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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

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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): OCTOBER 24, 2003

 

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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)

 

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ITEM 7.

FINANCIAL STATEMENTS AND EXHIBITS.

 

(c) Exhibits

 

99.1		Slide Presentation for October 24, 2003 Conference Call
99.2		Press Release of Dana Corporation.

 

ITEM 9.

REGULATION FD DISCLOSURE.

 

This Current Report on Form 8-K and the attached exhibits 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, insofar as they disclose historical information regarding Dana’s results of operations and financial condition for the fiscal quarter and the nine months ended September 30, 2003.

 

During a conference call scheduled to be held at 10:00 a.m. EDT on October 24, 2003, Dana’s Acting President and Chief Operating Officer, William Carroll, and Chief Financial Officer, Robert Richter, intend to present the slide presentation that is furnished as Exhibit 99.1 to this Current Report.

 

Certain slides in this presentation include financial measures which are not presented in accordance with U.S. Generally Accepted Accounting Principles (GAAP). These include slides 7 through 12, 15 and 27, which contain non-GAAP financial measures due to the inclusion of Dana Credit Corporation (DCC) on an equity basis. In accordance with Instruction 2 to Item 12 of Form 8-K, the presentation also includes, on slides 28 through 33, a quantitative reconciliation of the differences between the non-GAAP financial measures disclosed and the most directly comparable financial measures calculated and presented in accordance with GAAP. Item 12 below and Dana’s earnings release in the attached Exhibit 99.2 also contain information about the reconciliation of these non-GAAP financial measures to comparable GAAP financial measures and an explanation of why management believes the non-GAAP financial measures provide useful information to investors.

 

ITEM 12.

RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

 

On October 24, 2003, Dana issued a news release regarding its earnings for the fiscal quarter and nine months ended September 30, 2003. A copy of that release is furnished as Exhibit 99.2 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 September 30, 2003 and 2002 and Nine Months Ended September 30, 2003 and 2002; (ii) Dana Corporation (Including Dana Credit Corporation on an Equity Basis), Condensed Balance Sheet (Unaudited) — September 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 September 30, 2003 and 2002 and Nine Months Ended September 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 results of operations and financial condition 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 the attached exhibits, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities 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 filing.

 

-2-

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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:		October 24, 2003				By:		/s/    Michael L. DeBacker
						Name:		Michael L. DeBacker
						Title:		Vice President, General Counsel and Secretary

 

-3-

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EXHIBIT INDEX

 

99.1		Slide Presentation for October 24, 2003 Conference Call.
99.2		Press Release of Dana Corporation.

 

-4-

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Exhibit 99.2

 

Contact:

Michelle Hards

(419) 535-4636

michelle.hards@dana.com

 

DANA CORPORATION REPORTS

STRONGER THIRD-QUARTER EARNINGS

 

•

Third-quarter earnings significantly improved over 2002

 

•

Full-year net income forecast raised to range of $210 to $220 million

 

•

Net debt-to-capital ratio reduced to below 51 percent

 

•

Fourth-quarter dividend increased to 6 cents per share

 

TOLEDO, Ohio, October 24, 2003 — Dana Corporation (NYSE: DCN) today announced third-quarter net income totaling $61 million, or 41 cents per share, on sales of $2.4 billion. These results are a significant improvement over net income of $4 million, or 2 cents per share, on sales of $2.4 billion during the same period last year.

 

Third-quarter 2003 net income of $61 million included $9 million in after-tax gains from the continued reduction of Dana Credit Corporation (DCC) assets, and $9 million in after-tax gains from early retirement of debt. Excluding these items, quarterly net income totaled $43 million, or 29 cents per share. Third-quarter 2002 reported net income of $4 million included $40 million in after-tax charges associated with the company’s restructuring plan and $6 million of after-tax income from divested businesses classified as “discontinued operations.” Excluding these items, third-quarter 2002 net income totaled $38 million, or 26 cents per share.

 

“The plan we initiated two years ago is now yielding results, achieving or surpassing every goal associated with it,” said Bill Carroll, Dana’s Acting President and Chief Operating Officer. “Our performance, evident in today’s reported results, continues to validate our strategic course. We’re doing what we said we’d do. We are delivering world-class support to our customers, our margins are improving, we are paying down debt, and we are increasing the dividend payout to our shareholders.”

