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		(IRS Employer Identification Number)
incorporation or organization)
4500 Dorr Street, Toledo, Ohio		43615
(Address of principal executive offices)		(Zip Code)

(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 definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o		Accelerated filer þ		Non-accelerated filer   o		Smaller reporting company o

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 May 1, 2008
Common stock, $0.01 par value		98,979,254

 

 

DANA HOLDING CORPORATION — FORM 10-Q
FOR THE QUARTERLY PERIOD
ENDED MARCH 31, 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			7
Item 2		Management’s Discussion and Analysis of Financial Condition and Results of Operations			42
Item 3		Quantitative and Qualitative Disclosures About Market Risk			64
Item 4		Controls and Procedures			64
		PART II — OTHER INFORMATION
Item 1		Legal Proceedings			65
Item 1A		Risk Factors			65
Item 6		Exhibits			65
Signatures					66
Exhibit Index					67
EX-10.1
EX-10.2
EX-10.3
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

		Three Months Ended
		March 31, 2008
		Period from					Prior Dana				Prior Dana
		February 1					January 1				Three Months
		through					through				Ended
		March 31,					January 31,				March 31,
		2008					2008				2007
Net sales		$	1,561				$	751			$	2,145
Costs and expenses
Cost of sales			1,477					702				2,043
Selling, general and administrative expenses			65					34				96
Amortization of intangibles			12
Realignment charges, net			5					12				19
Other income, net			32					8				46
Income from continuing operations before interest, reorganization items and income taxes			34					11				33
Interest expense (contractual interest of $17 for the one month ended January 31, 2008 and $36 for the three months ended March 31, 2007)			27					8				23
Reorganization items, net			9					98				37
Fresh start accounting adjustments								1,009
Income (loss) from continuing operations before income taxes			(2	)				914				(27	)
Income tax expense			(20	)				(199	)			(15	)
Minority interests			(2	)				(2	)			(2	)
Equity in earnings of affiliates			1					2				8
Income (loss) from continuing operations			(23	)				715				(36	)
Loss from discontinued operations			(1	)				(6	)			(56	)
Net income (loss)			(24	)				709				(92	)
Preferred stock dividend requirements			5
Net income (loss) available to common stockholders		$	(29	)			$	709			$	(92	)
Net income (loss) from continuing operations:
Basic		$	(0.28	)			$	4.77			$	(0.24	)
Diluted		$	(0.28	)			$	4.75			$	(0.24	)
Net loss from discontinued operations:
Basic		$	(0.01	)			$	(0.04	)		$	(0.37	)
Diluted		$	(0.01	)			$	(0.04	)		$	(0.37	)
Net income (loss) available to common stockholders:
Basic		$	(0.29	)			$	4.73			$	(0.61	)
Diluted		$	(0.29	)			$	4.71			$	(0.61	)
Average common shares outstanding — Basic			100					150				150
Average common shares outstanding — Diluted			160					150				150

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

DANA HOLDING CORPORATION

							Prior Dana
		March 31,					December 31,
		2008					2007
Assets
Current assets
Cash and cash equivalents		$	1,283				$	1,271
Restricted cash								93
Accounts receivable
Trade, less allowance for doubtful accounts of $23 in 2008 and $20 in 2007			1,444					1,197
Other			364					295
Inventories
Raw materials			383					331
Work in process and finished goods			634					481
Assets of discontinued operations								24
Other current assets			123					100
Total current assets			4,231					3,792
Goodwill			310					349
Intangibles			678					1
Investments and other assets			252					348
Investments in affiliates			183					172
Property, plant and equipment, net			2,049					1,763
Total assets		$	7,703				$	6,425
Liabilities and stockholders’ equity (deficit)
Current liabilities
Notes payable, including current portion of long-term debt		$	127				$	283
Debtor-in-possession financing								900
Accounts payable			1,214					1,072
Accrued payroll and employee benefits			268					258
Liabilities of discontinued operations								9
Taxes on income			142					12
Other accrued liabilities			555					418
Total current liabilities			2,306					2,952
Liabilities subject to compromise								3,511
Deferred employee benefits and other non-current liabilities			907					630
Long-term debt			1,321					19
Minority interest in consolidated subsidiaries			115					95
Commitments and contingencies (Note 16)
Total liabilities			4,649					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, 97,971,791 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			2,267					202
Retained earnings (deficit)			(29	)				(468	)
Accumulated other comprehensive income (loss)			44					(666	)
Total stockholders’ equity (deficit)			3,054					(782	)
Total liabilities and stockholders’ equity (deficit)		$	7,703				$	6,425

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

DANA HOLDING CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)

