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Dana Corporation Reports First-Quarter Results for 2005 TOLEDO, Ohio, April 20 /PRNewswire-FirstCall/ -- Dana Corporation (NYSE:DCN) today announced that its 2005 first-quarter sales were $2.5 billion, compared to $2.3 billion during the same period last year. Net income for the quarter totaled $18 million, or 12 cents per share, versus $65 million, or 43 cents per share, for the period in 2004. (Logo: http://www.newscom.com/cgi-bin/prnh/19990903/DANA ) First-quarter 2004 net income included $13 million from the discontinued automotive aftermarket businesses that were sold in November, 2004. Additionally, first-quarter 2004 net income included $2 million of unusual net gains from the sale of Dana Credit Corporation assets, while unusual transactions in the first quarter of 2005 did not have a significant impact on net income. Dana Chairman and CEO Mike Burns said 2005 first-quarter earnings were impacted by several external factors. "The single greatest factor impacting our earnings was roughly $32 million in additional steel costs that we incurred compared to the first quarter of 2004," he said. "This is an after- tax number and is net of what we've recovered from our customers. "In addition, this year's results were affected by a component shortage from a principal supplier, which resulted in reduced shipments of heavy-duty axles in March," Mr. Burns said. "The component shortage also affected the operating efficiency in our Heavy Vehicle group and led to significantly higher levels of inventory on other related components. "Finally, the performance of our Automotive Systems Group was impacted by lower production on many of our key light vehicle platforms in North America. "Against this challenging backdrop, we are stepping up our focus on those items within our control," Mr. Burns said. "This means accelerating our cost- reduction actions to deliver savings to the bottom line, despite external challenges. We are also working hard to grow our top line. During the quarter, we were awarded net new business that will add approximately $60 million to full-year 2005 sales." Recent Actions Position Dana for Long-Term Success Mr. Burns said Dana has also taken several recent actions that position the company to further leverage its capabilities and achieve success over the longer term: * In February, Dana's principal Brazilian subsidiary, Dana-Albarus, initiated a tender offer in Brazil for the 15.8 percent of its outstanding shares not held by Dana. Completion of this offer will enable Dana to consolidate all profits from this business, while at the same time saving the administrative costs associated with operating a separate public company. * In March, Dana announced an agreement to form a 50/50 joint venture in China - Dongfeng Dana Axle Co. Ltd. The joint venture is expected to be established in the third quarter of this year, following government approvals. Dana will initially have a $60 million net investment in the joint venture, which will provide axles - and potentially other driveline products - for the growing Chinese commercial vehicle market. * Earlier this month, Dana and IBM announced an agreement for IBM Business Consulting Services to provide Dana with administrative services in the human resources area, such as payroll and benefits, compensation, and recruitment and training. This move is designed to improve Dana's flexibility in managing its human resource processes, as well as to deliver cost savings over the 10-year life of the contract. Outlook Commenting on the company's near-term outlook, Mr. Burns said, "Our full- year guidance remains $1.30 to $1.45 per share." He continued, "As we put the recent component shortage behind us, and address other operational issues that have held back margin expansion in the Heavy Vehicle group over the past two quarters, we expect to more fully benefit over the remainder of the year from the strong demand anticipated in the North American commercial vehicle market. "In the case of the Automotive Systems Group, the dominant issue has been the effect of higher steel prices," Mr. Burns added. "The good news is that the market price for raw steel has decreased in recent months and demand appears to be moderating. Although the price we pay for forgings and other parts with high steel content has been slow to follow the decrease for a variety of reasons, we remain hopeful that we'll see less pressure on steel and other material price increases during the balance of the year. Therefore, if light-duty production schedules for