 

Looking ahead to 2004, Mr. Carroll noted that, “We expect that the costs associated with our seven concurrent product launches will be largely behind us, and that we will begin to deliver full returns on these programs. Coupled with a steadily improving heavy-truck market and stability in the light-truck market, we believe Dana is positioned for further improved performance next year.”

 

(more)

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Nine-Month Results Improved

 

In the first nine months of 2003, Dana’s net income totaled $154 million, or $1.04 per share, on sales of $7.4 billion. This compares favorably to a loss of $173 million, or $1.16 per share, on sales of $7.3 billion during the first nine months of 2002. Nine-month net income in 2003 included net gains from divestitures and the repurchase of debt, and losses from discontinued operations. Net income in the period 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, as well as restructuring charges, divestiture gains, and income from discontinued operations.

 

Net Debt-to-Capital Reduced; Asset Reduction Continues at DCC

 

“During the third quarter, we used a portion of the divestiture proceeds we received earlier this year to repurchase some of our long-term bonds at attractive prices,” said Dana Chief Financial Officer Bob Richter. “We bought back bonds with a face value of $158 million, generating an after-tax gain of $9 million. This helped bring our ratio of net debt-to-capital at Sept. 30, exclusive of DCC, down to 50.7 percent from 57.0 percent at the beginning of the year.

 

“We also reduced DCC assets by another $70 million during the quarter,” he said. “This brings the total asset reduction since we began the program in October 2001, to $780 million through September 30th, with a cumulative net after-tax gain of $58 million.”

 

2003 Net Income Forecast Raised; 2004 Guidance Reaffirmed

 

“We look forward to building on the momentum of all that we have accomplished over the last two years,” Mr. Richter added. “On the strength of the third-quarter results, we are again raising our guidance for 2003 full-year net income to a range of $210 to $220 million and reaffirming our belief that earnings in 2004 will be at least $300 million, which would be just over $2 per share.”

 

Dividend Increased to 6 Cents per Share for the Fourth Quarter

 

On Oct. 21, Dana announced that it would raise its dividend to 6 cents per share for the fourth quarter. “We are pleased that our continuing success in executing our restructuring plan has enabled us to provide our shareholders with this dividend increase,” said Glen Hiner, Dana’s Acting Chairman. “We committed to our shareholders that we would revisit our dividend policy as our results approached what could be considered ‘investment grade’ performance. Our confidence that our net debt-to-capital will be below 50 percent by year-end moves us toward that goal. Increasing the dividend at this time is also consistent with our expectation of continued improvement in earnings and cash flow.”

 

He added, “This action reflects the strong belief of Dana that dividends are an important component of the total return that Dana provides to our shareholders.”

 

(more)

 

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Quarterly Conference Call Scheduled Today at 10 a.m.

 

Dana will discuss its third-quarter results in a conference call at 10 a.m. (EDT) today. 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. today. To access this recording, please dial (800) 537-8823. A webcast replay of the call will be available after 3 p.m. today 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 that 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 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’s shareholders, and its customers, suppliers and employees, are strongly advised to read carefully Dana’s solicitation/recommendation statement regarding ArvinMeritor’s tender offer, because it contains important information. Free copies of the solicitation/recommendation statement and the related amendments, which have been filed by Dana with the Securities and Exchange Commission, are available at the SEC’s web site at www.sec.gov, or at the Dana web site at www.dana.com, and also by directing requests to Dana’s Investor Relations Department or Dana’s information agent, D.F. King & Co., Inc., at 1-800-901-0068.

 

# # #

 

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Dana Corporation

Reconciliation to GAAP Presentation

(in millions, except per share amounts)

 

		Three Months Ended September 30
		Dollar amounts							Diluted per share amounts
		2003			2002				2003			2002
Operating profit after tax (a)		$	43		$	38			$	0.29		$	0.26
Add items excluded from segment performance measures:
After-tax gains from DCC asset sales			9			—				0.06			—
After-tax gains from early retirement of debt			9			—				0.06
Restructuring charges after-tax			—			(40	)			—			(0.27	)
Income from discontinued operations			—			6				—			0.03
Net income—GAAP basis		$	61		$	4			$	0.41		$	0.02

 

(a)	Operating profit after tax is presented in our Business Segment table as the key internal measure of performance used by management as a measure of segment profitability.