		Three Months Ended
		March 31, 2008
		Period from					Prior Dana				Prior Dana
		February 1					January 1				Three Months
		through					through				Ended
		March 31,					January 31,				March 31,
		2008					2008				2007
Cash flows — operating activities
Net income (loss)		$	(24	)			$	709			$	(92	)
Depreciation and amortization			67					23				70
Amortization of inventory valuation			15
Minority interest			2					2
Deferred income taxes			(2	)				191
Reorganization:
Gain on settlement of liabilities subject to compromise								(27	)
Payment of claims			(88	)
Reorganization items net of cash payments			(18	)				79				27
Fresh start adjustments								(1,009	)
Payments to VEBAs			(733	)				(55	)
Loss on sale of businesses and assets			1					7				14
Change in working capital			(124	)				(61	)			(52	)
Other, net			(23	)				19				16
Net cash flows used in operating activities			(927	)				(122	)			(17	)
Cash flows — investing activities
Purchases of property, plant and equipment			(29	)				(16	)			(39	)
Proceeds from sale of businesses and assets								5				328
Change in restricted cash								93
Other			8					(5	)			(15	)
Net cash flows provided by (used in) investing activities			(21	)				77				274
Cash flows — financing activities
Proceeds from (repayment of) debtor-in-possession facility								(900	)			200
Net change in short-term debt			(7	)				(18	)			65
Payment of DCC Medium Term Notes								(136	)
Proceeds from Exit Facility debt			80					1,350
Original issue discount fees								(114	)
Deferred financing fees								(40	)
Repayment of Exit Facility debt			(4	)
Issuance of Series A and Series B preferred stock								771
Other			(5	)				(1	)
Net cash flows provided by financing activities			64					912				265
Net increase (decrease) in cash and cash equivalents			(884	)				867				522
Cash and cash equivalents — beginning of period			2,147					1,271				719
Effect of exchange rate changes on cash balances			20					5				17
Net change in cash of discontinued operations								4				(8	)
Cash and cash equivalents — end of period		$	1,283				$	2,147			$	1,250

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

DANA HOLDING CORPORATION

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (Unaudited)

																		Accumulated
										Additional				Retained				Other
		Preferred				Common				Paid-In-				Earnings				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
Foreign 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															(24	)							(24	)
Foreign currency translation																			44				44
Other comprehensive income																							44
Total comprehensive income																							20
Preferred stock dividends															(5	)							(5	)
Balance, March 31, 2008, Dana		$	771			$	1			$	2,267			$	(29	)		$	44			$	3,054

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

DANA HOLDING CORPORATION

INDEX TO NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

1.		Emergence from Chapter 11
2.		Organization and Summary of Significant Accounting Policies
3.		Reorganization Proceedings
4.		Asset Disposals and Impairments, Divestitures and Acquisitions
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. Emergence from Chapter 11

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.

Emergence from Reorganization Proceedings and Related Subsequent Events

     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 March 3, 2006 (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 Third Amended Joint Plan of Reorganization of Debtors and Debtors-in-Possession (as modified, 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 71 million shares of Dana common stock to holders of allowed unsecured claims totaling approximately $2,050. Pursuant to the Plan, we have issued and set aside approximately 27 million additional shares of Dana common stock for future distribution to all holders of allowed unsecured nonpriority claims in Class 5B under the Plan. These shares are distributed as the disputed and unliquidated claims are resolved. Subsequent to emergence we distributed approximately six million shares from the disputed claims reserve leaving approximately 21 million shares for the remaining disputed and unliquidated claims estimated not to exceed $700. To the extent that such remaining claims are settled for less than $700, additional distributions will also be made to previously allowed claimants. The terms and conditions governing such distributions are set forth in the Plan and the Confirmation Order.

     Under the provisions of the Plan, an additional two million shares of common stock are being issued and distributed during the second quarter of 2008 to pay bonuses to union employees and non-union hourly and salaried non-management employees.

     As provided in the Plan and the Confirmation Order, asbestos personal injury claims were reinstated, and holders of such claims may continue to assert them. Certain other specific categories of claims against the Debtors (primarily worker’s compensation and intercompany liabilities to non-Debtors) were retained and are being discharged in the normal course of business.

     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. Administrative claims, priority tax claims and other classes of allowed claims of $212 have been satisfied by cash payments of $88 during the first quarter of 2008, with the additional cash payments of $124 expected to be made during the remainder of 2008.

     Except as specifically provided in the Plan, the distributions under the Plan were in exchange for, and 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.

     Organization — In connection with the formation of a new holding company, we formed a new legal organization aligned with how our businesses are managed operationally. Except as described below, all operating assets and related undischarged liabilities of Prior Dana were transferred to new legal entities within the new holding company structure. Certain other assets and liabilities, including those associated with asbestos personal injury claims, were retained in Prior Dana, which was then merged into Dana Companies, LLC, a consolidated wholly owned subsidiary of Dana. The assets of Dana Companies, LLC include insurance rights relating to coverage against these liabilities and other assets which we believe are sufficient to satisfy its liabilities. Dana Companies, LLC continues to process asbestos personal injury claims in the normal course of business and is paying such claims in cash. Dana Companies, LLC is separately managed, and has an independent board member. The independent board member is required to approve certain transactions including dividends or other transfers of $1 or more of value to Dana. See Note 16 for a discussion of our asbestos liabilities.

