Dana Corporation reports second-quarter earnings

Toledo, Ohio, July 22 -- - Announces conference call at 8:30 a.m. on Wednesday, July 23

Dana Corporation today announced second-quarter sales of US$2.5 billion and net income of US$52 million, or 35 cents per share. This compares to sales of US$2.6 billion and net income of US$52 million during the same period last year.

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"We entered the quarter knowing that we faced ongoing challenges within our Automotive Aftermarket Group and start-up costs associated with program launches in our Structural Solutions group," said Dana Chairman and CEO Joe Magliochetti. "Nevertheless, the benefits of the company's restructuring program helped us exceed consensus earnings estimates for the quarter.

"During the second quarter, we achieved several important milestones. The divestiture of our Engine Management operations was significant as we further sharpened our focus on our core disciplines," he said. "We also continued our strong growth with global vehicle manufacturers by securing strategically important new light-axle and driveshaft business with Toyota in South Africa."

Net income for the second quarter of 2003 included a US$7.5 million after- tax gain from the continuing divestiture of assets by Dana Credit Corporation (DCC). This gain was partially offset by a US$2.5 million additional after-tax charge associated with the sale of a significant portion of Dana's Engine Management operations to Standard Motor Products, Inc.

The company also realized an after-tax profit of approximately US$8 million associated with the sale of its Parish Structural Products (Thailand) Ltd. operation to AAPICO Hitech Public Co., Ltd. This amount represents the recovery of development costs previously expensed during the start-up of an operation that supported an Isuzu light-truck program in Thailand.

- First-Half Results Improved

Dana's six-month consolidated sales were US$5 billion, up from US$4.9 billion during the same period last year. Net income was US$93 million, or 63 cents per share, compared to a loss of US$177 million, or US$1.19 per share, during the first six months of 2002. Net income in 2002 reflected a charge of US$220 million, or US$1.48 per share, associated with the required adoption of FAS 142 related to accounting for goodwill.

"Our recent divestitures enabled us to reduce non-DCC debt by more than US$130 million during the quarter," said Dana Chief Financial Officer Bob Richter. "This brought our ratio of net debt-to-capital at June 30, exclusive of DCC, down to 52.8 percent from 57.0 percent at the beginning of the year.

"The sale of DCC assets also continues to progress well," he added. "DCC has reduced its portfolio assets by US$160 million so far this year and reduced its total debt outstanding by more than US$145 million. As a result, DCC now has cash on hand in excess of its bank debt."

Looking Ahead: Restructuring, Transformation Actions Pave Way for Further Progress

Mr. Magliochetti said that while a limited number of actions remain to be completed in conjunction with the company's October 2001 restructuring plan, all of Dana's restructuring costs from the program have been accounted for and the company expects to realize the full run-rate of its restructuring benefits by the end of the year.

"We've made solid progress in reducing costs, and we've generated significant cash to reduce debt," he said. "As we put our restructuring behind us and shift our full focus to transforming Dana, we expect to realize even greater benefits from our sharpened customer focus, reduced cost structure, and technology-driven growth opportunities.

"Our recent success in securing new business with customers such as BMW, Ford, Nissan, and Toyota, to name but a few, reflects our commitment to technological leadership and underscores the progress we're making," he added.

"We look forward to building on the momentum of these achievements. We remain firmly on track to achieve our projected full-year earnings of US$195 million to US$215 million in 2003, and expect that earnings in 2004 will be at least US$300 million, or US$2 per share," Mr. Magliochetti said.

Quarterly Conference Call Scheduled for 8:30 a.m. Tomorrow

Dana will discuss its second-quarter results and its response to the ArvinMeritor tender offer in a conference call at 8:30 a.m. (EDT) tomorrow. 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 dialling (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. tomorrow. To access this recording, please dial (800) 537-8823. A webcast replay of the call will also be available at 1 p.m. tomorrow 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 vehicle manufacturers and their related aftermarkets. The company employs approximately 60,000 people worldwide. Founded in 1904 and based in Toledo, Ohio, Dana operates hundreds of technology, manufacturing, and customer service facilities in 30 countries. The company reported 2002 sales of US$9.5 billion.

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, which 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; 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 of our long-term transformation strategy for the company; costs associated with the tender offer for our common stock that was commenced on July 9, 2003, by ArvinMeritor, Inc.; 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 contained in this release.

Michelle Hards of Dana Corporation, +1-419-535-4636, or michelle.hards@dana.com

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