 

Page 1

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Dana Corporation

Condensed Statement of Income (Unaudited)

(in millions, except per share amounts)

 

		Three Months Ended September 30
		2003				2002
Net sales		$	2,410			$	2,356
Revenue from lease financing and other income			42				44
			2,452				2,400
Costs and expenses
Cost of sales			2,165				2,103
Selling, general and administrative expenses			171				199
Restructuring charges							34
Interest expense			55				63
			2,391				2,399
Income before income taxes			61				1
Income tax expense			(3	)			(5	)
Minority interest			(2	)			(4	)
Equity in earnings of affiliates			5				7
Income (loss) from continuing operations			61				(1	)
Income from discontinued operations			—				5
Net income		$	61			$	4
Basic earnings (loss) per share
Income (loss) from continuing operations		$	0.41			$	(0.01	)
Income from discontinued operations							0.03
Net income		$	0.41			$	0.02
Diluted earnings (loss) per share
Income (loss) from continuing operations		$	0.41			$	(0.01	)
Income from discontinued operations							0.03
Net income		$	0.41			$	0.02
Average shares outstanding—
For Basic EPS			148				148
For Diluted EPS			149				149

 

 

Page 2

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Dana Corporation

Condensed Statement of Income (Unaudited)

(in millions, except per share amounts)

 

		Nine Months Ended September 30
		2003				2002
Net sales		$	7,393			$	7,253
Revenue from lease financing and other income			112				172
			7,505				7,425
Costs and expenses
Cost of sales			6,624				6,412
Selling, general and administrative expenses			580				639
Restructuring charges							122
Interest expense			170				195
			7,374				7,368
Income before income taxes			131				57
Income tax expense			(3	)			(40	)
Minority interest			(6	)			(13	)
Equity in earnings of affiliates			40				40
Income from continuing operations before effect of change in accounting			162				44
Income (loss) from discontinued operations			(8	)			3
Income before effect of change in accounting			154				47
Effect of change in accounting							(220	)
Net income (loss)		$	154			$	(173	)
Basic earnings (loss) per share
Income from continuing operations before effect of change in accounting		$	1.10			$	0.30
Income (loss) from discontinued operations			(0.06	)			0.02
Effect of change in accounting							(1.49	)
Net income (loss)		$	1.04			$	(1.17	)
Diluted earnings (loss) per share
Income from continuing operations before effect of change in accounting		$	1.09			$	0.30
Income (loss) from discontinued operations			(0.05	)			0.02
Effect of change in accounting							(1.48	)
Net income (loss)		$	1.04			$	(1.16	)
Average shares outstanding—
For Basic EPS			148				148
For Diluted EPS			149				149

 

Page 3

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Dana Corporation

Condensed Balance Sheet (Unaudited)

(in millions)

 

		September 30 2003			December 31 2002
Assets
Current assets
Cash and cash equivalents		$	636		$	571
Accounts receivable
Trade			1,496			1,348
Other			313			320
Inventories			1,167			1,116
Other current assets			622			763
Total current assets			4,234			4,118
Property, plant and equipment, net			2,475			2,556
Investment in leases			658			827
Investments and other assets			2,117			2,052
Total assets		$	9,484		$	9,553
Liabilities and Shareholders’ Equity
Current liabilities
Notes payable		$	584		$	287
Accounts payable			1,187			1,004
Other current liabilities			1,142			1,533
Total current liabilities			2,913			2,824
Long-term debt			2,653			3,215
Deferred employee benefits and other noncurrent liabilities			1,968			1,925
Minority interest			100			107
Shareholders’ equity			1,850			1,482
Total liabilities and shareholders’ equity		$	9,484		$	9,553

 

Page 4

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Dana Corporation

Condensed Statement of Cash Flows (Unaudited)

(in millions)

 

		Three Months Ended September 30
		2003				2002
Net income		$	61			$	4
Depreciation and amortization			92				118
Asset impairment			9				15
Gain on divestitures, asset sales and note repurchases			(7	)			(1	)
Working capital increase			(33	)			(35	)
Other			(5	)			(16	)
Net cash flows—operating activities			117				85
Purchases of property, plant and equipment			(73	)			(85	)
Payments received on leases			5				21
Net loan repayments from customers			1				4
Acquisitions			—				(31	)
Divestitures			—				163
Asset sales			27				8
Other			24				(7	)
Net cash flows—investing activities			(16	)			73
Net change in short-term debt			88				(71	)
Payments on and repurchases of long-term debt			(182	)			(28	)
Dividends paid			(2	)			(2	)
Other			(1	)			72
Net cash flows—financing activities			(97	)			(29	)
Net change in cash and cash equivalents			4				129
Cash and cash equivalents—beginning of period			632				318
Cash and cash equivalents—end of period		$	636			$	447

