Dana Incorporated - 10-K annual report

Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

DANA CORPORATION
(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code (419) 535-4500

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to section 12(g) of the Act:

None
————————————————
(Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes     X       No ______

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [  ]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12 b-2 of the Act).
Yes     X       No ______

The aggregate market value of the voting stock held by non-affiliates of the registrant at February 14, 2003, was approximately $1,354,000,000.

There were 148,599,168 shares of registrant’s common stock, $1 par value, outstanding at February 14, 2003.

DOCUMENTS INCORPORATED BY REFERENCE

-1-

Table of Contents

TABLE OF CONTENTS
DANA CORPORATION — FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002

-2-

Table of Contents

PART I

ITEM 1 — BUSINESS

     Dana Corporation is one of the world’s largest independent suppliers of modules, systems and components for light, commercial and off-highway vehicle original equipment (OE) manufacturers globally and for related OE service and aftermarket customers. Our products are used in passenger cars and vans, sport-utility vehicles (SUVs), light, medium and heavy trucks and a wide range of off-highway vehicles.

     From our introduction of the automotive universal joint in 1904 to the development of high-performance products for the 21st century, we have been a leader in technological innovation. Many of our products have unique and patented features that provide added value to our customers. We are also highly focused on product quality, delivery and service, as evidenced by our numerous supplier quality awards. As a result, we have developed successful long-standing business relationships with thousands of customers worldwide.

     Our operations are organized into the following market-focused strategic business units (SBUs):

     For nearly two decades, we were a leading provider of lease financing services in selected markets through our wholly owned subsidiary, Dana Credit Corporation (DCC). However, in October 2001, we determined that the sale of DCC’s businesses would enable us to more sharply focus on our foundation businesses. During 2002, we sold portions of DCC, reducing its portfolio assets by approximately $500 million, to less than $1.7 billion. While some key pieces of DCC will be retained within Dana, significant assets remain for sale. During 2003, we will work to maximize the value of these businesses to Dana and its shareholders.

     The above description reflects our SBU structure at the end of 2002. Several changes were made to the SBUs during 2002, the most significant of which was the combination of CVS and the OHSG to form the HVTSG. You can find more information in “Note 21. Business Segments” on pages 39 – 42 of our 2002 Annual Report.

ACQUISITION AND DIVESTITURE SUMMARY

     For information regarding acquisitions and divestitures completed in 2002 see “Note 18. Acquisitions” and “Note 19. Divestitures” on pages 38 – 39 of our 2002 Annual Report.

STRATEGY

     Our overall strategic direction is set out in our Transformation 2005business plan. Our goals under this plan represent an increased emphasis on anticipating the needs of our markets and serving our customers. The following are key elements of our plan:

-3-

Table of Contents

Focus and Expand Foundation Businesses. We believe that our foundation businesses are the key to the long-term profitable growth of our company. These foundation businesses focus on the development, design and manufacture of our core products: axles, driveshafts, structures, brake and chassis products, fluid systems, filtration products and bearing and sealing products. These businesses have leading market positions and brand equity and provide our customers with value-added solutions and products.

     In connection with the restructuring actions announced in October 2001, we completed the realignment in 2002 of these businesses with the markets they serve. Our OE customers continue to target improved asset utilization, speed to market, lower cost, lower investment risk, and greater flexibility and to look for outsourcing alternatives. We expect that our global presence and technological and engineering capabilities, as well as our experience, scale of operations and long-standing relationships with major OE customers, will enable us to continue to take advantage of this opportunity. We project net new business, based on our review of our customers’ production estimates, of approximately $4.5 billion in total revenues from 2003 through 2007. The new business is not only with our traditional U.S.-based OE customers, but also with OEs such as BMW, Isuzu, Nissan and Toyota.

Focus on Capital and Operating Efficiency. In 2002, we continued to focus on opportunities to optimize our resources and reduce manufacturing costs and undertook initiatives to maximize our return on invested capital and to improve cash flow. The combination of our former CVS and OHSG units into the new HVTSG has enabled us to better leverage the combined manufacturing, engineering and support capabilities of these units. On the operational side, we focused on outsourcing non-core manufacturing activity, reducing working capital and managing for cash.

