UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Dana Holding Corporation

(Exact name of registrant as specified in its charter)

Delaware		26-1531856
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification Number)
4500 Dorr Street, Toledo, Ohio		43615
(Address of principal executive offices)		(Zip Code)

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

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 þ     No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes þ No o

SEC 1296(02-08) Potential persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class		Outstanding at August 1, 2008
Common stock, $0.01 par value		99,854,161

 

 

DANA HOLDING CORPORATION — FORM 10-Q
FOR THE QUARTERLY PERIOD
ENDED JUNE 30, 2008

				10-Q
				Pages
Cover					1
Table of Contents					2
		PART I — FINANCIAL INFORMATION
Item 1		Financial Statements			3
		Consolidated Statement of Operations (Unaudited)			3
		Consolidated Balance Sheet (Unaudited)			4
		Consolidated Statement of Cash Flows (Unaudited)			5
		Consolidated Statement of Stockholders’ Equity (Unaudited)			6
		Notes to Consolidated Financial Statements (Unaudited)			7
Item 2		Management’s Discussion and Analysis of Financial Condition and Results of Operations			50
Item 3		Quantitative and Qualitative Disclosures About Market Risk			78
Item 4		Controls and Procedures			78
		PART II — OTHER INFORMATION
Item 1		Legal Proceedings			78
Item 1A		Risk Factors			79
Item 6		Exhibits			79
Signatures					80
Exhibit Index					81
EX-31.1
EX-31.2
EX-32

PART I — FINANCIAL INFORMATION
(In millions, except per share amounts)

ITEM 1. FINANCIAL STATEMENTS

DANA HOLDING CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)

											Dana					Prior Dana				Prior Dana
		Three Months Ended									Five Months					One Month				Six Months
		June 30,									Ended					Ended				Ended
		Dana					Prior Dana				June 30,					January 31,				June 30,
		2008					2007				2008					2008				2007
Net sales		$	2,333				$	2,289			$	3,894				$	751			$	4,434
Costs and expenses
Cost of sales			2,206					2,141				3,683					702				4,184
Selling, general and administrative expenses			84					88				149					34				184
Amortization of intangibles			19									31
Realignment charges, net			40					134				45					12				153
Impairment of goodwill			75									75
Impairment of intangible assets			7									7
Other income, net			20					32				52					8				78
Income (loss) from continuing operations before interest, reorganization items and income taxes			(78	)				(42	)			(44	)				11				(9	)
Interest expense (contractual interest of $55 for the three months ended June 30, 2007, $17 for the one month ended January 31, 2008 and $105 for the six months ended June 30, 2007)			35					28				62					8				51
Reorganization items, net			12					38				21					98				75
Fresh start accounting adjustments																	1,009
Income (loss) from continuing operations before income taxes			(125	)				(108	)			(127	)				914				(135	)
Income tax expense			(12	)				(3	)			(32	)				(199	)			(18	)
Minority interests			(3	)				(4	)			(5	)				(2	)			(6	)
Equity in earnings of affiliates			2					10				3					2				18
Income (loss) from continuing operations			(138	)				(105	)			(161	)				715				(141	)
Loss from discontinued operations			(2	)				(28	)			(3	)				(6	)			(84	)
Net income (loss)			(140	)				(133	)			(164	)				709				(225	)
Preferred stock dividend requirements			8									13
Net income (loss) available to common stockholders		$	(148	)			$	(133	)		$	(177	)			$	709			$	(225	)
Net income (loss) per share from continuing operations:
Basic		$	(1.46	)			$	(0.70	)		$	(1.74	)			$	4.77			$	(0.94	)
Diluted		$	(1.46	)			$	(0.70	)		$	(1.74	)			$	4.75			$	(0.94	)
Net loss per share from discontinued operations:
Basic		$	(0.01	)			$	(0.19	)		$	(0.02	)			$	(0.04	)		$	(0.56	)
Diluted		$	(0.01	)			$	(0.19	)		$	(0.02	)			$	(0.04	)		$	(0.56	)
Net income (loss) per share available to common stockholders:
Basic		$	(1.47	)			$	(0.89	)		$	(1.76	)			$	4.73			$	(1.50	)
Diluted		$	(1.47	)			$	(0.89	)		$	(1.76	)			$	4.71			$	(1.50	)
Average common shares outstanding — Basic			100					150				100					150				150
Average common shares outstanding — Diluted			160					150				160					150				150

The accompanying notes are an integral part of the financial statements.

DANA HOLDING CORPORATION
CONSOLIDATED BALANCE SHEET (Unaudited)

		Dana					Prior Dana
		June 30,					December 31,
		2008					2007
Assets
Current assets
Cash and cash equivalents		$	1,191				$	1,271
Restricted cash								93
Accounts receivable
Trade, less allowance for doubtful accounts of $24 in 2008 and $20 in 2007			1,431					1,197
Other			295					295
Inventories
Raw materials			401					331
Work in process and finished goods			640					481
Assets of discontinued operations								24
Other current assets			147					100
Total current assets			4,105					3,792
Goodwill			248					349
Intangibles			649					1
Investments and other assets			269					348
Investments in affiliates			172					172
Property, plant and equipment, net			2,039					1,763
Total assets		$	7,482				$	6,425
Liabilities and stockholders’ equity (deficit)
Current liabilities
Notes payable, including current portion of long-term debt		$	62				$	283
Debtor-in-possession financing								900
Accounts payable			1,203					1,072
Accrued payroll and employee benefits			265					258
Liabilities of discontinued operations								9
Taxes on income			160					12
Other accrued liabilities			501					418
Total current liabilities			2,191					2,952
Liabilities subject to compromise								3,511
Deferred employee benefits and other non-current liabilities			879					630
Long-term debt			1,318					19
Minority interest in consolidated subsidiaries			115					95
Commitments and contingencies (Note 16)
Total liabilities			4,503					7,207
Preferred stock, 50,000,000 shares authorized
Series A, $0.01 par value, 2,500,000 issued and outstanding			242
Series B, $0.01 par value, 5,400,000 issued and outstanding			529
Common stock, $.01 par value, 450,000,000 authorized, 99,735,387 issued and outstanding			1
Prior Dana common stock, $1.00 par value, 350,000,000 authorized, 150,245,250 issued and outstanding								150
Additional paid-in capital			2,310					202
Accumulated deficit			(177	)				(468	)
Accumulated other comprehensive income (loss)			74					(666	)
Total stockholders’ equity (deficit)			2,979					(782	)
Total liabilities and stockholders’ equity (deficit)		$	7,482				$	6,425

The accompanying notes are an integral part of the financial statements.

