FORM 8-K
 

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): January 17, 2006
Dana Corporation
(Exact name of registrant as specified in its charter)
         
Virginia
(State or other jurisdiction
of incorporation)
  1-1063
(Commission File Number)
  34-4361040
(IRS Employer
Identification Number)
     
4500 Dorr Street, Toledo, Ohio
(Address of principal executive offices)
  43615
(Zip Code)
Registrant’s telephone number, including area code: (419) 535-4500
      
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 


 

Item 2.02. Results of Operations and Financial Condition.
     On January 17, 2006, Dana Corporation (Dana) issued a news release regarding its financial results for the three- and nine-month periods ended September 30, 2005. The text of that release is set out in the attached Exhibit 99.1.
     The news release contains information about Dana’s earnings presented on an EBIT basis (earnings before interest and taxes). EBIT is not a financial measure accepted under accounting principles generally accepted in the United States (GAAP). The release also includes tables showing (i) Dana Corporation (Including Dana Credit Corporation on an Equity Basis), Condensed Statements of Income (Unaudited) for the Three and Nine Months Ended September 30, 2005 and September 30, 2004 (Restated); (ii) Dana Corporation (Including Dana Credit Corporation on an Equity Basis), Condensed Balance Sheets (Unaudited) as of September 30, 2005 and December 31, 2004 (Restated); and (iii) Dana Corporation (Including Dana Credit Corporation on an Equity Basis), Condensed Statement of Cash Flows (Unaudited) for the Three and Nine Months Ended September 30, 2005 and 2004 (Restated). As GAAP requires that Dana Credit Corporation (DCC) be included in Dana’s results on a consolidated basis, these tables contain non-GAAP financial measures.
     For the non-GAAP EBIT information and the tables showing DCC on an equity basis, the release includes (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 EBIT financial measures provides useful information to investors due to the impact of the unusual items on the company’s three- and nine-month results in 2005. Management also believes that the presentation of the results with DCC accounted for on an equity basis provides useful information to investors regarding Dana’s financial condition and results of operations because management evaluates Dana’s operating segments as if DCC were accounted for on this basis. 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. Moreover, the financial covenants contained in Dana’s bank facility are measured with DCC accounted for on an equity basis.
Item 7.01. Regulation FD Disclosure.
     During a conference call scheduled to be held at 10:00 a.m. EST on January 17, 2006, Dana’s Chairman and Chief Executive Officer, Michael J. Burns, and Chief Financial Officer, Robert C. Richter, will discuss Dana’s third-quarter and nine-month 2005 results and matters related to the company’s restated financial statements. Copies of the slides for this presentation are set out in the attached Exhibit 99.2.
     Certain of the slides in Exhibit 99.2 include financial measures which are not presented in accordance with GAAP. These include (i) slide 4 (which presents income and earnings per share from continuing operations, excluding unusual items) and (ii) slides 8,10, 11,12 and 14, (which include DCC on an equity basis). Slides 34 and 35 of the presentation, Item 2.02, above, and Dana’s news release in the attached Exhibit 99.1 also contain information about the reconciliation of some 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.

2


 

Item 9.01. Financial Statements and Exhibits.
(c)   Exhibits
     
99.1
  Press release dated January 17, 2006 (furnished but not filed)
 
   
99.2
  Slides for January 17, 2006 conference call (furnished but not filed)

3


 

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: January 17, 2006  By:   /s/ Robert C. Richter    
    Robert C. Richter   
    Chief Financial Officer   
 

4


 

Exhibit Index
     
99.1
  Text of Dana Corporation News Release dated January 17, 2006
 
   
99.2
  Slide presentation for January 17, 2006 conference call

5

EX-99.1
 

Exhibit 99.1
     N e w s R e l e a s e
(DANA LOGO)
Contacts:
     
Investor Relations
  Media Relations
Michelle L. Hards
  Todd M. Romain
(419) 535-4636
  (419) 535-4727
michelle.hards@dana.com
  todd.romain@dana.com
Dana Corporation Reports Third-Quarter 2005 Results
TOLEDO, Ohio — January 17, 2006 — Dana Corporation (NYSE: DCN) today reported financial results for both the quarter and nine months ended Sept. 30, 2005, and announced that it will file its Form 10-Q for the third quarter of 2005 later today. The filing and delivery of this report will eliminate any defaults related to late filing of the third-quarter financial statements under the company’s financing agreements.
Sales for the third quarter of 2005 were $2,396 million, compared to $2,114 million during the same period in 2004. The company recorded a net loss of $1,272 million, or $8.50 per share, for the quarter, compared to net income of $42 million, or 28 cents per share in the third quarter of 2004. Results for the quarter and nine months ended Sept. 30, 2004 have been restated, as previously disclosed in the 2004 Form 10-K/A filed on Dec. 30, 2005.
The third-quarter 2005 net loss included two significant unusual items that were previously announced. These two non-cash items account for 94 percent of the reported net loss:
  ¾   The company provided a valuation allowance, as announced on Oct. 10, 2005, against its net U.S. deferred tax assets during the third quarter. The one-time impact of providing this allowance was a reduction in net income of $918 million in the period, which represents the restated net U.S. deferred tax assets at the beginning of the third quarter and also includes $13 million for a similar allowance against the company’s U.K. tax assets. The valuation allowance was recorded because, based on its current outlook, Dana believes it is no longer more likely than not that the company will be able to utilize these tax assets. This action does not affect the company’s ability to use these tax assets later if justified by future profitability in the U.S. and U.K.
 
  ¾   Additionally, on Oct. 20, 2005, the company announced its intention to divest its non-core engine hard parts, fluid products, and pump products businesses. An impairment charge to reduce the book value of certain assets of these businesses of $275 million after tax was recorded in the third quarter. Additional charges will be recorded in the fourth quarter of 2005 in connection with the classification of these businesses as discontinued operations.
In the third quarter of 2005, the company also recorded an aggregate charge of approximately $16 million, or 11 cents per share, related to the sale of its domestic fuel rail business and the dissolution of its engine bearings joint venture with The Daido Metal Company.

 


 

The balance of the third-quarter 2005 loss — totaling $63 million — was from operations. The comparable number for the third quarter of 2004 was $39 million after adjusting for unusual charges and results of discontinued operations.
The comparison of quarterly operating income year-on-year was impacted significantly by taxes. The third-quarter 2004 results included a significant tax benefit. By contrast, third-quarter 2005 results reflect tax expense on income of foreign operations, despite the fact that there was a consolidated loss before tax. This is due to the fact that the company no longer provides deferred tax benefits against U.S. losses.
Interest expense was $11 million lower in the third quarter of 2005 than in the comparable period in 2004 due to lower average debt levels.
As disclosed in the company’s segment information, on an EBIT basis the Heavy Vehicle Technologies and Systems Group earned $16 million in the third quarter of 2005, compared to $41 million during the same period in 2004. The principal reasons for this decline were substantially higher steel costs and production inefficiencies within the Commercial Vehicle business. Additionally, the Off-Highway business experienced higher costs associated with the ongoing realignment of its manufacturing facilities.
On an EBIT basis, the Automotive Systems Group’s earnings declined to $41 million in the third quarter of 2005 from $65 million during the same period last year. In addition to the adverse effects of higher material costs and continuing pricing pressures, results in this business unit were also negatively impacted by start-up losses at a new manufacturing facility in its actuation systems joint venture.
Nine-Month Results
Sales for the nine months ended Sept. 30, 2005 were $7,505 million which compares to $6,755 million for the same period in 2004. For the first nine months of 2005, the company reported a net loss of $1,226 million compared to net income of $200 million for the same period in 2004. The primary reasons for the difference in the year-on-year change in net income were the unusual items that occurred in the third quarter.
On an EBIT basis the Heavy Vehicle Technologies and Systems Group earned $81 million in the first nine months of 2005, compared to $125 million during the same period in 2004. The Automotive Systems Group earnings declined to $179 million in the first nine months of 2005 from $270 million during the same period last year. Material costs were chiefly responsible for the lower income in both business units.
“Obviously, our results are far from acceptable, particularly the operating loss,” said Dana Chairman and CEO Mike Burns. “Many of the challenges we are facing on the automotive side, including higher material costs and lower production levels, are industry-wide issues. However, the reduced income in our Heavy Vehicle unit reflects not only material cost increases, but also internal operating inefficiencies, which we are moving aggressively to address.
“Specifically, within our Commercial Vehicle business, we have announced a series of actions to reposition our operations and balance capacity to enhance our efficiency,” Mr. Burns added. “I am also confident in the capabilities of our newly appointed Heavy Vehicle Products President, Nick Stanage. Nick’s outstanding combination of leadership ability and technical knowledge promises to serve this business and our customers well as we move forward.”

