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Dana Corporation Reports Stronger First-Quarter Results Increased Volume and Cost Reductions Drive Improvement TOLEDO, Ohio, April 21 /PRNewswire-FirstCall/ -- Dana Corporation today announced that its 2004 first-quarter sales were $2.3 billion compared to $2.0 billion during the same period last year. Net income for the quarter totaled $63 million, or 42 cents per share, compared to net income of $41 million, or 28 cents per share, for the period in 2003. First-quarter 2004 net income included $2 million of unusual net gains on the sale of Dana Credit Corporation (DCC) assets, while income during the same period last year included $10 million in comparable gains. (Logo: http://www.newscom.com/cgi-bin/prnh/19990903/DANA ) "We are very pleased with the continued progress demonstrated by our first-quarter performance," said Dana Chairman and CEO Mike Burns. "Our profit improvement was driven by a combination of higher production volumes, new business programs, and the continued realization of benefits from our restructuring and other cost-reduction efforts." First-quarter sales were up 17 percent over the comparable period last year. While 2004 sales benefited from $125 million of currency translation, the majority of the sales increase was driven by new business programs and higher production volumes in the principal markets served by Dana, particularly the North American heavy-truck sector. Profit from continuing operations -- those operations not included in the company's proposed divestiture of its aftermarket business -- was $50 million, or 33 cents per share, in the first quarter of 2004, compared to $36 million or 25 cents per share during the first quarter of 2003. Excluding the unusual gains from DCC asset sales, this represents an 85 percent quarter-over-quarter improvement. "Our improved profitability was evident in a higher operating margin," Mr. Burns said. "In fact, our margin improvement would have been even better if not for continued launch-related costs in our structures group. While these costs are not yet fully behind us, we took further actions to address the remaining issues in the first quarter and are confident that we will see improvement in the second quarter." Aftermarket Business Performance Improved Dana also saw improved results from its automotive aftermarket business, which is accounted for as a "discontinued operation" and targeted for divestiture by June 30. Bottom-line performance in the aftermarket business currently held for sale improved from $10 million in the first quarter of 2003 to $13 million in the first quarter of this year. Income from discontinued operations reported for the first quarter of 2003 included a $5 million loss from the company's engine management business, which was sold in June 2003. Cash Flow Improved Dana Chief Financial Officer Bob Richter said, "While we experienced our normal seasonal build-up in working capital, the increase in net debt was less than during the comparable period last year, due to stronger earnings and the receipt of more than $70 million in tooling reimbursements from our customers. "During the quarter, we paid off $231 million in maturing bonds," he added. "So, exclusive of DCC's obligations, our next scheduled maturity of long-term debt does not occur until 2008. "DCC also reduced its debt as it continues to work down its portfolio through scheduled payments and asset sales," he added. "During the first quarter, the DCC portfolio was reduced by another $100 million, at a net gain of $2 million. This brings the total asset reduction since we began the DCC asset sale program in October 2001 to $940 million, with a cumulative net after-tax gain of $68 million." Business Unit Combination Leverages Resources for Automotive Customers Dana recently announced the combination of its Automotive Systems and Engine and Fluid Management groups into a single business unit retaining the Automotive Systems