Dana Corporation
3rd Quarter Conference Call
October 24, 2003
Exhibit 99.1
Forward-Looking Statements
Statements herein about our forecasts, beliefs, and expectations constitute
“forward-looking” statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements are 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 we anticipate or project due to a number of factors. These
factors include the impact of 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;
the performance of the global aftermarket sector; 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 impact of our collective bargaining
negotiations and those of our customers in the North American light vehicle
sector; the continued success of our cost reduction and cash management
programs and our long-term transformation strategy; and costs associated
with ArvinMeritor’s tender offer for our common stock. Additional factors are
contained in our public filings with the SEC. We do not undertake to update
any forward-looking statements contained herein.
© Dana Corporation, 2003
Agenda
Operational Review
Third-Quarter Performance
Increased Dividend
Future Outlook
Wrap-Up
Q & A Session
Sales
Financial Summary
Q3 -2003
$ 0.02
$ 2.4 billion
$ 2.4 billion
Net Income
$ 61 million
$ 4 million
Earnings Per Share
$ 0.41
Q3 -2002
Segment Comparison – 3rd Qtr
Sales
OPAT
2003
2003
2002
2002
Chg.
Chg.
%
%
%
%
%
N/M
N/M
N/M: Not Meaningful
N/M
$
$
$
$
$
$
$
$
$
$
$
$4
Automotive
928
859
8
35
28
25
Aftermarket
574
562
2
26
26
0
Engine & Fluid
482
498
(3)
18
18
0
Heavy Vehicle
488
494
(1)
23
20
15
DCC
6
7
(14)
Other
(62)
(57)
9
(65)
(61)
7
Results from Cont.
Operations
2,410
2,356
2
43
38
13
Discontinued Ops.
6
Unusual Items
18
(40)
Total
2,410
2,356
2
61
Projected Net Incremental Business
($ Millions)
SBU
2004
2003
2006
2005
2007
ASG
AAG
EFMG
HVTSG
TOTAL
195
20
85
195
495
545
30
125
190
890
720
35
170
175
1,100
685
35
215
240
1,175
635
35
235
250
1,155
Prior Qtr.
905
495
1,230
1,100
1,270
Estimates based on Dana’s review of the projected production schedules of our customers
($ Millions)
2003
2002
Income Statement
With DCC on an Equity Basis
2003
2002
YTD
Third Quarter
Net sales
2,410
$
2,356
$
7,393
$
7,253
$
Other income
33
20
71
47
2,443
2,376
7,464
7,300
Cost of sales
2,176
2,118
6,658
6,457
SG&A expense
156
174
529
558
Restructuring
34
122
Interest expense
40
42
123
131
2,372
2,368
7,310
7,268
Income before taxes
71
8
154
32
Income taxes
(25)
(12)
(58)
(46)
Minority interest
(2)
(4)
(6)
(13)
Equity in affiliate earnings
17
7
72
71
Discontinued operations
5
(8)
3
Accounting change effect
(220)
Net income (loss)
61
4
154
(173)
$
$
$
$
Cash Flow Statement
With DCC on an Equity Basis
2003
2002
YTD
($ Millions)
Sources
Net income (loss)
154
(173)
$
Accounting change effect
220
Depreciation
249
291
Asset sales
7
12
Divestitures
145
41
Working capital increase
(219)
(15)
336
376
Uses
Capital spend
(209)
(186)
Dividends
(5)
(5)
Acquisitions
(31)
Net change in other accounts
(19)
55
(233)
(167)
Restructuring plan
After-tax charges
119
Cash payments
(92)
(108)
Proceeds from asset sales
37
23
(55)
34
Cash decrease in net debt
48
243
$
$
$
Working Capital Comparison
With DCC on an Equity Basis
($ Millions)
2003
2002
YTD
Increase through Sept. 30
(219)
(15)
Q1 2002 tax refund
-
(152)
Adjusted increase through Sept. 30
(219)
(167)
Capital Structure
With DCC on an Equity Basis
12/31/02
Operations
9/30/03
Other
($ Millions)
Short-term debt
53
52
254
359
Long-term debt
2,462
(102)
(270)
2,090
Borrowings
2,515
(50)
(16)
2,449
Cash
551
(2)
1
550
Net debt
1,964
(48)
(17)
1,899
Equity
1,482
150
218
1,850
Net debt/capital
57.0%
50.7%
$
$
$
$
$
$
$
$
$
$
$
$
September 30, 2003 Debt Portfolio
With DCC on an Equity Basis
Maturities do not reflect swap valuation adjustments
23
262
100
Committed Drawn Available
September 30, 2003 Liquidity
With DCC on an Equity Basis
5-year bank facility
$400
$
-
$
400
Accts receivable program
400
100
300
Total short-term