2


 

Mr. Burns said Dana is continuing to improve focus and increase performance in all of its businesses, as evidenced by recent announcements regarding strategic divestitures, consolidation of facilities, and workforce reductions. “At the same time, we can’t just work the cost side,” he said. “We must also continue to grow our revenue base. And to this end, we continue to add to our backlog of profitable new business.”
Conference Call Scheduled Today at 10 a.m.
Dana will discuss its third-quarter 2005 and nine-month results, as well as matters related to the company’s restated financial statements, during a conference call and supporting webcast at 10 a.m. (ET) today. The call may be accessed via Dana’s web site (www.dana.com), or by dialing (877) 340-DANA (3262) in the U.S. and Canada, or (706) 758-9313 elsewhere. Callers must reference Conference I.D. #4076436. An audio recording of this conference call will be available after 2 p.m. (ET) today. To access this recording, please dial (800) 642-1687 in the U.S. and Canada, or (706) 645-9291 elsewhere, and enter the Conference I.D. number referenced above. A webcast replay of the call will also be available after 4 p.m. today and will be accessible via the Dana web site. Individuals may also print the supporting slide presentation available in PDF format by visiting the investor page at: www.dana.com.
About Dana Corporation
Dana people design and manufacture products for every major vehicle producer in the world. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. A leading supplier of axle, driveshaft, engine, frame, chassis, and transmission technologies, Dana employs 46,000 people in 28 countries. Based in Toledo, Ohio, the company reported sales of $9 billion in 2004. Dana’s Internet address is: www.dana.com.
Use of Non-GAAP Financial Information
This release contains information about Dana’s financial results which is not presented in accordance with accounting principles generally accepted in the United States (GAAP). Specifically, the release contains information about Dana’s financial results presented on an EBIT basis and includes tables that show the company’s results with Dana Credit Corporation (DCC) accounted for on an equity basis, rather than on a consolidated basis. Management believes that the presentation of the EBIT financial measures provides useful information to investors due to the impact of the unusual tax items on the company’s three- and nine-month results in 2005. Management also believes that the presentation of results with DCC on an equity basis is useful because that is how management evaluates Dana’s operating segments. 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. Moreover, the financial covenants in Dana’s bank facility are measured with DCC accounted for on an equity basis. For the non-GAAP measures presented in this release, there is supplementary information at the end showing the most directly comparable financial measures calculated and presented in accordance with GAAP and a quantitative reconciliation of the differences between the non-GAAP financial measures and the most directly comparable GAAP financial measures.

3


 

Forward-Looking Statements
Statements in this release which are not entirely historical 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. However, forward-looking statements are inherently subject to risks and uncertainties and Dana’s actual results could differ materially from those that are anticipated or projected due to a number of factors. These factors include the cyclical nature of the vehicular markets we serve, particularly the heavy-duty commercial vehicle market; changes in the competitive environment in our markets due, in part, to outsourcing and consolidation by our customers; changes in national and international economic conditions that affect our markets, such as increased fuel prices and legislation regulating vehicle emissions; potential adverse effects on our operations and business from terrorism or hostilities; the strength of other currencies in the overseas countries in which we do business relative to the U.S. dollar; increases in our commodity costs (including steel, other raw materials, and energy) that we cannot recoup in our product pricing; our success in implementing our cost-savings, lean manufacturing and VA/VE (value added/value engineering) programs; changes in business relationships with our major customers and in the timing, size and continuation of their programs; the ability of our customers to maintain their market positions and achieve their projected sales and production levels; the ability of our suppliers to maintain their projected production levels and furnish critical components for our products, as well as other necessary goods and services; competitive pressures on our sales from other vehicle component suppliers; price reduction pressures from our customers; our ability to negotiate new or modified financing agreements prior to the expiration of the waivers under our existing agreements; our ability to complete our previously announced strategic actions as contemplated (including the divestiture of our non-core engine hard parts, fluid products and pump products businesses; the operational restructuring in our Automotive Systems Group and our Commercial Vehicle business; the dissolution of our Mexican joint venture, Spicer S.A. de C.V.; and the finalization of our Chinese joint venture, Dongfeng Axle Co., Ltd.); and other factors set out in our public filings with the Securities and Exchange Commission. Forward-looking statements in this release speak only as of the date of the release. Dana does not undertake to update such forward-looking statements.
# # #

4


 

Dana Corporation
Financial Summary (Unaudited)
(in millions, except per share amounts)
                                 
    Three Months Ended Sept 30     Nine Months Ended Sept 30  
    2005     2004     2005     2004  
            Restated             Restated  
 
                               
Sales
  $ 2,396     $ 2,114     $ 7,505     $ 6,755  
 
                       
 
Income (loss) from continuing operations
  $ (1,274 )   $ 54     $ (1,232 )   $ 165  
Income (loss) from discontinued operations
          (12 )           35  
Effect of change in accounting
    2             6       -  
 
                       
Net income (loss)
  $ (1,272 )   $ 42     $ (1,226 )   $ 200  
 
                       
 
                               
Income (loss) from continuing operations
  $ (1,274 )   $ 54     $ (1,232 )   $ 165  
Impairment and restructuring charges
    275       5       275       5  
Losses on divestitures
    16             16       -  
Valuation allowance against deferred tax assets
    920               920          
Gain associated with the sale of assets to a newly formed joint venture
          (13 )           (13 )
Net gains associated with DCC asset sales
          (7 )     (4 )     (25 )
Charge related to Ohio tax legislation
                5       -  
 
                       
Income (loss) from continuing operations, excluding unusual items
  $ (63 )   $ 39     $ (20 )   $ 132  
 
                       
 
                               
Income (loss) from discontinued operations
  $     $ (12 )   $     $ 35  
Adjustment of deferred tax allowance related to aftermarket sale
          20             -  
Costs related to sale of aftermarket businesses
          10             13  
 
                       
 
                               
Income from discontinued operations, excluding unusual items
  $     $ 18     $     $ 48  
 
                       
Diluted earnings (loss) per share:
                               
Income (loss) from continuing operations
  $ (8.51 )   $ 0.36     $ (8.24 )   $ 1.10  
Effect of change in accounting
    0.01             0.04       -  
Income(loss) from discontinued operations
          (0.08 )           0.23  
 
                       
Net income
  $ (8.50 )   $ 0.28     $ (8.20 )   $ 1.33  
 
                       
 
                               
Income (loss) from continuing operations, excluding unusual items
  $ (0.42 )   $ 0.26     $ (0.13 )   $ 0.87  
Income (loss) from discontinued operations, excluding unusual items
          0.12             0.32  
 
                       
Net income, excluding unusual items
    (0.42 )     0.38       (0.13 )     1.19  
Effect of change in accounting
    0.01             0.04       -  
Income (loss) from Unusual items
    (8.09 )     (0.10 )     (8.11 )     0.14  
 
                       
Net income (loss)
  $ (8.50 )   $ 0.28     $ (8.20 )   $ 1.33  
 
                       
Page 1


 

Dana Corporation
Reconciliation of Earnings before interest
and taxes (EBIT) for the Segments to
Income before income taxes
                                 
    Three Months     Nine Months  
    Ended September 30,     Ended September 30,  
    2005     2004     2005     2004  
            Restated             Restated  
 
                               
Segment income (loss)
                               
ASG
  $ 41     $ 65     $ 179     $ 270  
HVTSG
    16       41       81       125  
 
                       
 
    57       106       260       395  
Other
    (75 )     (65 )     (201 )     (174 )
 
                               
 
                       
Segment income (loss) from continuing operations
  $ (18 )   $ 41     $ 59     $ 221  
 
                               
Unusual items excluded from performance measures
                               
Total operations
    (306 )     (6 )     (297 )     (15 )
Discontinued operations
            16               20  
Interest expense, excluding DCC
    (34 )     (42 )     (102 )     (120 )
Interest income, excluding DCC
    8       1       24       7  
DCC pre-tax loss
    (1 )     (42 )     (12 )     (49 )
 
                       
Income (loss) before income taxes
  $ (351 )   $ (32 )   $ (328 )   $ 64  
 
                       
Page 2

 


 

Dana Corporation
Condensed Statement of Income (Unaudited)
(in millions, except per share amounts)
                                 
    Three Months Ended Sept 30     Nine Months Ended Sept 30  
    2005     2004     2005     2004  
            Restated             Restated  
 
                               
Net sales
  $ 2,396     $ 2,114     $ 7,505     $ 6,755  
Revenue from lease financing and other income
    11       (8 )     67       27  
 
                       
 
    2,407       2,106       7,572       6,782  
 
                       
 