     Common Stock — 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, we began the process of issuing 100 million shares of Dana common stock, par value $0.01 per share, including approximately 71 million shares for allowed unsecured nonpriority claims, approximately 27 million additional shares issued and deposited to a reserve for disputed unsecured nonpriority claims in Class 5B under the Plan and approximately two million shares to pay bonuses to union employees and non-union hourly and salaried non-management employees. A charge of $47 to reorganization items for these bonuses was recorded as a liability as of the Effective Date. A portion of the bonus shares were issued in April 2008 with approximately one million remaining to be issued.

     Preferred Stock — Pursuant to the Plan, we 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. The Series A Preferred was sold to Centerbridge Partners, L.P. and certain of its affiliates (Centerbridge) for $250, less a commitment fee of $3 and expense reimbursement of $5, resulting in net proceeds of $242. The Series B Preferred was sold to certain qualified investors (as described in the Plan) for $540, less a commitment fee of $11, resulting in net proceeds of $529.

     In accordance with the terms of the preferred stock, all of the shares of preferred stock are, at the holder’s option, convertible into fully paid and non-assessable shares of new common stock at a conversion price of $13.19. Conversion of all of the outstanding shares of preferred stock would increase the number of shares of our common stock outstanding by approximately 60 million.

     Shares of Series A Preferred having an aggregate liquidation preference of not more than $125 and all of the Series B Preferred are convertible at any time at the option of the applicable holder after July 31, 2008. The remaining shares of Series A Preferred are convertible after January 31, 2011. In addition, we will be able to force conversion of all, but not less than all, of the preferred stock if the common stock’s per share closing price exceeds the mandatory conversion trigger price, as determined at that time, for at least 20 consecutive trading days. The price at which the preferred stock is convertible is subject to adjustment in certain customary circumstances, including as a result of stock splits and combinations, dividends and distributions and issuances of common stock or common stock derivatives at a price below the preferred stock conversion price in effect at that time.

     Dividends on the preferred stock are accrued from the issue date at a rate of 4% per annum and are payable in cash on a quarterly basis as approved by the Board of Directors. If at any time we fail to pay the equivalent of six quarterly dividends on the preferred stock, the holders of the preferred stock, voting separately as a single class, will be entitled to elect two additional directors to our Board of Directors. However, so long as Centerbridge owns Series A Preferred having an aggregate liquidation preference of at least $125, this provision will not be applicable.

     In connection with the issuance of the preferred stock, we entered into two registration rights agreements: one with Centerbridge and the other with the purchasers of Series B Preferred, and we also entered into a shareholder’s agreement. Under the terms of these agreements and the Restated Certificate of Incorporation, Centerbridge was granted representation on our Board of Directors and limited approval rights. See Note 8 for additional information.

     Financing at emergence — On the Effective Date, Dana, as borrower, and certain of our domestic subsidiaries, as guarantors, entered into an exit financing facility (the Exit Facility) with Citicorp USA, Inc., Lehman Brothers Inc. and Barclays Capital. 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. There have been no borrowings under the Revolving Facility but $200 was utilized for existing letters of credit. Net proceeds from the Exit Facility were $1,276 after $114 of original issue discount (OID) and $40 of customary issuance costs and fees, both of which were deferred and will amortize to interest expense over the term of the loan. The net proceeds were used to repay the Senior Secured Superpriority Debtor-in-Possession Credit Agreement (DIP Credit Agreement), make other payments required upon exit from bankruptcy and provide liquidity to fund working capital and other general corporate purposes. 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 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). 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 between the Interested Parties. 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. This valuation and a valuation using market value multiples for peer companies were blended to arrive at the compromise valuation. This value is enterprise value of the entity and, after adjusting for certain liabilities and debt, is intended to approximate the amount a willing buyer would pay for the assets and liabilities of Dana immediately after restructuring. Based on current conditions in the automobile industry and general economic conditions, we used the low end of the range of valuations provided by the valuation specialists to determine the enterprise reorganization value.

     Under fresh start accounting, this compromise total enterprise value is adjusted to reorganization value and is allocated to our assets based on their respective fair values in conformity with the purchase method of accounting for business combinations in Statement of Financial Accounting Standards (SFAS) No. 141, “Business Combinations” (SFAS 141). The valuations required to determine the fair value of certain of Dana’s assets as presented below represent the results of valuation procedures performed by valuation specialists.

     The enterprise reorganization value, after adjustments for cash net of expected claims payments, is reduced by debt, minority interest and preferred stock with the remainder representing the value to common shareholders.