Evaluate Strategic Alliances, Joint Ventures and Selected Divestiture and Acquisition Opportunities. Among the keys to our business plan is the concept of capitalizing on strategic alliances and joint ventures. Such relationships offer opportunities to expand our capabilities with a reduced level of investment and enhance our ability to provide the full scope of services required by our customers. We have a number of strategic alliances, including our Roadranger™ marketing program with Eaton Corporation and programs with GETRAG Cie, to strengthen our portfolio of advanced axle technologies; Motorola Inc., to integrate its electronic expertise into the development of advanced technology for traditionally mechanical components; and Bühler Motor Inc., to provide advanced automotive motor-module technologies and manufacturing expertise to support our product applications.

     Increasingly, our products are incorporating new electronic features that further enhance their capability. In 2002, we established a partnership with Emerson Electric Co. to develop a series of actuator products and related components for the global electronic steering market. We will continue to evaluate potential strategic alliances and joint ventures in order to gain access to advanced technology, strengthen our market position and our global presence, and reduce our overall manufacturing costs.

     Our divestiture activities in 2002 and early 2003 are described elsewhere in this report. In 2003, we will continue to evaluate remaining non-core operations for divestiture. We will also evaluate potential acquisition candidates that have product platforms complementary to our foundation businesses, strong operating potential and strong existing management teams. We believe that targeted acquisitions will help us achieve our long-term objectives.

2002 OVERVIEW

     The past year was one of the most important periods in Dana’s history. We took extraordinary actions to improve our near- and long-term performance. We made fundamental improvements to our operations and our business model. And we achieved improved performance in the midst of continued challenges in the global economy and tensions in our industries.

     From the outset of 2002, we began to see benefits from our restructuring actions, which were announced in October 2001. We also saw modest improvement in first-quarter North American vehicle production volumes compared with the fourth quarter of 2001. This increase was largely attributable to light-vehicle incentive programs and a pre-buy of Class 8 trucks in anticipation of new U.S. EPA emissions standards in October 2002. During the first quarter, Dana also adopted Statement of Financial Accounting Standards No. 142, which altered the way in which companies account for goodwill and other intangible assets. Due to the change in accounting, we reduced goodwill by $289, resulting in an after-tax charge of $220 million during the quarter.

     In the second quarter, the combination of continued restructuring progress and stronger than-expected vehicle production resulted in earnings improvement and significant cash flow. Restructuring progress was most significant in our AAG and EFMG units.

     By the third quarter of 2002, all four of our SBUs were exhibiting solid improvement in operating profit after tax (our internal measure of performance), again largely driven by their restructuring actions.

-4-

Table of Contents

The heavy truck pre-buy was also in full swing, as the October effective date of the new emission standards approached.

     The final three months of 2002 saw significant divestiture activity, including the sale of our FTE brake and clutch actuation businesses and most of our Boston Weatherhead industrial hose and fitting operations. Along with these divestitures, we continued to sell portions of our DCC leasing operations, which effectively reduced DCC’s asset portfolio by more than $500 million during 2002.

RESTRUCTURING

     In October 2001, we announced plans to accelerate the restructuring of our operations, to evaluate at least 30 facilities for closure and to reduce our workforce globally by more than 15%. As of December 31, 2002, we had closed or consolidated 28 facilities and announced plans to close an additional 11 facilities. When completed, these actions are expected to reduce our workforce — at all levels of the organization — by approximately 17% since October of 2001. The after-tax charges recorded in connection with this restructuring totaled approximately $442 million over the last five quarters.

     We also sold portions of our Dana Credit Corporation (DCC) leasing operation, as described above.

GEOGRAPHIC AREAS

     We maintain administrative organizations in four regions — North America, Europe, South America and Asia Pacific — to facilitate financial and statutory reporting and tax compliance on a worldwide basis and to support our SBUs.

     Our operations are located in the following countries (shown by the regions in which we administer them):

     Our non-U.S. subsidiaries and affiliates manufacture and sell a number of products similar to those we produce in the U.S. In addition to normal business risks, operations outside the U.S. may be subject to a greater risk of changing political, economic and social environments, changing governmental laws and regulations, currency revaluations and market fluctuations.

     Consolidated non-U.S. sales were $3.2 billion, or 34% of our 2002 consolidated sales. Including U.S. exports of $226 million, non-U.S. sales accounted for 36% of 2002 consolidated sales. Our non-U.S. net loss was $54 million, as compared to a consolidated net loss of $182 million in 2002. These amounts include $33 million of equity in earnings of non-U.S. affiliates.

     You can find more information about our regional operating results in “Note 21. Business Segments” on pages 39 – 42 of our 2002 Annual Report.

