Dana Corporation Revises 2005 Earnings Outlook, Restatement of Second-Quarter 2005 Financial Statements Likely
September 15 2005 - 9:01AM
PR Newswire (US)
TOLEDO, Ohio, Sept. 15 /PRNewswire-FirstCall/ -- Dana Corporation
(NYSE:DCN) today announced that it has revised its 2005 full-year
earnings outlook to a range of $90 million to $105 million, or
approximately 60 to 70 cents per share, from its previously
announced range of $196 million to $219 million, or $1.30 to $1.45
per share. In both cases, the outlook excludes gains and losses on
divestitures and asset sales, and other unusual items. (Logo:
http://www.newscom.com/cgi-bin/prnh/19990903/DANA ) The company is
assessing whether, as the result of the change in earnings outlook,
it will be required to write down its U.S. deferred tax assets. A
write-down of U.S. deferred tax assets and the consequent inability
to record similar tax benefits in the future would not have a cash
impact, but would have a direct negative impact on the revised 2005
full-year earnings outlook set forth above. At June 30, the
company's U.S. deferred tax assets totaled approximately $740
million. The revised outlook includes approximately $60 million of
tax benefits on domestic losses in the second half. Dana Chairman
and CEO Michael J. Burns said that this reduction reflects a
reassessment of the company's full-year outlook after reviewing its
preliminary results through the end of August. These results
indicate that the company is being negatively impacted by continued
higher-than-expected costs for steel and other materials, as well
as increased energy costs. In addition, the company's Commercial
Vehicle business has been unable to achieve projected cost
reductions and is experiencing significant manufacturing
inefficiencies. For these reasons, the company now expects that the
Commercial Vehicle unit's performance in the balance of the year
will be substantially below previous projections. Although less
significant, results in the company's Automotive Systems business
have been impacted by lower-than- anticipated light-vehicle
production volumes on vehicles with significant Dana content. "We
are considering a number of significant measures, both operational
and strategic, to improve our financial performance," Mr. Burns
said. "We are acting swiftly and will make further announcements
regarding our plans as soon as appropriate." The company is also
assessing the impact of the reduced earnings outlook on its ability
to comply with certain covenants contained in its five-year bank
facility and is initiating conversations with its banks in this
regard. Company Likely to Restate Second-Quarter 2005 Financial
Statements Dana also announced that it will likely restate its
second-quarter 2005 financial statements, primarily to correct
inappropriate recognition of price increases in its Commercial
Vehicle business during the second quarter. Based on a preliminary
internal review, the company believes that the potential
restatement could result in an after-tax reduction of approximately
$10 million to $15 million in second-quarter income. The actual
amount is subject to the completion of the review process. The
company's independent registered public accounting firm has been
advised of the company's preliminary findings to date and is also
reviewing the situation. 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 $9.1 billion in 2004.
Dana's Internet address is: http://www.dana.com/ . Forward-Looking
Statements Certain statements contained in this release constitute
"forward-looking" statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements
represent Dana's expectations based on our current information and
assumptions. Forward-looking statements are inherently subject to
risks and uncertainties. Dana's actual results could differ
materially from those that are anticipated or projected due to a
number of factors. These factors include the effect of national and
international economic conditions; adverse effects from terrorism
or hostilities; the strength of other currencies relative to the
U.S. dollar; increases in commodity costs, including steel, that
cannot be recouped in product pricing; our ability and that of our
customers to achieve projected sales and production levels; the
continued availability of necessary goods and services from our
suppliers; competitive pressures on our sales and pricing; our
ability to implement our cost reduction, cash management and
long-term transformation programs, and our U.S. tax loss
carryforward utilization strategies; and other factors set out in
our public filings with the Securities and Exchange Commission.
Dana does not undertake to update any forward-looking statements in
this release. http://www.newscom.com/cgi-bin/prnh/19990903/DANA
DATASOURCE: Dana Corporation CONTACT: Michelle L. Hards of Dana
Corporation, +1-419-535-4636, or Web site: http://www.dana.com/
Company News On-Call: http://www.prnewswire.com/comp/226839.html
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