     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		(2)						Dana
Assets
Current assets
Cash and cash equivalents		$	1,199			$	948		(6)					$	—							$	2,147
Restricted cash
Accounts receivable
Trade,			1,255												1								1,256
Other			316												(1	)							315
Inventories			843												169								1,012
Other current assets			127												(32	)							95
Total current assets			3,740				948								137								4,825
Goodwill			352												(50	)							302
Intangibles			1												679								680
Investments and other assets			294				22		(3)						(70	)							246
Investments in affiliates			172												9								181
Property, plant and equipment, net			1,763												278								2,041
Total assets		$	6,322			$	970							$	983							$	8,275
Liabilities and Stockholders’ equity (deficit)
Current liabilities
Notes payable, including current portion of long-term debt		$	178			$	(35	)						$	—							$	143
Debtor-in-possession financing			900				(900	)
Accounts payable			1,094																				1,094
Accrued payroll and employee benefits			267												1								268
Taxes on income			132																				132
Other accrued liabilities			471				887		(6)						21								1,379	(6)
Total current liabilities			3,042				(48	)							22								3,016
Liabilities subject to compromise			3,382				(3,382	)
Deferred employee benefits and other non-current liabilities			614												254								868
Long-term debt			19																				19
Term loan facility							1,221		(3)														1,221
Minority interest in consolidated subsidiaries			96												16								112
Total liabilities			7,153				(2,209	)							292								5,236
Series A preferred stock							242		(3)														242
Series B preferred stock							529		(3)														529
Common stock — successor							1																1
Additional paid in capital — successor							2,267																2,267
Common stock — predecessor			150				(150	)
Additional paid in capital — predecessor			202				(202	)
Accumulated deficit			(515	)			275		(4)						240		(5)
Accumulated other comprehensive income			(668	)			217		(4)						451		(5)
Total stockholders’ equity (deficit)			(831	)			3,179								691		(5)						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 as discussed above.
	(2)		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 performed by third party valuation specialists. The fresh start adjustments also result in the elimination of the accumulated deficit and accumulated other comprehensive income (AOCI).
			The reorganization value was allocated to assets and liabilities at appropriate fair market values, with the excess of reorganization value over the fair value of our net assets of $302 recorded as goodwill.
	(3)		Records debt financing for the senior credit facility and the issuance of new Series A and Series B Preferred. An additional $80 of the term loan facility was borrowed by Dana on February 1, 2008 and is not included in the January balance above. Debt issuance costs of $40 are recorded in Investments and other assets and OID of $114 is netted against the debt. Both of these are deferred and amortized over the debt term. The $790 of preferred stock is recorded at the net proceeds of $771.
	(4)		Records reorganization costs of $104 and a gain of $27 on extinguishment of the obligations pursuant to implementation of the Plan and the closeout of the Prior Dana common stock balances coincident with the issuance of shares of Dana. Other comprehensive income of $217 related to the termination of the union postretirement plans at emergence is included in AOCI.
	(5)		Includes the $1,009 ($831 after tax) adjustment to assets and liabilities for fresh start accounting and a charge of $140 to other comprehensive income related to the remeasurement of employee benefit plans.
	(6)		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 (3) 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.

Note 2. Summary of Significant Accounting Policies

     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 is the first public report of our post-emergence results and, as discussed in Note 1, includes the results of the implementation of 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 will result in financial statements that are not comparable to financial statements in periods prior to emergence.

     Basis of Presentation — As discussed in Note 3, the Debtors reorganized under Chapter 11 of the United States 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 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 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 asset values were valued at fair market value in accordance with SFAS 141. In addition, our liabilities were adjusted to fair value or present value where appropriate. Deferred taxes are determined in accordance with SFAS 109, “Accounting for Income Taxes.”

     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 first-in, first-out (FIFO) or average cost basis for non-U.S. inventories. In connection with our adoption of fresh start accounting on February 1, 2008, inventories were revalued upward by $169 including the elimination of the U.S. LIFO reserve of $120. Of this valuation amount, $15 related to FIFO basis inventory outside of the U.S. is to be amortized to cost of sales as the inventory is sold. This occurred primarily in the first quarter with a nominal amount to be recorded in the second quarter. The remainder of the valuation represents U.S. inventories which will be accounted for on a LIFO basis following the initial valuation on the effective date.

     Property, Plant and Equipment — Prior to the effective date, property, plant and equipment of Prior Dana was recorded at cost. If assets were impaired their value was reduced by an increase in the depreciation reserve. Depreciation was 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. In connection with our adoption of fresh start accounting on February 1, 2008, fixed assets were revalued to their fair market value, generally their appraised value after considering economic obsolescence, and new useful lives were established. The appraisals assigned remaining useful lives to each asset with assigned lives ranging from two to thirty years. The revalued assets will depreciate over these estimated remaining useful lives under the same straight-line method as utilized for the Prior Dana assets. Property additions after January 31, 2008 will be assigned lives based on our existing practices.

     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.

     Intangible Assets — Intangible assets were valued as part of the appraisals performed for fresh start reporting. Historically we carried nominal values for acquired patent and trademark intangibles. Our intangible assets as valued for fresh start accounting include customer contracts, developed technology and trademark and trade names. Customer contracts and developed technology have finite lives while substantially all of the trademarks and trade names have infinite lives. Intangible assets are carried at cost less accumulated amortization and are amortized over their useful life using the straight-line method of amortization. See Note 7.

     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 or more frequently under certain circumstances to determine if any impairment has occurred. See Note 7.

     Earnings Per Share — Basic earnings per share is computed by dividing earnings by the weighted average common shares outstanding. 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 No. 161”). SFAS No. 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,” 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 No. 133. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. Early application is encouraged.

     In April 2008, the FASB issued FASB Staff Position No. FAS 142-3 (FSP 142-3) “Determination of the Useful Life of Intangible Assets.” 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 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.

