<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 11-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1998
----------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to ________
Commission file number 1-4651
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A. Full title of the plan and the address of the plan, if different
from that of the issuer named below:
Echlin Incentive and Savings Investment Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Dana Corporation
4500 Dorr Street
Toledo, Ohio 43615
<PAGE> 2
ECHLIN INCENTIVE AND
SAVINGS INVESTMENT PLAN
FINANCIAL STATEMENTS AND
ADDITIONAL INFORMATION
DECEMBER 31, 1998 AND 1997
2
<PAGE> 3
ECHLIN INCENTIVE AND SAVINGS INVESTMENT PLAN
INDEX TO FINANCIAL STATEMENTS AND ADDITIONAL INFORMATION
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<TABLE>
<CAPTION>
Page
<S> <C>
Report of Independent Accountants 4
Financial Statements:
Statement of Net Assets Available for Benefits
as of December 31, 1998 and 1997 5
Statement of Changes In Net Assets Available for Benefits,
With Fund Information for the Years Ended December 31, 1998
And 1997 6-7
Notes to Financial Statements 8-11
Additional Information*:
Line 27 a - Schedule of Assets Held for Investment Purposes Schedule I
Line 27d - Schedule of Reportable Transactions Schedule II
</TABLE>
*Other schedules required by Section 2520.103-10 of the Department of Labor
Rules and Regulations for Reporting and Disclosure under ERISA have been omitted
because they are not applicable.
3
<PAGE> 4
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrator of the
Echlin Incentive and Savings Investment Plan
In our opinion, the accompanying statements of net assets available for benefits
and the related statements of changes in net assets available for benefits with
fund information present fairly, in all material respects, the net assets
available for benefits of the Echlin Incentive and Savings Investment Plan (the
"Plan") at December 31, 1998 and 1997, and the changes in net assets available
for benefits for the two years ended December 31, 1998 in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Plan's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of Assets Held
for Investment Purposes and Reportable Transactions are presented for the
purpose of additional analysis and are not a required part of the basic
financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The fund information in the
statement of changes in net assets available for benefits is presented for
purposes of additional analysis rather than to present the changes in net assets
available for benefits of each fund. These supplemental schedules and fund
information are the responsibility of the Plan's management. The supplemental
schedules and fund information have been subjected to the auditing procedures
applied in the audits of the basic financial statements and, in our opinion, are
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
June 25, 1999
4
<PAGE> 5
ECHLIN INCENTIVE AND SAVINGS INVESTMENT PLAN 5
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
(AMOUNTS IN THOUSANDS)
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<TABLE>
<CAPTION>
DECEMBER 31,
1998 1997
<S> <C> <C>
Assets
Investments,
At fair value:
Putnam New Opportunities Fund $ 18,278 $ 15,813
Putnam Voyager Fund 30,807 29,340
Dodge & Cox Balanced Fund 6,298 6,400
Vanguard Index Trust 500 Fund 14,367 10,093
AIM Constellation Fund 9,568 9,655
Templeton Foreign Equity Fund 2,858 4,054
Dana Corporation common stock 29,992
Massachusetts Mutual Life Insurance Company Mutual Fund 2,956
Prudential Insurance Company of America Mutual Fund 3,655
Principal Mutual Life Insurance Company Mutual Fund 6,251
Echlin Inc. common stock 30,005
At contract value:
New York Life Insurance Company Annuity 6,740 6,231
INVESCO Stable Value Fund 30,963 23,641
------------- -------------
Total investments 149,871 148,094
Receivables:
Employee loans 7,566 8,528
Other receivables 114
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Total Assets 157,551 156,622
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Liabilities
Employee withdrawals payable 903
Other payables 212 262
------------- -------------
Total liabilities 212 1,165
------------- -------------
Net assets available for benefits $ 157,339 $ 155,457
============= =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE> 6
6