 

Page 5

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Dana Corporation

Condensed Statement of Cash Flows (Unaudited)

(in millions)

 

		Nine Months Ended September 30
		2003				2002
Net income (loss)		$	154			$	(173	)
Depreciation and amortization			294				360
Asset impairment			18				45
Change in accounting for goodwill			—				220
Gain on divestitures, asset sales and note repurchases			(29	)			(35	)
Working capital increase			(317	)			(11	)
Other			(35	)			(46	)
Net cash flows—operating activities			85				360
Purchases of property, plant and equipment			(215	)			(250	)
Payments received on leases			21				46
Net loan repayments from customers			12				18
Acquisitions			—				(31	)
Divestitures			145				235
Asset sales			206				67
Other			33				(18	)
Net cash flows—investing activities			202				67
Net change in short-term debt			(9	)			(282	)
Proceeds from long-term debt			—				285
Payments on and repurchases of long-term debt			(225	)			(252	)
Dividends paid			(5	)			(5	)
Other			16				75
Net cash flows—financing activities			(223	)			(179	)
Net change in cash and cash equivalents			64				248
Net change in cash—discontinued operations			1
Cash and cash equivalents—beginning of period			571				199
Cash and cash equivalents—end of period		$	636			$	447

 

Page 6

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Dana Corporation

(Including Dana Credit Corporation on an Equity Basis)

Condensed Statement of Income (Unaudited)

(in millions)

 

 

		Three Months Ended September 30
		2003				2002
Net sales		$	2,410			$	2,356
Other income			33				20
			2,443				2,376
Costs and expenses
Cost of sales			2,176				2,118
Selling, general and administrative expenses			156				174
Restructuring charges							34
Interest expense			40				42
			2,372				2,368
Income before income taxes			71				8
Income tax expense			(25	)			(12	)
Minority interest			(2	)			(4	)
Equity in earnings of affiliates			17				7
Income (loss) from continuing operations			61				(1	)
Income from discontinued operations							5
Net income		$	61			$	4

 

Page 7

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Dana Corporation

(Including Dana Credit Corporation on an Equity Basis)

Condensed Statement of Income (Unaudited)

(in millions)

 

 

		Nine Months Ended September 30
		2003				2002
Net sales		$	7,393			$	7,253
Other income			71				47
			7,464				7,300
Costs and expenses
Cost of sales			6,658				6,457
Selling, general and administrative expenses			529				558
Restructuring charges							122
Interest expense			123				131
			7,310				7,268
Income before income taxes			154				32
Income tax expense			(58	)			(46	)
Minority interest			(6	)			(13	)
Equity in earnings of affiliates			72				71
Income from continuing operations before effect of change in accounting			162				44
Income (loss) from discontinued operations			(8	)			3
Income before effect of change in accounting			154				47
Effect of change in accounting							(220	)
Net income (loss)		$	154			$	(173	)

 

Page 8

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Dana Corporation

(Including Dana Credit Corporation on an Equity Basis)

Condensed Balance Sheet (Unaudited)

(in millions)

 

 

		September 30							December 31
		2003							2002
Assets
Current assets
Cash and cash equivalents		$	550						$	551
Accounts receivable
Trade			1,496							1,348
Other			306							209
Inventories			1,167							1,116
Other current assets			582							716
Total current assets			4,101							3,940
Property, plant and equipment, net			2,235							2,253
Investments and other assets			2,516							2,375
Total assets		$	8,852						$	8,568
Liabilities and Shareholders’ Equity
Current liabilities
Notes payable		$	359						$	53
Accounts payable			1,187							1,004
Other current liabilities			1,287							1,555
Total current liabilities			2,833							2,612
Long-term debt			2,090							2,462
Deferred employee benefits and other noncurrent liabilities			1,980							1,906
Minority interest			99							106
Shareholders’ equity			1,850							1,482
Total liabilities and shareholders’ equity		$	8,852						$	8,568

 

Page 9

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Dana Corporation

(Including Dana Credit Corporation on an Equity Basis)

Cash Flow Impact on Net Debt

(in millions)

 

 