Note 3. Reorganization Proceedings

     The Bankruptcy Cases were jointly administered, with the Debtors managing 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.

Claims Resolution

     See Note 1 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 non-Debtor subsidiary of Dana. At the time of our bankruptcy filing, DCC had outstanding notes totaling approximately $399. DCC has sold substantially all of its remaining asset portfolio and has used the proceeds to pay down the DCC Notes to a balance of $136 at December 31, 2007. In January 2008, DCC made a $90 payment to the forbearing noteholders, consisting of $87 of principal and $3 of interest.

     Dana and DCC 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, 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.

Liabilities Subject to Compromise

     As required by SOP 90-7, liabilities being addressed through the bankruptcy process (i.e., general unsecured nonpriority claims) were reported as liabilities subject to compromise and adjusted to allowed claim amounts 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 unresolved claims has not yet been determined, our liability associated with these unresolved claims subject to compromise has been discharged upon our emergence. Except for certain specific claims, most of the general unsecured claims 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 unresolved claims are settled for less than the $700 estimated, additional distributions will be made to previously allowed claimants.

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

		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 by $129 in January 2008 as a result of additional liabilities retained by Dana with the remainder settled by the terms of the Plan. All 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. Professional fees include fees paid in connection with the reorganization process. 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 quarters ended March 31, 2008 and 2007 consisted of the following items:

		Three Months Ended
		March 31, 2008
		Dana					Prior Dana				Prior Dana
		Two Months					One Month				Three Months
		Ended					Ended				Ended
		March 31,					January 31,				March 31,
		2008					2008				2007
Professional fees		$	6				$	27			$	39
Contract rejections and claim settlements prior to emergence												1
Gain on settlement of liabilities subject to compromise								(27	)
Employee emergence bonus								47
Foreign tax costs due to reorganization								33
Other			3					19
Interest income								(1	)			(3	)
Total reorganization items		$	9				$	98			$	37

     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 1. We incurred professional fees of $21 during January 2008 and we incurred additional reorganization expenses of approximately $104 upon emergence from bankruptcy on January 31, 2008. Included in these expenses are $47 for the provision of common stock bonuses to certain union and non-union people. 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 Disposals and Impairments, Divestitures and Acquisitions

Impairments

     In accordance with SFAS 142, “Goodwill and Other Intangible Assets,” 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 have been 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.

DCC Asset Disposals and Impairments

     Since 2001, DCC has sold portfolio assets in individually structured transactions and achieved further reductions through normal portfolio runoff. In 2006, DCC adopted a plan to proceed with an accelerated sale of substantially all of its remaining assets. The carrying value of the remaining DCC portfolio assets was $4 at March 31, 2008 and $7 at December 31, 2007. These assets have been adjusted to their estimated fair value less cost to sell. The remaining DCC assets include a partnership investment with a current carrying value of $3.

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.

     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. We have pending purchase price adjustments related to the sales in the third quarter of 2007 of our fluid products hose and tubing business and our coupled fluid products business. We do not expect these adjustments to have a significant impact on our results.

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.

     The results of the discontinued operations for the three months ended March 31, 2008 and 2007 were as follows:

		Three Months Ended
		March 31, 2008
							Prior Dana				Prior Dana
		Two Months					One Month				Three Months
		Ended					Ended				Ended
		March 31,					January 31,				March 31,
		2008					2008				2007
Sales		$	—				$	6			$	278
Cost of sales								6				270
Selling, general and administrative expenses												15
Impairment charges												1
Realignment and other expense, net			1					8				26
Loss before income taxes			(1	)				(8	)			(34	)
Income tax benefit (expense)								2				(22	)
Loss from discontinued operations		$	(1	)			$	(6	)		$	(56	)

     Realignment and other expense, net in 2008 includes the pre-tax loss of $1 on the sale of the remaining pump products business and a post-closing adjustment of $5 related to the sale of the engine hard parts business in the prior year. The first quarter of 2007 includes a pre-tax loss of $26 on the sale of the engine hard parts business to MAHLE GmbH.

     With the sale of the remaining assets of the pump products business to Melling Tool Company in January 2008, we have completed the disposal of our discontinued operations.

     The assets and liabilities of discontinued operations reported in the consolidated balance sheet at December 31, 2007 consisted of the following:

		December 31,
		2007
Assets of discontinued operations
Accounts receivable		$	13
Inventories			5
Cash and other assets			6
Total assets		$	24
Liabilities of discontinued operations
Accounts payable		$	6
Accrued payroll and employee benefits			1
Other current liabilities			2
Total liabilities		$	9

     There were no remaining assets and liabilities of discontinued operations as of March 31, 2008.

     In the consolidated statement of cash flows, the cash flows of discontinued operations are reported in the respective categories of cash flows, along with those of our continuing operations.

Note 6. Realignment of Operations

     Realignment of our manufacturing operations was an essential component of our bankruptcy reorganization plans. We focused on eliminating excess capacity, closing and consolidating facilities and repositioning operations in lower cost facilities or those with excess capacity and on reducing and realigning overhead costs.

