DETROIT -- Chassis supplier Dana Corp. said Monday that it will have to restate its earnings for 2004 and the first half of 2005 due to problems with customer pricing and deals with suppliers in its Commercial Vehicles units.
Dana, of Toledo, Ohio, also said it would not release its third-quarter earnings on Oct. 19 and withdrew its earnings guidance for this year.
The company also said it believes there are "material weaknesses" in its internal control over financial reporting.
Dana joins a growing number of auto suppliers plagued by accounting troubles. Also on that list are Delphi Corp., which filed for Chapter 11 bankruptcy protection on Saturday, Oct. 8; and trim supplier Collins & Aikman Corp.
The company is still conducting an internal investigation into its finances, with the help of accounting firm PricewaterhouseCoopers LLC.
On Sept. 15, Dana said it would take a charge of $10 million to $15 million to its second-quarter income due to the accounting issues. The company said Monday it does not know if the amount of the charge will change.
Also, Dana said it will write off $740 million in deferred tax assets and does not expect to record similar benefits in the future.
On Sept. 15, Dana said it had obtained waivers from its lenders for loans and lines of credit for the second quarter, due to the pending charge. It said on Monday it will need to review its credit lines in light of the new disclosures.
Dana ranks No. 15 on the Automotive News list of the top 150 global suppliers with worldwide original-equipment automotive parts sales of $9.06 billion in 2004.
The commercial vehicle business makes up about a quarter of Dana's total sales and the light vehicle market represents about three-quarters. Ford accounted for 25 percent of Dana's sales last year, with 11 percent going to GM.
The restatements and accounting investigation pose yet another challenge to an industry rocked by high raw materials prices, soaring labor costs, and reduced North American production of light trucks and SUVs.
"It's more than labor costs. (Dana) needs to become more efficient," said Standard and Poor's analyst Dan DiSenzo, whose rating agency last month downgraded Dana's debt to a speculative grade of "BB+," from "BBB-."
DiSenzo said Dana's problems are not comparable with Delphi's.
"They (Dana) have received bank waivers and they have a fair amount of cash on the balance sheet, so it's not a question of major liquidity problems," he said. "In comparison to Delphi, it's certainly not as significant."
On Sept. 15, Dana slashed its 2005 profit forecast by more than half, to $90 million to $105 million, or about 60 to 70 cents a share, citing higher steel and energy costs. It said then its truck parts unit was unable to meet projected cost cuts and was operating with significant inefficiencies.
You may e-mail Dale Jewett at
contributed to this report.