DANA HOLDING CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)

		Dana					Prior Dana				Prior Dana
		Five Months					One Month				Six Months
		Ended					Ended				Ended
		June 30,					January 31,				June 30,
		2008					2008				2007
Cash flows — operating activities
Net income (loss)		$	(164	)			$	709			$	(225	)
Depreciation			120					23				139
Amortization of intangibles			38
Amortization of inventory valuation			15
Amortization of deferred financing charges and original issue discount			11
Impairment of goodwill and other intangible assets			82
Non-cash portion of U.K. pension charge												60
Minority interest			5					2				6
Deferred income taxes			(17	)				191				(7	)
Reorganization:
Gain on settlement of liabilities subject to compromise								(27	)
Payment of claims			(97	)
Reorganization items net of cash payments			(23	)				79				7
Fresh start adjustments								(1,009	)
Payments to VEBAs			(733	)				(55	)			(27	)
Loss (gain) on sale of businesses and assets			1					7				(8	)
Change in working capital			(67	)				(61	)			(64	)
Other, net			(22	)				19				(33	)
Net cash flows used in operating activities			(851	)				(122	)			(152	)
Cash flows — investing activities
Purchases of property, plant and equipment			(76	)				(16	)			(94	)
Proceeds from sale of businesses and assets								5				421
Change in restricted cash								93				(88	)
Other			(4	)				(5	)			25
Net cash flows provided by (used in) investing activities			(80	)				77				264
Cash flows — financing activities
Proceeds from (repayment of) debtor-in-possession facility								(900	)			200
Net change in short-term debt			(88	)				(18	)			(28	)
Payment of DCC Medium Term Notes								(136	)
Proceeds from Exit Facility debt			80					1,350
Original issue discount fees								(114	)
Deferred financing fees			(1	)				(40	)
Repayment of Exit Facility debt			(7	)
Issuance of Series A and Series B preferred stock								771
Preferred dividends paid			(11	)
Other			(12	)				(1	)			(2	)
Net cash flows provided by (used in) financing activities			(39	)				912				170
Net increase (decrease) in cash and cash equivalents			(970	)				867				282
Cash and cash equivalents — beginning of period			2,147					1,271				704
Effect of exchange rate changes on cash balances			14					5				28
Net change in cash of discontinued operations								4				(13	)
Cash and cash equivalents — end of period		$	1,191				$	2,147			$	1,001

The accompanying notes are an integral part of the financial statements.

DANA HOLDING CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (Unaudited)

																		Accumulated
										Additional								Other
		Preferred				Common				Paid-In				Accumulated				Comprehensive
		Stock				Stock				Capital				Deficit				Income (Loss)				Total
Balance, December 31, 2007, Prior Dana		$	—			$	150			$	202			$	(468	)		$	(666	)		$	(782	)
Comprehensive income:
Net income															709								709
Currency translation																			3				3
Defined benefit plans																			79				79
Other																			(6	)			(6	)
Other comprehensive income																							76
Total comprehensive income																							785
Cancellation of Prior Dana common stock							(150	)			(202	)											(352	)
Elimination of Prior Dana accumulated deficit and accumulated other comprehensive loss															(241	)			590				349
Balance, January 31, 2008, Prior Dana
Issuance of new equity in connection with emergence from Chapter 11			771				1				2,267												3,039
Balance, January 31, 2008, Dana			771				1				2,267												3,039
Comprehensive income:
Net loss															(164	)							(164	)
Currency translation																			77				77
Defined benefit plans																			37				37
Income tax provision																			(26	)			(26	)
Unrealized investment gains (losses) and other																			(14	)			(14	)
Other comprehensive income																							74
Total comprehensive loss																							(90	)
Preferred stock dividends															(13	)							(13	)
Employee emergence bonus											40												40
Stock compensation											3												3
Balance, June 30, 2008, Dana		$	771			$	1			$	2,310			$	(177	)		$	74			$	2,979

The accompanying notes are an integral part of the financial statements.

DANA HOLDING CORPORATION
INDEX TO NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

1.		Organization and Summary of Significant Accounting Policies
2.		Emergence from Chapter 11
3.		Reorganization Proceedings
4.		Asset Impairments and Divestitures
5.		Discontinued Operations
6.		Realignment of Operations
7.		Goodwill and Other Intangible Assets
8.		Capital Stock
9.		Earnings Per Share
10.		Incentive and Stock Compensation
11.		Pension and Postretirement Benefit Plans
12.		Comprehensive Income (Loss)
13.		Cash Deposits
14.		Financing Agreements
15.		Fair Value Measurements
16.		Commitments and Contingencies
17.		Warranty Obligations
18.		Income Taxes
19.		Other Income, Net
20.		Segments

Notes to Consolidated Financial Statements
($ in millions, except per share amounts)

Note 1. Summary of Significant Accounting Policies

General

     Dana Holding Corporation (Dana), incorporated in Delaware, is headquartered in Toledo, Ohio. We are a leading supplier of axle, driveshaft, structural, sealing and thermal management products for global vehicle manufacturers. Our people design and manufacture products for every major vehicle producer in the world. We employ approximately 35,000 people in 26 countries and operate 113 major facilities throughout the world.

     As a result of Dana Corporation’s emergence from Chapter 11 of the United States Bankruptcy Code (the Bankruptcy Code) on January 31, 2008 (the Effective Date), Dana is the successor registrant to Dana Corporation (Prior Dana) pursuant to Rule 12g-3 under the Securities Exchange Act of 1934.

     The terms “Dana”, “we,” “our,” and “us,” when used in this report with respect to the period prior to Dana Corporation’s emergence from bankruptcy, are references to Prior Dana, and when used with respect to the period commencing after Dana Corporation’s emergence, are references to Dana. These references include the subsidiaries of Prior Dana or Dana, as the case may be, unless otherwise indicated or the context requires otherwise.

     These financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2007. Financial results for interim periods are not necessarily indicative of anticipated results for the entire year.

     This report, as discussed in Note 2, includes the results of the implementation of the Third Amended Joint Plan of Reorganization of Debtors and Debtors in Possession as modified (the Plan) and the effects of the adoption of fresh start accounting. In accordance with generally accepted accounting principles in the United States (GAAP), historical financial statements of Prior Dana will be presented separately from Dana results in this filing and future filings.

     The implementation of the Plan and the application of fresh start accounting result in financial statements that are not comparable to financial statements in periods prior to emergence.

Summary of Significant Accounting Policies

     Basis of Presentation — As discussed in Note 2, the Debtors reorganized under Chapter 11 of the United States Bankruptcy Code. American Institute of Certified Public Accountants’ (AICPA) Statement of Position 90-7, “Financial Reporting by Entities in Reorganization under the Bankruptcy Code” (SOP 90-7), which is applicable to companies operating under Chapter 11, generally does not change the manner in which financial statements are prepared. However, SOP 90-7 does require that the financial statements for periods subsequent to the filing of a Chapter 11 petition distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business.

