Dana Corporation to Restate Financial Statements for 2004 & 2005, Write Off U.S. Deferred Tax Assets
October 10 2005 - 9:03AM
PR Newswire (US)
Company Postpones Third-Quarter 2005 Earnings Release TOLEDO, Ohio,
Oct. 10 /PRNewswire-FirstCall/ -- Dana Corporation (NYSE:DCN) today
announced that it will restate its 2004, first-quarter 2005, and
second-quarter 2005 financial statements. Also, the company has
postponed its third-quarter 2005 earnings release and is
withdrawing its earnings guidance for full-year 2005. (Logo:
http://www.newscom.com/cgi-bin/prnh/19990903/DANA ) Restatement of
Financial Statements Dana's management and the Audit Committee of
the Board of Directors have determined, as a result of their
ongoing internal investigations, that the company did not properly
account for certain items during 2004 and the first and second
quarters of 2005. As a result, management and the Audit Committee
have concluded that Dana's financial statements for these periods
should no longer be relied upon and that restatements will be
required for these periods. The primary purpose for the
restatements is to correct issues involving customer pricing and
transactions with suppliers in Dana's Commercial Vehicle business.
The company's conclusions were reached in consultation with its
independent registered public accounting firm,
PricewaterhouseCoopers LLP, and independent investigators retained
by the Audit Committee. The company will file amended reports on
Forms 10-K/A and 10-Q/A for the periods being restated. In
connection with the restatements, the company believes that there
are material weaknesses in its internal control over financial
reporting. The company has not completed its investigations. It has
not determined whether it will be necessary to revise the estimated
impact on second-quarter income of $10-15 million after tax, which
it reported on Sept. 15, based on information available at that
time from its preliminary review. It has also not determined what
additional amounts will be required to adjust the statements for
the other periods. Company to Write Off U.S. Deferred Tax Assets On
Sept. 15, the company announced that it was evaluating its ability
to maintain its U.S. deferred tax assets in light of the change in
its earnings outlook. At June 30, the company reported that its
U.S. deferred tax assets totaled approximately $740 million. The
company now believes that it will be unable to maintain its U.S.
deferred tax assets or to record similar tax benefits in the
future. The company is assessing the impact of this on its
financial statements. The write-off of the U.S. deferred tax assets
and the inability to record similar tax benefits in the future has
a direct negative impact on net income but does not impact the
company's cash flow. Company Assessing Impact on Financial
Agreements Following the announcement on Sept. 15 that it would
likely restate its second-quarter financial statements, the company
received certain necessary waivers under its five-year bank
facility and its accounts receivable securitization agreement for
the second quarter. The company also received a waiver of the
financial covenants under its bank facility for the third quarter.
The company is now assessing the impact of the additional
restatements and the decision to write off the U.S. deferred tax
assets on its obligations under those credit facilities and other
agreements. Third-Quarter Earnings Release Postponed As a result of
the restatements, Dana will not release its third-quarter 2005
results on Oct. 19, as previously anticipated. At this time, no
date has been set for the third-quarter release. Operational and
Strategic Actions Being Evaluated The company continues to evaluate
a number of significant measures, both operational and strategic,
to improve its financial performance, and will make further
announcements regarding its plans as soon as appropriate. 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 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, in addition to those
discussed in this release, 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 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.
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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