the balance of the year do not change significantly, we expect that our accelerated cost reduction efforts will lead to improved performance in this group as well." Quarterly Conference Call Scheduled Today at 10 a.m. Dana will discuss its first-quarter results in a conference call at 10 a.m. (EDT) today. The call may be accessed via Dana's web site ( http://www.dana.com/ ), where it will be accompanied by a brief slide presentation, or by dialing (800) 275-3210. Please dial into the conference five minutes prior to the call. An audio recording of this conference call will be available after 2 p.m. today. To access this recording, please dial (800) 537-8823. A webcast replay of the call will be available after 4 p.m. today and will be accessible via the Dana web site. 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: 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; the success of our cost reduction and cash management programs, long-term transformation, and U.S. tax loss carryforward utilization strategies; our ability to finalize the Brazilian tender offer and Dongfeng joint venture as contemplated; our ability to realize expected cost savings under the IBM agreement; 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. Dana Corporation Financial Summary (Unaudited) (in millions, except per share amounts) Three Months Ended March 31 2005 2004 Sales $2,488 $2,311 Income from continuing operations $18 $52 Income from discontinued operations - 13 Net income $18 $65 Income from continuing operations $18 $52 Less - Net gains from sales of DCC assets (2) Income from continuing operations, excluding unusual items $18 $50 Income from discontinued operations $- $13 Diluted earnings per share: Income from continuing operations $0.12 $0.34 Income from discontinued operations 0.09 Net income $0.12 $0.43 Income from continuing operations, excluding unusual items $0.12 $0.33 Income from discontinued operations, excluding unusual items 0.09 Net income, excluding unusual items 0.12 0.42 Unusual items 0.01 Net income $0.12 $0.43 Dana Corporation Condensed Statement of Income (Unaudited) (in millions, except per share amounts) Three Months Ended March 31 2005 2004 Net sales $2,488 $2,311 Revenue from lease financing and other income (expense) 32 14 2,520 2,325 Costs and expenses Cost of sales 2,327 2,105 Selling, general and administrative expenses 136 134 Interest expense 43 51 2,506 2,290 Income before income taxes 14 35 Income tax benefit 3 Minority interest (3) (3) Equity in earnings of affiliates 7 17 Income from continuing operations 18 52 Income from discontinued operations 13 Net income $18 $65 Basic earnings per share Income from continuing operations $0.12 $0.35 Income from discontinued operations 0.09 Net income $0.12 $0.44 Diluted earnings per share Income from continuing operations $0.12 $0.34 Income from discontinued operations 0.09 Net income $0.12 $0.43 Average shares outstanding - For Basic EPS 149 148 For Diluted EPS 151 150 Dana Corporation Condensed Balance Sheet (Unaudited) (in millions) March 31 December 31 Assets 2005 2004 Current assets Cash and cash equivalents $590 $634 Accounts receivable Trade 1,479 1,266 Other 379 444 Inventories 977 907 Other current assets 256 217 Total current assets 3,681 3,468 Investment in leases 277 281 Investments and other assets 3,025 3,145 Property, plant and equipment, net 2,106 2,153 Total assets $9,089 $9,047 Liabilities and Shareholders' Equity Current liabilities Notes payable $305 $155 Accounts payable 1,407 1,317 Other current liabilities 1,138 1,217 Total current liabilities 2,850 2,689 Long-term debt 2,045 2,054 Deferred employee benefits and other noncurrent liabilities 1,689 1,746 Minority interest 126 123 Shareholders' equity 2,379 2,435 Total liabilities and shareholders' equity $9,089 $9,047 Dana Corporation Condensed Statement of Cash Flows (Unaudited) (in millions) Three Months Ended March 31 2005 2004 Net income $18 $65 Depreciation and amortization 83 93 Gain on divestitures and asset sales (1) (4) Working capital increase (266) (222) Other (37) 6 Net cash flows - operating activities (203) (62) Purchases of property, plant and equipment (70) (79) Payments received on leases and loans 4 4 Asset sales 35 103 Proceeds from partnership distributions 64 6 Other 1 (5) Net cash flows - investing activities 34 29 Net change in short-term debt 164 115 Proceeds from long-term debt 5 Payments on long-term debt (20) (259) Dividends paid (18) (18) Other (1) 5 Net cash flows - financing activities 125 (152) Net change in cash and cash equivalents (44) (185) Cash and