     We adopted SOP 90-7 on March 3, 2006 (the Filing Date) and prepared our financial statements in accordance with its requirements through January 31, 2008. Revenues, expenses, realized gains and losses and provisions for losses that can be directly associated with the reorganization and the related restructuring of our business were reported separately as reorganization items in our statement of operations. Our balance sheet prior to February 1, 2008 distinguished pre-petition liabilities subject to compromise both from those pre-petition liabilities that are not subject to compromise and from post-petition liabilities. Liabilities that were affected by the plan of reorganization were reported at the amounts expected to be allowed by the Bankruptcy Court. In addition, cash provided by or used for reorganization items was disclosed separately in our statement of cash flows. See Note 3 for further information about our financial statement presentation under SOP 90-7.

     Estimates — These consolidated financial statements are prepared in accordance with GAAP, which require the use of estimates, judgments and assumptions that affect the amounts reported in the consolidated financial statements and accompanying disclosures. Some of the more significant estimates include: valuation of deferred tax assets and inventories; restructuring, environmental, product liability, asbestos and warranty accruals; valuation of post-employment and postretirement benefits; valuation, depreciation and amortization of long-lived assets; valuation of goodwill; and allowances for doubtful accounts. We believe our assumptions and estimates are reasonable and appropriate. However, due to the inherent uncertainties in making estimates, actual results could differ from those estimates.

     As discussed above, in connection with the adoption of fresh start accounting, our assets were valued at fair value in accordance with Statement of Financial Accounting Standards (SFAS) No. 141, “Business Combinations” (SFAS 141). In addition, our liabilities were adjusted to fair value or present value where appropriate. Deferred taxes are determined in accordance with SFAS No. 109, “Accounting for Income Taxes” (SFAS 109).

     Inventories — Inventories are valued at the lower of cost or market. Cost is generally determined on the last-in, first-out (LIFO) basis for U.S. inventories, and on the average or first-in, first-out (FIFO) cost basis for most non-U.S. inventories. In connection with our adoption of fresh start accounting on February 1, 2008, inventories were increased by $169, including the elimination of the U.S. LIFO reserve of $120. Of this increase, $15 related to FIFO basis inventory outside of the U.S. The $15 was amortized to cost of sales as the inventory was sold, negatively impacting gross margin, primarily in the first quarter with a nominal amount in the second quarter.

     Property, Plant and Equipment — As a result of our adoption of fresh start accounting on February 1, 2008, property, plant and equipment have been stated at fair value (see Note 2) with useful lives ranging from two to thirty years. Depreciation is recognized over the estimated useful lives using primarily the straight-line method for financial reporting purposes and accelerated depreciation methods for federal income tax purposes. Prior to the Effective Date, property, plant and equipment of Prior Dana was recorded at cost. If assets are impaired their value is reduced by an increase in the depreciation reserve.

     Long-term Assets and Liabilities — As required by SFAS 141, in connection with the application of fresh start accounting we discounted our asbestos and worker’s compensation liabilities and the related amounts recoverable from the insurers. We discounted the projected cash flows using a risk-free rate of 4.0%, which we interpolated for the applicable period using U.S. Treasury rates. Use of a risk free rate was considered appropriate given that other risks affecting the volume and timing of payments had been considered in developing the probability-weighted projected cash flows.

     Intangible Assets — SFAS 141 requires intangible assets to be recorded separately from goodwill if they meet certain criteria. Intangible assets valued in connection with fresh start accounting include customer contracts, developed technology and trademarks and trade names. Customer contracts and developed technology have finite lives while substantially all of the trademarks and trade names have indefinite lives. Definite-lived intangible assets are amortized over their useful life using the straight-line method of amortization and are periodically reviewed for impairment indicators. Indefinite-lived intangible assets are reviewed for impairment annually or more frequently if impairment indicators exist. Historically we carried nominal values for acquired patent and trademark intangibles at cost. See Notes 2 and 7 for more information about intangible assets.

     Goodwill — Goodwill represents the excess of the reorganization value of Dana over the fair value of tangible and identified intangible assets. Goodwill is reviewed annually, and under certain circumstances on an interim basis, to determine if any impairment has occurred. See Note 7 for more information about goodwill.

     Earnings Per Share — Basic earnings per share is computed by dividing earnings available to common stockholders by the weighted average common shares outstanding during the period. Prior Dana shares were cancelled at emergence and shares in Dana were issued. Therefore the earnings per share information for Dana is not comparable to Prior Dana earnings per share. See Note 9 for details of the shares outstanding.

     Recent Accounting Pronouncements — In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (SFAS 161). SFAS 161 requires companies with derivative instruments to disclose additional information that would enable financial statement users to understand how and why a company uses derivative instruments, how derivative instruments and related hedged items are accounted for under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” (SFAS 133), and how derivative instruments and related hedged items affect a company’s financial position, financial performance and cash flows. The new requirements apply to derivative instruments and non-derivative instruments that are designated and qualify as hedging instruments and related hedged items accounted for under SFAS 133. SFAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. Early application is encouraged. We have not yet determined the impact SFAS 161 will have on the notes to our consolidated financial statements.

     In April 2008, the FASB issued FASB Staff Position No. FAS 142-3, “Determination of the Useful Life of Intangible Assets” (FSP 142-3). FSP 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, “Goodwill and Other Intangible Assets.” FSP 142-3 is effective on January 1, 2009. We have not yet determined the impact FSP 142-3 will have on our consolidated financial statements.

     In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles” (SFAS 162). SFAS 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements. SFAS 162 is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles.” The implementation of this standard will not have a material impact on our consolidated financial statements.

     In June 2008, the FASB ratified EITF Issue No. 07-5, “Determining Whether an Instrument (or an Embedded Feature) Is Indexed to an Entity’s Own Stock” (EITF 07-5). EITF 07-5 provides that an entity should use a two-step approach to evaluate whether an equity-linked financial instrument (or embedded feature) is indexed to its own stock, including evaluating the instrument’s contingent exercise and settlement provisions. It also clarifies the impact of foreign currency denominated strike prices and market-based employee stock option valuation instruments on the evaluation. EITF 07-5 is effective for fiscal years beginning after December 15, 2008. We are currently assessing the impact of EITF 07-5 on our consolidated financial statements.