     During 2007, we completed the closure of fifteen facilities. An additional 3 facilities are scheduled to close in 2008 and 2009 and other locations are in various stages of implementing work force reductions. Realignment costs in January 2008 include the announced closure of the Barrie, Ontario Commercial Vehicle facility.

     In connection with the adoption of fresh start accounting, the facilities which will be closed in 2008 and later were treated as closures of acquired facilities in accordance with Emerging Issues Task Force Issue No. 95-3 and an additional $32 was recorded at emergence for additional closure-related obligations.

     The following tables show the realignment charges and related payments including the amounts accrued in January 2008 under fresh start accounting in our continuing operations for the three months ended March 31, 2008.

		Employee				Long-Lived
		Termination				Asset				Exit
		Benefits				Impairment				Costs				Total
Balance at December 31, 2007		$	53			$	—			$	15			$	68
Activity during the period
Charged to realignment			7				2				3				12
Fresh start adjustment											32				32
Non-cash write-off							(2	)							(2	)
Cash payments			(2	)							(3	)			(5	)
Balance at January 31, 2008			58								47				105
Activity during the period
Charged to realignment			1								4				5
Cash payments			(4	)							(12	)			(16	)
Balance at March 31, 2008		$	55			$	—			$	39			$	94

     The realignment charges during the three months ended March 31, 2008 related primarily to the ongoing facility closure activities associated with the announced closure of the Barrie, Ontario facility and the previously announced manufacturing footprint actions.

     At March 31, 2008, $94 of realignment accruals remained in accrued liabilities, including $55 for the reduction of approximately 1,400 employees to be completed over the next two years and $39 for lease terminations and other exit costs. The estimated cash expenditures related to these liabilities are projected to approximate $81 in 2008 and $13 thereafter. In addition to the $94 accrued at March 31, 2008, we estimate that another $21 will be expensed in the future to complete pending initiatives.

     Realignment initiatives generally occur over multiple reporting periods. The following table provides project-to-date and estimated future expenses for completion of our pending realignment initiatives for the Automotive Systems Group (ASG) and the Heavy Vehicle Systems Group (HVSG) business units and the underlying segments.

		Expense Recognized												Future
		Prior to								Total				Cost to
		2008				2008				to Date				Complete
ASG
Axle		$	53			$	3			$	56			$	8
Driveshaft			28				1				29				5
Structures			68				4				72				1
Total ASG			149				8				157				14
HVSG
Commercial Vehicles			18				9				27				7
Other
Total continuing operations		$	167			$	17			$	184			$	21

Note 7. Goodwill and Other Intangible Assets

Goodwill

     Goodwill is tested for impairment on an annual basis and between annual tests if indicators of potential impairment exist, using a fair-value based approach. The annual evaluation for impairment is generally based on valuation models that incorporate internal projections of expected future cash flows and operating plans. The annual impairments tests are performed on October 31.

     The following table summarizes the components of goodwill by operating segment:

						Fresh				Effect of
		December 31,				Start				Currency				March 31,
		2007				Adjustments				and Other				2008
ASG
Driveshaft		$	173			$	2			$	3			$	178
Sealing			26				(26	)
Thermal			31				(31	)
Total			230				(55	)			3				178
HVSG
Off-Highway			119				5				8				132
Total		$	349			$	(50	)		$	11			$	310

Other Intangible Assets

     In connection with the adoption of fresh start accounting, we obtained valuations of certain intangible assets including core technology, trademarks and trade names and customer relationships. Core technology includes the valuation of proprietary know-how and expertise that is inherent in our products and manufacturing processes. Trademark and tradenames valuations include the valuation of our trade names and the related trademarks including Dana^®, Spicer^® and others. Customer relationships include the established relationships with our customers and the related ability of these customers to continue to generate future recurring revenue and income. The value of these intangible assets was measured by valuation experts and was recorded at emergence as part of the fresh start adjustments discussed in Note 1.

     Intangible assets are amortized using the straight-line method over their estimated period of benefit, ranging from one to seventeen years. We evaluate the recoverability of intangible assets periodically and take into account events or circumstances that warrant revised estimates of useful lives or that indicate that impairment exists. Substantially all of our intangible assets are subject to amortization.

          The following table summarizes the components of other intangible assets.

		Dana
		March 31, 2008
		Weighted				Gross								Net
		Average				Carrying				Accumulated				Carrying
		Useful Life				Amount				Amortization				Amount
		(years)
Amortizable intangible assets
Core technology			7			$	102			$	(3	)		$	99
Trademarks and trade names			17				4								4
Customer relationships			8				502				(12	)			490
Non-amortizable intangible assets
Trademarks and trade names							85								85
						$	693			$	(15	)		$	678

     Intangible assets attributable to each of our operating segments, net, at March 31, 2008, were as follows: Axle, $15; Driveshaft $238; Sealing $53; Thermal $25; Structures $61; Commercial Vehicle $52; and Off-Highway $234.

     Amortizable intangible assets at December 31, 2007, primarily trademarks, were less than $1.