committed facilities
$800
$ 100
$
700
Plus: Cash
550
Total
$1,250
12/01 Total Portfolio Assets - $2,200
DCC Portfolio Analysis
($ Millions)
Value-Added Services
Retained
Real Estate
Capital Markets
9/03 Total Portfolio Assets - $1,420
Net of certain non-recourse debt
2003 Full-Year Guidance
Net Income
In
Millions
January
$ 180-200
February
$ 185-205
April
$ 195-215
$ 1.41-1.48
October
$ 210-220
($ Millions, except per-share amounts)
Date
Provided
EPS
$ 1.21-1.34
$ 1.24-1.38
$ 1.31-1.44
2003 Cash Projection
With DCC on an Equity Basis
($ Millions)
Sources:
Net income
210
Depreciation
330
Working capital
150
Divestiture proceeds
145
835
Less:
Capital spend
(315)
Dividends
(15)
505
Cash payments for restructuring
$
$
$
$
100-130
Net Income $300 Million
EPS $2.00
Re-affirming 2004 Guidance
Dana Consolidated
Return On Invested Capital (ROIC)
(Last 12 Months Total Income/ 5-Quarter Rolling Average Invested Capital)
Return excludes unusual items. Invested capital reflects DCC on an equity basis.
A Word on ArvinMeritor
Greater Shareholder Value Created Under Dana’s Strategic Plan
Offer is inadequate
Offer is opportunistic
Macro environment improving every month
Our business momentum is substantial and
accelerating
Reflected in earnings and dividend increase
Offer is highly conditional
No announced progress on financing
Serious antitrust concerns: FTC has issued a
“second request”
Market Reaction Since July 7, 2003
07/07/03
10/23/03
S&P Auto Parts Index ArvinMeritor
ARM: -20%
S&P Auto Parts: +14%
Performance Flywheel
Core
Content
Capital
Efficiency
Innovation
ROIC
Gross Margin
Customer
Shareholder
Value
Shareholder
Value
Shareholder
Value
Shareholder
Value
Increased Dividend Declared
Dividend of 6 cents per share payable
Dec. 15, 2003 announced on October 21
Confidence in company’s performance
and direction
Continued success in executing restructuring plan
Approaching what could be considered
“investment-grade” performance
Expectation of continued improvement in earnings
and cash flow
Dividends are an important component of total return to shareholders
2004 Outlook
Improved top-line
performance
Heavy duty volumes
New business wins
Bottom-line and cash flow
improvements
Restructuring complete
Substantial operating
leverage
Leverage off of start-up
costs incurred in 2003
Long-Term Objectives
Key Drivers in 2004 Earnings
Annual top-line growth
6% to 7%
Continued margin
improvement
Balance sheet
Return to investment
grade credit rating
Net Income guidance of $300 million (~ $2.00 per share) for 2004
In Summary …
Strong third-quarter results
Earnings significantly improved over 2002
2003 full-year net income forecast raised
to range of $210 to $220 million
Net debt-to-capital ratio reduced to 50.7%
Increased fourth-quarter dividend to
6 cents per share
Reaffirming 2004 EPS guidance of $2.00
We are far from finished
Quickening the pace
Eliminating waste
Committed to growing our company
Questions?
Final Thoughts
Third-quarter earnings significantly
improved over 2002
2003 full-year net income forecast raised
to range of $210 to $220 million
Net debt-to-capital ratio reduced to 50.7%
Increased fourth-quarter dividend to
6 cents per share
Reaffirming 2004 EPS guidance of $2.00
Supplemental Data
Details of Restructuring Charges & Credits by SBU
Nine Months Ended September 30, 2003
Three Months Ended September 30, 2003
Restructuring
Restructuring
Reversals of
Disposition
Provisions
Accruals
Gain (Loss)
Automotive
3
-
-
Aftermarket
5
-
-
Engine & Fluid
1
1
-
Heavy Vehicle
6
16
1
Other
3
-
-
18
17
1
Restructuring
Restructuring
Reversals of
Disposition
Provisions
Accruals
Gain (Loss)
Automotive
10
9
1
Aftermarket
6
-
-
Engine & Fluid
4
1
1
Heavy Vehicle
7
17
2
Other
3
-
-
30
27
4
$
$
$
$
$
$
$
$
$
$
$
$
2003
2002
2003
2002
YTD
Third Quarter
Supplemental Data
Change in Working Capital - DCC on an Equity Basis
($Millions)
Balance at beginning of period
1,101
1,091
830
1,116
Cash from operations:
Incr (decr) in accts rec.