     In June 2008, the FASB ratified EITF Issue No. 08-3, “Accounting for Lessees for Maintenance Deposits Under Lease Arrangements” (EITF 08-3). EITF 08-3 provides guidance for accounting for nonrefundable maintenance deposits. EITF 08-3 is effective for fiscal years beginning after December 15, 2008. We are currently assessing the impact of EITF 08-3 on our consolidated financial statements.

     In June 2008, the FASB issued FASB Staff Position No. EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities” (FSP 03-6-1). FSP 03-6-1 addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the earnings allocation in computing earnings per share (EPS) under the two-class method described in paragraphs 60 and 61 of SFAS No. 128, “Earnings per Share.” The FSP 03-6-1 is effective for financial statements issued for fiscal years beginning after December 15, 2008, with all prior period EPS data being adjusted retrospectively. Early adoption is not permitted. We have not yet determined the impact of FSP 03-6-1 on our consolidated financial statements.

     Background — Dana and forty of its wholly-owned subsidiaries (collectively, the Debtors) operated their businesses as debtors in possession under Chapter 11 of the Bankruptcy Code from the Filing Date until emergence from Chapter 11 on January 31, 2008. The Debtors’ Chapter 11 cases (collectively, the Bankruptcy Cases) were consolidated in the United States Bankruptcy Court for the Southern District of New York (the Bankruptcy Court) under the caption In re Dana Corporation, et al., Case No. 06-10354 (BRL). Neither Dana Credit Corporation (DCC) and its subsidiaries nor any of our non-U.S. affiliates were Debtors.

     Claims resolution — On December 26, 2007, the Bankruptcy Court entered an order (the Confirmation Order) confirming the Plan and, on the Effective Date, the Plan was consummated and we emerged from bankruptcy. As provided in the Plan and the Confirmation Order, we issued and distributed approximately 70 million shares of Dana common stock (valued in reorganization at $1,628) on the Effective Date to holders of allowed general unsecured claims in Class 5B totaling approximately $2,050. Pursuant to the Plan, we also issued and set aside approximately 28 million additional shares of Dana common stock (valued in reorganization at $640) for future distribution to holders of allowed unsecured nonpriority claims in Class 5B under the Plan. These shares are being distributed as the disputed and unliquidated claims are resolved. The claim amount related to the 28 million shares for disputed and unliquidated claims was estimated not to exceed $700. Since emergence and through the date of this filing, we have distributed an additional 8 million shares for allowed claims (valued in reorganization at $182) increasing the total distribution to $1,810 for unsecured claims of approximately $2,090. The corresponding decrease in the disputed claims reserve leaves 20 million shares (valued in reorganization at $458). The claim amount related to the remaining shares for disputed and unliquidated claims is estimated to be approximately $540. To the extent that these remaining claims are settled for less than $540, additional incremental distributions will be made to the holders of the previously allowed general unsecured claims in Class 5B. The terms and conditions governing these distributions are set forth in the Plan and the Confirmation Order.

     Under the provisions of the Plan, approximately two million shares of common stock (valued in reorganization at $46) have been issued and distributed since the Effective Date to pay emergence bonuses to union employees and non-union hourly and salaried non-management employees. The original accrual of $47 on the Effective Date included approximately 60,000 shares (valued in reorganization at $1) that will not be utilized for these bonuses. These shares will be distributed instead to the holders of allowed general unsecured claims in Class 5B as provided in the Plan.

     Settlement obligations relating to non-pension retiree benefits and long-term disability (LTD) benefits for union claimants and non-pension retiree benefits for non-union claimants were satisfied with cash payments of $788 to non-Dana sponsored Voluntary Employee Benefit Associations (VEBAs) established for the benefit of the respective claimant groups. Additionally, we paid DCC $49, the remaining amount due to DCC noteholders, thereby settling DCC’s general unsecured claim of $325 against the Debtors. DCC, in turn, used these funds to repay the noteholders in full. Since emergence, payments of $97 have been made for administrative claims, priority tax claims, settlement pool claims and other classes of allowed claims of $212, with the remaining cash payments of $115 expected to be made during the remainder of 2008.

     Common Stock — As discussed in Note 8, pursuant to the Plan, all of the issued and outstanding shares of Prior Dana common stock, par value $1.00 per share, and any other outstanding equity securities of Prior Dana, including all options and warrants, were cancelled on the Effective Date, and we began the process of issuing 100 million shares of Dana common stock, par value $0.01 per share.

     Preferred Stock — As discussed in Note 8, pursuant to the Plan, we also issued 2,500,000 shares of 4.0% Series A Preferred Stock, par value $0.01 per share (the Series A Preferred), and 5,400,000 shares of 4.0% Series B Preferred Stock, par value $0.01 per share (the Series B Preferred), on the Effective Date. See Note 8 for dividend and conversion terms and an explanation of registration rights.

     Financing at emergence — As discussed in Note 14, we entered into an exit financing facility (the Exit Facility) on the Effective Date. The Exit Facility consists of a Term Facility Credit and Guaranty Agreement in the total aggregate amount of $1,430 (the Term Facility) and a $650 Revolving Credit and Guaranty Agreement (the Revolving Facility). The Term Facility was fully drawn with borrowings of $1,350 on the Effective Date and $80 on February 1, 2008. See Note 14 for the terms and conditions of these facilities and the availability of additional borrowing.

     Fresh Start Accounting — As required by accounting principles generally accepted in the United States (GAAP), we adopted fresh start accounting effective February 1, 2008 following the guidance of SOP 90-7. The financial statements for the periods ended prior to January 31, 2008 do not include the effect of any changes in our capital structure or changes in the fair value of assets and liabilities as a result of fresh start accounting.

     The timing of the availability of funds from the Exit Facility resulted in a January 31, 2008 consummation of the Plan. We have selected February 1, 2008 for adoption of fresh start accounting. In accordance with SOP 90-7, the results of operations of Dana for January 2008 include charges of $21 incurred during the month of January plus one-time reorganization costs incurred at emergence of $104 offset by a pre-emergence gain of $27 resulting from the discharge of liabilities under the Plan. In addition, we recorded a credit to earnings of $1,009 ($831 after tax) resulting from the aggregate changes to the net carrying value of our pre-emergence assets and liabilities to record their fair values under fresh start accounting.

     SOP 90-7 provides, among other things, for a determination of the value to be assigned to the equity of the emerging company as of a date selected for financial reporting purposes. Dana’s compromise total enterprise value is $3,563. This value represents the amount of resources available for the satisfaction of post-petition liabilities and allowed claims, as negotiated between the Debtors and their creditors. This value, along with other terms of the Plan, was determined only after extensive arms-length negotiations with the claimholders. Dana developed its view of what the value should be based upon expected future cash flows of the business after emergence from Chapter 11, discounted at rates reflecting perceived business and financial risks (the discounted cash flows). This valuation and a valuation using market value multiples for peer companies were blended to arrive at the compromise valuation. This value is the enterprise value of the entity and, after adjusting for certain liabilities and debt as explained below and summarized in explanatory note (5) to the reorganized consolidated balance sheet, is intended to approximate the amount a willing buyer would pay for the assets and liabilities of Dana immediately after restructuring.

