliates 44 6 (35) 15
--------------- ------- ----------- ------------
Income from continuing
operations 58 38 (38) 58
Loss from discontinued
operations (6) (6)
--------------- ------- ----------- ------------
Net income $ 52 $ 38 $ (38) $ 52
=============== ======= =========== ============
This consolidating statement provides a reconciliation of the amounts
presented for Dana with Dana Credit Corporation (DCC) on an equity
basis to amounts reported for Dana Corporation on a fully consolidated
basis.
Page 13
Dana Corporation
Condensed Consolidating Statement of Income (Unaudited)
(in millions)
Six Months Ended June 30, 2002
------------------------------------------------------
Dana
with DCC on Elimination Dana
Equity Basis DCC Entries Consolidated
-------------- ------- ----------- ------------
Net sales $ 4,897 $ $ $ 4,897
Other income 27 164 (63) 128
--------------- ------- ----------- ------------
4,924 164 (63) 5,025
--------------- ------- ----------- ------------
Costs and expenses
Cost of sales 4,339 (30) 4,309
Selling, general and
administrative
expenses 384 83 (27) 440
Restructuring
charges 88 88
Interest expense 89 43 132
--------------- ------- ----------- ------------
4,900 126 (57) 4,969
--------------- ------- ----------- ------------
Income before
income taxes 24 38 (6) 56
Income tax expense (34) (3) 2 (35)
Minority interest (9) (9)
Equity in earnings of
affiliates 64 13 (44) 33
--------------- ------- ----------- ------------
Income from continuing
operations 45 48 (48) 45
Loss from discontinued
operations (2) (2)
--------------- ------- ----------- ------------
Income before effect
of change in accounting 43 48 (48) 43
Effect of change in
accounting (220) (220)
--------------- ------- ----------- ------------
Net income (loss) $ (177) $ 48 $ (48) $ (177)
=============== ======= =========== ============
This consolidating statement provides a reconciliation of the amounts
presented for Dana with Dana Credit Corporation (DCC) on an equity
basis to amounts reported for Dana Corporation on a fully consolidated
basis.
Page 14
Dana Corporation
Condensed Consolidating Balance Sheet (Unaudited)
(in millions)
June 30, 2003
--------------------------------------------------------------
Dana
with DCC on Elimination Dana
Assets Equity Basis DCC Entries Consolidated
------ -------------- --------- -------------- ----------------
Current assets
Cash and cash equivalents $ 546 $ 86 $ $ 632
Accounts receivable
Trade 1,537 1,537
Other 279 4 283
Inventories 1,155 1,155
Other current assets 644 219 (171) 692
-------------- --------- -------------- ----------------
Total current assets 4,161 309 (171) 4,299
-------------- --------- -------------- ----------------
Property, plant and equipment, net 2,252 16 224 2,492
Investment in leases 921 (224) 697
Investments and other assets 2,484 539 (901) 2,122
-------------- --------- -------------- ----------------
Total assets $ 8,897 $1,785 $ (1,072) $ 9,610
============== ========= ============== ================
Liabilities and Shareholders' Equity
------------------------------------
Current liabilities
Notes payable $ 283 $ 180 $ $ 463
Accounts payable 1,132 1,132
Other current liabilities 1,382 33 (171) 1,244
------------- --------- -------------- ----------------
Total current liabilities 2,797 213 (171) 2,839
------------- --------- -------------- ----------------
Long-term debt 2,263 661 2,924
Deferred employee benefits
and other noncurrent liabilities 1,960 604 (595) 1,969
Minority interest 92 1 93
Shareholders' equity 1,785 306 (306) 1,785
-------------- --------- -------------- ----------------
Total liabilities and
shareholders' equity $ 8,897 $1,785 $ (1,072) $ 9,610
============== ========= ============== ================
This consolidating statement provides a reconciliation of the amounts presented for Dana with Dana
Credit Corporation (DCC) on an equity basis to amounts reported for Dana Corporation on a fully
consolidated basis.