		Three Months Ended September 30
		2003								2002
Sources
Net income		$	61							$	4
Depreciation			78								96
Asset sales (non-restructuring)			1								1
Divestitures											31
Working capital decrease (increase)			3								(39	)
			143								93
Uses
Capital spend			(76	)							(52	)
Dividends			(2	)							(2	)
Acquisitions											(31	)
Net changes in other accounts			11								81
			(67	)							(4	)
October 2001 restructuring cash impact
After-tax charges											40
Cash payments			(28	)							(30	)
Proceeds from asset sales											4
			(28	)							14
Cash change in net debt		$	48							$	103

 

Page 10

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Dana Corporation

(Including Dana Credit Corporation on an Equity Basis)

Cash Flow Impact on Net Debt

(in millions)

 

 

		Nine Months Ended September 30
		2003								2002
Sources
Net income (loss)		$	154							$	(173	)
Change in accounting for goodwill											220
Net income before goodwill change			154								47
Depreciation			249								291
Asset sales (non-restructuring)			7								12
Divestitures			145								41
Working capital decrease (increase)			(219	)							(15	)
			336								376
Uses
Capital spend			(209	)							(186	)
Dividends			(5	)							(5	)
Acquisitions											(31	)
Net changes in other accounts			(19	)							55
			(233	)							(167	)
October 2001 restructuring cash impact
After-tax charges											119
Cash payments			(92	)							(108	)
Proceeds from asset sales			37								23
			(55	)							34
Cash change in net debt		$	48							$	243

 

Page 11

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Dana Corporation

Condensed Consolidating Statement of Income (Unaudited)

(in millions)

 

		Three Months Ended September 30, 2003
		Dana with DCC on Equity Basis				DCC				Elimination Entries				Dana Consolidated
Net sales		$	2,410			$				$				$	2,410
Other income			33				27				(18	)			42
			2,443				27				(18	)			2,452
Costs and expenses
Cost of sales			2,176								(11	)			2,165
Selling, general and administrative expenses			156				22				(7	)			171
Interest expense			40				15								55
			2,372				37				(18	)			2,391
Income (loss) before income taxes			71				(10	)			—				61
Income tax benefit (expense)			(25	)			22								(3	)
Minority interest			(2	)											(2	)
Equity in earnings of affiliates			17				5				(17	)			5
Net income		$	61			$	17			$	(17	)		$	61

 

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

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Dana Corporation

Condensed Consolidating Statement of Income (Unaudited)

(in millions)

 

		Nine Months Ended September 30, 2003
		Dana with DCC on Equity Basis				DCC				Elimination Entries				Dana Consolidated
Net sales		$	7,393			$				$				$	7,393
Other income			71				101				(60	)			112
			7,464				101				(60	)			7,505
Costs and expenses
Cost of sales			6,658								(34	)			6,624
Selling, general and administrative expenses			529				77				(26	)			580
Interest expense			123				47								170
			7,310				124				(60	)			7,374
Income (loss) before income taxes			154				(23	)			—				131
Income tax benefit (expense)			(58	)			55								(3	)
Minority interest			(6	)											(6	)
Equity in earnings of affiliates			72				16				(48	)			40
Income from continuing operations			162				48				(48	)			162
Loss from discontinued operations			(8	)											(8	)
Net income		$	154			$	48			$	(48	)		$	154

 

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

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Dana Corporation

Condensed Consolidating Statement of Income (Unaudited)

(in millions)

 

		Three Months Ended September 30, 2002
		Dana with DCC on Equity Basis				DCC				Elimination Entries				Dana Consolidated
Net sales		$	2,356			$				$				$	2,356
Other income			20				55				(31	)			44
			2,376				55				(31	)			2,400
Costs and expenses
Cost of sales			2,118								(15	)			2,103
Selling, general and administrative expenses			174				37				(12	)			199
Restructuring charges			34												34
Interest expense			42				21								63
			2,368				58				(27	)			2,399
Income (loss) before income taxes			8				(3	)			(4	)			1
Income tax benefit (expense)			(12	)			6				1				(5	)
Minority interest			(4	)											(4	)
Equity in earnings of affiliates			7				6				(6	)			7
Income (loss) from continuing operations			(1	)			9				(9	)			(1	)
Income from discontinued operations			5												5
Net income		$	4			$	9			$	(9	)		$	4

 

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

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Dana Corporation

Condensed Consolidating Statement of Income (Unaudited)

(in millions)

 