     The basis for the discounted cash flows (DCF) was the projections published in the Plan. These five-year estimates included projected changes associated with our reorganization initiatives, anticipated changes in general market conditions, including variations in market regions and known new business gains and losses, as well as other factors considered by Dana management. We completed the DCF analysis by operating segment in late 2007 using discount rates ranging from 10.5% to 11.5% based on a capital asset pricing model which utilized weighted average cost of capital relative to certain ASG and HVSG reference group companies. The estimated enterprise value and the resulting equity value were highly dependent on the achievement of the future financial results contemplated in the projections that were published in the Plan. The estimates and assumptions made in our valuation are inherently subject to significant uncertainties, many of which are beyond our control, and there was no assurance that these results could be achieved. The primary assumptions for which there is a reasonable possibility of the occurrence of a variation that would have significantly affected the measurement value included the revenue assumptions, anticipated levels of commodity costs, achievement of the cost reductions outlined in our 2007 Form 10-K, the discount rate utilized, expected foreign exchange rates, the demand for pick-up trucks and SUVs and the overall strength of the U.S. automotive markets. The primary assumptions for conditions expected to be different from conditions in late 2007 were stronger light vehicle and off-highway markets outside North America and a peak in demand for Class 8 trucks in North America in 2009 related to stricter U.S. emission standards that become effective in 2010.

     Based on conditions in the automotive industry and general economic conditions, we used the low end of the range of valuations to determine the enterprise reorganization value.

     For the DCF portion of the valuation, we utilized the average of two DCF methodologies to derive the enterprise value of Dana:

	•		Earnings Before Income Tax, Depreciation and Amortization (EBITDA) Multiple Method — The sum of the present values of the unlevered free cash flows was added to the present value of the terminal value of Dana, computed using EBITDA exit multiples by segment ranging from 3.8 to 9.0 based in part on the range of multiples calculated in using a comparable public company methodology, to arrive at an implied enterprise value for Dana’s operating assets (excluding cash).
	•		Perpetuity Growth Method — The sum of the present values of the unlevered free cash flows was added to the present value of the terminal value of Dana, which was computed using the perpetuity growth method based in part on industry growth prospects and our business plans, to arrive at an implied enterprise value for Dana’s operating assets (excluding cash).

     We also utilized a comparable companies methodology which identified a group of publicly traded companies whose businesses and operating characteristics were similar to those of Dana as a whole, or similar to significant portions of Dana’s operations, and evaluated various operating metrics, growth characteristics and valuation multiples for equity and net debt for each of the companies in the group. We then developed a range of valuation multiples to apply to our projections to derive a range of implied enterprise values for Dana. The multiples ranged from 3.8 to 9.0 depending on the comparable company.

     The final valuation range was an average of the DCF valuation ranges and the comparable company multiples range. This amount was also adjusted for the fair value of unconsolidated subsidiaries, the residual value of DCC’s assets, the fair value of our net operating losses and a note receivable obtained in connection with a divestiture in 2004.

     Under fresh start accounting, this compromise total enterprise value was adjusted for Dana’s available cash and was allocated to our assets based on their respective fair values in conformity with the purchase method of accounting for business combinations in SFAS 141. Available cash was determined by adjusting actual cash at emergence for emergence related cash activity expected to occur after January 31, 2008. The valuations required to determine the fair value of certain of Dana’s assets as presented below represent the results of valuation procedures we performed. The enterprise reorganization value, after adjustments for available cash, is reduced by debt, minority interest and preferred stock with the remainder representing the value to common shareholders.

     The significant assumptions related to the valuations of our assets in connection with fresh start accounting included the following:

Inventory — The value of inventory for fresh start accounting was based on the following:

	•		The fair value of finished goods was calculated as the estimated selling price of the finished goods on hand, less the costs to dispose of that inventory (i.e., selling costs) and a reasonable profit margin for the selling effort.
	•		The fair value of work in process was calculated as the selling price less the sum of costs to complete the manufacturing process, selling costs and a reasonable profit on the remaining manufacturing effort and the selling effort based on profits for similar finished goods.
	•		The fair value of raw material inventory was its current replacement costs.

Fixed Assets — Except for specific fixed assets identified as held for sale, which were valued at their estimated net realizable value, fixed assets were valued at fair value. In establishing fair value, three approaches were utilized to ensure that all market conditions were considered:

•

The market or comparison sales approach uses recent sales or offerings of similar assets currently on the market to arrive at a probable selling price. In applying this method, aligning adjustments were made to reconcile differences between the comparable sale and the appraised asset.

•

The cost approach considers the amount required to construct or purchase a new asset of equal utility, then adjusts the value in consideration of all forms of depreciation as of the appraisal date as described below:

	•		Physical deterioration — the loss in value or usefulness attributable solely to physical causes such as wear and tear and exposure to the elements.
	•		Functional obsolescence — a loss in value is due to factors inherent in the property itself and due to changes in design or process resulting in inadequacy, overcapacity, excess construction, lack of functional utility or excess operation costs.
	•		Economic obsolescence — loss in value by unfavorable external conditions such as economics of the industry, loss of material and labor sources or change in ordinances.

•

The income approach considers value in relation to the present worth of future benefits derived from ownership and is usually measured through the capitalization of a specific level of income.

     Useful lives were assigned to applicable appraised assets based on estimates of economic future usefulness in consideration of all forms of depreciation.

Intangible Assets — The financial information used to determine the fair value of intangible assets was consistent with the information used in estimating the enterprise value of Dana. Following is a summary of each category considered in the valuation of intangible assets:

	•		Core technology — An income approach, the relief from royalty method, was used to value developed technology at $99 as of January 31, 2008. Significant assumptions included development of the forecasted revenue streams for each technology category by geographic region, estimated royalty rates for each technology category, applicable tax rates by geographic region and appropriate discount rates which considered variations among markets and geographic regions.
	•		Trademarks and trade names — Four trade names/trademarks were identified as intangible assets: Dana®, Spicer®, Victor-Reinz® and Long®. An income approach, the relief from royalty method, was used to value trademarks and trade names at $90 as of January 31, 2008. Significant assumptions included the useful life, the forecasted revenue streams for each trade name/trademark by geographic region, estimated applicable royalty rate for each technology category, applicable tax rates by geographic region and appropriate discount rates. For those indefinite lived trade names/trademarks (Dana® and Spicer®), terminal growth rates were also estimated.
	•		Customer contracts and related relationships — Customer contracts and related relationships were valued by operating segment utilizing an income approach, the multi-period excess earnings method, which resulted in a valuation of $491. Significant assumptions included the forecasted revenue streams by customer by geographic region, the estimated contract renewal probability for each operating segment, estimated profit margins by customer by region, estimated charges for contributory assets for each customer (fixed assets, net working capital, assembled workforce, trade names/trademarks and developed technology), estimated tax rates by geographic region and appropriate discount rates.