                               
Costs and expenses
                               
Cost of sales
    2,290       1,964       7,072       6,186  
Selling, general and administrative expenses
    136       121       413       375  
Impairment charges
    290               290        
Interest expense
    42       53       125       157  
 
                       
 
    2,758       2,138       7,900       6,718  
 
                       
 
                               
Income (loss) before income taxes
    (351 )     (32 )     (328 )     64  
Income tax benefit (expense)
    (929 )     83       (925 )     85  
Minority interest
    1       (3 )     (5 )     (9 )
Equity in earnings of affiliates
    5       6       26       25  
 
                       
 
                               
Income (loss) from continuing operations
    (1,274 )     54       (1,232 )     165  
Effect of change in accounting
    2             6        
Income (loss) from discontinued operations
            (12 )           35  
 
                       
Net income (loss)
  $ (1,272 )   $ 42     $ (1,226 )   $ 200  
 
                       
 
                               
Basic earnings per share
                               
Income (loss) from continuing operations
  $ (8.51 )   $ 0.36     $ (8.24 )   $ 1.11  
Effect of change in accounting
    0.01             0.04        
Income (loss) from discontinued operations
          (0.08 )           0.23  
 
                       
Net income (loss)
  $ (8.50 )   $ 0.28     $ (8.20 )   $ 1.34  
 
                       
 
                               
Diluted earnings per share
                               
Income (loss) from continuing operations
  $ (8.51 )   $ 0.36     $ (8.24 )   $ 1.10  
Effect of change in accounting
    0.01             0.04        
Income (loss) from discontinued operations
          (0.08 )           0.23  
 
                       
Net income (loss)
  $ (8.50 )   $ 0.28     $ (8.20 )   $ 1.33  
 
                       
 
                               
Average shares outstanding —
                               
For Basic EPS
    150       149       150       149  
For Diluted EPS
    151       151       151       151  
Page 3

 


 

Dana Corporation
Condensed Balance Sheet (Unaudited)
(in millions)
                 
    September 30     December 31  
    2005     2004  
            Restated  
 
               
Assets
               
 
               
Current assets
               
Cash and cash equivalents
  $ 730     $ 634  
Accounts receivable
               
Trade
    1,454       1,254  
Other
    274       437  
Inventories
    878       898  
Other current assets
    146       200  
 
           
Total current assets
    3,482       3,423  
 
               
Investment in leases
    256       281  
Investments and other assets
    2,397       3,144  
Property, plant and equipment, net
    1,742       2,171  
 
           
Total assets
  $ 7,877     $ 9,019  
 
           
 
               
Liabilities and Shareholders’ Equity
               
 
               
Current liabilities
               
Notes payable
  $ 2,304     $ 155  
Accounts payable
    1,322       1,330  
Other current liabilities
    1,082       1,188  
 
           
Total current liabilities
    4,708       2,673  
 
               
Long-term debt
    280       2,054  
Deferred employee benefits and other noncurrent liabilities
    1,747       1,759  
Minority interest
    85       122  
Shareholders’ equity
    1,057       2,411  
 
           
Total liabilities and
shareholders’ equity
  $ 7,877     $ 9,019  
 
           
Page 4

 


 

Dana Corporation
Condensed Statement of Cash Flows (Unaudited)
(in millions)
                                 
    Three Months Ended Sept. 30     Nine Months Ended Sept. 30  
    2005     2004     2005     2004  
            Restated             Restated  
 
                               
Net income (loss)
  $ (1,272 )   $ 42     $ (1,226 )   $ 200  
Depreciation and amortization
    64       90       227       273  
Impairments
    290       24       290       24  
(Gain) loss on asset sales
    19       (32 )     14       (57 )
Effect of change in accounting
    (2 )             (6 )        
Working capital decrease (increase)
    22       (249 )     (193 )     (378 )
Deferred taxes
    763       (31 )     728       (72 )
Other
    (35 )     46       (134 )     (47 )
 
                       
Net cash flows — operating activities
    (151 )     (110 )     (300 )     (57 )
 
                       
 
                               
Purchases of property, plant and equipment
    (69 )     (66 )     (193 )     (214 )
Payments received from leases and partnerships
    32       2       70       10  
Proceeds from divestitures and asset sales
    39       166       176       318  
Other
    38       10       27       (22 )
 
                       
Net cash flows — investing activities
    40       112       80       92  
 
                       
 
                               
Net change in short-term debt
    181       28       406       181  
Payments on long-term debt
          (101 )     (45 )     (405 )
Proceeds from long-term debt
    21             21       5  
Dividends paid
    (18 )     (17 )     (54 )     (53 )
Other
    (9 )     3       (12 )     16  
 
                       
Net cash flows — financing activities
    175       (87 )     316       (256 )
 
                       
Net change in cash and cash equivalents
    64       (85 )     96       (221 )
Net change in cash — discontinued operations
                      2  
Cash and cash equivalents — beginning of period
    666       597       634       731  
 
                       
Cash and cash equivalents — end of period
  $ 730     $ 512     $ 730     $ 512  
 
                       
Page 5

 


 

Dana Corporation
(Including Dana Credit Corporation on an Equity Basis)
Condensed Statement of Income (Unaudited)
(in millions)
                                 
    Three Months Ended Sept.30     Nine Months Ended Sept. 30  
    2005     2004     2005     2004  
            Restated             Restated  
 
                               
Net sales
  $ 2,396     $ 2,114     $ 7,505     $ 6,755  
Other income (expense)
    (1 )     23       41       37  
 
                       
 
    2,395       2,137       7,546       6,792  
 
                       
 
                               
Costs and expenses
                               
Cost of sales
    2,293       1,970       7,083       6,205  
Selling, general and administrative expenses
    128       115       387       353  
Impairment charges
    290               290          
Interest expense
    34       42       102       120  
 
                       
 
    2,745       2,127       7,862       6,678  
 
                       
 
                               
Income (loss) before income taxes
    (350 )     10       (316 )     114  
Income tax benefit (expense)
    (932 )     29       (946 )     (7 )
Minority interest
    1       (3 )     (5 )     (9 )
Equity in earnings of affiliates
    7       18       35       67  
 
                       
Income (loss) from continuing operations
    (1,274 )     54       (1,232 )     165  
 
                               
Change in accounting
    2               6            
 
                               
Income (loss) from discontinued operations
            (12 )             35  
 
                       
Net income (loss)
  $ (1,272 )   $ 42     $ (1,226 )   $ 200  
 
                       
Page 6

 


 

Dana Corporation
(Including Dana Credit Corporation on an Equity Basis)
Condensed Balance Sheet (Unaudited)
(in millions)
                 
    September 30     December 31  
    2005     2004  
            Restated  
 
               
Assets
               
Current assets
               
Cash and cash equivalents
  $ 707     $ 619  
Accounts receivable
               
Trade
    1,454       1,253  
Other
    277       438  
Inventories
    878       898  
Other current assets
    123       170  
 
           
Total current assets
    3,439       3,378  
 
               
Investment in leases
               
Investments and other assets
    2,650       3,338  
Property, plant and equipment, net
    1,690       2,033  
 
           
Total assets
  $ 7,779     $ 8,749  
 
           
 
               
Liabilities and Shareholders’ Equity
               
 
               
Current liabilities
               
Notes payable
  $ 2,157     $ 289  
Accounts payable
    1,322       1,330  
Other current liabilities
    1,193       1,236  
 
           
Total current liabilities
    4,672       2,855  
 
               
Long-term debt
    225       1,611  
Deferred employee benefits and other noncurrent liabilities
    1,742       1,752  
Minority interest
    83       120  
Shareholders’ equity
    1,057       2,411  
 
           
Total liabilities and shareholders’ equity
  $ 7,779     $ 8,749  
 
           
Page 7

 


 

Dana Corporation
(Including Dana Credit Corporation on an Equity Basis)
Condensed Statement of Cash Flows (Unaudited)
(in millions)
                                 
    Three Months Ended Sept. 30     Nine Months Ended Sept. 30  
    2005     2004     2005     2004  
            Restated             Restated  
 
                               
Net income (loss)
  $ (1,272 )   $ 42     $ (1,226 )   $ 200  
Depreciation and amortization
    60       84       214       249  
Impairments
    290       3       290       3  
(Gain) loss on asset sales
    19       (20 )     14       (23 )
Effect of change in accounting
    (2 )           (6 )      
Working capital decrease (increase)
    47       (258 )     (170 )     (386 )
Deferred taxes
    773       (18 )     734       (68 )
Other
    (72 )     55       (73 )     (26 )
 
                       
Net cash flows — operating activities
    (157 )     (112 )     (223 )     (51 )
 
                       
 