		Nine Months Ended September 30, 2002
		Dana with DCC on Equity Basis				DCC			Elimination Entries				Dana Consolidated
Net sales		$	7,253			$			$				$	7,253
Other income			47				220			(95	)			172
			7,300				220			(95	)			7,425
Costs and expenses
Cost of sales			6,457							(45	)			6,412
Selling, general and administrative expenses			558				120			(39	)			639
Restructuring charges			122											122
Interest expense			131				64							195
			7,268				184			(84	)			7,368
Income before income taxes			32				36			(11	)			57
Income tax benefit (expense)			(46	)			3			3				(40	)
Minority interest			(13	)										(13	)
Equity in earnings of affiliates			71				18			(49	)			40
Income from continuing operations			44				57			(57	)			44
Income from discontinued operations			3											3
Income before effect of change in accounting			47				57			(57	)			47
Effect of change in accounting			(220	)										(220	)
Net income (loss)		$	(173	)		$	57		$	(57	)		$	(173	)

 

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

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Dana Corporation

Condensed Consolidating Balance Sheet (Unaudited)

(in millions)

 

		September 30, 2003
		Dana with DCC on Equity Basis			DCC			Elimination Entries				Dana Consolidated
Assets
Current assets
Cash and cash equivalents		$	550		$	86		$				$	636
Accounts receivable
Trade			1,496										1,496
Other			306			7							313
Inventories			1,167										1,167
Other current assets			582			211			(171	)			622
Total current assets			4,101			304			(171	)			4,234
Property, plant and equipment, net			2,235			16			224				2,475
Investment in leases						882			(224	)			658
Investments and other assets			2,516			520			(919	)			2,117
Total assets		$	8,852		$	1,722		$	(1,090	)		$	9,484
Liabilities and Shareholders’ Equity
Current liabilities
Notes payable		$	359		$	225		$				$	584
Accounts payable			1,187										1,187
Other current liabilities			1,287			26			(171	)			1,142
Total current liabilities			2,833			251			(171	)			2,913
Long-term debt			2,090			563							2,653
Deferred employee benefits and other noncurrent liabilities			1,980			584			(596	)			1,968
Minority interest			99			1							100
Shareholders’ equity			1,850			323			(323	)			1,850
Total liabilities and shareholders’ equity		$	8,852		$	1,722		$	(1,090	)		$	9,484

 

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

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Dana Corporation

Condensed Consolidating Balance Sheet (Unaudited)

(in millions)

 

		December 31, 2002
		Dana with DCC on Equity Basis			DCC			Elimination Entries				Dana Consolidated
Assets
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 17

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Dana Corporation

Consolidating Cash Flow Impact on Net Debt

(in millions)

 

		Three Months Ended September 30, 2003
		Dana with DCC on Equity Basis				DCC				Elimination Entries				Dana Consolidated
Sources
Net income		$	61			$	17			$	(17	)		$	61
Depreciation			78				14								92
Asset sales (non-restructuring)			1				30				(4	)			27
Working capital decrease (increase)			3				(4	)			(4	)			(5	)
			143				57				(25	)			175
Uses
Capital spend			(76	)			(1	)			4				(73	)
Dividends			(2	)											(2	)
Net changes in other accounts			11				(4	)			21				28
			(67	)			(5	)			25				(47	)
October 2001 restructuring cash impact
Cash payments			(28	)											(28	)
Proceeds from asset sales															—
			(28	)			—				—				(28	)
Cash change in net debt		$	48			$	52			$	—			$	100
Analysis of components of increase (decrease) in net debt:
Net change in short-term debt		$	92			$				$				$	92
Repurchases of long-term debt			(140	)											(140	)
Payments on long-term debt			3				(52	)							(49	)
Change in cash			(3	)											(3	)
Cash change in net debt			(48	)			(52	)			—				(100	)
Non-cash changes in net debt			(53	)			(1	)							(54	)
Total change in net debt		$	(101	)		$	(53	)		$	—			$	(154	)

 

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

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Dana Corporation

Consolidating Cash Flow Impact on Net Debt

(in millions)

 

