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Dana Corporation Page 31 of 176 Table of Contents more on our core original equipment markets will enable us to capitalize on the continuing trends toward modularity and systems integration in these markets. New Business In the OE vehicular business, new programs are generally awarded to suppliers well in advance of the expected start of production. The amount of lead time varies based on the nature of the product, size of the program and required start-up investment. The awarding of new business often coincides with model changes on the part of vehicle manufacturers. Given the cost and service concerns associated with changing suppliers, we expect to retain any awarded business over the vehicle life, which is typically several years. During 2003, more than $400 of our sales increase resulted from the addition of net new business -- new business in excess of lost business. As of December 31, 2003, we expected net new business to contribute a minimum of $400 to our 2004 sales. Beyond 2004, based on business already awarded or lost, we expect net new business contributions through 2009. Summary Over the last three years, we have repositioned the organization -- through divestitures, restructuring, outsourcing and strategic partnerships -- to be more strategically focused and more competitive. In the process, we have downsized from a company with sales in excess of $13,000 (before adjustments to reflect discontinued businesses) to a company with 2003 sales ofjust under $8,000 reported by our continuing operations. At the same time, we have improved our overall profitability and financial position. With a more focused strategy and improved financial situation, we are better positioned to grow the business in our core markets. Liquidity and Capital Resources Cash Flows (2003 versus 2002) Cash Flows from Operating Activities: Net income (loss) Effect of change in accounting Depreciation and amortization Deferred income taxes Unremitted earnings of affiliates Gains on divestitures and asset sales Asset impairment charges Decrease (increase) in operating working capital Other Cash flows from operating activities 2003 2002 Dollar Change $ 222 394 (35) (49) (47) 21 (212) 41 $(182) 220 478 (135) (43) (53) 114 50 72 $ 335 $ 521 $ 404 (220) (84) 100 (6) 6 (93) (262) (31) $(186) For a number of reasons, the substantial increase in net income did not translate into stronger http://www.sec.gOv/Archives/edgar/data/26780/000095015204001384/105571ael0vk.htm 8/1/2004