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 23, 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 Slide presentation for July 23, 2003 conference call.
ITEM 9. REGULATION FD DISCLOSURE.
This Current Report on Form 8-K and the attached exhibit 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.
During a conference call on July 23, 2003, Dana Corporation's Chief
Executive Officer, Joseph Magliochetti, and Chief Financial Officer, Robert
Richter, intend to present the slide presentation furnished as Exhibit 99.1 to
this Current Report.
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 23, 2003 By: /s/ Michael L. DeBacker
Name: Michael L. DeBacker
Title: Vice President, General Counsel
and Secretary
-3-
EXHIBIT INDEX
99.1 Slide presentation for July 23, 2003 conference call.
-4-
Dana Corporation
2nd Quarter Conference Call
[Dana Logo]
July 23, 2003
(c)Dana Corporation, 2003
FORWARD-LOOKING STATEMENTS
Certain statements contained herein (including our forecasts, beliefs, and
expectations) constitute "forward-looking" statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These statements involve
assumptions, uncertainties, and risks, and Dana's actual results, performance,
or achievements may differ materially from those expressed or implied in these
statements. Among the factors that could affect our actual results are the
impact of national and international economic conditions (including additional
adverse effects from terrorism or hostilities) on production and sales by our
vehicular customers; our ability to complete the sale of DCC's businesses as
contemplated; the success and timing of our restructuring, cost reduction and
cash management programs as well as costs associated with the tender offer for
our common stock that was commenced on July 9, 2003 by a subsidiary of
ArvinMeritor, Inc. Additional factors are contained in our public filings with
the Securities and Exchange Commission. We do not undertake to update any
forward-looking statements contained herein.
2
(c)Dana Corporation. Dated July 23, 2003. This slide may contain
forward-looking information. Actual results may differ materially due to
factors listed on slide 2.
DISCUSSION AGENDA
-- Review of ArvinMeritor Offer
-- Second-Quarter Performance
-- Dana's Strategy: Positioned for Growth
-- Q&A Session
3
(c)Dana Corporation. Dated July 23, 2003. This slide may contain
forward-looking information. Actual results may differ materially due to
factors listed on slide 2.
KEY TERMS AND CONDITIONS OF OFFER
Offeror -- A wholly owned subsidiary of ArvinMeritor
Offer -- $15.00 per share in cash via a tender offer for all Dana
outstanding shares
-- No Financing
Key
Conditions -- Financing Condition
-- Minimum Tender Condition
-- Antitrust Condition
-- Affiliated Transaction Condition
-- Control Share Condition
4
(c)Dana Corporation. Dated July 23, 2003. This slide may contain
forward-looking information. Actual results may differ materially due to
factors listed on slide 2.
RATIONALE FOR REJECTION
-- Offer is inadequate
-- Offer is opportunistic
- Restructuring and transformation not yet reflected in
stock price
-- Offer is highly conditional
- No identified financing
- Serious antitrust concerns
5
(c)Dana Corporation. Dated July 23, 2003. This slide may contain
forward-looking information. Actual results may differ materially due to
factors listed on slide 2.
OFFER IS INADEQUATE
-- Board believes that the Offer does not reflect Dana's value
- Reaffirmed belief that on-going strategy is a better way
to enhance shareholder value
- Current strategy will deliver substantially higher levels
of performance in 2003, 2004 and beyond
-- Financial advisors provided independent opinions that Offer is
inadequate
-- Stock price traded above Offer since announcement
6
(c)Dana Corporation. Dated July 23, 2003. This slide may contain
forward-looking information. Actual results may differ materially due to
factors listed on slide 2.
OFFER IS OPPORTUNISTIC
-- Dana's stock was near 52-week low when ArvinMeritor approached
Dana
-- Our restructuring plan is bearing fruit
-- The heavy-duty truck markets that Dana serves are recovering
7
(c)Dana Corporation. Dated July 23, 2003. This slide may contain
forward-looking information. Actual results may differ materially due to
factors listed on slide 2.