		Nine Months Ended September 30, 2003
		Dana with DCC on Equity Basis				DCC				Elimination Entries				Dana Consolidated
Sources
Net income		$	154			$	48			$	(48	)		$	154
Depreciation			249				45								294
Asset sales (non-restructuring)			7				167				(5	)			169
Divestitures			145												145
Working capital decrease (increase)			(219	)			(8	)			2				(225	)
			336				252				(51	)			537
Uses
Capital spend			(209	)			(9	)			3				(215	)
Dividends			(5	)											(5	)
Net changes in other accounts			(19	)			(11	)			48				18
			(233	)			(20	)			51				(202	)
October 2001 restructuring cash impact
Cash payments			(92	)											(92	)
Proceeds from asset sales			37												37
			(55	)			—				—				(55	)
Cash change in net debt		$	48			$	232			$	—			$	280
Analysis of components of increase (decrease) in net debt:
Net change in short-term debt		$	87			$	(96	)		$				$	(9	)
Repurchases of long-term debt			(140	)											(140	)
Proceeds from swap settlement			18												18
Net payments on long-term debt			(15	)			(70	)							(85	)
Change in cash			2				(66	)							(64	)
Cash change in net debt			(48	)			(232	)			—				(280	)
Non-cash changes in net debt			(17	)			(33	)							(50	)
Total change in net debt		$	(65	)		$	(265	)		$	—			$	(330	)

 

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

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Dana Corporation

Consolidating Cash Flow Impact on Net Debt

(in millions)

 

		Three Months Ended September 30, 2002
		Dana with DCC on Equity Basis				DCC				Elimination Entries				Dana Consolidated
Sources
Net income		$	4			$	8			$	(8	)		$	4
Depreciation			96				22								118
Asset sales			1				32				(29	)			4
Divestitures			31				132								163
Working capital increase			(39	)			(2	)			(4	)			(45	)
			93				192				(41	)			244
Uses
Capital spend			(52	)			(53	)			20				(85	)
Dividends			(2	)											(2	)
Acquisitions			(31	)											(31	)
Net changes in other accounts			81				(83	)			21				19
			(4	)			(136	)			41				(99	)
October 2001 restructuring cash impact
After-tax charges			40												40
Cash payments			(30	)											(30	)
Proceeds from asset sales			4												4
			14				—				—				14
Cash change in net debt		$	103			$	56			$	—			$	159
Analysis of components of increase (decrease) in net debt:
Net change in short-term debt		$	(82	)		$	23			$				$	(59	)
Proceeds from long-term debt			—				—								—
Proceeds from swap termination			72												72
Payments on long term debt			(21	)			(22	)							(43	)
Change in cash			(72	)			(57	)							(129	)
Cash change in net debt			(103	)			(56	)			—				(159	)
Non-cash changes in net debt			(11	)			(16	)							(27	)
Total change in net debt		$	(114	)		$	(72	)		$	—			$	(186	)

 

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

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Dana Corporation

Consolidating Cash Flow Impact on Net Debt

(in millions)

 

		Nine Months Ended September 30, 2002
		Dana with DCC on Equity Basis				DCC				Elimination Entries				Dana Consolidated
Sources
Net income (loss)		$	(173	)		$	56			$	(56	)		$	(173	)
Change in accounting for goodwill			220												220
Net income before goodwill change			47				56				(56	)			47
Depreciation			291				69								360
Asset sales			12				32								44
Divestitures			41				194								235
Working capital increase			(15	)			(14	)			7				(22	)
			376				337				(49	)			664
Uses
Capital spend			(186	)			(55	)			(9	)			(250	)
Dividends			(5	)											(5	)
Acquisitions			(31	)											(31	)
Net changes in other accounts			55				(97	)			58				16
			(167	)			(152	)			49				(270	)
October 2001 restructuring cash impact
After-tax charges			119												119
Cash payments			(108	)											(108	)
Proceeds from asset sales			23												23
			34				—				—				34
Cash change in net debt		$	243			$	185			$	—			$	428
Analysis of components of increase (decrease) in net debt:
Net change in short-term debt		$	(207	)		$	(63	)		$				$	(270	)
Proceeds from long-term debt			250				35								285
Proceeds from swap termination			72												72
Payments on long term debt			(167	)			(100	)							(267	)
Change in cash			(191	)			(57	)							(248	)
Cash change in net debt			(243	)			(185	)			—				(428	)
Non-cash changes in net debt			40				(11	)							29
Total change in net debt		$	(203	)		$	(196	)		$	—			$	(399	)

 

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 21

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Investor Relations

Dana Corporation

Quarterly Financial Information (Unaudited)