                               
Purchases of property, plant and equipment
    (67 )     (72 )     (191 )     (210 )
Proceeds from divestitures and asset sales
    30       3       53       34  
Other
    69       16       27       (32 )
 
                       
Net cash flows — investing activities
    32       (53 )     (111 )     (208 )
 
                       
 
                               
Net change in short-term debt
    202       173       488       356  
Payments on long-term debt
          (5 )     (6 )     (239 )
Proceeds from long-term debt
    6               6        
Dividends paid
    (18 )     (17 )     (54 )     (53 )
Other
    (9 )     3       (12 )     16  
 
                       
Net cash flows — financing activities
    181       154       422       80  
 
                       
Net change in cash and cash equivalents
    56       (11 )     88       (179 )
Net change in cash — discontinued operations
                      2  
Cash and cash equivalents — beginning of period
    651       498       619       664  
 
                       
Cash and cash equivalents — end of period
  $ 707     $ 487     $ 707     $ 487  
 
                       
Page 8

 


 

Dana Corporation
Condensed Consolidating Statement of Income (Unaudited)
(in millions)
                                 
    Three Months Ended September 30, 2005  
    Dana                      
    with DCC on             Elimination     Dana  
    Equity Basis     DCC     Entries     Consolidated  
 
                               
Net sales
  $ 2,396     $       $       $ 2,396  
Other income (expense)
    (1 )     19       (7 )     11  
 
                       
 
    2,395       19       (7 )     2,407  
 
                       
 
                               
Costs and expenses
                               
Cost of sales
    2,293               (3 )     2,290  
Selling, general and administrative expenses
    128       11       (3 )     136  
Impairment charges
    290                       290  
Interest expense
    34       9       (1 )     42  
 
                       
 
    2,745       20       (7 )     2,758  
 
                       
 
                               
Income (loss) before income taxes
    (350 )     (1 )           (351 )
Income tax benefit (expense)
    (932 )     3               (929 )
Minority interest
    1                       1  
Equity in earnings of affiliates
    7       1       (3 )     5  
 
                       
 
                               
Income from continuing operations
    (1,274 )     3       (3 )     (1,274 )
 
                               
Effect of change in accounting
    2                       2  
 
                       
Net income
  $ (1,272 )   $ 3     $ (3 )   $ (1,272 )
 
                       
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 9

 


 

Dana Corporation
Condensed Consolidating Statement of Income (Unaudited)
(in millions)
                                 
    Nine Months Ended September 30, 2005  
    Dana                      
    with DCC on             Elimination     Dana  
    Equity Basis     DCC     Entries     Consolidated  
 
                               
Net sales
  $ 7,505     $       $       $ 7,505  
Other income (expense)
    41       49       (23 )     67  
 
                       
 
    7,546       49       (23 )     7,572  
 
                       
 
                               
Costs and expenses
                               
Cost of sales
    7,083               (11 )     7,072  
Selling, general and administrative expenses
    387       33       (7 )     413  
Impairment charges
    290                       290  
Interest expense
    102       28       (5 )     125  
 
                       
 
    7,862       61       (23 )     7,900  
 
                       
 
                               
Income (loss) before income taxes
    (316 )     (12 )           (328 )
Income tax benefit (expense)
    (946 )     21               (925 )
Minority interest
    (5 )                     (5 )
Equity in earnings of affiliates
    35       7       (16 )     26  
 
                       
 
                               
Income from continuing operations
    (1,232 )     16       (16 )     (1,232 )
 
                               
Effect of change in accounting
    6                     6  
 
                       
Net income
  $ (1,226 )   $ 16     $ (16 )   $ (1,226 )
 
                       
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 10

 


 

Dana Corporation
Condensed Consolidating Statement of Income (Unaudited)
(in millions)
                                 
    Three Months Ended September 30, 2004 (Restated)  
    Dana                      
    with DCC on             Elimination     Dana  
    Equity Basis     DCC     Entries     Consolidated  
 
                               
Net sales
  $ 2,114     $       $       $ 2,114  
Other income (expense)
    23       (20 )     (11 )     (8 )
 
                       
 
    2,137       (20 )     (11 )     2,106  
 
                       
 
                               
Costs and expenses
                               
Cost of sales
    1,970               (6 )     1,964  
Selling, general and administrative expenses
    115       11       (5 )     121  
Interest expense
    42       11               53  
 
                       
 
    2,127       22       (11 )     2,138  
 
                       
 
                               
Income before income taxes
    10       (42 )             (32 )
Income tax benefit (expense)
    29       54               83  
Minority interest
    (3 )                     (3 )
Equity in earnings of affiliates
    18             (12 )     6  
 
                       
 
                               
Income from continuing operations
    54       12       (12 )     54  
 
                               
Income from discontinued operations
    (12 )                     (12 )
 
                       
Net income
  $ 42     $ 12     $ (12 )   $ 42  
 
                       
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)
                                 
    Nine Months Ended September 30, 2004 (Restated)  
    Dana                      
    with DCC on             Elimination     Dana  
    Equity Basis     DCC     Entries     Consolidated  
 
                               
Net sales
  $ 6,755     $       $       $ 6,755  
Other income (expense)
    37       26       (36 )     27  
 
                       
 
    6,792       26       (36 )     6,782  
 
                       
 
                               
Costs and expenses
                               
Cost of sales
    6,205               (19 )     6,186  
Selling, general and administrative expenses
    353       38       (16 )     375  
Interest expense
    120       37             157  
 
                       
 
    6,678       75       (35 )     6,718  
 
                       
 
                               
Income (loss) before income taxes
    114       (49 )     (1 )     64  
Income tax benefit (expense)
    (7 )     91       1       85  
Minority interest
    (9 )                     (9 )
Equity in earnings of affiliates
    67       4       (46 )     25  
 
                       
Income from continuing operations
    165       46       (46 )     165  
Income from discontinued operations
    35                       35  
 
                       
Net income
  $ 200     $ 46     $ (46 )   $ 200  
 
                       
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 Balance Sheet (Unaudited)
(in millions)
                                 
    September 30, 2005  
    Dana                      
    with DCC on             Elimination     Dana  
    Equity Basis     DCC     Entries     Consolidated  
 
                               
Assets
                               
Current assets
                               
Cash and cash equivalents
  $ 707     $ 23     $       $ 730  
Accounts receivable
                               
Trade
    1,454                       1,454  
Other
    277       285       (288 )     274  
Inventories
    878                       878  
Other current assets
    123       183       (160 )     146  
 
                       
Total current assets
    3,439       491       (448 )     3,482  
 
                       
 
                               
Investment in leases
          664       (408 )     256  
Investments and other assets
    2,650             (253 )     2,397  
Property, plant and equipment, net
    1,690       8       44       1,742  
 
                       
 
                               
Total assets
  $ 7,779     $ 1,163     $ (1,065 )   $ 7,877  
 
                       
 
                               
Liabilities and Shareholders’ Equity
                               
Current liabilities
                               
Notes payable
  $ 2,157     $ 431     $ (284 )   $ 2,304  
Accounts payable
    1,322                     1,322  
Other current liabilities
    1,193       53       (164 )     1,082  
 
                       
Total current liabilities
    4,672       484       (448 )     4,708  
 
                       
 
                               
Long-term debt
    225       55               280  
Deferred employee benefits and other noncurrent liabilities
    1,742       305       (300 )     1,747  
Minority interest
    83       2               85  
Shareholders’ equity
    1,057       317       (317 )     1,057  
 
                       
Total liabilities and shareholders’ equity
  $ 7,779     $ 1,163     $ (1,065 )   $ 7,877  
 
                       
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 Balance Sheet (Unaudited)
(in millions)
                                 
    December 31, 2004 (Restated)  
    Dana                      
    with DCC on             Elimination     Dana  
    Equity Basis     DCC     Entries     Consolidated  
 
                               
Assets
                               
Current assets
                               
Cash and cash equivalents
  $ 619     $ 15     $       $ 634  
Accounts receivable
                               
Trade
    1,254                       1,254  
Other
    437       208       (208 )     437  
Inventories
    898                       898  
Other current assets
    170       137       (107 )     200  
 
                       
Total current assets
    3,378       360       (315 )     3,423  
 
                       
 
                               
Investment in leases
            411       (130 )     281  
Investments and other assets
    3,338       467       (661 )     3,144  
Property, plant and equipment, net
    2,033       8       130       2,171  
 
                       
Total assets
  $ 8,749     $ 1,246     $ (976 )   $ 9,019  
 
                       
 
                               
Liabilities and Shareholders’ Equity
                               
 
                               