     The adjustments presented below are to our January 31, 2008 balance sheet. The balance sheet reorganization adjustments presented below summarize the impact of the Plan and the adoption of fresh start accounting as of the Effective Date.

DANA HOLDING CORPORATION
REORGANIZED CONSOLIDATED BALANCE SHEET

		January 31, 2008
		Prior				Reorganization				Fresh Start
		Dana				Adjustments (1)				Adjustments				Dana
Assets
Current assets
Cash and cash equivalents		$	1,199			$	948	(2)		$	—			$	2,147
Accounts receivable
Trade, less allowance for doubtful accounts			1,255								1	(6)			1,256
Other			316								(1	)(6)			315
Inventories			843								169	(6)			1,012
Other current assets			127								(32	)(6)			95
Total current assets			3,740				948				137				4,825
Goodwill			352								(50	)(6)			302	(5)
Intangibles			1								679	(6)			680
Investments and other assets			294				40	(2)			(35	)(6)
							(18	)(3)			(35	)(7)
			294				22				(70	)			246
Investments in affiliates			172								9	(6)			181
Property, plant and equipment, net			1,763								278	(6)			2,041
Total assets		$	6,322			$	970			$	983			$	8,275

DANA HOLDING CORPORATION
REORGANIZED CONSOLIDATED BALANCE SHEET (Continued)

		January 31, 2008
		Prior				Reorganization				Fresh Start
		Dana				Adjustments(1)				Adjustments				Dana
Liabilities and Stockholders’ equity (deficit)
Current liabilities
Notes payable, including current portion of long-term debt		$	177			$	(49	)(2)
							15	(2)
			177				(34	)							143
Debtor-in-possession financing			900				(900	)(2)
Accounts payable			1,094												1,094
Accrued payroll and employee benefits			267								1	(6)			268
Taxes on income including current deferred			132												132
Other accrued liabilities (incuding VEBA paid on February 1)			472				815	(3)			21	(6)
							86	(3)
							(15	)(2)
			472				886				21				1,379	(2)
Total current liabilities			3,042				(48	)			22				3,016
Liabilities subject to compromise			3,382				(3,327	)(3)
							(55	)(2)
			3,382				(3,382	)
Deferred employee benefits and other non-current liabilities			614								(29	)(6)
											105	(7)
											178	(6)
			614								254				868
Long-term debt			19												19
Term loan facility							1,221	(2)							1,221
Minority interest in consolidated subsidiaries			96								16	(6)			112
Total liabilities			7,153				(2,209	)			292				5,236
Series A preferred stock							242	(2)							242
Series B preferred stock							529	(2)							529
Common stock — successor							1	(3)(5)							1
Additional paid-in capital — successor							2,267	(3)(5)							2,267
Common stock — predecessor			150				(150	)(4)
Additional paid-in capital — predecessor			202				(202	)(4)
Accumulated deficit			(515	)			27	(3)			831	(6)
							(104	)(3)			(591	)(8)
							352	(4)
			(515	)			275				240
Accumulated other comprehensive loss			(668	)			278	(3)			591	(8)
							(61	)(3)			(140	)(7)
			(668	)			217				451
Total stockholders’ equity (deficit)			(831	)			3,179				691				3,039
Total liabilities and stockholders’ equity (deficit)		$	6,322			$	970			$	983			$	8,275

 

Explanatory Notes

(1)

Represents amounts recorded on the Effective Date for the implementation of the Plan, including the settlement of liabilities subject to compromise and related payments, the issuance of new debt and repayment of old debt, distributions of cash and new shares of common and preferred stock, and the cancellation of Prior Dana common and preferred stock.

(2)

Cash proceeds at emergence (net of cash payments):

Amount borrowed under the Exit Facility		$	1,350
Original issue discount (OID)			(114	)
Exit Facility, net of OID ($15 current, $1,221 to long-term debt)			1,236
Less: deferred issuance fees			(40	)
Exit Facility net proceeds			1,196
Preferred stock issuance, net of fees and expenses — Series A			242
Preferred stock issuance, net of fees and expenses — Series B			529
Repayment of DIP lending facility			(900	)
Non-union retiree VEBA obligation payment			(55	)
Fees paid at emergence (including $10 previously accrued)			(15	)
Payment to DCC bondholders			(49	)
Net cash		$	948

This entry records our exit financing, the issuance of new Series A and Series B Preferred Stock and the payment of certain bankruptcy obligations on January 31, 2008. An additional $80 of the term loan portion of the Exit Facility was borrowed by Dana on February 1, 2008 and is not included in the January balance sheet above. Debt issuance costs of $40 are recorded in Investments and other assets and OID of $114 is presented net with the debt balance. Both of these are deferred and amortized over the term of the facility. The $790 of preferred stock is recorded at the net proceeds of $771.

(3)

Retirement of Liabilities subject to compromise (LSTC):

Liabilities subject to compromise		$	3,382
APBO reduction charged to LSTC and credited to Accumulated other comprehensive loss (See Note 11 to the consolidated financial statements)			(278	)
Non-union retiree VEBA obligation payment			(55	)
New common stock and paid-in capital issued to satisfy allowed and disputed claims			(2,268	)
Claims to be satisfied in cash transferred to Other accrued liabilities at January 31, 2008 (includes $733 union VEBA obligation paid on February 1)			(815	)
Prior service credits recognized (See Note 11 to the consolidated financial statements)			61
Gain on settlement of Liabilities subject to compromise		$	27
Deferred tax assets not realizable due to emergence		$	(18	)
Reorganization costs accrued at emergence (includes $47 of emergence bonuses)			(86	)
Total reorganization costs incurred at emergence (See Note 3 to the consolidated financial statements)		$	(104	)

This entry records reorganization costs of $104 incurred as a result of emergence and a gain of $27 on extinguishment of the obligations pursuant to implementation of the Plan.

Other accrued liabilities include a $733 liability to the union VEBAs. On February 1, 2008, Dana paid this obligation and borrowed the remaining $80 of the term loan commitment in (2) above. Payments after January 31, under the terms of the Plan, will include approximately $212 of administrative claims, priority tax claims and other classes of allowed claims, and are also included in Other accrued liabilities of Dana at January 31, 2008.