Page 15
Dana Corporation
Condensed Consolidating Balance Sheet (Unaudited)
(in millions)
December 31, 2002
------------------------------------------------------------
Dana
with DCC on Elimination Dana
Assets Equity Basis DCC Entries Consolidated
------ -------------- --------- -------------- ----------------
Current assets
Cash and cash equivalents $ 551 $ 20 $ $ 571
Accounts receivable
Trade 1,348 1,348
Other 209 111 320
Inventories 1,116 1,116
Other current assets 716 105 (58) 763
-------------- --------- -------------- ----------------
Total current assets 3,940 236 (58) 4,118
-------------- --------- -------------- ----------------
Property, plant and equipment, net 2,253 39 264 2,556
Investment in leases 1,091 (264) 827
Investments and other assets 2,375 569 (892) 2,052
-------------- --------- -------------- ----------------
Total assets $ 8,568 $1,935 $ (950) $ 9,553
============== ========= ============== ================
Liabilities and Shareholders' Equity
------------------------------------
Current liabilities
Notes payable $ 53 $ 234 $ $ 287
Accounts payable 1,004 1,004
Other current liabilities 1,555 37 (59) 1,533
------------- --------- -------------- ----------------
Total current liabilities 2,612 271 (59) 2,824
------------- --------- -------------- ----------------
Long-term debt 2,462 753 3,215
Deferred employee benefits
and other noncurrent liabilities 1,906 639 (620) 1,925
Minority interest 106 1 107
Shareholders' equity 1,482 271 (271) 1,482
-------------- --------- -------------- ----------------
Total liabilities and
shareholders' equity $ 8,568 $1,935 $ (950) $ 9,553
============== ========= ============= ================
This consolidating statement provides a reconciliation of the amounts presented for Dana with Dana
Credit Corporation (DCC) on an equity basis to amounts reported for Dana Corporation on a fully
consolidated basis.
Page 16
Dana Corporation
Consolidating Cash Flow Impact on Net Debt
(in millions)
Three Months Ended June 30, 2003
--------------------------------------------------------------
Dana
with DCC on Elimination Dana
Equity Basis DCC Entries Consolidated
-------------- --------- -------------- -----------------
Sources
Net income $ 52 $ 15 $ (15) $ 52
Depreciation 85 14 99
Asset sales 2 57 (1) 58
Divestitures 145 145
Working capital decrease (increase) (30) 4 (1) (27)
---------------- --------- ------------- -----------------
254 90 (17) 327
---------------- --------- ------------- -----------------
Uses
Capital Spend (61) (3) (2) (66)
Dividends (2) (2)
Net changes in other accounts (22) 27 19 24
---------------- --------- ------------- -----------------
(85) 24 17 (44)
---------------- --------- ------------- -----------------
October 2001 restructuring cash impact
Cash payments (20) (20)
Proceeds from asset sales 17 17
---------------- --------- ------------- -----------------
(3) - - (3)
---------------- --------- ------------- -----------------
Cash change in net debt $ 166 $ 114 $ - $ 280
================ ========= ============= =================
Analysis of components of increase
(decrease) in net debt:
Net change in short-term debt $ (162) $ (26) $ $ (188)
Proceeds from long-term debt 18 18
Debt assumed by buyer (32) (32)
Payments on long-term debt (18) (12) (30)
Change in cash (4) (44) (48)
----------------- -------- ------------- -----------------
Cash change in net debt (166) (114) - (280)
Non-cash changes in net debt 28 28
----------------- -------- ------------- -----------------
Total change in net debt $ (138) $(114) $ - $ (252)
================= ======== ============= =================
This consolidating statement provides a reconciliation of the amounts presented for Dana with
Dana Credit Corporation (DCC) on an equity basis to amounts presented for Dana Corporation on a
fully consolidated basis. Page 17
Dana Corporation
Consolidating Cash Flow Impact on Net Debt
(in millions)
Six Months Ended June 30, 2003
--------------------------------------------------------------
Dana
with DCC on Elimination Dana
Equity Basis DCC Entries Consolidated
-------------- --------- -------------- -----------------
Sources
Net income $ 93 $ 31 $ (31) $ 93
Depreciation 171 31 202
Asset sales 6 137 (1) 142
Divestitures 145 145
Working capital decrease (increase) (222) (4) 6 (220)
---------------- --------- ------------- -----------------
193 195 (26) 362
---------------- --------- ------------- -----------------
Uses
Capital spend (133) (8) (1) (142)
Dividends (3) (3)
Net changes in other accounts (30) 25 27 22
---------------- --------- ------------- -----------------
(166) 17 26 (123)
---------------- --------- ------------- -----------------
October 2001 restructuring cash impact
Cash payments (64) (64)
Proceeds from asset sales 37 37
---------------- --------- ------------- -----------------
(27) - - (27)
---------------- --------- ------------- -----------------