OFFER IS HIGHLY CONDITIONAL
(\) ArvinMeritor must raise the necessary financing to fund the
Offer
(\) ArvinMeritor must receive the necessary HSR clearance
(\) Numerous other conditions
8
(c)Dana Corporation. Dated July 23, 2003. This slide may contain
forward-looking information. Actual results may differ materially due to
factors listed on slide 2.
SUBSTANTIAL FINANCING RISK
Risk to Shareholders Uncertainty of Financing
-------------------- ------------------------
-- Offer contains no certainty -- Pro forma ArvinMeritor
of financing leverage would be on of the
- Represents substantial highest in the industry
risk of non-completion (88% debt to capital ratio)
-- Substantial leverage of the -- Multi-billion dollar
combined entity provides external financing required
significant financing risk for (plus assumed debt)
ArvinMeritor
-- Significant pension and
-- In response to regulatory inquiries, OPEB liabilities
ArvinMeritor acknowledges that it has
no financing commitments -- Rating agencies have
already expressed
significant concern
-- Poor industry track record
in highly leveraged
transactions
9
(c)Dana Corporation. Dated July 23, 2003. This slide may contain
forward-looking information. Actual results may differ materially due to
factors listed on slide 2.
SERIOUS ANTITRUST CONCERNS
-- Combined North American share in several key markets is
80-100%
- Axles, driveshafts and foundation brakes for medium- and
heavy-duty trucks
-- The only North American suppliers (via joint arrangements) of
heavy-truck driveline systems
-- Highly likely to be subject to intensive and prolonged
government scrutiny
-- Potential uncertainty, instability for customers
10
(c)Dana Corporation. Dated July 23, 2003. This slide may contain
forward-looking information. Actual results may differ materially due to
factors listed on slide 2.
BOARD COMMITMENT
- -- Focused on building shareholder value and safeguarding shareholder interests
- -- Continuing obligation by the Board to oversee the progress of the Company
- -- Actively participates in setting strategic direction and evaluating
alternatives
11
(c)Dana Corporation. Dated July 23, 2003. This slide may contain forward-
looking information. Actual results may differ materially due to factors listed
on slide 2.
WHY WE WANT YOUR SUPPORT
- -- Offer is inadequate
- -- Offer is opportunistic
- Restructuring and transformation not yet
reflected in stock price
- -- Offer is highly conditional
- No identified financing
- Serious antitrust concerns
- --------------------------------------------------------------------------------
GREATER SHAREHOLDER VALUE CREATED UNDER CURRENT STRATEGIC PLAN
- --------------------------------------------------------------------------------
12
(c)Dana Corporation. Dated July 23, 2003. This slide may contain forward-
looking information. Actual results may differ materially due to factors listed
on slide 2.
FINANCIAL SUMMARY
Q2-2003 Q2-2002
Sales $ 2.5 billion $ 2.6 billion
Net Income $ 52 million $ 52 million
Earnings Per Share $ 0.35 $ 0.35
13
(c)Dana Corporation. Dated July 23, 2003. This slide may contain forward-
looking information. Actual results may differ materially due to factors listed
on slide 2.
Segment Comparison- 2nd Qtr
Sales OPAT
--------------------------- -------------------------
2003 2002 Chg. 2003 2002 Chg.
---- ---- ---- ---- ---- ---
Automotive 966 970 (1)% 46 50 (8)%
Aftermarket 575 591 (3)% 18 33 (45)%
Engine & Fluid 541 558 (3)% 22 27 (19)%
Heavy Vehicle 520 524 (1)% 18 23 (22)%
DCC 6 7 (14)%
Other (61) (67) (9)% (62) (70) (11)%
Results from Cont. ------------------------- -------------------------
Operations 2,541 2,576 (1)% 48 70 (31)%
Discontinued Ops. (1) (3)
Unusual Items 5 (15)
------------------------- ------------------------
Total 2,541 2,576 (1)% 52 52
14
(c)Dana Corporation. Dated July 23, 2003. This slide may contain forward-
looking information. Actual results may differ materially due to factors listed
on slide 2.