Current liabilities
                               
Notes payable
  $ 289     $ 68     $ (202 )   $ 155  
Accounts payable
    1,330                       1,330  
Other current liabilities
    1,236       67       (115 )     1,188  
 
                       
Total current liabilities
    2,855       135       (317 )     2,673  
 
                       
 
                               
Long-term debt
    1,611       443               2,054  
Deferred employee benefits and other noncurrent liabilities
    1,752       311       (304 )     1,759  
Minority interest
    120       2               122  
Shareholders’ equity
    2,411       355       (355 )     2,411  
 
                       
 
                               
Total liabilities and shareholders’ equity
  $ 8,749     $ 1,246     $ (976 )   $ 9,019  
 
                       
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
Consolidating Cash Flow (Unaudited)
(in millions)
                                 
    Three Months Ended September 30, 2005  
    Dana                      
    with DCC on             Elimination     Dana  
    Equity Basis     DCC     Entries     Consolidated  
 
                               
Net income
  $ (1,272 )   $ 3     $ (3 )   $ (1,272 )
Depreciation and amortization
    60       4             64  
Loss on divestitures and asset sales
    19                   19  
Effect of change in accounting
    (2 )                     (2 )
Impairments
    290                       290  
Working capital decrease (increase)
    47       (46 )     21       22  
Deferred taxes
    773       (10 )           763  
Other
    (72 )     34       3       (35 )
 
                       
Net cash flows — operating activities
    (157 )     (15 )     21       (151 )
 
                       
 
                               
Purchases of property, plant and equipment
    (67 )     (2 )           (69 )
Payments received on leases and partnership
          32             32  
Proceeds from asset sales
    30       9             39  
Other
    69       (31 )           38  
 
                       
Net cash flows — investing activities
    32       8             40  
 
                       
 
                               
Net change in short-term debt
    202             (21 )     181  
Proceeds from long-term debt
    6       15               21  
Payments on long-term debt
                       
Dividends paid
    (18 )                 (18 )
Other
    (9 )                 (9 )
 
                       
Net cash flows — financing activities
    181       15       (21 )     175  
 
                       
Net change in cash and cash equivalents
    56       8             64  
Cash and cash equivalents — beginning of period
    651       15             666  
 
                       
Cash and cash equivalents — end of period
  $ 707     $ 23     $     $ 730  
 
                       
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 15

 


 

Dana Corporation
Consolidating Cash Flow (Unaudited)
(in millions)
                                 
    Nine Months Ended September 30, 2005  
    Dana                      
    with DCC on             Elimination     Dana  
    Equity Basis     DCC     Entries     Consolidated  
 
                               
Net income
  $ (1,226 )   $ 16     $ (16 )   $ (1,226 )
Depreciation and amortization
    214       13             227  
Loss on divestitures and asset sales
    14                   14  
Effect of change in accounting
    (6 )                     (6 )
Impairments
    290                       290  
Working capital increase
    (170 )     (104 )     81       (193 )
Deferred taxes
    734       (6 )           728  
Other
    (73 )     (27 )     (34 )     (134 )
 
                       
Net cash flows — operating activities
    (223 )     (108 )     31       (300 )
 
                       
 
                               
Purchases of property, plant and equipment
    (191 )     (2 )             (193 )
Payments received on leases and partnership
          70             70  
Proceeds from asset sales
    53       122             175  
Other
    27       1             28  
 
                       
Net cash flows — investing activities
    (111 )     191             80  
 
                       
 
                               
Net change in short-term debt
    488       (1 )     (81 )     406  
Proceeds from long-term debt
    6       15             21  
Payments on long-term debt
    (6 )     (39 )           (45 )
Dividends paid
    (54 )     (50 )     50       (54 )
Other
    (12 )                     (12 )
 
                       
Net cash flows — financing activities
    422       (75 )     (31 )     316  
 
                       
Net change in cash and cash equivalents
    88       8             96  
Cash and cash equivalents — beginning of period
    619       15             634  
 
                       
Cash and cash equivalents — end of period
  $ 707     $ 23     $     $ 730  
 
                       
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 16

 


 

Dana Corporation
Condensed Statement of Cash Flows (Unaudited)
(in millions)
                                 
    Three Months Ended September 30, 2004 (Restated)  
    Dana                      
    with DCC on             Elimination     Dana  
    Equity Basis     DCC     Entries     Consolidated  
 
                       
 
                               
Net income
  $ 42     $ 12     $ (12 )   $ 42  
Depreciation and amortization
    84       6             90  
Gain on divestitures and asset sales
    (20 )     (12 )           (32 )
Impairments
    3       21               24  
Working capital decrease (increase)
    (258 )     (141 )     150       (249 )
Deferred taxes
    (18 )     (13 )           (31 )
Other
    55       (16 )     7       46  
 
                       
Net cash flows — operating activities
    (112 )     (143 )     145       (110 )
 
                       
 
                               
Purchases of property, plant and equipment
    (72 )     (1 )           (73 )
Payments received on leases and partnerships
          2             2  
Proceeds from asset sales
    3       163             166  
Other
    16       1             17  
 
                       
Net cash flows — investing activities
    (53 )     165             112  
 
                       
 
                               
Net change in short-term debt
    173             (145 )     28  
Payments on long-term debt
    (5 )     (96 )           (101 )
Dividends paid
    (17 )                 (17 )
Other
    3                   3  
 
                       
Net cash flows — financing activities
    154       (96 )     (145 )     (87 )
 
                       
Net change in cash and cash equivalents
    (11 )     (74 )           (85 )
Cash and cash equivalents — beginning of period
    498       99             597  
 
                       
Cash and cash equivalents — end of period
  $ 487     $ 25     $     $ 512  
 
                       
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
Condensed Statement of Cash Flows (Unaudited)
(in millions)
                                 
    Nine Months Ended September 30, 2004 (Restated)  
    Dana                      
    with DCC on             Elimination     Dana  
    Equity Basis     DCC     Entries     Consolidated  
 
                               
Net income
  $ 200     $ 46     $ (46 )   $ 200  
Depreciation and amortization
    249       24             273  
Gain on divestitures and asset sales
    (23 )     (34 )           (57 )
Impairments
    3       21               24  
Working capital decrease (increase)
    (386 )     (142 )     150       (378 )
Deferred taxes
    (68 )     (4 )           (72 )
Other
    (26 )     (62 )     41       (47 )
 
                       
Net cash flows — operating activities
    (51 )     (151 )     145       (57 )
 
                       
 
                               
Purchases of property, plant and equipment
    (210 )     (7 )     3       (214 )
Payments received on leases and partnerships
            10             10  
Proceeds from asset sales
    34       287       (3 )     318  
Other
    (32 )     10             (22 )
 
                       
Net cash flows — investing activities
    (208 )     300             92  
 
                       
Net change in short-term debt
    356       (30 )     (145 )     181  
Proceeds from long-term debt
          5               5  
Payments on long-term debt
    (239 )     (166 )           (405 )
Dividends paid
    (53 )                 (53 )
Other
    16                   16  
 
                       
Net cash flows — financing activities
    80       (191 )     (145 )     (256 )
 
                       
Net change in cash and cash equivalents
    (179 )     (42 )           (221 )
Net change in cash — discontinued operations
    2                       2  
Cash and cash equivalents — beginning of period
    665       66             731  
 
                       
Cash and cash equivalents — end of period
  $ 488     $ 24     $     $ 512  
 
                       
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

 

EX-99.2
 

Exhibit 99.2
Welcome to Dana's Third-Quarter 2005 Conference Call January 17, 2006


 

Presenters: Mike Burns Chairman and Chief Executive Officer Bob Richter Vice President and Chief Financial Officer


 

To print this presentation ... please go to: www.dana.com/investors


 

Dana Corporation Third-Quarter 2005 Conference Call January 17, 2006 (c) Dana Corporation, 2006 Statements in this presentation which are not entirely historical 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. However, forward-looking statements are inherently subject to risks and uncertainties and Dana's actual results could differ materially from those that are anticipated or projected due to a number of factors. These factors include the cyclical nature of the vehicular markets we serve, particularly the heavy-duty commercial vehicle market; changes in the competitive environment in our markets due, in part, to outsourcing and consolidation by our customers; changes in national and international economic conditions that affect our markets, such as increased fuel prices and legislation regulating vehicle emissions; potential adverse effects on our operations and business from terrorism or hostilities; the strength of other currencies in the overseas countries in which we do business relative to the U.S. dollar; increases in our commodity costs (including steel, other raw materials, and energy) that we cannot recoup in our product pricing; our success in implementing our cost-savings, lean manufacturing and VA/VE (value added/value engineering) programs; changes in business relationships with our major customers and in the timing, size and continuation of their programs; the ability of our customers to maintain their market positions and achieve their projected sales and production levels; the ability of our suppliers to maintain their projected production levels and furnish critical components for our products, as well as other necessary goods and services; competitive pressures on our sales from other vehicle component suppliers; price reduction pressures from our customers; our ability to negotiate new or modified financing agreements prior to the expiration of the waivers under our existing agreements; and our ability to complete our previously announced strategic actions as contemplated (including the divestiture of our non-core engine hard parts, fluid products and pump products businesses; the operational restructuring in our Automotive Systems Group and our Commercial Vehicle business; the dissolution of our Mexican joint venture, Spicer S.A. de C.V.; the finalization of our Chinese joint venture, Dongfeng Axle Co., Ltd.); and other factors set out in our public filings with the Securities and Exchange Commission. Forward-looking statements in this presentation speak only as of the date of this presentation. Dana does not undertake to update such forward-looking statements. 1


 

Agenda Recent financial challenges Mike Burns Q3 financial overview Overview of operational actions Detailed financial review Bob Richter Operational review Mike Burns Net new business Dana strengths Investor day 2 (c) Dana Corporation. Dated January 17, 2006.