ECHLIN INCENTIVE AND SAVINGS INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1998
(AMOUNTS IN THOUSANDS)
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<TABLE>
<CAPTION>
PUTNAM DODGE VANGUARD TEMPLETON
DANA PUTNAM NEW & COX INDEX AIM FOREIGN
STOCK VOYAGER OPPORTUNITIES BALANCED TRUST 500 CONSTELLATION EQUITY
FUND FUND FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income (loss):
Net appreciation
(depreciation) of investments $ 3,898 $ 4,408 $ 3,195 $ (175) $ 2,810 $ 1,441 $ (387)
Interest and dividends 959 2,063 571 566 208 237 314
--------- --------- ----------- ---------- --------- ----------- -----------
Total investment income 4,857 6,471 3,766 391 3,018 1,678 (73)
Employees' contributions 1,399 2,290 1,930 844 1,586 1,154 476
Employees' rollovers 74 67 158 155 248 48 59
Employer incentive match contribution 998 - - - - - -
Interest on employee loans - - - - - - -
--------- --------- ----------- ---------- --------- ----------- -----------
Total additions 7,328 8,828 5,854 1,390 4,852 2,880 462
--------- --------- ----------- ---------- --------- ----------- -----------
Benefit payments (8,426) (5,514) (3,218) (1,929) (3,034) (1,961) (799)
--------- --------- ----------- ---------- --------- ----------- -----------
Interfund transfers 1,167 (1,851) (146) 439 2,455 (990) (851)
--------- --------- ----------- ---------- --------- ----------- -----------
Net increase (decrease)
in net assets available for benefits 69 1,463 2,490 (100) 4,273 (71) (1,188)
Net assets available for benefits
at beginning of year 29,912 29,322 15,777 6,394 10,084 9,632 4,044
--------- --------- ----------- ---------- --------- ----------- -----------
Net assets available for benefits
at end of year $ 29,981 $ 30,785 $ 18,267 $ 6,294 $ 14,357 $ 9,561 $ 2,856
========= ========= =========== ========== ========= =========== ===========
<CAPTION>
STABLE EMPLOYEE
VALUE LOAN
FUND FUND TOTAL
<S> <C> <C> <C>
Investment income (loss):
Net appreciation
(depreciation) of investments $ - $ - $ 15,190
Interest and dividends 2,414 - 7,332
-------- -------- -----------
Total investment income 2,414 - 22,522
Employees' contributions 4,191 - 13,870
Employees' rollovers 191 - 1,000
Employer incentive match contribution - - 998
Interest on employee loans - 471 471
-------- -------- -----------
Total additions 6,796 471 38,861
-------- -------- -----------
Benefit payments (12,098) - (36,979)
-------- -------- -----------
Interfund transfers 1,179 (1,402) -
-------- -------- -----------
Net increase (decrease)
in net assets available for benefits (4,123) (931) 1,882
Net assets available for benefits
at beginning of year 41,795 8,497 155,457
-------- -------- -----------
Net assets available for benefits
at end of year $ 37,672 $ 7,566 $ 157,339
======== ======== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE> 7
ECHLIN INCENTIVE AND SAVINGS INVESTMENT PLAN 7
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1997
(AMOUNTS IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PUTNAM DODGE VANGUARD TEMPLETON
ECHLIN PUTNAM NEW & COX INDEX AIM FOREIGN
STOCK VOYAGER OPPORTUNITIES BALANCED TRUST 500 CONSTELLATION EQUITY
FUND FUND FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Net appreciation
(depreciation) of investments $ 3,734 $ 4,211 $ 2,580 $ 513 $ 1,875 $ 357 $ (249)
Interest and dividends 749 1,764 353 477 195 704 444
--------- --------- ----------- ---------- --------- ----------- -----------
Total investment income 4,483 5,975 2,933 990 2,070 1,061 195
Employees' contributions 1,357 2,391 2,027 667 1,054 1,245 514
Employees' rollovers 135 261 325 185 336 199 117
Employer incentive match contribution 916 - - - - - -
Interest on employee loans - - - - - - -
--------- --------- ----------- ---------- --------- ----------- -----------
Total additions 6,891 8,627 5,285 1,842 3,460 2,505 826
--------- --------- ----------- ---------- --------- ----------- -----------
Benefit payments (2,558) (1,830) (1,888) (428) (614) (694) (236)
--------- --------- ----------- ---------- --------- ----------- -----------
Interfund transfers (902) (937) (1,748) 795 2,311 (539) 618
--------- --------- ----------- ---------- --------- ----------- -----------
Net increase in net assets available
for benefits 3,431 5,860 1,649 2,209 5,157 1,272 1,208
Net assets available for benefits at
beginning of year 26,481 23,462 14,128 4,185 4,927 8,360 2,836
--------- --------- ----------- ---------- --------- ----------- -----------