Group name. The move is designed to better leverage Dana's resources to benefit its automotive customers, while also enhancing its own focus on profitable growth with these customers. The new Automotive Systems Group provides Dana with a focused $5.9 billion business integrating the company's product offerings to light-vehicle original equipment manufacturers. All of Dana's segment disclosures now reflect the combination of these business units. Dana Reiterates Full-Year EPS Guidance "While we are pleased with our continued progress, we recognize that we still have much work to do," Mr. Burns said. "Specifically, we will increase our customer focus to achieve top-line growth and better leverage our capabilities in areas like purchasing to achieve greater economies of scale. "The first quarter was not without its challenges, including launch costs and industry-wide steel surcharges," he added. "And yet, we met our expectations in spite of these challenges. There will always be bumps in the road, but we remain committed to achieving our goal of earnings per share of at least $1.90 in 2004." 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 1 p.m. today. To access this recording, please dial (800) 537-8823. A webcast replay of the call will be available after 3 p.m. today and will be accessible via the Dana web site. Dana Corporation is a global leader in the design, engineering, and manufacture of value-added products and systems for automotive, commercial, and off-highway vehicles. Delivering on a century of innovation, the company's continuing operations employ approximately 45,000 people worldwide dedicated to advancing the science of mobility. Founded in 1904 and based in Toledo, Ohio, Dana operates technology, manufacturing, and customer-service facilities in 30 countries. Sales from continuing operations totaled $7.9 billion in 2003. 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; the cyclical nature of the global vehicular industry; changes in business relationships with our major customers and in the timing, size and continuation of their and our programs; the ability of our customers and suppliers to achieve their projected sales and production levels; competitive pressures on our sales and pricing; increases in production or material costs that cannot be recouped in product pricing; the continued success of our cost reduction and cash management programs and of our long-term transformation strategy for the company; the success and timing of the contemplated divestiture of the automotive aftermarket business; 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 Percent 2004 2003 Change Sales $2,311 $1,976 17% Income from continuing operations $50 $36 39% Income from discontinued operations 13 5 160% Net income $63 $41 54% Income from continuing operations $50 $36 39% Less - gains from sales of DCC assets (2) (10) -80% Income from continuing operations excluding unusual items $48 $26 85% Components of discontinued operations: Income from automotive aftermarket business $13 $10 30% Loss from engine management business (5) -100% Income from discontinued operations $13 $5 160% Diluted earnings per share: Income from continuing operations $0.33 $0.25 32% Income from discontinued operations 0.09 0.03 200% Net income $0.42 $0.28 50% Income from continuing operations, excluding unusual items $0.32 $0.18 78% Income from discontinued operations 0.09 0.03 200% Net income, excluding unusual items 0.41 0.21 95% Unusual items 0.01 0.07 Net income $0.42 $0.28 50% Dana Corporation Condensed Statement of Income (Unaudited) (in millions, except per share amounts) Three Months Ended March 31 2004 2003 Net sales $2,311 $1,976 Revenue from lease financing and other income 14 29 2,325 2,005 Costs and expenses Cost of sales 2,105 1,801 Selling, general and administrative expenses 136 136 Interest expense 51 59 2,292 1,996 Income before income taxes 33 9 Income tax benefit 3 12 Minority interest (3) (2) Equity in earnings of