 

Since our last earnings call in July 2005, Dana has faced three major financial challenges Dana completed restatements of financial results for 2000 through Q2-2005 Total net income for these periods reduced by $44 million By filing amended financial statements for 2004 and the first two quarters of 2005, as well as today's third- quarter filing, Dana will have eliminated defaults under financing agreements Dana provided a valuation allowance of $918 million against its net U.S. & U.K. deferred tax assets The valuation allowance is a non-cash charge 3 (c) Dana Corporation. Dated January 17, 2006.


 

Unusual charges accounted for 95% of Q3-05 loss, but operating results still unacceptable Q3-2005 Q3-2004 Restated 4 ($ Millions, except per share data) (c) Dana Corporation. Dated January 17, 2006. *Comparable GAAP measures available at www.dana.com/investors


 

Dana has initiated key actions to improve its financial results and sharpen business focus As announced Oct. 20, 2005: Divestiture of three non-core businesses Operational restructuring in ASG and HVTSG Annualized savings of more than $20 million before tax expected by second half of 2007 Salaried workforce and benefit reductions Annualized savings of more than $40 million before tax expected in 2006 As announced Nov. 22, 2005, Dana intends to acquire full ownership of axle and driveshaft operations in Mexico (current ownership of 49%) As announced Dec. 14, 2005, Dana to consolidate Thermal Products operations 5 (c) Dana Corporation. Dated January 17, 2006. Slide contains forward-looking information. Actual results may differ materially due to factors discussed on slide 1.


 

Results of Restatements (c) Dana Corporation. Dated January 17, 2006. As Reported As Restated Difference 6 ($ Millions)


 

Material Weaknesses (c) Dana Corporation. Dated January 17, 2006. 7 We did not maintain an effective control environment in our Commercial Vehicle business unit. Our financial and accounting organization was not adequate to support our financial accounting and reporting needs. We did not maintain effective controls over the completeness and accuracy of certain revenue and expense accruals. We did not maintain effective controls over reconciliations of certain financial statement accounts. We did not maintain effective controls over the valuation of certain inventory and costs of goods sold.


 

Q3-2005 Financial Overview 2005 2004 Restated (c) Dana Corporation. Dated January 17, 2006. 8 Three months ended September 30 2005 2004 Restated Nine months ended September 30 ($ Millions, except per share data) *Non-GAAP measure


 

Q3-2005 Unusual, Non-cash Items Valuation allowance of $918 million against deferred tax assets ($905-U.S., $13-U.K.) Asset impairment of $275 million related to planned divestures Engine hard parts Fluid products Pump products Loss of $16 million on smaller divestitures completed in Q3 (c) Dana Corporation. Dated January 17, 2006. 9


 

Q3-2005 Income Statement ($ Millions) Unusual Items As DCC to Reported Equity Def Tax Valuation Impairmt Divest As Adjusted Sales Other income $2,396 11 $(12) $16 $2,39615 (12) 2,411 Cost of sales SG&A 2,407 3 (8) 2,293 128 Impairment Interest 2,290 136 290 42 (8) $(290) 16 34 2,758 (13) (290) 2,455 Income (loss) before taxes Tax benefit (expense) Minority interest Equity in 1 (3) (44) (27) 1 earnings of affiliates (351) (929) 1 5 2 $920 290 (15) 16 7 Income (loss) from continuing ops Effect of accounting change (1,274) 2 920 (2) 275 16 (63) Net income (loss) $(1,272)$- $918 $275 $16 $(63) 10 © Dana Corporation. Dated January 17, 2006.


 

Nine-month 2005 Income Statement ($ Millions) Unusual Items As Reported DCC to Equity Def Tax Valuation DCC Impairmt Divest Sales OH Tax & Other As Adjusted Sales Other income $7,505 67 $(26) $ 16 $7,505 57 (26) 7,562 Cost of sales SG&A Impairment 7,572 11 (26) 7,083 396 Interest 7,072 413 290 125 (23) $(290) 16 $9 102 7,900 (38) (290) 9 7,581 Income (loss) before taxes Tax benefit (expense) Minority interest Equity in earnings of (328) (925) 12 (21) 16 affiliates (5) 26 9 $920 290 (15) $(4) (9) 14 (19) (27) (5) 31 Income (loss) from continuing ops Effect of accounting change (1,232) 6 920 (2) 275 16 (4) 5 (4) (20) Net income (loss) $(1,226) $ $918 $275 $ 16 $ (4) $1 $(20) 11 © Dana Corporation. Dated January 17, 2006.


 

Cash Flow Statement With DCC on an Equity Basis Third Quarter Nine Months 2005 2004 2005 2004 ($Millions) Restated Restated Net income $(1,272) $42 $(1,226) $200 Depreciation and amortization 60 84 214 249 Impairments 290 3 290 3 Loss (gain) on asset sales 19 (20) 14 (23) Effect of change in accounting (2) (6) Working capital decrease (increase) 47 (258) (170) (386) Deferred taxes 773 (18) 734 (68) Other (72) 55 (73) (26) Net cash flows - operating activities (157) (112) (223) (51) Purchases of property, plant and equipment (67) (72) (191) (210) Proceeds from divestitures and asset sales 30 3 53 34 Other 69 16 27 (32) Net cash flows - investing activities 32 (53) (111) (208) Net change in short-term debt 202 173 488 356 Payments on long-term debt (5) (6) (239) Proceeds from long-term debt 6 6 Dividends paid (18) (17) (54) (53) Other (9) 3 (12) 16 Net cash flows - financing activities 181 154 422 80 Net change in cash and cash equivalents 56 (11) 88 (179) Net change in cash - discontinued operations 2 Cash and cash equivalents - beginning of period 651 498 619 664 Cash and cash equivalents - end of period $707 $487 $707 $487 12 Dana Corporation. Dated January 17, 2006. * Non-GAAP measure


 

Working Capital Reduction With DCC on an Equity Basis 13 ($ Millions) (c) Dana Corporation. Dated January 17, 2006. Slide contains forward-looking information. Actual results may differ materially due to factors discussed on slide 1.


 

Capital Structure - Nine-months 2005 (c) Dana Corporation. Dated February 1, 2005. Slide contains forward-looking information. Actual results may differ materially due to factors discussed on slide 37 14 ($ Millions) * Non-GAAP measure With DCC on an Equity Basis (c) Dana Corporation. Dated January 17, 2006.


 

2005 2006 2007 2008 2009 2010 2011 2015 2028 2029 Domestic STD 285 Sr Notes 149.8 349.267 74.158 124.402 449.8 164.217 265.74 DCC Loan to Dana 245.7 International/Other 39.054 4.629 3.778 4.103 3.153 5.739 Dana Debt Portfolio at Sept. 30, 2005 Excluding Debt Maturities of DCC Note: Maturities do not reflect swap valuation adjustments 15 2005 2006 2007 2008 2009 2010 2011 2015 2028 2029 Domestic STD 475 Sr Notes 149.829 349.317 77.341 127.329 449.805 164.226 265.766 DCC Loan to Dana 267.5 0 Int'l / Other 28.1 4.846 3.987 3.76 3.879 10.516 0 770 4 5 154 85 353 124 164 450 266 ($ Millions) (c) Dana Corporation. Dated January 17, 2006.