Cash change in net debt $ - $ 212 $ - $ 212
================ ========= ============= =================
Analysis of components of increase
(decrease) in net debt:
Net change in short-term debt $ (5) $ (96) $ $ (101)
Proceeds from long-term debt 18 18
Debt assumed by buyer (32) (32)
Payments on long-term debt (18) (18) (36)
Change in cash 5 (66) (61)
----------------- -------- ------------- -----------------
Cash change in net debt - (212) - (212)
Non-cash changes in net debt 36 36
----------------- -------- ------------- -----------------
Total change in net debt $ 36 $ (212) $ - $ (176)
================= ======== ============= =================
This consolidating statement provides a reconciliation of the amounts presented for Dana with
Dana Credit Corporation (DCC) on an equity basis to amounts presented for Dana Corporation on a
fully consolidated basis. Page 18
Dana Corporation
Consolidating Cash Flow Impact on Net Debt
(in millions)
Three Months Ended June 30, 2002
--------------------------------------------------------------
Dana
with DCC on Elimination Dana
Equity Basis DCC Entries Consolidated
-------------- --------- -------------- -----------------
Sources
Net income $ 52 $ 38 $ (38) $ 52
Depreciation 97 24 121
Asset Sales 11 15 26
Divestitures 62 62
Working capital decrease (increase) 34 (9) 17 42
---------------- --------- ------------- -----------------
194 115 (6) 303
---------------- --------- ------------- -----------------
Uses
Capital spend (70) (20) (90)
Dividends (2) (2)
Net changes in other accounts 6 (23) 26 9
---------------- --------- ------------- -----------------
(66) (23) 6 (83)
---------------- --------- ------------- -----------------
October 2001 restructuring cash impact
After-tax charges 42 42
Cash payments (39) (39)
Proceeds from asset sales 17 17
---------------- --------- ------------- -----------------
20 - - 20
---------------- --------- ------------- -----------------
Cash change in net debt $ 148 $ 92 $ - $ 240
================ ========= ============= =================
Analysis of components of increase
(decrease) in net debt:
Net change in short-term debt $ (91) $ (108) $ $ (199)
Proceeds from long-term debt 35 35
Payments on long-term debt (11) (22) (33)
Change in cash (46) 3 (43)
----------------- -------- ------------- -----------------
Cash change in net debt (148) (92) - (240)
Non-cash changes in net debt 86 5 91
----------------- -------- ------------- -----------------
Total change in net debt $ (62) $ (87) $ - $ (149)
================= ======== ============= =================
This consolidating statement provides a reconciliation of the amounts presented for Dana with
Dana Credit Corporation (DCC) on an equity basis to amounts presented for Dana Corporation on a
fully consolidated basis.
Page 19
Dana Corporation
Consolidating Cash Flow Impact on Net Debt
(in millions)
Six Months Ended June 30, 2002
--------------------------------------------------------------
Dana
with DCC on Elimination Dana
Equity Basis DCC Entries Consolidated
-------------- --------- -------------- -----------------
Sources
Net income (loss) $ (177) $ 48 $ (48) $ (177)
Change in accounting for goodwill 220 220
-------------- ---------- ------------- -----------------
Net income (loss) before goodwill change 43 48 (48) 43
Depreciation 195 47 242
Asset Sales 11 29 40
Divestitures 10 62 72
Working capital decrease (increase) 24 (12) 11 23
---------------- --------- ------------- -----------------
283 145 (8) 420
---------------- --------- ------------- -----------------
Uses
Capital spend (134) (2) (29) (165)
Dividends (3) (3)
Net changes in other accounts (26) (14) 37 (3)
---------------- --------- ------------- -----------------
(163) (16) 8 (171)
---------------- --------- ------------- -----------------
October 2001 restructuring cash impact
After-tax charges 79 79
Cash payments (78) (78)
Proceeds from asset sales 19 19
---------------- --------- ------------- -----------------
20 - - 20
---------------- --------- ------------- -----------------
Cash change in net debt $ 140 $ 129 $ - $ 269
================ ========= ============= =================
Analysis of components of increase
(decrease) in net debt:
Net change in short-term debt $ (125) $ (86) $ $ (211)
Proceeds from long-term debt 250 35 285
Payments on long-term debt (146) (78) (224)
Change in cash (119) (119)
----------------- -------- ------------- -----------------
Cash change in net debt (140) (129) - (269)
Non-cash changes in net debt 51 5 56
----------------- -------- ------------- -----------------
Total change in net debt $ (89) $ (124) $ - $ (213)
================= ======== ============= =================
This consolidating statement provides a reconciliation of the amounts presented for Dana with
Dana Credit Corporation (DCC) on an equity basis to amounts presented for Dana Corporation on a
fully consolidated basis.
