Dana Corporation Reports Third-Quarter 2005 Results

TOLEDO, Ohio, Jan. 17 /PRNewswire-FirstCall/ -- 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. (Logo: http://www.newscom.com/cgi-bin/prnh/19990903/DANA ) 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: -- 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. -- 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." 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 (http://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: http://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: http://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. 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. Dana Corporation Financial Summary (Unaudited) (in millions, except per share amounts) Three Months Ended Nine Months Ended Sept 30 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 Dana Corporation Reconciliation of Earnings before interest and taxes (EBIT) for the Segments to Income before income taxes (Unaudited) (in millions) Three Months Nine Months Ended Sept 30, Ended Sept 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 Dana Corporation Condensed Statement of Income (Unaudited) (in millions, except per share amounts) Three Months Ended Nine Months Ended Sept 30 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 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 Dana Corporation Condensed Statement of Cash Flows (Unaudited) (in millions) Three Months Nine Months Ended Sept. 30 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 70 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 Dana Corporation (Including Dana Credit Corporation on an Equity Basis) Condensed Statement of Income (Unaudited) (in millions) Three Months Ended Nine Months Ended Sept. 30 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 Dana Corporation (Including Dana Credit Corporation on an Equity Basis) Condensed Balance Sheet (Unaudited) (in millions) September 30 December 31 2005 2004 Assets Restated 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 Dana Corporation (Including Dana Credit Corporation on an Equity Basis) Condensed Statement of Cash Flows (Unaudited) (in millions) Three Months Nine Months Ended Sept. 30 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 Dana Corporation Condensed Consolidating Statement of Income (Unaudited) (in millions) Three Months Ended September 30, 2005 Dana with DCC on Equity Elimination Dana 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. Dana Corporation Condensed Consolidating Statement of Income (Unaudited) (in millions) Nine Months Ended September 30, 2005 Dana with DCC on Equity Elimination Dana 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. Dana Corporation Condensed Consolidating Statement of Income (Unaudited) (in millions) Three Months Ended September 30, 2004 (Restated) Dana with DCC on Equity Elimination Dana 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) 0 (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. Dana Corporation Condensed Consolidating Statement of Income (Unaudited) (in millions) Nine Months Ended September 30, 2004 (Restated) Dana with DCC on Equity Elimination Dana 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. Dana Corporation Condensed Consolidating Balance Sheet (Unaudited) (in millions) September 30, 2005 Dana with DCC on Equity Elimination Dana Basis DCC Entries Consolidated 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. Dana Corporation Condensed Consolidating Balance Sheet (Unaudited) (in millions) December 31, 2004 (Restated) Dana with DCC on Equity Elimination Dana 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. Dana Corporation Consolidating Cash Flow (Unaudited) (in millions) Three Months Ended September 30, 2005 Dana with DCC on Equity Elimination Dana 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 partnerships - 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. Dana Corporation Consolidating Cash Flow (Unaudited) (in millions) Nine Months Ended September 30, 2005 Dana with DCC on Equity Elimination Dana 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 partnerships - 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. Dana Corporation Condensed Statement of Cash Flows (Unaudited) (in