     Amortization expense related to intangible assets was $15 in the two months ended March 31, 2008. Amortization of core technology of $3 was charged to cost of sales and $12 of amortization of trademarks and trade names and customer relationships was charged to amortization of intangibles.

     Estimated amortization expense related to intangible assets for 2008 and each of the five succeeding fiscal years is shown below. Actual amounts may differ from these estimates due to such factors as foreign exchange, customer turnover, impairments, additional intangible asset acquisitions and other events.

		Estimated
		Aggregate
		Amortization
		Expense
		(pre-tax)
Remainder of 2008		$	68
2009			90
2010			90
2011			89
2012			89
2013			88

Note 8. Capital Stock

Preferred Stock

Prior Dana Preferred Stock

     Prior Dana had 5,000,000 shares of preferred stock authorized, without par value, including 1,000,000 shares reserved for issuance under a Rights Agreement. No shares of Prior Dana preferred stock were issued. The share authorization and reservation were cancelled on the Effective Date.

22

Series A and Series B Preferred Stock

     Issuance — Pursuant to the Plan, we issued 2,500,000 shares of our Series A Preferred and 5,400,000 shares of our Series B Preferred on the Effective Date. The Series A Preferred was sold to Centerbridge for $250, less a commitment fee of $3 and expense reimbursement of $5, resulting in net proceeds of $242. The Series B Preferred was sold to certain qualified investors (as described in the Plan) for $540, less a commitment fee of $11, resulting in net proceeds of $529.

     Conversion Rights — In accordance with the terms of the preferred stock, all of the shares of preferred stock are, at the holder’s option, convertible into a number of fully paid and non-assessable shares of common stock at an initial price of $13.19. This initial conversion price is subject to certain adjustments as set forth in our Restated Certificate of Incorporation.

     Shares of Series A Preferred having an aggregate liquidation preference of not more than $125 and the Series B Preferred are convertible at any time at the option of the applicable holder after July 31, 2008. The remaining shares of Series A Preferred are convertible after January 31, 2011. In addition, we will be able to cause the conversion of all, but not less than all, of the preferred stock, if the common stock’s per share closing price exceeds the mandatory conversion trigger price, as determined at that time, for at least 20 consecutive trading days. This price is subject to adjustment in certain customary circumstances, including as a result of stock splits and combinations, dividends and distributions and certain issuances of common stock or common stock derivatives.

Common Stock

New Common Stock

     On the Effective Date, we began the process of issuing 100 million shares of Dana common stock, par value $0.01 per share, including approximately 71 million shares for allowed unsecured nonpriority claims, approximately 27 million additional shares deposited to a reserve for disputed unsecured nonpriority claims in Class 5B under the Plan and approximately two million shares to pay bonuses to union employees and non-union hourly and salaried non-management employees. We relied, based on the Confirmation Order, on Section 1145(a)(1) of the Bankruptcy Code to exempt us from the registration requirements of the Securities Act for the offer and sale of the common stock to the general unsecured creditors. We filed a Registration Statement on Form S-8 with respect to the common stock issued for the post-emergence bonuses to non-union hourly and salaried non-management employees which we began issuing in April 2008. The charge to reorganization items, net for these bonuses was accrued as a current liability as of the Effective Date.

Note 9. Earnings Per Share

     The 100 million shares of common stock utilized in the calculation of earnings per share for the two month period ended March 31, 2008 represent the average shares of common stock issued and committed for issuance for the two months ended March 31, 2008. The 98 million shares of common stock issued have been increased by the shares of common stock committed for future issuance to certain union and non-union employees. In the calculation of basic earnings per share, net income is reduced by the preferred dividend.

     Stock options and restricted stock units issued during the quarter had a nominal impact on the weighted average shares outstanding as a substantial portion of the stock options carry a strike price above the average price of the stock. Conversion of the preferred stock has not been included in the share count for diluted earnings per share as it was anti-dilutive. The preferred stock would convert into approximately 60 million shares of common stock at the $13.19 conversion price.

23

     In addition to average shares of common stock outstanding of 150 million for 2007, we had one million shares that satisfy the definition of potentially dilutive shares. These potentially dilutive shares have been excluded from the computation of earnings per share for the three months ended March 31, 2007 as the loss from continuing operations for these periods caused the shares to have an anti-dilutive effect. In addition, we excluded 14 million shares of common stock for the 2007 period from the computation of earnings per share as these shares represented stock options with exercise prices higher than the average per share trading price of our stock during the respective periods and the effect of including them would also be anti-dilutive.

Note 10. Incentive and Stock Compensation

     Upon emergence, all common stock as well as equity-based incentive compensation, including but not limited to stock options and restricted stock units of Prior Dana, were cancelled in accordance with the Plan.

Stock Distributions

     As previously disclosed, as part of the amendments to executive agreements Dana entered into with certain executive officers, Dana instituted an Executive Incentive Compensation (EIC) plan. The participant is eligible to receive payments with respect to 2007 and 2008 performance upon the achievement of certain earnings before interest, depreciation and amortization, reorganization and realignment (EBITDA) targets as defined in the EIC plan. Please note, in previous filings we have utilized the term “EBITDAR” to describe earnings before interest, depreciation and amortization, reorganization and realignment. For purposes of reflecting this measurement as it is customarily used, we have elected for this report and future filings to describe earnings before interest, depreciation and amortization, reorganization and realignment by now utilizing the term “EBITDA”. On April 14, 2008, we issued 73,562 shares of common stock to EIC participants for meeting 2007 performance goals. The average fair value per share was $9.84 on the date of distribution.