DCC PORTFOLIO ANALYSIS
($ MILLIONS)
[Pie Graph depicting the following:] [Pie Graph depicting the following:]
12/01 Total Portfolio Assets - $2,200 6/03 Total Portfolio Assets- $1,490
Consisting of: Value Added Services, Real Estate, Capital Markets, Retained
15
(c)Dana Corporation. Dated July 23, 2003. This slide may contain forward-
looking information. Actual results may differ materially due to factors listed
on slide 2.
INCOME STATEMENT
WITH DCC ON AN EQUITY BASIS
($ Millions) Second Quarter YTD
----------------------- ----------------------
2003 2002 2003 2002
------ ------- ------- -------
($ Millions)
Net sales $ 2,541 $ 2,576 $ 4,983 $4,897
Other income 25 13 38 27
-------- ------- ------- --------
2,566 2,589 5,021 4,924
-------- ------- ------- --------
Cost of sales 2,286 2,270 4,482 4,339
SG&A expense 192 189 373 384
Restructuring 51 88
Interest expense 41 44 83 89
-------- ------- ------- --------
2,519 2,554 4,938 4,900
-------- ------- ------- --------
Income before taxes 47 35 83 24
Income taxes (18) (18) (33) (34)
Minority interest (2) (3) (4) (9)
Equity in affiliate earnings 28 44 55 64
Discontinued operations (3) (6) (8) (2)
Accounting change effect (220)
-------- ------- ------- -------
Net income (loss) $ 52 $ 52 $ 93 $ (177)
-------- ------- ------- -------
-------- ------- ------- -------
16
(c)Dana Corporation. Dated July 23, 2003. This slide may contain forward-
looking information. Actual results may differ materially due to factors listed
on slide 2.
CASH FLOW STATEMENT
With DCC on an Equity Basis
($Millions) Second Quarter YTD
--------------------- ---------------------
Sources 2003 2002 2003 2002
---- ---- ---- ----
Net Income (Loss) $ 52 $ 52 $ 93 $ (177)
Accounting change effect 220
Depreciation 85 97 171 195
Asset sales 2 11 6 11
Divestitures 145 - 145 10
Working capital decrease (increase) (30) 34 (222) 24
-------- -------- ---------- -------
245 194 193 283
-------- -------- ---------- -------
Uses
Capital spend (61) (70) (133) (134)
Dividends (2) (2) (3) (3)
Net change in other accounts (22) 6 (30) (26)
------- -------- ---------- --------
(85) (66) (166) (163)
------- -------- ---------- --------
Restructuring Plan
After-tax charges - 42 - 79
Cash Payments (20) (39) (64) (78)
Proceeds from Asset Sales 17 17 37 19
------- ------- ----------- --------
(3) 20 (27) 20
------- ------- ----------- --------
Cash Change in Net Debt $ 166 $ 148 $ - $ 140
------ ------- ---------- --------
17
(c)Dana Corporation. Dated July 23, 2003. This slide may contain forward-
looking information. Actual results may differ materially due to factors listed
on slide 2.
CAPITAL STRUCTURE
With DCC on an Equity Basis
12/31/02 Operations Other 6/30/03
-------- ---------- ----- -------
($Millions)
Short-term debt $ 53 $ (23) $ 253 $ 283
Long-term debt 2,462 18 (217) 2,263
-------- ---------- ------- -------
Borrowings 2,515 (5) 36 2,546
Cash 551 (5) - 546
-------- ---------- ------- -------
Net Debt $ 1,964 $ - $ 36 $ 2,000
Equity $ 1,482 $ 90 $ 213 $ 1,785
Net debt/capital 57.0% 52.8%
18
(c)Dana Corporation. Dated July 23, 2003. This slide may contain
forward-looking information. Actual results may differ materially due to
factors listed on slide 2.
JUNE 30, 2003 DEBT PORTFOLIO
With DCC on an Equity Basis
Maturity Schedule
Average Life - 10.4 Years
Bar Graph depicting the year on the X-axis for the years set forth below and
$Millions on the Y-axis.