(4)

Closes Prior Dana capital stock and paid-in capital to accumulated deficit.

(5)

Reconciliation of enterprise value to the reorganization value of Dana assets, determination of goodwill and allocation of compromise enterprise value to common stockholders:

Compromise total enterprise value		$	3,563
Plus: cash and cash equivalents			2,147
Less: adjustments to cash assumptions used in valuation and emergence related cash payments after January 31, 2008			(1,129	)
Plus: liabilities (excluding debt and liability for emergence bonuses)			3,694
Reorganization value of Dana assets			8,275
Fair value of Dana assets (excluding goodwill)			7,973
Reorganization value of Dana assets in excess of fair value (goodwill)		$	302
Reorganization value of Dana assets		$	8,275
Less: liabilities (excluding debt and the liability for emergence bonuses)			(3,694	)
Less: debt			(1,383	)
Less: minority interest			(112	)
Less: preferred stock (net of issuance costs)			(771	)
Less: liability for emergence bonus shares not issued at January 31, 2008			(47	)
New common stock ($1) and paid-in capital ($2,267)		$	2,268
Shares outstanding at January 31, 2008			97,971,791
Per share value		$	23.15

The per share value of $23.15 was utilized to record the shares issued for allowed claims, the shares issued for the disputed claims reserve and the liability for shares issued to employees subsequent to January 31, 2008 as emergence bonuses.

The $1,129 in the caption “Adjustments to cash assumptions used in valuation and emergence-related cash payments” in the table above represents adjustments to cash on hand for amounts expected to be paid for bankruptcy claims and fees after emergence of $962 (VEBA payment ($733), remaining administrative claims, priority tax claims, settlement pool claims and other classes of allowed claims ($212) and settlements (cures) for contract rejections ($17)). In addition, consistent with assumptions made in the valuation of enterprise value, available cash was reduced by $56 for DCC settlements and $111 for cash deposits which support letters of credit, a number of self-insured programs and lease obligations, all of which were deemed to be unavailable to Dana.

The following table summarizes the allocation of fair values of the assets and liabilities at the date of emergence as shown in the reorganized consolidated balance sheet as of January 31, 2008:

Cash		$	2,147
Current assets			2,678
Goodwill			302
Intangibles			680
Investments and other assets			246
Investments in affiliates			181
Property, plant and equipment, net			2,041
Total assets			8,275
Less: current liabilities (including notes payable and current portion of long-term debt)			(3,016	)
Less: long-term debt			(1,240	)
Less: long-term liabilities and minority interests			(980	)
Total liabilities acquired			(5,236	)
Net assets acquired		$	3,039

(6)		This entry records the adjustments for fresh start accounting including the write-up of inventory and the adjustment of property, plant and equipment to its appraised value. Fresh start adjustments for intangible assets are also included and are based on valuations discussed above.
		The adjustments required to report assets and liabilities at fair value under fresh start accounting resulted in a pre-tax adjustment of $1,009, which was reported as Fresh start accounting adjustments in the consolidated statement of operations for January 2008. Income tax expense for January included $178 of tax expense related to these adjustments, reducing to $831 the impact of fair value adjustments on net income for the month and on the accumulated deficit at January 31, 2008.
		The $29 reduction in Deferred employee benefits and other non-current liabilities resulted from adjustments to the asbestos liability, discounting of workers’ compensation liabilities and reductions in certain tax liabilities.
		The fresh start adjustment to Other accrued liabilities included realignment-related exit costs of $32 consisting of $10 of projected maintenance, security and taxes on assets held for sale, $9 of costs to be incurred in preparing these assets for sale and $13 of obligations under lease contracts related to facilities and equipment that were in use at January 31, 2008 but will cease operations in 2008 as part of restructuring plans approved prior to Dana’s emergence from bankruptcy. Charges to liability accounts, primarily to write off deferred revenue, reduced the total fresh start adjustment to other accrued liabilities to $21.
(7)		Charge to Accumulated other comprehensive loss for the remeasurement of retained employee benefit plans. (See Note 11 to the consolidated financial statements.)

Reduction of pension plan net assets		$	(35	)
Increase in Deferred employee benefits and other non-current liabilities			(105	)
Charge to Accumulated other comprehensive loss		$	(140	)

(8)

Adjusts Accumulated other comprehensive loss to zero.

Note 3. Reorganization Proceedings

     The Bankruptcy Cases were jointly administered, and the Debtors managed their businesses as debtors in possession subject to the supervision of the Bankruptcy Court. We continued normal business operations during the bankruptcy process and emerged from bankruptcy on January 31, 2008.

     See Note 2 for an explanation of the distributions under the Plan. Except as specifically provided in the Plan, the distributions under the Plan were in complete satisfaction, discharge and release of, all claims and third-party ownership interests in the Debtors arising on or before the Effective Date, including any interest accrued on such claims from and after the Filing Date.

DCC Notes

     DCC is a U.S. subsidiary of Dana but was not part of the bankruptcy. At the time of the bankruptcy filing, DCC had outstanding notes totaling approximately $399. DCC sold substantially all of its asset portfolio and used the proceeds to pay down the DCC notes to a balance of $49 as of the Effective Date. Dana and DCC had executed a settlement agreement whereby they agreed to the discontinuance of a tax sharing agreement between them and to a stipulated amount of a general unsecured claim owed by Prior Dana to DCC of $325 (the DCC Claim). On the Effective Date and pursuant to the Plan, Dana paid DCC $49, the remaining amount due to DCC noteholders, thereby settling DCC’s general unsecured claim of $325 against the Debtors. DCC, in turn, used these funds to repay the noteholders in full.

Liabilities Subject to Compromise

     As required by SOP 90-7, liabilities that were being addressed through the bankruptcy process (i.e., general unsecured nonpriority claims) were reported as Liabilities subject to compromise and adjusted to the allowed claim amount as determined through the bankruptcy process, or to the estimated claim amount if determined to be probable and estimable in accordance with generally accepted accounting principles. Certain of these claims were resolved and satisfied on or before our emergence on January 31, 2008, while others have been or will be resolved subsequent to emergence. Although the allowed amount of certain disputed claims has not yet been determined, our liability associated with these

disputed claims has been discharged upon our emergence. Except for certain specific priority claims (see Note 2), most of the allowed unsecured nonpriority claims in Class 5B will be satisfied by distributions from the previously funded reserve holding shares of Dana common stock. Therefore, the future resolution of claims subject to the reserve will not have an impact on our post-emergence results of operations or financial condition. To the extent that disputed and unliquidated claims are settled for less than the $540 currently estimated, additional distributions will be made to holders of allowed unsecured nonpriority claims.