(21)
(98)
203
298
Incr (decr) in inventory
12
52
(10)
17
Incr (decr) in other assets
(11)
(3)
33
13
Decr (incr) in curr liabs
17
88
(7)
(313)
Net from operations
(3)
39
219
15
Restructuring
28
(10)
92
(11)
Divestitures
6
(71)
Exchange & other non-cash
(49)
(29)
7
(23)
Balance at end of period
1,077
1,097
1,077
1,097
$
$
$
$
$
$
$
$
Dana w/DCC
on Equity Basis
December 31, 2002
Capital Structure
DCC
Elimination
Entries
Dana
Consolidated
Debt
53
2,462
2,515
551
1,964
1,482
57.0
234
753
987
20
967
271
78.1
-
-
-
-
-
287
3,215
3,502
571
2,931
1,482
66.4
Short-term debt
Long-term debt
Borrowings
Cash
Net debt
Equity
Net debt/capital
(271)
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.
($ in Millions)
Dana w/DCC
on Equity Basis
September 30, 2003
Capital Structure
DCC
Elimination
Entries
Dana
Consolidated
Debt
359
2,090
2,449
550
1,899
1,850
50.7
225
563
788
86
702
323
68.5
-
-
-
-
-
(323)
584
2,653
3,237
636
2,601
1,850
58.4
Short-term debt
Long-term debt
Borrowings
Cash
Net debt
Equity
Net debt/capital
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.
($ in Millions)
Dana w/DCC
on Equity Basis
Three Months Ended September 30, 2003
Change in Working Capital
DCC
Elimination
Entries
Dana
Consolidated
1,101
(21)
12
(11)
17
(3)
190
3
-
(8)
9
4
-
4
-
-
-
4
1,291
(14)
12
(19)
26
5
Balance at beginning of period
Cash from operations:
Increase (decrease) in receivables
Increase (decrease) in inventory
Net from operations
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.
Increase (decrease) in other assets
Decrease (increase) in current liabilities
Restructuring
Divestitures
Exchange and other non-cash
Balance at end of period
28
-
(49)
1,077
-
-
(2)
192
-
-
(4)
-
28
-
(55)
1,269
($ in Millions)
Dana w/DCC
on Equity Basis
Nine Months Ended September 30, 2003
Change in Working Capital
DCC
Elimination
Entries
Dana
Consolidated
830
203
(10)
33
(7)
219
179
(104)
-
106
6
8
1
-
-
-
(2)
(2)
1,010
99
(10)
139
(3)
225
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.
92
(71)
7
1,077
-
-
5
192
-
-
1
-
92
(71)
13
1,269
($ in Millions)
Balance at beginning of period
Cash from operations:
Increase (decrease) in receivables
Increase (decrease) in inventory
Net from operations
Increase (decrease) in other assets
Decrease (increase) in current liabilities
Restructuring
Divestitures
Exchange and other non-cash
Balance at end of period
Dana w/DCC
on Equity Basis
Three Months Ended September 30, 2002
Change in Working Capital
DCC
Elimination
Entries
Dana
Consolidated
1,091
(98)
52
(3)
88
39
106
1
-
(4)
5
2
1
4
-
-
-
4
1,198
(93)
52
(7)
93
45
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.
(10)
6
(29)
1,097
-
-
12
120
-
-
(12)
(7)
(10)
6
(29)
1,210
($ in Millions)
Balance at beginning of period
Cash from operations:
Increase (decrease) in receivables
Increase (decrease) in inventory
Net from operations
Increase (decrease) in other assets
Decrease (increase) in current liabilities
Restructuring
Divestitures
Exchange and other non-cash
Balance at end of period
Dana w/DCC
on Equity Basis
Nine Months Ended September 30, 2002
Change in Working Capital
DCC
Elimination
Entries
Dana
Consolidated
1,116
298
17
13
(313)
15
109
(18)
-
22
10
14
4
(7)
-
-
-
(7)
1,229
273
17
35
(303)
22
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.
(11)
-
(23)
1,097
-
-
(3)
120
-
-
(4)
(7)
(11)
-
(30)
1,210
($ in Millions)
Balance at beginning of period
Cash from operations:
Increase (decrease) in receivables
Increase (decrease) in inventory
Net from operations
Increase (decrease) in other assets
Decrease (increase) in current liabilities
Restructuring
Divestitures
Exchange and other non-cash
Balance at end of period