2003: Revolver, $33 Million
2004: Senior Notes & Other, $276 Million
2006: $0
2008: Senior Notes, $150 Million
2009: Senior Notes, $350 Million
2010: Senior Notes, $250 Million
2011: Senior Notes, $805 Million
2028: Senior Notes, $197 Million
2029: Senior Notes, $375 Million
Amounts by maturity exclude swap valuation adjustments and issue expenses of
$17 million net
19
(c)Dana Corporation. Dated July 23, 2003. This slide may contain forward-
looking information. Actual results may differ materially due to factors listed
on slide 2.
RE-AFFIRMED 2003 GUIDANCE
($ Millions, except per-share amounts)
NET INCOME: $195 TO $215
EPS: $1.31 TO 1.44
20
(c)Dana Corporation. Dated July 23, 2003. This slide may contain forward-
looking information. Actual results may differ materially due to factors listed
on slide 2.
2003 PRELIMINARY CASH PROJECTION
With DCC on an Equity Basis
($ Millions)
SOURCES:
Net income $ 195
Depreciation 340
Working capital 175
Divestiture proceeds 145
--------
$ 855
LESS:
Capital spend (325)
Dividends (5)
$ 525
Cash Payments for Restructuring $ 100-150
21
(c)Dana Corporation. Dated July 23, 2003. This slide may contain forward-
looking information. Actual results may differ materially due to factors listed
on slide 2.
DANA CONSOLIDATED RETURN ON INVESTED CAPITAL (ROIC)
(Last 12 Months Total Income/ 5-Quarter Rolling Average Invested Capital)
[Bar Graph depicting the following information]
11.8% 13.2% 9.1% 6.6% 4.5% 3.2% 2.8% 3.4% 4.3% 5.4% 6.8% 7.1% 6.7%
1998 1999 2000 Q1 01 Q2 01 Q3 01 Q4 01 Q1 02 Q2 02 Q3 02 Q4 02 Q1 03 Q2 03
22
(c)Dana Corporation. Dated July 23, 2003. This slide may contain forward-
looking information. Actual results may differ materially due to factors listed
on slide 2.
DANA CONSOLIDATED RETURN ON INVESTED CAPITAL (ROIC)
(Last 12 Months Total Income/ 5-Quarter Rolling Average Invested Capital)
[Bar graph depicting the following information]
11.8% 13.2% 9.1% 6.6% 4.5% 3.2% 2.8% 3.4% 4.3% 5.4% 6.8% 7.1% 6.7%
1998 1999 2000 Q1 01 Q2 01 Q3 01 Q4 01 Q1 02 Q2 02 Q3 02 Q4 02 Q1 03 Q2 03
23
(c)Dana Corporation. Dated July 23, 2003. This slide may contain forward-
looking information. Actual results may differ materially due to factors listed
on slide 2.
REVENUE BREAKDOWN
[Pie Chart depicting the following information]
Automotive Systems Group 37%
Automotive Aftermarket Group 23%
Engine and Fluid Management Group 21%
Heavy Vehicle Technologies & Systems 19%
2002 Revenues $9,504
2002 EBIT(1) 390
2002 Margin 4.1%
Excludes restructuring and accounts for DCC under the equity method.
24
(c)Dana Corporation. Dated July 23, 2003. This slide may contain forward-
looking information. Actual results may differ materially due to factors listed
on slide 2.
STRONG CUSTOMER RELATIONSHIPS
[Pie Chart depicting the following information]
DaimlerChrysler, Freightliner 10%
Ford, Volvo, Land Rover, Jaguar 18%
General Motors 8%
Other (1) 64%
(1) Volkswagen, Carquest, BMW, Nissan, Isuzu, Toyota, Renault, Pep Boys,
Caterpillar, Honda, Napa, International
Non-US based OEMs are composing an incresing percentage of Dana's revenue
25 Data as of Dec. 31, 2002
(c)Dana Corporation. Dated July 23, 2003. This slide may contain forward-
looking information. Actual results may differ materially due to factors listed
on slide 2.
