Document 6bB4nYRNBX23mMN3Qak0vGvZg

Dana Corporation Page 61 of 176 Table of Contents Income (loss) before taxes 2003 2002 Dollar Change $81 $(114) $195 The matters presented earlier on discussions relating to sales, cost of sales and selling, general and administrative expenses have virtually no impact on the change in income (loss) before income taxes between 2002 and 2003 because of their overall offsetting nature. The improvement from a pre-tax loss in 2002 to pre-tax income in 2003 was also impacted by lower restructuring charges from continuing operations of $158 and $38 lower interest expense in 2003. The reduction in restructuring charges is attributable mainly to the winding down of the restructuring program announced in the fourth quarter of 2001. The reduction in interest expenses is due to both lower average interest rates and lower average debt outstanding. Dollar 2003 2002 Change Income tax benefits $49 $78 $(29) We experienced income tax benefits in both 2003 and 2002 that resulted in a net tax benefit significantly greater than the tax provision normally expected at a customary effective tax rate equal to the U.S. federal rate of 35%. Net tax benefits greater than that expected by applying a 35% rate to income (loss) before taxes were $77 in 2003 and $38 in 2002. A capital loss was generated in 2002 in connection with the sale of one of our subsidiaries. We recognized a benefit of $49 in 2002 in connection with the utilization of a portion of this capital loss. Since the benefit of these losses can only be realized by generating capital gains, a valuation allowance was recorded against the deferred tax asset representing the unused capital loss benefit. The valuation allowance is released upon the occurrence of transactions generating capital gains, or the determination that the occurrence of the transaction is probable. During 2003, income tax benefits of $49 were recognized through the release of the valuation allowance against our capital loss carryforward. Similarly, deferred tax assets relating to ordinary (not capital) operating losses generated in certain jurisdictions where realization is not assured also have valuation allowances recorded against them. As income is generated in these jurisdictions, income tax benefits are recognized through the release of valuation allowances. Tax benefits of $21 were recognized in 2003 as a result of releasing valuation allowances. Results of Operations (2002 versus 2001) Sales of our continuing operations by region for 2002 and 2001 were as follows: Geographical Sales Analysis North America Dollar Change Due To Dollar % Currency 2002 2001 Change Change Effects Acquisitions/ Divestitures Organic Change & Other $5,516 $5,469 $47 1 $(10) $(34) $91 http://www.sec.gOv/Archives/edgar/data/26780/000095015204001384/105571ael0vk.htm 8/1/2004