CUSTOMER DEPENDENCE

     We have thousands of customers around the world and have developed long-standing business relationships with many of them. Ford and DaimlerChrysler were the only individual customers accounting for 10% or more of our consolidated sales in 2002. We have been supplying products to these companies and their subsidiaries for many years. As a percentage of total sales, sales to Ford were 23%, 20% and 18% in 2000, 2001 and 2002, and sales to DaimlerChrysler were 18%, 12% and 10%. Loss of all or a substantial portion of our sales to Ford, DaimlerChrysler or other large volume customers would have a significant adverse effect on our financial results until such lost sales volume could be replaced. There would be no assurance, in such event, that the lost volume would be replaced.

-5-

Table of Contents

     Ford, DaimlerChrysler and some of our other customers periodically ask us to reduce the prices of our products. We discuss cost saving measures with these customers on an ongoing basis. In light of these requests, we cannot assure that we will be able to maintain or improve our historical levels of profitability.

PRODUCTS

     The following table presents our relative sales by core product for the last three years:

     We do not consider our leasing service revenue to be sales and none of our other products individually accounted for 10% of sales in these periods.

MATERIAL SOURCE AND SUPPLY

     Our operating units purchase most of the raw materials (such as steel) and semi-processed or finished items (such as forgings and castings) used in our products from suppliers located within the same geographic regions. Generally, these materials are available from numerous qualified sources in quantities sufficient for our needs. Temporary shortages of a particular material or part occasionally occur, but we do not consider the overall availability of materials to be a significant risk factor for our operations.

SEASONALITY

     Our businesses are not seasonal. However, sales to our OE manufacturing customers are closely related to their production schedules and historically those schedules have been strongest in the first two quarters of the year.

BACKLOG

     Generally, our products are not on a backlog status. They are produced from readily available materials and have a relatively short manufacturing cycle. Each operating unit maintains its own inventories and production schedules and some of our products are available from more than one facility.

COMPETITION

     We compete worldwide with a number of other manufacturers and distributors which produce and sell similar products. These competitors include Visteon and Delphi, large parts manufacturers that previously were vertically-integrated units of Ford and General Motors, and a number of other U.S. and non-U.S. suppliers. Our traditional U.S.-based OE customers, facing substantial foreign competition, have expanded their worldwide sourcing of components to better compete with lower cost imports. In addition, these customers have been shifting research and development, design and validation responsibilities to their key suppliers, focusing on stronger relationships with fewer suppliers. We have established operations throughout the world to enable us to meet these competitive challenges and to be a strong global supplier of our core products.

-6-

Table of Contents

PATENTS AND TRADEMARKS

     Our proprietary drivetrain, engine parts, chassis, structural components, fluid power systems and industrial power transmission product lines have strong identities in the markets we serve. Throughout these product lines, we manufacture and sell our products under a number of patents which have been obtained over a period of years and expire at various times. We consider each of these patents to be of value and aggressively protect our rights throughout the world against infringement. Because we are involved with many product lines, the loss or expiration of any particular patent would not materially affect our sales and profits.

     We own or have licensed numerous trademarks which are registered in many countries, enabling us to market our products worldwide. Our Spicer®, Victor Reinz®, Wix®, Clevite®, Glacier® and Vandervell® trademarks, among others, are widely recognized in their respective industries.

RESEARCH AND DEVELOPMENT

     Our objective is to be a leader in offering superior quality, technologically advanced products to our customers at competitive prices. To enhance quality and reduce costs, we use statistical process control, cellular manufacturing, flexible regional production and assembly, global sourcing and extensive employee training.

     In addition, we engage in ongoing engineering, research and development activities to improve the reliability, performance and cost-effectiveness of our existing products and to design and develop new products for existing and new applications. We are implementing a new more functional facility concept by integrating related operations to speed product development, maximize efficiency and improve communication and information sharing among our research and development operations, as illustrated by our new ASG Technology Center scheduled to open in late 2003. At December 31, 2002, our SBUs had the following technical centers: AAG, 7; ASG, 23; EFMG, 16, and HVTSG, 4. Our spending on engineering, research and development and quality control programs was $287 million in 2000, $260 million in 2001 and $248 million in 2002.

EMPLOYMENT

     Our worldwide employment (including consolidated subsidiaries) was approximately 63,100 at December 31, 2002. This represents a 10% reduction from the number of people reported at the end of 2001, which resulted from our 2002 restructuring activities and divestitures. We expect further reductions of 4,400 in 2003 as we complete our restructuring activities and the planned divestiture of our Engine Management aftermarket operations.

