EX-99.1 2 l17825aexv99w1.htm EX-99.1: NEWS RELEASE 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.”

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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.

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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  
 
            
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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