For Nine Months Ended September 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 Group		$	2,773		$	2,655		$	95		$	70		$	155			$	153			$	116			$	116			$	52			$	52			$	1,912			$	1,796
Automotive Aftermarket Group			1,656			1,678			10			12			94				134				59				82				14				36				1,005				1,001
Engine and Fluid Management Group			1,494			1,496			71			75			98				95				64				62				31				28				1,030				948
Heavy Vehicle Technologies and Systems Group			1,425			1,378			58			74			93				86				57				53				17				15				635				674
Dana Commercial Credit																							18				24				18				24				324				258
Other			45			46			5			10			(185	)			(164	)			(187	)			(197	)			(5	)			(15	)			13				21
Continuing Operations			7,393			7,253			239			241			255				304				127				140				127				140				4,919				4,698
Discontinued Operations															(9	)			(3	)			(6	)			(1	)			(6	)			(1	)
Unusual Items Excluded from Performance Measurement															5				(158	)			33				(92	)			33				(92	)
Effect of change in Accounting																											(220	)							(220	)
Consolidated		$	7,393		$	7,253		$	239		$	241		$	251			$	143			$	154			$	(173	)		$	154			$	(173	)		$	4,919			$	4,698
North America		$	5,300		$	5,500		$	61		$	28		$	261			$	351			$	154			$	217			$	41			$	91			$	3,003			$	2,980
Europe			1,292			1,111			62			53			79				48				61				42				32				15				1,197				1,095
South America			406			367			139			137			58				54				36				33				27				25				338				296
Asia Pacific			395			275			2			1			37				12				24				8				13								179				178
Dana Commercial Credit																							18				24				18				24				324				258
Other															(180	)			(161	)			(166	)			(184	)			(4	)			(15	)			(122	)			(109	)
Continuing Operations			7,393			7,253			264			219			255				304				127				140				127				140				4,919				4,698
Discontinued Operations															(9	)			(3	)			(6	)			(1	)			(6	)			(1	)
Unusual Items Excluded from Performance Measurement															5				(158	)			33				(92	)			33				(92	)
Effect of change in Accounting																											(220	)							(220	)
Consolidated		$	7,393		$	7,253		$	264		$	219		$	251			$	143			$	154			$	(173	)		$	154			$	(173	)		$	4,919			$	4,698
Information for Discontinued Operations			155			623			6			50

 

The differences between the Net Profit (Loss) amounts reported for discontinued operations above and the income (loss) from discontinued operations reported on the condensed statement of income result from the separate reporting of unusual items excluded from performance measurement, which include amounts recorded by our 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)

Q3 – 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		$	895		$	836		$	33		$	23		$	57			$	42			$	35			$	28			$	12		$	9			$	1,912			$	1,796
Automotive Aftermarket Group			571			558			3			5			42				43				26				26				9			12				1,005				1,001
Engine and Fluid Management Group			458			473			24			25			28				28				18				18				7			8				1,030				948
Heavy Vehicle Technologies and Systems Group			471			474			17			20			38				32				23				20				9			7				635				674
Dana Commercial Credit																							6				7				6			7				324				258
Other			15			15			2			2			(70	)			(48	)			(65	)			(61	)						(5	)			13				21
Continuing Operations			2,410			2,356			79			75			95				97				43				38				43			38				4,919				4,698
Discontinued Operations																			7								6							6
Unusual Items Excluded from Performance Measurement															12				(50	)			18				(40	)			18			(40	)
Consolidated		$	2,410		$	2,356		$	79		$	75		$	107			$	54			$	61			$	4			$	61		$	4			$	4,919			$	4,698
North America		$	1,709		$	1,773		$	19		$	10		$	94			$	96			$	54			$	58			$	15		$	19			$	3,003			$	2,980
Europe			410			361			20			16			28				20				15				13				5			4				1,197				1,095
South America			157			116			48			48			25				23				16				14				12			11				338				296
Asia Pacific			134			106			1			1			13				6				8				4				4			1				179				178
Dana Commercial Credit																							6				7				6			7				324				258
Other															(65	)			(48	)			(56	)			(58	)			1			(4	)			(122	)			(109	)
Continuing Operations			2,410			2,356			88			75			95				97				43				38				43			38				4,919				4,698
Discontinued Operations																			7								6							6
Unusual Items Excluded from
Performance Measurement															12				(50	)			18				(40	)			18			(40	)
Consolidated		$	2,410		$	2,356		$	88		$	75		$	107			$	54			$	61			$	4			$	61		$	4			$	4,919			$	4,698
Information for Discontinued Operations						210						17

 

The differences between the Net Profit (Loss) amounts reported for discontinued operations above and the income (loss) from discontinued operations reported on the condensed statement of income result from the separate reporting of unusual items excluded from performance measurement, which include amounts recorded by our 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