ENVIRONMENTAL COMPLIANCE

     We make capital expenditures in the normal course of business as necessary to ensure that our facilities are in compliance with applicable environmental laws and regulations. The cost of environmental compliance was not a material part of our capital expenditures and did not have a material adverse effect on our earnings or competitive position in 2002. We do not anticipate that future environmental compliance costs will be material. You can find more information in “Environmental Compliance and Remediation” under “Note 1. Summary of Significant Accounting Policies” on page 27 and under “Note 17. Commitments and Contingencies” on pages 37-38 of our 2002 Annual Report.

AVAILABLE INFORMATION

     We make available free of charge on or through our Internet website our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (Exchange Act) as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. Our Internet address is http://www.dana.com.

-7-

Table of Contents

EXECUTIVE OFFICERS

     The following table contains information about our current executive officers, including their principal occupations and business experience in the past five years. All positions are with Dana unless otherwise indicated. The first four persons listed in the table are the members of our Policy Committee, which is responsible for our corporate strategies and partnership relations, as well as the development of our people, policies and philosophies.

*At February 14, 2003

     Joseph M. Magliochetti has been a director since 1996 and Chairman of the Board since 2000. He has been Chief Executive Officer since 1999, Chief Operating Officer since 1997 and President since 1996.

     Robert C. Richter has been Vice President and Chief Financial Officer since 1999. He was previously Vice President – Finance and Administration (1998-1999) and Vice President – Administration (1997-1998). He has also been Chairman of Dana Credit Corporation since February 1, 2002.

     William J. Carroll has been President – Automotive Systems Group and Chairman of DTF Trucking, Inc. since 1997.

     Marvin A. Franklin, III has been President – Dana International & Global Initiatives since 2000. He was previously President – Dana International (1997-2000).

     Bernard N. Colehas been President – Heavy Vehicle Technologies and Systems Group since May 1, 2002. He was previously President – Off-Highway Systems Group (1997-2002) and President – Commercial Vehicle Systems (February 15 to May 1, 2002). He has also been Chairman of Dana India Pvt. Ltd. since 2001.

     James M. Laisurehas been President – Engine and Fluid Management Group since 2001. He was previously President – Fluid Systems Group (2000-2001), Group Vice President – Fluid Systems Group (1999-2000) and Vice President - Modules and Systems Group (1996-1999).

     Terry R. McCormack has been President – Automotive Aftermarket Group since 2000. He was previously President – Wix Worldwide Filtration (2000). Also, for Wix Division, North America, he was Vice President and General Manager (1998-2000), Vice President – Distribution Services Division (1996-98) and General Manager (1995-1998).

     Richard J. Westerheide has been Chief Accounting Officer since June 1, 2002, and Assistant Treasurer since April 16, 2002. He was previously Group Controller – Engine Management Group (2000-2002). Also, for Dana Credit Corporation, he was Vice President – Finance (2000) and Director of Accounting Policy and Financial

-8-

Table of Contents

Reporting (1998-2000). From 1991-1998, he was Director of Auditing and Business Advisory Services for Price Waterhouse LLP.

     Some of the above officers are elected by the Board annually at its organizational meeting after the annual meeting of shareholders, as provided in our By-Laws, and these persons hold office until their successors are elected. Others are appointed by the Board or designated by the Chief Executive Officer from time to time.

-9-

Table of Contents

ITEM 2 — PROPERTIES

     As shown in the following table, at December 31, 2002, we had more than 380 manufacturing, distribution and service branch or office facilities worldwide. We own the majority of our manufacturing and larger distribution facilities. We lease certain manufacturing facilities and most of our smaller distribution outlets and financial service branches and offices.

Dana Facilities by Geographic Region

ITEM 3 — LEGAL PROCEEDINGS

     We are a party to various pending judicial and administrative proceedings arising in the ordinary course of business. After reviewing the proceedings that are currently pending (including the probable outcomes, reasonably anticipated costs and expenses, availability and limits of our insurance coverage, and our established reserves for uninsured liabilities), we do not believe that any liabilities that may result from these proceedings are reasonably likely to have a material adverse effect on our liquidity, financial condition or results of operations.

     We are currently a party to one environmental proceeding which is reportable under the rules of the SEC. In August 2002, our Sanford Street plant in Muskegon, Michigan received a notice of an enforcement action and a draft consent order from the Michigan Department of Environmental Quality (MDEQ) alleging various air permit and rule violations. The alleged violations relate to smoke and odor complaints from neighbors, failure to have permits for the installation of certain engine test cells and noncompliance with certain record keeping requirements. The MDEQ proposed a fine of $166,075, which was later amended to $175,511. Negotiations with the MDEQ resulted in a final consent order with a fine of $122,858. The MDEQ released this order for public comment in December 2002 and we expect it will be finalized and executed in the second quarter of 2003.