     Liabilities subject to compromise in the consolidated balance sheet include those of our discontinued operations and consisted of the following at December 31, 2007:

		Prior Dana
		December 31,
		2007
Accounts payable		$	285
Pension and other postretirement obligations			1,034
Debt (including accrued interest of $39)			1,621
Other			571
Liabilities subject to compromise		$	3,511

     On the Effective Date, the Plan required that certain liabilities previously reported as Liabilities subject to compromise be retained by Dana. At December 31, 2007, we reclassified approximately $213 of liabilities, including $145 of asbestos liabilities, $27 of pension liabilities and $41 of other liabilities from Liabilities subject to compromise to current or long-term liabilities of Dana, as appropriate. Liabilities subject to compromise declined further, by $128, in January 2008 as a result of the retention of additional liabilities including $111 of priority tax claim liabilities, $9 of other tax liabilities and $8 of other liabilities. The remaining liabilities subject to compromise were discharged at January 31, 2008 or were retained by us under the terms of the Plan.

Reorganization Items

     Professional advisory fees and other costs directly associated with our reorganization were reported separately as reorganization items pursuant to SOP 90-7. Post-emergence professional fees relate to claim settlements, plan implementation and other transition costs attributable to the reorganization. Reorganization items also include provisions and adjustments to reflect the carrying value of certain pre-petition liabilities at their estimated allowable claim amounts, as well as the costs incurred by the non-Debtor companies as a result of the Debtors’ bankruptcy proceedings.

     The reorganization items in the consolidated statement of operations for the three and six months ended June 30, 2008 and 2007 consisted of the following items:

											Dana					Prior Dana				Prior Dana
		Three Months Ended									Five Months					One Month				Six Months
		June 30,									Ended					Ended				Ended
		Dana					Prior Dana				June 30,					January 31,				June 30,
		2008					2007				2008					2008				2007
Professional fees		$	8				$	34			$	14				$	27			$	73
Contract rejections and claim settlements prior to emergence								8													9
Employee emergence bonus																	47
Foreign tax costs due to reorganization																	33
Other			4									7					19
Interest income								(4	)								(1	)			(7	)
Total reorganization items			12					38				21					125				75
Gain on settlement of liabilities subject to compromise																	(27	)
Reorganization items, net		$	12				$	38			$	21				$	98			$	75

     Reorganization items for the one month ended January 31, 2008 include costs incurred during the month and items recorded at emergence from bankruptcy on January 31, 2008.

		January 2008 Reorganization Items
		Prior Dana				Reorganization				Total
		January 1 to				Costs				January 1
		January 31				Incurred				through
		Reorganization				Upon				January 31,
		Costs				Emergence				2008
Professional fees		$	22			$	5			$	27
Employee emergence bonus							47				47
Foreign tax costs due to reorganization							33				33
Other							19				19
Interest income			(1	)							(1	)
Total reorganization items			21				104				125
Gain on settlement of liabilities subject to compromise							(27	)			(27	)
Total Prior Dana reorganization items		$	21			$	77			$	98

     The gain on settlement of liabilities subject to compromise results from the satisfaction of these liabilities at emergence through issuance of Dana common stock or cash payments, as described in Note 2. We incurred professional fees of $22 during January 2008 and we incurred additional reorganization expenses of approximately $104 upon emergence from bankruptcy on January 31, 2008. Included in the reorganization cost incurred upon emergence is an accrual of $47 for stock bonuses for certain union and non-union employees. Other one-time expenses associated with emergence included transfer taxes and other tax charges to effectuate the emergence and new legal organization, success fee obligations to certain professional advisors and other parties contributing to the bankruptcy reorganization and other costs relating directly to emergence.

Note 4. Asset Impairments and Divestitures

Asset Impairments

     In accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (SFAS 144), we review long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of such assets may not be recoverable. Recoverability of these assets is determined by comparing the forecasted undiscounted net cash flows of the operation in which the assets are utilized to their carrying amount. If those cash flows are determined to be less than the carrying amount of the assets, the long-lived assets of the operation (excluding goodwill) are written down to fair value if the fair value is lower than the carrying amount. Fair value is determined based on discounted cash flows or other methods providing best estimates of value.

     Asset impairments often result from significant actions like the discontinuance of customer programs, facility closures or other events which result in the assets being held for sale. When this occurs, the specific assets are adjusted to their fair value less cost to sell or dispose if that amount is less than the current book value.

     Long-lived assets that continue to be used internally are evaluated for impairment, in the aggregate, by business segment given the global nature of the business segment operation, the interdependency of operations within the segment and the ability to reallocate assets within the segment.

     With our adoption of fresh start accounting upon emergence, assets were revalued to new carrying values based on our enterprise reorganization value and, in some cases, the appraised values of long-lived assets are higher than their previous net book value. These increased valuations for fresh start accounting purposes subject us to greater risks of future impairment.

     Our ASG operating segments are being significantly impacted by reduced North American customer production schedules, potentially longer-term structural reductions in market demand for light pick-ups and SUVs that have been important vehicle platforms for us and higher steel costs. As a result, our earnings outlook for these businesses has declined and we recorded a goodwill impairment in the Driveshaft segment (See Note 7). We also evaluated the long-lived assets in certain of these businesses for impairment at June 30, 2008 given the reduced level of expected sales, profits and cash flows. Based on this assessment, we determined that there was no impairment.

Divestitures

     In 2005, the Board of Directors of Prior Dana approved the divestiture of our engine hard parts, fluid products and pump products operations and we have reported these businesses as discontinued operations through the dates of divestiture. The divestiture of these discontinued operations, with the exception of the pump products business, was completed during 2007. In the first quarter of 2008, we completed the sale of the remaining assets of the pump products business to Melling Tool Company, generating proceeds of $5 and an after-tax loss of $1 that was recorded in January 2008.

     With the sale of the remaining assets of the pump products business in January 2008, we have completed the disposal of the businesses initially classified as discontinued operations in the fourth quarter of 2005.

     During January 2008, we recorded an expense of $5 in discontinued operations associated with a post-closing adjustment relating to the sale of the engine products business. The adjustment reinstated certain retained liabilities. In the second quarter of 2008, we settled the final purchase price adjustment related to the sale of our coupled products business with no impact on our results. We also recorded, as an expense in discontinued operations, additional post-closing purchase price adjustments of $2 in the second quarter of 2008 related to the sale of our engine hard parts and pump products businesses.

Note 5. Discontinued Operations

     The results of operations of the engine hard parts, fluid products and pump products businesses are aggregated and presented as discontinued operations through their respective dates of divestiture. The sales of these businesses were substantially completed during 2007.