Net assets available for benefits at
end of year $ 29,912 $ 29,322 $ 15,777 $ 6,394 $ 10,084 $ 9,632 $ 4,044
========= ========= =========== ========== ========= =========== ===========
<CAPTION>
STABLE EMPLOYEE
VALUE LOAN
FUND FUND TOTAL
<S> <C> <C> <C>
Investment income:
Net appreciation
(depreciation) of investments $ - $ - $ 13,021
Interest and dividends 2,670 - 7,356
-------- -------- -----------
Total investment income 2,670 - 20,377
Employees' contributions 4,154 - 13,409
Employees' rollovers 344 - 1,902
Employer incentive match contribution - - 916
Interest on employee loans - 653 653
-------- -------- -----------
Total additions 7,168 653 37,257
-------- -------- -----------
Benefit payments (6,044) - (14,292)
-------- -------- -----------
Interfund transfers 737 (335) -
-------- -------- -----------
Net increase in net assets available
for benefits 1,861 318 22,965
Net assets available for benefits at
beginning of year 39,934 8,179 132,492
-------- -------- -----------
Net assets available for benefits at
end of year $ 41,795 $ 8,497 $ 155,457
======== ======== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE> 8
ECHLIN INCENTIVE AND SAVINGS INVESTMENT PLAN 8
NOTES TO FINANCIAL STATEMENTS
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1. DESCRIPTION OF THE PLAN
GENERAL
The Echlin Incentive and Savings Investment Plan (Plan) is a defined
contribution employee benefit plan that was established on March 1, 1984
to provide benefits for all eligible employees of the former Echlin Inc.
as identified in the Plan agreement. It is subject to the provisions of
the Employee Retirement Income Security Act of 1974 (ERISA). The
following is a brief description of the Plan. Participants should refer
to the Plan agreement for more complete information.
The Plan is sponsored by Echlin Inc. (Echlin). During 1998, Echlin Inc.
was acquired by Dana Corporation (Dana).
ADMINISTRATION
The Plan is administered by the Employee Benefits Committee of Echlin.
On January 1, 1998, the Plan's trustee was changed from Putnam
Fiduciary Trust Company to The Chase Manhattan Bank (Trustee).
PARTICIPATION
Each employee who is in a covered class of employees within a
participating division, has attained age 21 and has met the service
requirements stipulated in the plan agreement is eligible to participate
in the Plan.
EMPLOYEE CONTRIBUTIONS
An employee may elect to have up to 20 percent of his or her eligible
compensation, as defined in the Plan agreement, up to the maximum
elective deferral amount as determined under Section 402(g) of the
Internal Revenue Code, contributed to his or her account. Contributions
for some participants may be further limited as a result of other
Internal Revenue Code requirements.
EMPLOYER CONTRIBUTIONS
Echlin contributes ten percent on the first six percent of the
employee's compensation contributed to the Plan. An additional
contribution, as defined in the Plan agreement, may be made depending on
Echlin's financial performance during the Plan year. Matching
contributions made by Echlin will be invested solely in common stock of
Dana.
VESTING
Participants are fully vested at all times in their contributions.
Before completing five years of service, participants become vested in
Echlin's matching contributions at the end of the third calendar year
after the contribution was made. Participants who have attained five
years of service are fully vested in Echlin's matching contributions.
<PAGE> 9
ECHLIN INCENTIVE AND SAVINGS INVESTMENT PLAN 9
NOTES TO FINANCIAL STATEMENTS
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1. DESCRIPTION OF THE PLAN (CONTINUED)
NORMAL RETIREMENT, DISABILITY, TERMINATION OR DEATH
In accordance with the Plan provisions, participating employees who
retire upon attaining age sixty-five or become totally and permanently
disabled and whose accounts balance is greater than $5,000 are eligible
to receive the full value of their account in either a lump sum payment
or in an annuity payment. Retiring and disabled participants whose
account balance is less than $5,000 receive the full value of their
account in a lump sum payment.
Upon termination, the vested portion of the participant's account will be
payable in a lump sum if the account balance is less than $5,000.
Otherwise, the participant's account may remain in the Plan until the
participant attains the age of 65.