cash equivalents - beginning of period 634 731 Cash and cash equivalents - end of period $590 $546 Dana Corporation (Including Dana Credit Corporation on an Equity Basis) Condensed Statement of Income (Unaudited) (in millions) Three Months Ended March 31 2005 2004 Net sales $2,488 $2,311 Other income (expense) 18 7 2,506 2,318 Costs and expenses Cost of sales 2,331 2,114 Selling, general and administrative expenses 129 120 Interest expense 35 38 2,495 2,272 Income before income taxes 11 46 Income tax expense (11) Minority interest (3) (3) Equity in earnings of affiliates 10 20 Income from continuing operations 18 52 Income from discontinued operations 13 Net income $18 $65 Dana Corporation (Including Dana Credit Corporation on an Equity Basis) Condensed Balance Sheet (Unaudited) (in millions) March 31 December 31 Assets 2005 2004 Current assets Cash and cash equivalents $564 $619 Accounts receivable Trade 1,479 1,266 Other 380 445 Inventories 977 907 Other current assets 234 192 Total current assets 3,634 3,429 Investments and other assets 3,310 3,337 Property, plant and equipment, net 1,969 2,015 Total assets $8,913 $8,781 Liabilities and Shareholders' Equity Current liabilities Notes payable $504 $289 Accounts payable 1,407 1,317 Other current liabilities 1,212 1,269 Total current liabilities 3,123 2,875 Long-term debt 1,604 1,611 Deferred employee benefits and other noncurrent liabilities 1,683 1,739 Minority interest 124 121 Shareholders' equity 2,379 2,435 Total liabilities and shareholders' equity $8,913 $8,781 Dana Corporation (Including Dana Credit Corporation on an Equity Basis) Cash Flow Impact on Net Debt (Unaudited) (in millions) Three Months Ended March 31 2005 2004 Sources Net income $18 $65 Depreciation 78 83 Asset sales 19 14 Working capital increase (250) (180) (135) (18) Uses Capital spend (70) (76) Dividends (18) (18) Restructuring cash payments (8) (23) Net changes in other accounts (36) 14 (132) (103) Cash change in net debt $(267) $(121) Dana Corporation Condensed Consolidating Statement of Income (Unaudited) (in millions) Three Months Ended March 31, 2005 Dana with DCC on Equity Elimination Dana Basis DCC Entries Consolidated Net sales $2,488 $ $ $2,488 Other income (expense) 18 23 (9) 32 2,506 23 (9) 2,520 Costs and expenses Cost of sales 2,331 (4) 2,327 Selling, general and administrative expenses 129 10 (3) 136 Interest expense 35 10 (2) 43 2,495 20 (9) 2,506 Income before income taxes 11 3 - 14 Income tax expense - Minority interest (3) (3) Equity in earnings of affiliates 10 5 (8) 7 Net income $18 $8 $(8) $18 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 March 31, 2004 Dana with DCC on Equity Elimination Dana Basis DCC Entries Consolidated Net sales $2,311 $ $ $2,311 Other income (expense) 7 22 (15) 14 2,318 22 (15) 2,325 Costs and expenses Cost of sales 2,114 (9) 2,105 Selling, general and administrative expenses 120 20 (6) 134 Interest expense 38 13 51 2,272 33 (15) 2,290 Income (loss) before income taxes 46 (11) - 35 Income tax benefit (expense) (11) 14 3 Minority interest (3) (3) Equity in earnings of affiliates 20 6 (9) 17 Income from continuing operations 52 9 (9) 52 Income from discontinued operations 13 13 Net income $65 $9 $(9) $65 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) March 31, 2005 Dana with DCC on Equity Elimination Dana Assets Basis DCC Entries Consolidated Current assets Cash and cash equivalents $564 $26 $ $590 Accounts receivable Trade 1,479 1,479 Other 380 262 (263) 379 Inventories 977 977 Other current assets 234 151 (129) 256 Total current assets 3,634 439 (392) 3,681 Investment in leases 406 (129) 277 Investments and other assets 3,310 402 (687) 3,025 Property, plant and equipment, net 1,969 8 129 2,106 Total assets $8,913 $1,255 $(1,079) $9,089 Liabilities and Shareholders' Equity Current liabilities Notes payable $504 $57 $(256) $305 Accounts payable 1,407 1,407 Other current liabilities 1,212 63 (137) 1,138 Total current liabilities 3,123 120 (393) 2,850 Long-term debt 1,604 441 2,045 Deferred employee benefits and other noncurrent liabilities 1,683 334 (328) 1,689 Minority interest 124 2 126 Shareholders' equity 2,379 358 (358) 2,379 Total liabilities and shareholders' equity $8,913 $1,255 $(1,079) $9,089 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 Dana with DCC on Equity Elimination Dana Assets Basis DCC Entries Consolidated Current assets Cash and cash equivalents $619 $15 $ $634 Accounts receivable Trade 1,266 1,266 Other 445 208 (209) 444 Inventories 907 907 Other current assets 192 137 (112) 217 Total current assets 3,429 360 (321) 