millions) Three Months Ended September 30, 2004 (Restated) Dana with DCC on Equity Elimination Dana Basis DCC Entries Consolidated Net income $ 42 $ 12 $ (12) $ 42 Depreciation and amortization 84 6 - 90 Loss 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 3 - 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. Dana Corporation Condensed Statement of Cash Flows (Unaudited) (in millions) Nine Months Ended September 30, 2004 (Restated) Dana with DCC on Equity Elimination Dana Basis DCC Entries Consolidated Net income $ 200 $ 46 $ (46) $ 200 Depreciation and amortization 249 24 - 273 Loss 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. Three Months Ended September 30, Inter- Net External Segment Operating Profit 2005 Sales Sales EBIT PAT (Loss) ASG $1,745 $39 $41 $29 $(13) HVTSG 642 2 16 10 (9) DCC 3 3 Other 9 12 (75) (105) (44) Total operations 2,396 53 (18) (63) (63) Valuation adjustment against deferred tax asset (920) (920) Effect of change in accounting 2 2 Unusual items excluded from performance measures (306) (291) (291) Consolidated $2,396 $53 $(324) $(1,272) $(1,272) 2004 - Restated ASG $1,534 $49 $65 $44 $9 HVTSG 559 1 41 26 10 DCC 4 4 Other 21 15 (65) (34) 17 Total continuing operations 2,114 65 41 40 40 Discontinued operations 29 17 17 Unusual items excluded from performance measures (6) (15) (15) Consolidated $2,114 $65 $64 $42 $42 Nine Months Ended September 30, Inter- Net External Segment Operating Profit 2005 Sales Sales EBIT PAT (Loss) ASG $5,467 $110 $179 $128 $14 HVTSG 2,014 4 81 50 (3) DCC 12 12 Other 24 42 (201) (210) (43) Total operations 7,505 156 59 (20) (20) Valuation adjustment against deferred tax asset (920) (920) Effect of change in accounting 6 6 Unusual items excluded from performance measures (297) (292) (292) Consolidated $7,505 $156 $(238) $(1,226) $(1,226) 2004 - Restated ASG $4,966 $141 $270 $184 $85 HVTSG 1,719 3 125 77 34 DCC 16 16 Other 70 48 (174) (145) (3) Total continuing operations 6,755 192 221 132 132 Discontinued operations 86 48 48 Unusual items excluded from performance measures (15) 20 20 Consolidated $6,755 $192 $292 $200 $200 Three Months Ended September 30, Inter- Net External Segment Operating Profit 2005 Sales Sales EBIT PAT (Loss) North America $1,476 $33 $(38) $(28) $(58) Europe 452 30 31 22 12 South America 259 61 33 20 15 Asia Pacific 209 12 19 12 7 DCC 3 3 Other (63) (92) (42) Total operations 2,396 136 (18) (63) (63) Valuation adjustment to deferred tax asset (920) (920) Effect of change in accounting 2 2 Unusual items excluded from performance measures (306) (291) (291) Consolidated $2,396 $136 $(324) $(1,272) $(1,272) 2004 - Restated North America $1,382 $33 $15 $9 $(15) Europe 397 23 30 22 15 South America 172 56 28 17 14 Asia Pacific 163 14 9 6 2 DCC 4 4 Other (41) (18) 20 Total continuing operations 2,114 126 41 40 40 Discontinued operations 29 17 17 Unusual items excluded from performance measures (6) (15) (15) Consolidated $2,114 $126 $64 $42 $42 Nine Months Ended September 30, Inter- Net External Segment Operating Profit 2005 Sales Sales EBIT PAT (Loss) North America $4,687 $93 $(23) $(18) $(105) Europe 1,507 91 118 82 54 South America 713 187 87 54 41 Asia Pacific 598 37 51 33 20 DCC 12 12 Other (174) (183) (42) Total operations 7,505 408 59 (20) (20) Valuation adjustment against net deferred tax assets (920) (920) Effect of change in accounting 6 6 Unusual items excluded from performance measures (297) (292) (292) Consolidated $7,505 $408 $(238) $(1,226) $(1,226) 2004 - Restated North America $4,553 $100 $166 $103 $23 Europe 1,255 74 94 67 44 South America 454 150 73 45 37 Asia Pacific 493 38 32 21 9 DCC 16 16 Other (144) (120) 3 Total continuing operations 6,755 362 221 132 132 Discontinued operations 86 48 48 Unusual items excluded from performance measures (15) 20 20 Consolidated $6,755 $362 $292 $200 $200 FCMN Contact: michelle.hards@dana.com http://www.newscom.com/cgi-bin/prnh/19990903/DANADATASOURCE: Dana Corporation CONTACT: Investor Relations: Michelle L. Hards, +1-419-535-4636, , or Media Relations: Todd M. Romain, +1-419-535-4727, , both of Dana Corporation Web site: http://www.dana.com/ Company News On-Call: http://www.prnewswire.com/comp/226839.html

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