2008 Omnibus Incentive Plan

     As part of the Plan, the Bankruptcy Court approved our 2008 Omnibus Incentive Plan. The purpose of the Omnibus Incentive Plan is to attract and retain our directors, officers, other employees and consultants and to motivate and provide to such persons incentives and rewards for superior performance. The eligibility requirements and terms governing the allocation of any common stock and the receipt of other consideration under the Omnibus Incentive Plan is determined by the Board of Directors and/or the Compensation Committee of the Board of Directors, as applicable. It is a tenet of our executive compensation philosophy that performance-based compensation provided to our Chief Executive Officer and other senior managers who are “covered employees” under Section 162(m) of the Internal Revenue Code of 1986, as amended (the Code) should comply with the Code requirements that qualify such compensation as tax-deductible for Dana, unless the Compensation Committee determines that it is in Dana’s best interests in individual circumstances to provide compensation that is not tax-deductible.

     Under the Omnibus Incentive Plan and subject to adjustment as provided therein, the number of shares of common stock that may be issued or delivered

•		upon the exercise of option rights or appreciation rights,
•		as restricted shares and released from the substantial risk of forfeiture thereof,
•		as settlement for restricted stock units upon satisfaction of the substantial risk of forfeiture thereof,
•		in payment of performance shares or performance units that have been earned,
•		as awards to non-employee directors, or
•		in payment of dividend equivalents paid with respect to awards made under the Omnibus Incentive Plan

may not exceed, in the aggregate, 16,090,000 shares, plus any shares relating to awards that terminate or are forfeited. The aggregate number of shares of common stock we actually issue or transfer upon the exercise of incentive stock options may not exceed 4,000,000 shares. Further, no participant may be granted option rights or appreciation rights for more than 2,000,000 shares of common stock during any calendar year, subject to adjustments as provided in the Omnibus Incentive Plan.

     In no event may any participant receive restricted shares, restricted stock units or performance shares in the aggregate for more than 1,000,000 shares of common stock during any calendar year or receive an award of performance units having an aggregate maximum value as of their respective dates of grant in excess of $10. The maximum number of shares that may be granted under the Omnibus Incentive Plan is subject to adjustment in the

24

event of stock dividends, stock splits, combinations of shares, recapitalizations, mergers, consolidations, spin-offs, reorganizations, liquidations, issuances of rights or warrants and similar events.

     No grants may be made under the Omnibus Incentive Plan after December 25, 2017.

     Under the Omnibus Incentive Plan, the Board of Directors may also, in its discretion, authorize the granting of option rights and appreciation rights to non-employee directors and may also authorize the grant of other awards.

     Upon a change in control of Dana, except as otherwise provided in the terms of the award or as provided by the Compensation Committee of the Board of Directors, to the extent outstanding awards are not assumed, converted or replaced by the resulting entity, all outstanding awards that may be exercised will become fully exercisable, all restrictions with respect to outstanding awards will lapse and such awards will become fully vested and non-forfeitable, and any specified performance measures with respect to outstanding awards will be deemed to be satisfied at target.

Stock Options

     During the first quarter of 2008, we granted stock options to our Executive Chairman as well as our non-employee directors under the Omnibus Incentive Plan. We calculated a fair value at the date of the grant using the Black-Scholes valuation method for options granted. We changed from the lattice valuation method because we believe Black-Scholes is more appropriate for situations in which historical exercise data is not available. The fair value at grant date for the employee options was $5.57. The weighted-average fair value at grant date for the non-employee director options was $4.53. The exercise price of each option awarded under the Omnibus Incentive Plan equaled the market price of Dana common stock on the date of grant and an option’s maximum term is 10 years. Shares issued upon the exercise of options are recorded in the common stock accounts at the option price.

     The following table summarizes the stock options granted to employees under the Omnibus Incentive Plan during the two months ended March 31, 2008:

		Number of				Exercise
		Shares				Price
Outstanding at January 31, 2008			—			$	—
Granted			800,000				12.75
Outstanding at March 31, 2008			800,000			$	12.75

     The following table summarizes information about the employee stock options outstanding at March 31, 2008:

		Outstanding Options						Exercisable Options
				Remaining
Range of		Number of		Contractual		Exercise		Number of		Exercise
Exercise Prices		Options		Life in Years		Price		Options		Price
$12.75		800,000		9.8		$12.75		—		$—

25

     The following table summarizes the stock options granted to the non-employee directors under the Omnibus Incentive Plan during the two months ended March 31, 2008:

						Weighted
						Average
		Number of				Exercise
		Shares				Price
Outstanding at January 31, 2008			—			$	—
Granted			231,714				10.06
Outstanding at March 31, 2008			231,714			$	10.06