Officials at auto-parts maker Dana Corp., who said in October that the company would need to restate its financials for 2004 and part of 2005, said Dana will restate its financials from 2000 through 2003 based on an accounting requirement.
In October, the embattled company admitted that certain items had not been properly accounted for during 2004 and the first and second quarters of 2005. The announcement led to restatements of net income downward by between $25 million and $45 million after tax. The restatements were intended to correct issues involving customer pricing and transactions with suppliers in Dana’s commercial-vehicle business, noted the company. At the time, officials warned that restatements of prior periods may be required.
In its latest announcement, Dana executives said that the items requiring the restatements of the years prior to 2004 are unrelated to the company’s ongoing internal investigation. The restatement for these older items will affect only the timing of reported income and not the cumulative net income in the periods affected.
The latest determinations were made in consultation with the company’s accounting firm, PricewaterhouseCoopers LLP, and independent investigators retained by Dana’s audit committee.
Meanwhile, Dana officials said that the restated results may have violated a covenant requiring the company to furnish financial statements prepared in accordance with generally accepted accounting principles. Indeed, on October 10 — when the restatement was announced — officials notified the company’s trustee that covenants for indentures dated August 8, 2001, and March 11, 2002, may have been broken.
By November 4, Dana was advised by the trustee that the registered holders of notes issued under those indentures were notified of the possible violation, and told of Dana’s intention to restate its financial statements in the near term. Dana said it expects to “cure” the possible violation by filing its financial statements within the 60-day period provided in the indentures.
Dana also said that it is discussing with its bank groups an extension of the covenant waivers for its existing principal bank facility and accounts-receivable facility from November 30, 2005, to beyond year-end, as well as amendments to the bank facility. The company is also discussing possible modifications to the existing facilities or the creation of successor facilities.