 

September 30, 2005 Liquidity Excluding DCC ($ Millions) Lines Drawn Available 5-year bank facility $400 $255 $145 Accts receivable program 275 220 5 Bank lines 35 — 35 Bank facilities 710 475 185 Amount due DCC $268 Total short-term facilities $743 Plus cash 707 Total $892 Note 1 - Excludes committed borrowing lines related to foreign operations. Note 2 - Cash on balance sheet includes cash of non-North American Operations of $315 million and cash in pledged accounts of $120 million. (c) Dana Corporation. Dated January 17, 2006. 16


 

Retained 900 Capital Markets 1030 Value-Added 180 Real Estate 170 Retained 310 590 735 Capital Markets 295 Value-Added 0 180 Real Estate 0 12/01 Total Portfolio Assets - $2,200 Dana Credit Corporation Portfolio Analysis Value-Added Services Retained Real Estate Capital Markets 9/05 Total Portfolio Assets - $605 (c) Dana Corporation. Dated January 17, 2006. 17 ($ Millions)


 

2005 2006 2007 DCC Debt Portfolio at Sept. 30, 2005 ($ Millions) Total Recourse Debt = $431 18 (c) Dana Corporation. Dated January 17, 2006.


 

DCC Wind-Down Status ($Millions) Portfolio assets$605 Net required from future asset sales: Debt maturities $431 Cash on balance sheet (23) Note receivable from Dana (268) Total $140 Proceeds required / Portfolio assets 23% 19 © Dana Corporation. Dated January 17, 2006.


 

Financing Agreements Filing and delivery of amended financial statements in December 2005, together with the filing of the third-quarter 2005 10-Q cures issues with existing financing agreements and indentures Covenant waivers under the 5-Year bank facility until May 31, 2006 Waivers under the A/R facility until April 14, 2006 renewal date Currently working with our bank group on modified or replacement facilities which we expect to have in place prior to the expiration of the waivers 20 (c) Dana Corporation. Dated January 17, 2006. Slide contains forward-looking information. Actual results may differ materially due to factors discussed on slide 1.


 

Recapping the Quarter (Q3-05) ($ Millions) 2005 2004 Restated $41 $65 16 41 (75) (65) (18) 41 (26) (41) (44) - (27) 31 1 (3) 7 11 EBIT: ASG HVTSG Corp & other Interest — net Income (loss) before taxes Taxes on income Minority interest Equity earnings Income (loss) from cont ops (63) 39 Income from disc ops 18 Deferred tax valuation (918) Impaiment charge (275) Other unusual items (16) (15) Net income (loss) $(1,272) $42 21 © Dana Corporation. Dated January 17, 2006.


 

Sales 1,784 1,583 201 644 560 84 EBIT 41 65 (24) 16 41 (25) Steel Impact* 25 20 5 18 3 15 ASG HVTSG 2005 2005 2004 Restated 2004 Restated Chg. Chg. ($ Millions) * Before tax, net of recoveries (c) Dana Corporation. Dated January 17, 2006. 22 Dana's Q3-05 operating performance impacted by high steel and manufacturing costs $ $ $ $ $ $


 

($ Millions) 23 Sales 5,577 5,107 470 2,018 1,722 296 EBIT 179 270 (91) 81 125 (44) Steel Impact* 117 32 85 65 7 58 ASG HVTSG 2005 2005 2004 Restated 2004 Restated Chg. Chg. $ $ $ $ Nine-month 2005 EBIT disappointing, mainly for Commercial Vehicle, given strong market * Before tax, net of recoveries $ $ (c) Dana Corporation. Dated January 17, 2006.


 

Intense focus on Commercial Vehicle - new leadership, restructuring, common processes Nick Stanage, VP of Commercial Vehicle, named president of Heavy Vehicle Products in December 2005 Other leadership changes made throughout the business, including group controller Restructuring actions announced in October 2005 to enhance efficiency, throughput, and logistics Increasing axle assembly capacity in Monterrey, Mexico, to relieve Henderson, Ky. operation Increasing gear production capacity in Toluca, Mexico, to relieve Glasgow, Ky. operation Consolidating Commercial Vehicle Service Parts work in Crossville, Tenn. Significant increase in lean manufacturing activities Common processes across automotive and heavy vehicle operations (c) Dana Corporation. Dated January 17, 2006. 24


 

Dana intends to acquire full ownership of operations in Mexico for low-cost production Joint venture with DESC S.A. de C.V. - 51% DESC, 49% Dana - will be dissolved Dana to take full ownership of five axle and driveshaft plants in Mexico DESC to take full ownership of transmission and aftermarket gasket operations Expect to complete in Q1-2006 Assets will be better utilized and offer low-cost manufacturing capacity to Dana Will positively impact EBIT performance as results from these operations will be 100% consolidated Provides base to do more 25 (c) Dana Corporation. Dated January 17, 2006. Slide contains forward-looking information. Actual results may differ materially due to factors discussed on slide 1.


 

Rebalancing capacity and reducing cost to improve results in Automotive Systems Group Buena Vista, Va., axle facility will be closed and its production consolidated into Dana facility in Dry Ridge, Ky. Buena Vista facility employs approximately 275 people Bristol, Va., driveshaft facility will be closed and its production consolidated into Dana operations in Mexico Bristol facility employs approximately 270 people Steering shaft component and assembly lines in Lima, Ohio, will also be moved to Dana operations in Mexico Approximately 100 of the 385 jobs will be affected Dana to consolidate Thermal Products operations Facilities in Danville, Ind.; Sheffield, Pa.; and Burlington, Ont. - with 200 people - will be closed Production will be moved to plants in St. Clair, Mich.; and Cambridge, Ont. 26 (c) Dana Corporation. Dated January 17, 2006. Slide contains forward-looking information. Actual results may differ materially due to factors discussed on slide 1.


 

Improved profitability through benefit reductions and lean manufacturing Salaried workforce will be reduced by at least five percent (in addition to positions eliminated through announced divestitures and plant closures) generating savings of $15 million before tax in 2006 Benefit cost reductions expected to generate cost savings of more than $25 million before tax in 2006 Through ongoing lean manufacturing and improved efficiency, Dana is optimizing its workforce Workforce reductions of nearly 1,000 in 2005 27 (c) Dana Corporation. Dated January 17, 2006. Slide contains forward-looking information. Actual results may differ materially due to factors discussed on slide 1.


 

Non-core businesses to be divested had 2004 sales of $1.3 billion, 9,800 employees Engine hard parts business 2004 sales of $720 million 5,300 people in 26 operations in 10 countries Piston rings, camshafts, engine bearings under Perfect Circle(tm), Clevite(tm), and Glacier Vandervell(tm) brands Fluid products business 2004 sales of $470 million 3,850 people in 16 operations in six countries Pump products business 2004 sales of $80 million 650 people in two operations in Brazil Non-core businesses to be classified as discontinued operations in Q4-2005 Expect to complete divestitures in 2006 28 (c) Dana Corporation. Dated January 17, 2006. Slide contains forward-looking information. Actual results may differ materially due to factors discussed on slide 1.


 

Excludes the announced divestitures of engine hard parts and fluid businesses Estimates based on Dana's review of the projected production schedules of our customers ASG HVTSG 2006 2007 2008 Pluses Minuses ($ Millions) Net $375M vs. 2005 Net $455M vs. 2006 Net $95M vs. 2007 $900 million in incremental new business Projected $900 million in Net New Business for 2006 - 2008; aggressively pursuing more (c) Dana Corporation. Dated January 17, 2006. Slide contains forward-looking information. Actual results may differ materially due to factors discussed on slide 1. 29


 

Despite challenges ... Dana strengths Global and growing manufacturing footprint with diverse customer base Strong, balanced product mix Driveshafts, axles, frames, thermal and sealing products for light, commercial, and off-highway vehicle markets Narrowing business focus to profitable core Committed to profitable top-line growth Leadership team with a mandate for performance Functional and product group leaders understand the urgency and importance of executing our plans (c) Dana Corporation. Dated January 17, 2006. 30


 

Investor Day Late April or early May Introduce and meet Dana leadership team New York 31 (c) Dana Corporation. Dated January 17, 2006.


 

Questions (c) Dana Corporation, 2006 32


 

Supplemental Slides (c) Dana Corporation, 2006 33


 

Q3 2004 Income Statement (Restated) ($ Millions) Unusual Items As DCC to Knorr DCC As Restated Equity AAG Bremse Sales Impairmt Adjusted Sales $2,114 $2,114 Other income (8) $31 $(21) $4 6 2,106 31 (21) 4 2,120 Cost of sales 1,964 6 1,970 SG&A 121 (6) $(7) 108 Interest 53 (11) 42 2,138 (11) (7) 2,120 Income (loss) before taxes (32) 42 (21) 4 7 Tax benefit (expense) 83 (54) 8 (4) (2) 31 Minority interest (3) (3) Equity in earnings of affiliates 6 12 (7) 11 Income (loss) from continuing ops 54 (13) (7) 5 39 Income (loss) from discontinued ops (12) $30 18 Net income (loss) 42 $ 5 $ 57 $ (7)$ $30 $ (13)$ 34 © Dana Corporation. Dated January 17, 2006.