affiliates 17 17 Income from continuing operations 50 36 Income from discontinued operations 13 5 Net income $63 $41 Basic earnings per share Income from continuing operations $0.34 $0.25 Income from discontinued operations 0.09 0.03 Net income $0.43 $0.28 Diluted earnings per share Income from continuing operations $0.33 $0.25 Income from discontinued operations 0.09 0.03 Net income $0.42 $0.28 Average shares outstanding - For Basic EPS 148 148 For Diluted EPS 150 149 Dana Corporation Condensed Balance Sheet (Unaudited) (in millions) March 31 December 31 Assets 2004 2003 Current assets Cash and cash equivalents $546 $731 Accounts receivable Trade 1,334 1,048 Other 296 326 Inventories 736 743 Assets of discontinued operations 1,283 1,254 Other current assets 387 431 Total current assets 4,582 4,533 Investment in leases 530 622 Investments and other assets 2,243 2,252 Property, plant and equipment, net 2,182 2,210 Total assets $9,537 $9,617 Liabilities and Shareholders' Equity Current liabilities Notes payable $361 $493 Accounts payable 1,242 1,076 Liabilities of discontinued operations 328 307 Other current liabilities 1,033 1,089 Total current liabilities 2,964 2,965 Long-term debt 2,588 2,605 Deferred employee benefits and other noncurrent liabilities 1,786 1,901 Minority interest 99 96 Shareholders' equity 2,100 2,050 Total liabilities and shareholders' equity $9,537 $9,617 Dana Corporation Condensed Statement of Cash Flows (Unaudited) (in millions) Three Months Ended March 31 2004 2003 Net income $63 $41 Depreciation and amortization 93 103 Asset impairment 1 6 Gain on divestitures and asset sales (4) (11) Working capital increase (222) (237) Other 7 (13) Net cash flows - operating activities (62) (111) Purchases of property, plant and equipment (79) (76) Payments received on leases 3 9 Net loan repayments from customers 1 2 Asset sales 103 104 Other 1 6 Net cash flows - investing activities 29 45 Net change in short-term debt 115 87 Proceeds from long-term debt 5 Payments on long-term debt (259) (6) Dividends paid (18) (1) Other 5 (1) Net cash flows - financing activities (152) 79 Net change in cash and cash equivalents (185) 13 Cash and cash equivalents - beginning of period 731 571 Cash and cash equivalents - end of period $546 $584 Dana Corporation (Including Dana Credit Corporation on an Equity Basis) Condensed Statement of Income (Unaudited) (in millions) Three Months Ended March 31 2004 2003 Net sales $2,311 $1,976 Other income 7 13 2,318 1,989 Costs and expenses Cost of sales 2,114 1,814 Selling, general and administrative expenses 122 116 Interest expense 38 42 2,274 1,972 Income before income taxes 44 17 Income tax expense (11) (6) Minority interest (3) (2) Equity in earnings of affiliates 20 27 Income from continuing operations 50 36 Income from discontinued operations 13 5 Net income $63 $41 Dana Corporation (Including Dana Credit Corporation on an Equity Basis) Condensed Balance Sheet (Unaudited) (in millions) March 31 December 31 Assets 2004 2003 Current assets Cash and cash equivalents $451 $664 Accounts receivable Trade 1,334 1,048 Other 280 300 Inventories 736 743 Assets of discontinued operations 1,283 1,254 Other current assets 364 399 Total current assets 4,448 4,408 Investments and other assets 2,577 2,580 Property, plant and equipment, net 1,992 2,014 Total assets $9,017 $9,002 Liabilities and Shareholders' Equity Current liabilities Notes payable $172 $260 Accounts payable 1,242 1,076 Liabilities of discontinued operations 328 307 Other current liabilities 1,200 1,235 Total current liabilities 2,942 2,878 Long-term debt 2,099 2,087 Deferred employee benefits and other noncurrent liabilities 1,779 1,893 Minority interest 97 94 Shareholders' equity 2,100 2,050 Total liabilities and shareholders' equity $9,017 $9,002 Dana Corporation (Including Dana Credit Corporation on an Equity Basis) Cash Flow Impact on Net Debt (Unaudited) (in millions) Three Months Ended March 31 2004 2003 Sources Net income $63 $41 