     You can find more information about our legal proceedings under “Note 17. Commitments and Contingencies” on pages 37 – 38 of our 2002 Annual Report and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” on pages 44 – 54 of our 2002 Annual Report.

ITEM 4 — SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

-None -

-10-

Table of Contents

PART II

ITEM 5 — MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     Our common stock is listed on the New York Stock Exchange and the Pacific Exchange. On February 14, 2003, there were approximately 37,400 shareholders of record.

     We have paid quarterly cash dividends on our common stock since 1942. You can find more information about dividends paid in the past two years in “Shareholders’ Investment” on page 58 of our 2002 Annual Report.

ITEM 6 — SELECTED FINANCIAL DATA

     You can find selected financial data related to Dana in “Additional Information” under “Six-Year History” on page 59 of our 2002 Annual Report.

ITEM 7 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     You can find “Management’s Discussion and Analysis of Financial Condition and Results of Operations” on pages 44 – 54 of our 2002 Annual Report.

     In the discussion of our $400 accounts receivable securitization program in “Liquidity and Capital Resources” under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” on page 44 of our 2002 Annual Report, we indicated that if our credit ratings were lowered beyond certain levels specified in the program agreement, the lenders would have the option to terminate the program. As of February 14, 2003, we were rated BB by Standard & Poor’s Rating Services (S&P) and Ba3 by Moody’s Investors Service (Moody’s). At these ratings, a downgrade to B by S&P or to B2 by Moody’s would entitle the lenders to terminate the program.

ITEM 7A — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     You can find market risk information in “Financial Instruments,” “Derivative Financial Instruments” and “Cash and Marketable Securities” under “Note 1. Summary of Significant Accounting Policies” on pages 26 – 28, in “Note 9. Interest Rate Agreements” on page 31, in “Note 16. Fair Value of Financial Instruments” on page 36 of our 2002 Annual Report and in “Liquidity and Capital Resources” under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” on pages 44-47 of our 2002 Annual Report.

ITEM 8 — FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     You can find our financial statements and the report by PricewaterhouseCoopers LLP dated February 10, 2003, on pages 21 – 43 and “Unaudited Quarterly Financial Information” on page 58 of our 2002 Annual Report.

ITEM 9 — CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

     -None -

-11-

Table of Contents

PART III

ITEM 10 — DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     You can find general information about our directors and nominees under “Election of Directors” on pages 1 – 4 in our 2003 Proxy Statement and information about our executive officers in Part I, Item 1 of this report.

     You can find information about the filing of reports by our directors, executive officers and 10% stockholders under Section 16(a) of the Exchange Act under “Section 16(a) Beneficial Ownership Reporting Compliance” on page 18 in our 2003 Proxy Statement.

ITEM 11 — EXECUTIVE COMPENSATION

     You can find information about executive compensation in the following sections of our 2003 Proxy Statement: “Compensation” on page 4 under “The Board and its Committees,” “Executive Compensation” on pages 7 – 12 and “Compensation Committee Report on Executive Compensation” on pages 13 – 16.

     You can find information about our stock performance under “Comparison of Five-Year Cumulative Total Return” on page 17 of our 2003 Proxy Statement.

ITEM 12 — SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

     You can find information about securities authorized for issuance under our equity compensation plans under “Equity Compensation Plan Information” on pages 28-29 of our 2003 Proxy Statement and information about the stock ownership of our directors, director-nominees, executive officers and more than 5% beneficial owners under “Stock Ownership” on pages 5 – 6 of our 2003 Proxy Statement.

ITEM 13 — CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     You can find information about transactions between Dana and our directors, director-nominees, executive officers and 5% stockholders under “Other Transactions” on page 17 of our 2003 Proxy Statement.

ITEM 14 — CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

     Our Chief Executive Officer (CEO) and Chief Financial Officer (CFO) have evaluated Dana’s disclosure controls and procedures, as defined in the rules of the SEC, within 90 days of the filing date of this report and have determined that such controls and procedures were effective in ensuring that material information relating to Dana and its consolidated subsidiaries was made known to them during the period covered by this report.