 

Nine-month 2004 Income Statement (Restated) ($ Millions) Unusual Items As DCC to Knorr DCC As Restated Equity AAG Bremse Sales Impairmt Adjusted Sales $6,755 $6,755 Other income 27 $10 $(21) $9 25 6,782 10 (21) 9 6,780 Cost of sales 6,186 19 6,205 SG&A 375 (22) $ (7)346 Interest 157 (37) 120 Income (loss) before taxes Tax benefit (expense) Minority interest Equity in earnings of affiliates Income (loss) from continuing ops Income (loss) from disc ops Income (loss) before acct change $200$ 6,718 (40) (7) 6,671 64 50 (21) 9 7 109 85 (92) 8 (6) (2) (7) (9) (9) 25 42 (28) 39 165 (13) (25) 5 132 35 $ 13 48 5 $180 $13 $ (13)$ (25)$ 35 © Dana Corporation. Dated January 17, 2006.


 

Capital Structure (c) Dana Corporation. Dated January 17, 2006. 36 Reconciliation as of September 30, 2005


 

Light Vehicle Production (c) Dana Corporation. Dated January 17, 2006. Slide contains forward-looking information. Actual results may differ materially due to factors discussed on slide 1. 2001 2002 2003 2004 2005T 2006P 2007F East 415 443 20.5 21.8 22.7 23.9 575 2001 2002 2003 2004 2005T 2006P 2007F East 477 466 1.9 2.4 2.6 2.7 451 2001 2002 2003 2004 2005T 2006P 2007F East 48 55 15.9 15.8 15.7 16.1 75 2001 2002 2003 2004 2005T 2006P 2007F East 278 260 19.6 20.5 20.7 21.3 358 37 (Units Millions)


 

NAFTA Commercial Vehicle Production Class 5-7 Class 8 1999 241 333 2000 215 252 2001 176 146 2002 189 181 2003 196 177 2004 225 263 2005T 242 333 2006P 227 330 2007P 203 200 Units (000s) (c) Dana Corporation. Dated January 17, 2006. Slide contains forward-looking information. Actual results may differ materially due to factors discussed on slide 1. 38


 

2003 2004 2005T 2006P 2007F East 480 526 549 564 575 2003 2004 2005T 2006P 2007F East 452 450 453 447 451 2003 2004 2005T 2006P 2007F East 61 65 69 73 75 Off-Highway Vehicle Production* 2003 2004 2005T 2006P 2007F East 281 325 353 361 358 * Units in 1,000 for Wheeled Construction, Ag, Mining, Material Handling & Forestry (c) Dana Corporation. Dated January 17, 2006. Slide contains forward-looking information. Actual results may differ materially due to factors discussed on slide 1. 39


 

www.dana.com (c) Dana Corporation, 2006 40


 

(DANA LOGO)
Investor Relations
Dana Corporation
Quarterly Financial Information (Unaudited)
For the Quarter Ended September 30, 2005

(in millions)
                                                                                   
    External Sales     Inter-Segment Sales     EBIT     Operating PAT     Net Profit
    05     04     05     04     05     04     05     04     05     04
            (Restated)             (Restated)             (Restated)             (Restated)             (Restated)  
Automotive Systems Group
  $ 1,745     $ 1,534     $ 39     $ 49     $ 41     $ 65     $ 29     $ 44     $ (13 )   $ 9  
Heavy Vehicle Technologies and Systems Group
    642       559       2       1       16       41       10       26       (9 )     10  
Dana Commercial Credit
                                                    3       4       3       4  
Other
    9       21       12       15       (75 )     (65 )     (105 )     (34 )     (44 )     17  
 
                                                         
Continuing Operations
    2,396       2,114       53       65       (18 )     41       (63 )     40       (63 )     40  
 
                                                                               
Discontinued Operations
                                            29               17               17  
Valuation adjustment to deferred tax asset
                                                    (920 )             (920 )        
Unusual Items Excluded from Performance Measurement
                                    (306 )     (6 )     (291 )     (15 )     (291 )     (15 )  
Effect of change in Accounting
                                                    2               2          
 
                                                         
Consolidated
  $ 2,396     $ 2,114     $ 53     $ 65     $ (324 )   $ 64     $ (1,272 )   $ 42     $ (1,272 )   $ 42  
 
                                                         
 
                                                                             
North America
  $ 1,476     $ 1,382     $ 33     $ 33     $ (38 )   $ 15     $ (28 )   $ 9     $ (58 )   $ (15 )
Europe
    452       397       30       23       31       30       22       22       12       15  
South America
    259       172       61       56       33       28       20       17       15       14  
Asia Pacific
    209       163       12       14       19       9       12       6       7       2  
Dana Commercial Credit
                                                    3       4       3       4  
Other
                                    (63 )     (41 )     (92 )     (18 )     (42 )     20  
 
                                                         
Continuing Operations
    2,396       2,114       136       126       (18 )     41       (63 )     40       (63 )     40  
 
                                                                               
Discontinued Operations
                                            29               17               17  
Valuation adjustment to deferred tax asset
                                                    (920 )             (920 )        
Unusual Items Excluded from Performance Measurement
                                    (306 )     (6 )     (291 )     (15 )     (291 )     (15 )
 
                                                                               
Effect of change in Accounting
                                                    2               2          
 
                                                         
Consolidated
  $ 2,396     $ 2,114     $ 136     $ 126     $ (324 )   $ 64     $ (1,272 )   $ 42     $ (1,272 )   $ 42  
 
                                                         
Information for Discontinued Operations
            539               88                                                  
 
                                                                         
The performance and net assets of Clevite are now included in ASG.
 
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


 

(DANA LOGO)
Investor Relations
Dana Corporation
Quarterly Financial Information (Unaudited)
For the Nine Months Ended September 30, 2005

(in millions)
                                                                                   
    External Sales     Inter-Segment Sales     EBIT     Operating PAT     Net Profit  
    05     04     05     04     05     04     05     04     05     04  
            (Restated)             (Restated)             (Restated)             (Restated)             (Restated)  
Automotive Systems Group
  $ 5,467     $ 4,966     $ 110     $ 141     $ 179     $ 270     $ 128     $ 184     $ 14     $ 85  
Heavy Vehicle Technologies and Systems Group
    2,014       1,719       4       3       81       125       50       77       (3 )     34    
Dana Commercial Credit
                                                    12       16       12       16  
Other
    24       70       42       48       (201 )     (174 )     (210 )     (145 )     (43 )     (3 )
 
                                                           
Continuing Operations
    7,505       6,755       156       192       59       221       (20 )     132       (20 )     132  
 
                                                                               
Discontinued Operations
                                            86               48               48  
Valuation adjustment to deferred tax asset
                                                    (920 )             (920 )        
Unusual Items Excluded from Performance Measurement
                                    (297 )     (15 )     (292 )     20       (292 )     20  
 
                                                                               
Effect of change in Accounting
                                                    6               6          
 
                                                           
Consolidated
  $ 7,505     $ 6,755     $ 156     $ 192     $ (238 )   $ 292     $ (1,226 )   $ 200     $ (1,226 )   $ 200  
 
                                                           
 
                                                                               
North America
  $ 4,687     $ 4,553     $ 93     $ 100     $ (23 )   $ 166     $ (18 )   $ 103     $ (105 )   $ 23  
Europe
    1,507       1,255       91       74       118       94       82       67       54       44  
South America
    713       454       187       150       87       73       54       45       41       37  
Asia Pacific
    598       493       37       38       51       32       33       21       20       9  
Dana Commercial Credit
                                                    12       16       12       16  
Other
                                    (174 )     (144 )     (183 )     (120 )     (42 )     3  
 
                                                           
Continuing Operations
    7,505       6,755       408       362       59       221       (20 )     132       (20 )     132  
 
                                                                               
Discontinued Operations
                                            86               48               48  
Valuation adjustment to deferred tax asset
                                                    (920 )             (920 )        
Unusual Items Excluded from Performance Measurement
                                    (297 )     (15 )     (292 )     20       (292 )     20  
 
                                                                               
Effect of change in Accounting
                                                    6               6          
 
                                                           
Consolidated
  $ 7,505     $ 6,755     $ 408     $ 362     $ (238 )   $ 292     $ (1,226 )   $ 200     $ (1,226 )   $ 200  
 
                                                           
Information for Discontinued Operations
            1,608               255                                                  
 
                                                                           
The performance and net assets of Clevite are now included in ASG.
 
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