Depreciation 83 86 Asset sales 14 24 Working capital decrease (increase) (180) (192) (20) (41) Uses Capital spend (76) (72) Dividends (18) (1) Restructuring cash payments (23) (44) Net changes in other accounts 16 (8) (101) (125) Cash change in net debt $(121) $(166) Dana Corporation Condensed Consolidating Statement of Income (Unaudited) (in millions) Three Months Ended March 31, 2004 Dana with DCC on Elimi- Dana Equity nation Consoli- Basis DCC Entries dated Net sales $2,311 $ $ $2,311 Other income 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 122 20 (6) 136 Interest expense 38 13 51 2,274 33 (15) 2,292 Income (loss) before income taxes 44 (11) - 33 Income tax benefit (expense) (11) 14 3 Minority interest (3) (3) Equity in earnings of affiliates 20 6 (9) 17 Income from continuing operations 50 9 (9) 50 Income from discontinued operations 13 13 Net income $63 $9 $(9) $63 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, 2003 Dana with DCC on Elimi- Dana Equity nation Consoli- Basis DCC Entries dated Net sales $1,976 $ $ $1,976 Other income 13 38 (22) 29 1,989 38 (22) 2,005 Costs and expenses Cost of sales 1,814 (13) 1,801 Selling, general and administrative expenses 116 29 (9) 136 Interest expense 42 17 59 1,972 46 (22) 1,996 Income (loss) before income taxes 17 (8) - 9 Income tax benefit (expense) (6) 18 12 Minority interest (2) (2) Equity in earnings of affiliates 27 6 (16) 17 Income from continuing operations 36 16 (16) 36 Income from discontinued operations 5 5 Net income $41 $16 $(16) $41 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, 2004 Dana with DCC on Elimi- Dana Equity nation Consoli- Assets Basis DCC Entries dated Current assets Cash and cash equivalents $451 $95 $ $546 Accounts receivable Trade 1,334 1,334 Other 280 37 (21) 296 Inventories 736 736 Asset of discontinued operations 1,283 1,283 Other current assets 364 204 (181) 387 Total current assets 4,448 336 (202) 4,582 Investment in leases 701 (171) 530 Investments and other assets 2,577 551 (885) 2,243 Property, plant and equipment, net 1,992 19 171 2,182 Total assets $9,017 $1,607 $(1,087) $9,537 Liabilities and Shareholders' Equity Current liabilities Notes payable $172 $189 $ $361 Accounts payable 1,242 1,242 Liabilities of discontinued operations 328 328 Other current liabilities 1,200 35 (202) 1,033 Total current liabilities 2,942 224 (202) 2,964 Long-term debt 2,099 489 2,588 Deferred employee benefits and other noncurrent liabilities 1,779 592 (585) 1,786 Minority interest 97 2 99 Shareholders' equity 2,100 300 (300) 2,100 Total liabilities and shareholders' equity $9,017 $1,607 $(1,087) $9,537 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, 2003 Dana with DCC on Elimi- Dana Equity nation Consoli- Assets Basis DCC Entries dated Current assets Cash and cash equivalents $664 $67 $ $731 Accounts receivable Trade 1,048 1,048 Other 300 26 326 Inventories 743 743 Assets of discontinued operations 1,254 1,254 Other current assets 399 212 (180) 431 Total current assets 4,408 305 (180) 4,533 Investment in leases 802 (180) 622 Investments and other assets 2,580 559 (887) 2,252 Property, plant and equipment, net 2,014 16 180 2,210 Total assets $9,002 $1,682 $(1,067) $9,617 Liabilities and Shareholders' Equity Current liabilities Notes payable $260 $233 $ $493 Accounts payable 1,076 1,076 Liabilities of discontinued operations 307 307 Other current liabilities 1,235 34 (180) 1,089 Total current liabilities 2,878 267 (180) 2,965 Long-term debt 2,087 518 2,605 Deferred employee benefits and other noncurrent liabilities 1,893 604 (596) 1,901 Minority interest 94 2 96 Shareholders' equity 2,050 291 (291) 2,050 Total liabilities and shareholders' equity $9,002 $1,682 $(1,067) $9,617 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, 2004 Dana with DCC on Elimi- Dana Equity nation Consoli- Basis DCC Entries dated Sources Net income (loss) $63 $9 $(9) $63 Depreciation 83 10 93 Asset sales 14 89 103 Working capital decrease (increase) (180) (8) (11) (199) (20) 100 (20) 60 Uses Capital spend (76) (3) (79) Dividends (18) (18) Restructuring cash payments (23) (23) Net changes in other accounts 16 (22) 20 14 (101) (25) 20 (106) 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. Dana Corporation Consolidating Cash Flow Impact on Net Debt (Unaudited) (in millions) Three Months Ended March 31, 2003 Dana with DCC on Elimi- Dana Equity nation Consoli- Basis DCC Entries dated Sources Net income $41 $16 $(16) $41 Depreciation 86 17 103 Asset sales 24 80 104 Working capital increase (192) (8) 7 (193) (41) 105 (9) 55 Uses Capital spend (72) (5) 1 (76) Dividends (1) (1) Restructuring cash payments (44) (44) Net changes in other accounts (8) (2) 8 (2) (125) (7) 9 (123) Cash change in net debt $(166) $98 $- $(68) Analysis of components of increase (decrease) in net debt: Net change in short-term debt $(157) $70 $ $(87) Payments on long term debt 6 6 Change in cash - continuing operations (9) 22 13 Cash change in net debt (166) 98 - (68) Non-cash changes in net debt (8) (8) Total change in net debt $(174) $98 $- $(76) 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) Q1 - 2004 (in millions) Inter-Segment External Sales Sales 04 03 04 03 Automotive Systems Group $1,712 $1,507 $45 $36 Heavy Vehicle Technologies and Systems Group 578 455 9 21 Dana Commercial Credit Other 21 14 2 1 Continuing Operations 2,311 1,976 56 58 Discontinued Operations Unusual Items Excluded from Performance Measurement Consolidated $2,311 $1,976 $56 $58 North America $1,594 $1,409 $27 $24 Europe 438 361 30 19 South America 130 86 44 38 Asia Pacific 149 120 1 1 Dana Commercial Credit Other Continuing Operations 2,311 1,976 102 82 Discontinued Operations Unusual Items Excluded from Performance Measurement Consolidated $2,311 $1,976 $102 $82 Information for Discontinued Operations 510 547 4 4 See Notes 22 in Dana's 2003 Annual Report for further information ( WWW.Dana.Com ) Investor Relations Dana Corporation Quarterly Financial Information (Unaudited) Q1 - 2004 (in millions) EBIT Operating PAT 04 03 04 03 Automotive Systems Group $103 $76 $71 $57 Heavy Vehicle Technologies and Systems Group 39 25 24 15 Dana Commercial Credit 7 6 Other (61) (45) (54) (52) Continuing Operations 81 56 48 26 Discontinued Operations 25 12 13 5 Unusual Items Excluded from Performance Measurement (1) - 2 10 Consolidated $105 $68 $63 $41 North America $83 $54 $54 $32 Europe 30 29 22 25 South America 18 8 11 5 Asia Pacific 8 11 5 7 Dana Commercial Credit 7 6 Other (58) (46) (51) (49) Continuing Operations 81 56 48 26 Discontinued Operations 25 12 13 5 Unusual Items Excluded from Performance Measurement (1) - 2 10 Consolidated $105 $68 $63 $41 Information for Discontinued Operations See Notes 22 in Dana's 2003 Annual Report for further information ( WWW.Dana.Com ) Investor Relations Dana Corporation Quarterly Financial Information (Unaudited) Q1 - 2004 (in millions) Net Profit Net Assets 04 03 04 03 Automotive Systems Group $39 $27 $3,031 $2,888 Heavy Vehicle Technologies and Systems Group 10 4 637 631 Dana Commercial Credit 7 6 301 287 Other (8) (11) (29) 18 Continuing Operations 48 26 3,940 3,824 Discontinued Operations 13 5 Unusual Items Excluded from Performance Measurement 2 10 Consolidated $63 $41 $3,940 $3,824 North America $24 $5 $2,165 $2,209 Europe 14 18 1,136 993 South America 9 3 312 269 Asia Pacific 2 4 183 164 Dana Commercial Credit 7 6 301 287 Other (8) (10) (157) (98) Continuing Operations 48 26 3,940 3,824 Discontinued Operations 13 5 Unusual Items Excluded from Performance Measurement 2 10 Consolidated $63 $41 $3,940 $3,824 Information for Discontinued Operations 945 1,056 See Notes 22 in Dana's 2003 Annual Report for further information ( WWW.Dana.Com ) FOR MORE INFORMATION ( 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 http://photoarchive.ap.org/ DATASOURCE: Dana Corporation CONTACT: Michelle 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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