Upon a participant's death, the participant's account balance will be
paid to the beneficiary in one lump sum.
LOANS
The Trustee may extend loans to participants with the approval of the
Plan administrator. Participant loans shall not be made for less than
$1,000 or exceed the lesser of 50% of the participant's account balance
or $50,000 minus the highest amount of outstanding balance of loans to
the participant for the previous 12 month period. The loan term shall not
be longer than 60 months unless the loan is used to acquire a principal
residence. Interest shall be charged on the loan based on rates currently
being charged by financial institutions lending money under similar
circumstances.
As participant loans are repaid, the amounts are allocated to the
investment fund according to the participant's most recent election with
respect to current contributions.
INVESTMENT OPTIONS
The following investment options are available to Plan participants:
a. Dana Stock Fund - Funds are invested in common stock of Dana
Corporation.
b. Stable Value Fund - Funds are invested in a mutual fund which
invests in pooled fixed income contracts.
c. Dodge and Cox Balanced Fund - Funds are invested in a mutual fund
which invests approximately 60% in large, well-established
companies and the remainder in high quality bonds and cash.
d. Vanguard Index Trust 500 Fund - Funds are invested in a mutual fund
which invests in common stocks listed on the Standard & Poor's 500
Composite Index.
e. AIM Constellation Fund - Funds are invested in a mutual fund which
invests in common stock of medium-sized and smaller emerging growth
companies.
<PAGE> 10
ECHLIN INCENTIVE AND SAVINGS INVESTMENT PLAN 10
NOTES TO FINANCIAL STATEMENTS
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1. DESCRIPTION OF THE PLAN (CONTINUED)
INVESTMENT OPTIONS (CONTINUED)
f. Putnam New Opportunities Fund - Funds are primarily invested a
mutual fund which invests in common stock of small to medium-sized
emerging growth companies.
g. Putnam Voyager Fund - Funds are invested in a mutual fund which
invests in a range of common stock of small, midsize and large
companies.
h. Templeton Foreign Equity Fund - Funds are invested in a mutual fund
which invests in stocks and debt obligations of companies and
governments outside of the United States.
The Dana Stock Fund also invests in the VISTA Money Market Fund for
temporary cash management purposes.
PLAN TERMINATION
Although it has not expressed any intention to do so, Echlin has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to ERISA. In the event of Plan termination,
participants will become vested in their accounts.
2. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements of the Plan have been prepared on the accrual
basis of accounting in accordance with generally accepted accounting
principles.
EXPENSES OF THE PLAN
Generally, Echlin pays all expenses associated with the administration
of the Plan.
VALUATION OF INVESTMENTS
The Plan's investments in common stocks and mutual funds are stated at
quoted market value. Investments in guaranteed investment contracts are
stated at contract value, which approximates market value.
Net appreciation or depreciation includes realized gains and losses and
net unrealized appreciation and depreciation. Realized gains and losses
on investment transactions are recorded as the difference between
proceeds received and the fair market value at the beginning of the year
of the respective investments sold or cost if acquired during the year.
Net unrealized appreciation or depreciation in the fair market value of
investments is recorded as the change between the fair market value of
investments at the end of the year and the beginning of the year, or cost
if acquired during the year.
<PAGE> 11
ECHLIN INCENTIVE AND SAVINGS INVESTMENT PLAN 11
NOTES TO FINANCIAL STATEMENTS
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2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of net assets available for
benefits at the date of the financial statements and reported changes in
net assets available for benefits during the reporting period. Actual
results could differ from those estimates.
3. INCOME TAX STATUS
The Internal Revenue Service has ruled that the Plan, as amended through
January 1, 1994, qualifies under Section 401(a) of the Internal Revenue
Code of 1986 (IRC) and therefore the related plan trust is not subject to
tax under present tax laws. The Plan has been amended since receiving the
determination letter. However, the Plan's administrator believes that the
Plan is currently designed and being operated in compliance with the IRC.
4. PARTIES-IN-INTEREST
Investments in the Dana Stock Fund consist of 722,000 shares of Dana
Corporation common stock at December 31, 1998. Investments in the Echlin
Stock Fund consisted of 835,000 shares of Echlin Inc. common stock at
December 31, 1997. Shares of the Dana Stock Fund are purchased in the
open market at fair market value. Consequently, such transactions are
permitted under the provisions of the Plan and are exempt from
prohibition of party-in-interest transactions under the IRS code and
ERISA.