Internal Controls

     Our CEO and CFO are primarily responsible for the accuracy of the financial information that is presented in this report. To meet their responsibility for financial reporting, they have established internal controls and procedures which they believe are adequate to provide reasonable assurance that Dana’s assets are protected from loss. These internal controls are reviewed by Dana’s internal auditors in order to monitor compliance and by our independent accountants to support their audit work. In addition, our Board’s Audit Committee, which is composed entirely of outside directors, meets regularly with management, internal auditors and the independent accountants to review accounting, auditing and financial matters. This Committee and the independent accountants have free access to each other, with or without management being present.

     There were no significant changes in Dana’s internal controls or in other factors that could significantly affect internal controls subsequent to the date of the CEO’s and CFO’s most recent evaluation.

-12-

Table of Contents

PART IV

ITEM 15 — EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

-13-

Table of Contents

SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

     Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.

-14-

Table of Contents

CERTIFICATION OF CHIEF EXECUTIVE OFFICER
UNDER SECTION 302 OF THE SARBANES-OXLEY ACT

I, Joseph M. Magliochetti, certify that:

-15-

Table of Contents

CERTIFICATION OF CHIEF FINANCIAL OFFICER
UNDER SECTION 302 OF THE SARBANES-OXLEY ACT

I, Robert C. Richter, certify that:

-16-

Table of Contents

Report of Independent Accountants on
Financial Statement Schedule

To the Board of Directors and Shareholders
of Dana Corporation

Our audits of the consolidated financial statements referred to in our report dated February 10, 2003 appearing in the 2002 Annual Report to Shareholders of Dana Corporation (which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the financial statement schedule listed in Item 15(a)(2) of this Form 10-K. In our opinion, this financial statement schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.

/s/PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP
Toledo, Ohio
February 10, 2003

-17-

Table of Contents

DANA CORPORATION AND CONSOLIDATED SUBSIDIARIES

SCHEDULE II(a) — VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

ALLOWANCE FOR DOUBTFUL ACCOUNTS RECEIVABLE

-18-

Table of Contents

DANA CORPORATION AND CONSOLIDATED SUBSIDIARIES

SCHEDULE II(b) — VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

ALLOWANCE FOR CREDIT LOSSES — LEASE FINANCING

(1)  During 2001, the factors used to estimate future credit losses related to lease financing receivables were refined to more accurately reflect the past history of credit losses and the inherent risks of the portfolio. The allowance for credit losses was reduced as a result of the refinement, resulting in a net credit provision for credit losses on lease financing receivables for the year ended December 31, 2001.

-19-

Table of Contents

DANA CORPORATION AND CONSOLIDATED SUBSIDIARIES

SCHEDULE II(c) — VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

VALUATION ALLOWANCE FOR DEFERRED TAX ASSETS

-20-

Table of Contents

DANA CORPORATION AND CONSOLIDATED SUBSIDIARIES

SCHEDULE II(d) — VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

ALLOWANCE FOR LOAN LOSSES

-21-

Table of Contents

DANA CORPORATION AND CONSOLIDATED SUBSIDIARIES

SUPPLEMENTARY INFORMATION TO FINANCIAL STATEMENTS

COMMITMENTS AND CONTINGENCIES

     We are a party to various legal proceedings (judicial and administrative) arising in the normal course of business, including proceedings which involve environmental and product liability claims. You can find additional information in “Note 17. Commitments and Contingencies” on pages 37 – 38 of our 2002 Annual Report and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” on pages 44 – 54 of our 2002 Annual Report.

     With respect to environmental claims, we are involved in investigative and/or remedial efforts at a number of locations, including “on-site” activities at currently or formerly owned facilities and “off-site” activities at “Superfund” sites where we have been named as a potentially responsible party. You can find more information about our accounting for such claims in “Environmental Compliance and Remediation” under “Note 1. Summary of Significant Accounting Policies” on page 27 and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” on pages 44 – 54 of our 2002 Annual Report.

     With respect to product liability claims, we are named in proceedings involving alleged defects in our products. Such proceedings currently include a large number of claims (most of which are for relatively small damage amounts) based on alleged asbestos-related personal injuries. At December 31, 2002, approximately 139,000 such claims were outstanding, of which approximately 24,000 were settled pending payment. We have agreements with our insurance carriers providing for the payment of a significant majority of the indemnity costs and the legal and administrative expenses for these claims. You can find additional information about our accounting for product liability claims under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” on pages 44 -54 of our 2002 Annual Report.

-22-

Table of Contents

EXHIBIT INDEX

-23-

Table of Contents

-24-

Table of Contents

-25-

Table of Contents

-26-

Table of Contents

-27-

Table of Contents

-28-