Dana Corp.'s credit default swaps tightened 150 basis points to trade at 950 after the company posted restated financial results that were better than expected. Its 5.85% '15 bonds traded up three points to 73 on the news.
Dana restated its financial results for the first two quarters of 2005 and all of 2004, 2003 and 2002. As a result of the restatements, the total reduction in net income for all periods was $44 million. The company made the restatements after improperly recognizing certain customer pricing increases and supplier reimbursement costs in its commercial vehicle business.
Michael Burns, Dana's chairman and ceo, said in a release, "During our investigations, we identified material weaknesses in our system of internal control over financial reporting and we have taken and will continue to take appropriate actions to remediate these weaknesses."
The filing of Dana's restated financial statements cures a default in a covenant requiring it to maintain its financial statements in accordance with generally accepted accounting principles. Dana also said in that release that it is in talks with its lenders regarding possible changes to existing facilities. A Dana spokesman did not return calls.