RESTRUCTURING NEAR COMPLETION
Restructuring Costs -- On target with original estimates of $445 million
Facility Closures -- Original target greater than or equal to 30
Status: 31 closed, 8 in progress
Workforce -- Original target greater than or equal to 15%
Status: 20% to date
Outsource Non-Core
Content -- Substantial non-core components outsourced
Divest DCC -- Over $700 million in assests divested - achieving value
----------------------------------------------------------
Restructuring plan substantially complete in Q4 2003
Organization positioned for growth
----------------------------------------------------------
26
(c)Dana Corporation. Dated July 23, 2003. This slide may contain forward-
looking information. Actual results may differ materially due to factors listed
on slide 2.
ENTERING GROWTH PHASE
-- Seven new ASG product launches in 2003
- Millions in investments, ready to begin full returns in 2004 and
beyond
-- Well positioned for improvements in heavy duty volumes
- 2003: 175,000 to 180,000
- 2004: 245,000 to 255,000
-- Groundwork is in place
- Organization is "right-sized" for growth
- Reduced investment and variable costs
27
(c)Dana Corporation. Dated July 23, 2003. This slide may contain forward-
looking information. Actual results may differ materially due to factors listed
on slide 2.
ENTERING GROWTH PHASE
-- Focus on technology
- Technology drives price
- Leading to new platform wins: $1.3 billion of new business over 4
years
-- Continuing to grow and diversify customer base
- Toyota, Nissan, BMW
- Increasing content
28
(c)Dana Corporation. Dated July 23, 2003. This slide may contain forward-
looking information. Actual results may differ materially due to factors listed
on slide 2.
PROJECTED NET INCREMENTAL BUSINESS
($ Millions)
SBU 2003 2004 2005 2006 2007
--------------------------------------------------------------
ASG 195 545 720 765 780
AAG 20 25 35 35 35
EFMG 85 150 180 200 215
HVTSG 195 185 165 230 240
- --------------------------------------------------------------------------------
TOTAL 495 905 1,100 1,230 1,270
Prior Qtr. 490 930 1,080 1,225 1,250
29
(c)Dana Corporation. Dated July 23, 2003. This slide may contain forward-
looking information. Actual results may differ materially due to factors listed
on slide 2.
FAVORABLE OUTLOOK
Key Drivers in 2004 Earnings Long-Term Objectives
- --------------------------------------- --------------------------------------
- -- Improved top-line performance -- Annual top-line growth
- Heavy duty volumes - 6% to 7%
- New business wins -- Continued margin improvement
- -- Bottom line and cash flow -- Balance sheet
improvements
- Return to investment grade
- Restructuring complete credit rating
- Substantial operating leverage -- Dividend policy
- Reduced start-up costs in 2004 - Re-examine dividend levels
- --------------------------------------------------------------------------------
Net Income guidance of $300 million (~ $2.00 per share) for 2004
- --------------------------------------------------------------------------------
30
(c)Dana Corporation. Dated July 23, 2003. This slide may contain forward-
looking information. Actual results may differ materially due to factors listed
on slide 2.
[DANA CORPORATION LOGO]
QUESTIONS?
(c)Dana Corporation, 2003
[DANA CORPORATION LOGO]
THANK YOU
(c)Dana Corporation, 2003
SUPPLEMENTAL DATA
Change in Working Capital - DCC on an Equity Basis
Second Quarter YTD
-------------------- -------------
2003 2002 2003 2002
($Millions) ---- ---- ---- ----
Balance at beginning of quarter $1,134 $1,107 $830 $1,116
Cash from operations:
Incr in accts receivable (11) 141 224 397
Incr (decr) in inventory (44) (20) (22) (38)
Incr in other assets 7 (16) 44 16
Decr (incr) in curr liabs 78 (169) (24) (429)
------ ------ ------ ------
Net from operations 30 (64) 222 (54)
Restructuring 20 (1) 64 15
Divestitures (71) (3) (71) (6)
Exchange & other non-cash (12) 52 56 20
------ ------ ------ ------
Balance at end of quarter $1,101 $1,091 $1,101 $1,091
------ ------ ------ ------
33
(c)Dana Corporation. Dated July 23, 2003. This slide may contain
forward-looking information. Actual results may differ materially due to
factors listed on slide 2.