Page 20
INVESTOR RELATIONS
DANA CORPORATION
QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
FOR SIX MONTHS ENDED JUNE 30, 2003
(IN MILLIONS)
EXTERNAL SALES INTER-SEGMENT SALES EBIT OPERATING PAT NET PROFIT NET ASSETS
-------------- ------------------- ---- ------------- ---------- ----------
03 02 03 02 03 02 03 02 03 02 03 02
-- -- -- -- -- -- -- -- -- -- -- --
AUTOMOTIVE SYSTEMS $ 1,878 $ 1,818 $ 62 $ 46 $ 99 $ 111 $ 82 $ 88 $ 40 $ 44 $ 1,891 $ 1,845
GROUP
AUTOMOTIVE 1,085 1,121 7 8 53 90 33 55 4 24 1,035 1,049
AFTERMARKET GROUP
ENGINE AND FLUID 1,036 1,023 46 51 70 67 45 44 23 20 1,027 976
MANAGEMENT GROUP
HEAVY VEHICLE 954 905 41 53 55 54 34 33 8 8 643 694
TECHNOLOGIES AND
SYSTEMS GROUP
DANA COMMERCIAL 12 17 12 17 306 250
CREDIT
OTHER 30 30 3 8 (116) (114) (122) (135) (3) (11) (8) 57
------ ----- ---- ---- ----- ----- ----- ----- --- ---- ----- -----
CONTINUING OPERATIONS 4,983 4,897 159 166 161 208 84 102 84 102 4,894 4,871
DISCONTINUED
OPERATIONS (9) (11) (6) (7) (6) (7)
UNUSUAL ITEMS EXCLUDED
FROM PERFORMANCE
MEASUREMENT (8) (109) 15 (52) 15 (52)
EFFECT OF CHANGE IN
ACCOUNTING (220) (220)
----- ----- --- --- --- -- -- ----- --- ----- ----- -----
CONSOLIDATED $ 4,983 $ 4,897 $ 159 $ 166 $ 144 $ 88 $ 93 $ (177) $93 $ (177) $ 4,894 $ 4,871
===== ===== === === ===== ===== ===== ===== === ===== ===== =====
NORTH AMERICA $ 3,591 $ 3,727 $ 43 $ 18 $ 164 $ 254 $ 105 $ 160 $26 $ 72 $ 3,019 $ 3,101
EUROPE 882 751 42 37 51 28 46 29 26 11 1,176 1,129
SOUTH AMERICA 249 250 90 89 32 32 20 19 14 13 352 354
ASIA PACIFIC 261 169 1 24 6 15 4 8 (1) 166 172
DANA COMMERCIAL 12 17 12 17 306 250
CREDIT
OTHER (110) (112) (114) (127) (2) (10) (125) (135)
----- ----- --- --- --- --- --- ----- --- ----- ----- -----
CONTINUING OPERATIONS 4,983 4,897 176 144 161 208 84 102 84 102 4,894 4,871
DISCONTINUED (9) (11) (6) (7) (6) (7)
OPERATIONS
UNUSUAL ITEMS EXCLUDED (8) (109) 15 (52) 15 (52)
FROM PERFORMANCE
MEASUREMENT
EFFECT OF CHANGE IN (220) (220)
ACCOUNTING
----- ----- --- --- --- --- --- ----- --- ----- ----- -----
CONSOLIDATED $ 4,983 $ 4,897 $ 176 $ 144 $ 144 $ 88 $ 93 $(177) $93 $ (177) $ 4,894 $ 4,871
===== ===== === === === === === ===== === ===== ===== =====
INFORMATION FOR 155 413 6 33 (15) 381
DISCONTINUED
OPERATIONS
===== ===== === === ===== =====
See Notes 20 and 21 in Dana's 2002 Annual Report for further information
(WWW.DANA.COM)
FOR MORE INFORMATION
(WWW.DANA.COM) - Dial-For-Dana U.S. or Canada 800-537-8823; OH 800-472-8810
E-Mail Michelle.Hards@Dana.com or Karen.Crawford@Dana.com
Dana Investor Relations 419-535-4635