<PAGE> 12
ECHLIN INCENTIVE AND SAVINGS INVESTMENT PLAN Schedule I
LINE 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1998
(AMOUNTS IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CURRENT
IDENTITY OF ISSUE DESCRIPTION OF INVESTMENT COST VALUE
<S> <C> <C> <C>
Putnam Investments Putnam New Opportunities Fund $ 13,206 $ 18,278
Putnam Investments Putnam Voyager Equity Fund 19,677 30,807
Dodge & Cox Dodge & Cox Balanced Fund 6,033 6,298
The Vanguard Group Vanguard Index Trust 500 Fund 10,379 14,367
AIM Funds AIM Constellation Fund 7,775 9,568
Franklin Templeton Templeton Foreign Equity Fund 3,353 2,858
New York Life Insurance Company New York Life Insurance Company
Annuity 6,740 6,740
AIM Funds INVESCO Stable Value Fund 30,963 30,963
*Dana Common Stock Common stock 21,809 29,992
*Participant Notes Receivable Various interest rates/various
maturities - 7,566
------------- -------------
$ 119,935 $ 157,437
============= =============
</TABLE>
*Dana Corporation and participants are known parties-in-interest to the Plan.
This schedule was prepared from data certified by The Chase Manhattan Bank, the
trustee of the Plan.
12
<PAGE> 13
ECHLIN INCENTIVE AND SAVINGS INVESTMENT PLAN Schedule II
LINE 27d - SCHEDULE OF REPORTABLE TRANSACTIONS*
FOR THE YEAR ENDED DECEMBER 31, 1998
(AMOUNTS IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CURRENT VALUE
DESCRIPTION OF ASSET ON
PARTY OF PURCHASE SELLING COST OF TRANSACTION
INVOLVED ASSET PRICE PRICE ASSET DATE NET GAIN
<S> <C> <C> <C> <C> <C> <C>
Echlin Inc. Echlin Inc. Common Stock $ 1,959 $ 1,959 $ 1,959
Echlin Inc. Echlin Inc. Common Stock $ 10,363 5,007 10,363 $ 5,356
AIM Funds INVESCO Stable Value Fund 21,957 21,957 21,957
AIM Funds INVESCO Stable Value Fund 14,633 14,633 14,633
Putnam Investments Putnam New Opportunities Fund 3,358 3,358 3,358
Putnam Investments Putnam New Opportunities Fund 4,088 3,090 4,088 998
Putnam Investments Putnam Voyager Fund 4,838 4,838 4,838
Putnam Investments Putnam Voyager Fund 7,779 4,859 7,779 2,920
The Vanguard Group, Vanguard Index Trust 500 Fund 5,994 5,994 5,994
Inc.
The Vanguard Group, Vanguard Index Trust 500 Fund 4,530 3,400 4,530 1,130
Inc.
Chase Manhattan Bank VISTA Money Market Fund 15,195 15,195 15,195
Chase Manhattan Bank VISTA Money Market Fund 14,705 14,705 14,705
</TABLE>
*Transactions or series of transactions in excess of 5 percent of the current
value of the Plan's assets as of December 31, 1997 as defined in section
2520.103-6 of the Department of Labor Rules and Regulations for Reporting and
Disclosure under ERISA.
This schedule was prepared from data certified by The Chase Manhattan Bank, the
trustee of the Plan.
13
<PAGE> 14
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan
Administrator of the Echlin Incentive and Savings Investment Plan has duly
caused this annual report to be signed by the undersigned thereunto duly
authorized.
Echlin Incentive and Savings
Investment Plan
Date: June 30, 1999 /s/ Armand T. Flynn
---------------------------------
Armand T. Flynn
Plan Administrator
14
<PAGE> 15
INDEX TO EXHIBITS
EXHIBIT NO.
- -----------
23. Consent of Independent Auditors
15
<PAGE> 1
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 333-69449) of Dana Corporation of our report dated
June 25, 1999 relating to the financial statements of the Echlin Incentive and
Savings Investment Plan which appears in this Form 11-K.
PricewaterhouseCoopers LLP
Toledo, Ohio
June 30, 1999
16
