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UPDATE 2-Auto parts supplier Dana's net falls

(Updates share price, adds analyst comments and other details, changes dateline previously TOLEDO, Ohio, adds byline)

By Karen Padley

CHICAGO, Oct 25 (Reuters) - Auto parts maker Dana Corp. said on Friday quarterly earnings fell after the latest in a series of charges taken during a year-long restructuring campaign.

Results excluding those costs were at the high end of analysts' estimates, although the company effectively lowered its fourth-quarter outlook by sticking with its forecast of 50 cents to 55 cents for the second half of 2002. Its shares fell by as much as 7.1 percent on the New York Stock Exchange.

Dana said it remains cautious due to an industrywide decline in heavy-duty truck orders, traditional seasonal weakness in the auto parts aftermarket and economic uncertainty.

The Toledo, Ohio-based company earned $4 million, or 2 cents a share, in the quarter, down from $13 million, or 8 cents per share, the year before. Sales rose 7 percent to $2.6 billion.

Excluding one-time items, Dana reported a profit of $44 million, or 30 cents per share, compared with a loss of $8 million, or 5 cents a share, a year earlier.

On that basis, analysts had expected Dana to earn 26 cents a share, with estimates ranging from 18 cents to 33 cents, according to Thomson First Call.

"On the surface, what we saw in the numbers indicated some shortfalls," said David Leiker, an analyst with Robert W. Baird & Co. "But when you get rid of the nonrecurring items it actually turns out to be a much better quarter than it appeared."

Leiker, who has an "outperform" rating on Dana and does not own the shares, said the company seems to be on track with both its restructuring and divestiture plans.

For the fourth quarter, analysts have been expecting earnings before items of 21 to 37 cents a share, with an average forecast of 28 cents, according to First Call.

Dana would have to earn only 20 cents to 25 cents in the fourth quarter to meet its forecast for the second half of the year.

The company has cut about 9 percent of its work force, closed 18 facilities and announced plans to close 16 others since the restructuring began. It expects to complete most of the actions by year-end.

Dana said on a conference call that it had recorded about 90 percent of the expected restructuring charges at the end of the third quarter and expects to take the remaining 10 percent in the fourth quarter.

In addition, the company said it does not expect to make a cash contribution to its pension plans this year as the plans are doing better than the overall stock market.

Dana said that assuming next year's market conditions are similar to this year's, pension would move from an $11 million credit to income in 2002 to an expense between $15 million and $25 million pretax.

In addition, its pension contributions next year would rise to between $25 million and $35 million from about $15 million in the current year.

The company said it expects to take a charge against shareholder equity at year-end of $180 million to $220 million to reflect the minimum liability for some of its underfunded plans. It took a similar $80 million charge last year.

Dana shares were down 51 cents at $9.99, a drop of 4.9 percent, on Friday afternoon, off an earlier low of $9.75.