INVESTOR RELATIONS
DANA CORPORATION
QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Q2-2003
(IN MILLIONS)
EXTERNAL SALES INTER-SEGMENT SALES EBIT OPERATING PAT NET PROFIT NET ASSETS
-------------- ------------------- ---- ------------- ---------- ----------
03 02 03 02 03 02 03 02 03 02 03 02
-- -- -- -- -- -- -- -- -- -- -- --
AUTOMOTIVE SYSTEMS GROUP $ 935 $ 945 $ 31 $ 25 $ 56 $ 66 $ 46 $ 50 $ 25 $ 28 $ 1,891 $ 1,845
AUTOMOTIVE AFTERMARKET
GROUP 572 587 3 4 28 54 18 33 2 17 1,035 1,049
ENGINE AND FLUID
MANAGEMENT GROUP 518 532 23 26 34 41 22 27 10 14 1,027 976
HEAVY VEHICLE TECHNOLOGIES
AND SYSTEMS GROUP 500 497 20 27 30 37 18 23 5 9 643 694
DANA COMMERCIAL CREDIT 6 7 6 7 306 250
OTHER 16 15 2 3 (62) (62) (62) (70) (5) (8) 57
----- ----- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---
CONTINUING OPERATIONS 2,541 2,576 79 85 86 136 48 70 48 70 4,894 4,871
DISCONTINUED OPERATIONS (2) (5) (1) (3) (1) (3)
UNUSUAL ITEMS EXCLUDED
FROM PERFORMANCE
MEASUREMENT (8) (63) 5 (15) 5 (15)
EFFECT OF CHANGE
IN ACCOUNTING
-------- -------- ----- ----- ----- ----- ----- ----- ----- ----- -------- --------
CONSOLIDATED $ 2,541 $ 2,576 $ 79 $ 85 $ 76 $ 68 $ 52 $ 52 $ 52 $ 52 $ 4,894 $ 4,871
======== ======== ===== ===== ===== ===== ===== ===== ===== ===== ======== ========
NORTH AMERICA $ 1,811 $ 1,969 $ 21 $ 7 $ 90 $ 155 $ 60 $ 97 $ 17 $ 53 $ 3,019 $ 3,101
EUROPE 452 385 22 19 24 11 21 13 10 4 1,176 1,129
SOUTH AMERICA 138 130 47 47 21 23 13 14 9 11 352 354
ASIA PACIFIC 140 92 - 13 4 8 3 4 - 166 172
DANA COMMERCIAL CREDIT 6 7 6 7 306 250
OTHER (62) (57) (60) (64) 2 (5) (125) (135)
-------- -------- ----- ----- ------ ----- ----- ------ ----- ------ -------- -------
CONTINUING OPERATIONS 2,541 2,576 90 73 86 136 48 70 48 70 4,894 4,871
DISCONTINUED OPERATIONS (2) (5) (1) (3) (1) (3)
UNUSUAL ITEMS EXCLUDED
FROM PERFORMANCE
MEASUREMENT (8) (63) 5 (15) 5 (15)
EFFECT OF CHANGE
IN ACCOUNTING
-------- -------- ----- ----- ----- ----- ----- ----- ----- ----- -------- --------
CONSOLIDATED $ 2,541 $ 2,576 $ 90 $ 73 $ 76 $ 68 $ 52 $ 52 $ 52 $ 52 $ 4,894 $ 4,871
INFORMATION FOR ======== ======== ===== ===== ===== ===== ===== ===== ===== ===== ======== ========
DISCONTINUED
OPERATIONS 75 213 3 17 (15) 381
======== ======== ===== ===== ======== ========
See Notes 20 and 21 in Dana's 2002 Annual Report for further information
(WWW.DANA.COM)
FOR MORE INFORMATION
(WWW.DANA.COM) - Dial-For-Dana U.S. or Canada 800-537-8823; OH 800-472-8810
E-Mail Michelle.Hards@Dana.com or Karen.Crawford@Dana.com
Dana Investor Relations 419-535-4635