3,468 Investment in leases 411 (130) 281 Investments and other assets 3,337 467 (659) 3,145 Property, plant and equipment, net 2,015 8 130 2,153 Total assets $8,781 $1,246 $(980) $9,047 Liabilities and Shareholders' Equity Current liabilities Notes payable $289 $68 $(202) $155 Accounts payable 1,317 1,317 Other current liabilities 1,269 67 (119) 1,217 Total current liabilities 2,875 135 (321) 2,689 Long-term debt 1,611 443 2,054 Deferred employee benefits and other noncurrent liabilities 1,739 316 (309) 1,746 Minority interest 121 2 123 Shareholders' equity 2,435 350 (350) 2,435 Total liabilities and shareholders' equity $8,781 $1,246 $(980) $9,047 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 Impact on Net Debt (Unaudited) (in millions) Three Months Ended March 31, 2005 Dana with DCC on Equity Elimination Dana Basis DCC Entries Consolidated Sources Net income $18 $8 $(8) $18 Depreciation 78 5 83 Asset sales 19 16 35 Working capital increase (250) (7) (1) (258) (135) 22 (9) (122) Uses Capital spend (70) (70) Dividends (18) (18) Restructuring cash payments (8) (8) Net changes in other accounts (36) 3 63 30 (132) 3 63 (66) Cash change in net debt $(267) $25 $54 $(188) Analysis of components of increase (decrease) in net debt: Net change in short-term debt $218 $ $(54) $164 Net payments on long-term debt (6) (14) (20) Change in cash 55 (11) 44 Cash change in net debt 267 (25) (54) 188 Non-cash changes in net debt (4) 1 (3) Total change in net debt $263 $(24) $(54) $185 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 Impact on Net Debt (Unaudited) (in millions) Three Months Ended March 31, 2004 Dana with DCC on Equity Elimination Dana Basis DCC Entries Consolidated Sources Net income $65 $9 $(9) $65 Depreciation 83 10 93 Asset sales 14 89 103 Working capital increase (180) (8) (11) (199) (18) 100 (20) 62 Uses Capital spend (76) (3) (79) Dividends (18) (18) Restructuring cash payments (23) (23) Net changes in other accounts 14 (22) 20 12 (103) (25) 20 (108) Cash change in net debt $(121) $75 $- $(46) Analysis of components of increase (decrease) in net debt: Net change in short-term debt $145 $(30) $ $115 Net payments on long-term debt (237) (17) (254) Change in cash - continuing operations 213 (28) 185 Cash change in net debt 121 (75) - 46 Non-cash changes in net debt 16 (27) (11) Total change in net debt $137 $(102) $- $35 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. Investor Relations Dana Corporation Quarterly Financial Information (Unaudited) For the Quarter Ended March 31, 2005 (in millions) Inter- Segment External Sales Sales EBIT 05 04 05 04 05 04 Automotive Systems Group $1,810 $1,712 $37 $45 $59 $103 Heavy Vehicle Technologies and Systems Group 674 578 8 9 40 39 Dana Commercial Credit Other 4 21 1 2 (59) (59) Continuing Operations 2,488 2,311 46 56 40 83 Discontinued Operations 25 Unusual Items Excluded from Performance Measurement (2) (1) Consolidated $2,488 $2,311 $46 $56 $38 $107 North America $1,586 $1,594 $27 $27 $24 $83 Europe 532 438 42 30 38 30 South America 209 130 59 44 22 18 Asia Pacific 161 149 5 1 10 8 Dana Commercial Credit Other (54) (56) Continuing Operations 2,488 2,311 133 102 40 83 Discontinued Operations 25 Unusual Items Excluded from Performance Measurement (2) (1) Consolidated $2,488 $2,311 $133 $102 $38 $107 Information for Discontinued Operations 510 4 Investor Relations Dana Corporation Quarterly Financial Information (Unaudited) For the Quarter Ended March 31, 2005 (in millions) Operating PAT Net Profit Net Assets 05 04 05 04 05 04 Automotive Systems Group $40 $71 $5 $40 $3,169 $3,031 Heavy Vehicle Technologies and Systems Group 25 24 8 10 746 637 Dana Commercial Credit 6 7 6 7 358 301 Other (53) (52) (1) (7) 9 (29) Continuing Operations 18 50 18 50 4,282 3,940 Discontinued Operations 13 13 Unusual Items Excluded from Performance Measurement 2 2 Consolidated $18 $65 $18 $65 $4,282 $3,940 North America $12 $54 $(16) $25 $2,308 $2,165 Europe 26 22 16 14 1,223 1,136 South America 14 11 10 9 411 312 Asia Pacific 7 5 3 2 206 183 Dana Commercial Credit 6 7 6 7 358 301 Other (47) (49) (1) (7) (224) (157) Continuing Operations 18 50 18 50 4,282 3,940 Discontinued Operations 13 13 Unusual Items Excluded from Performance Measurement 2 2 Consolidated $18 $- $65 $18 $65 $4,282 $3,940 Information for Discontinued Operations 945 FOR MORE INFORMATION (http://www.dana.com/) - Dial-For-Dana U.S. or Canada 800-537-8823; OH 800-472-8810 E-Mail or Dana Investor Relations 419-535-4635 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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