Dana Holding Corporation Reports First-Quarter 2008 Results
May 14, 2008
TOLEDO, Ohio, May 14 /PRNewswire-FirstCall/ -- Dana Holding Corporation (NYSE: DAN) has announced its first-quarter 2008 results. As a result of its January 31 emergence from Chapter 11 reorganization, Dana's first-quarter financial statements include two months presented under the provisions of "fresh start" accounting required for companies emerging from reorganization.
(Logo: http://www.newscom.com/cgi-bin/prnh/19990903/DANA ) First-Quarter Profits Improved
Dana delivered improved profitability in the first quarter of 2008 versus the same period one year ago, highlighted by:
-- Net sales of $2,312 million, an increase of approximately 8 percent compared to 2007, primarily because of currency effects. -- Net income of $685 million, including a one-time gain of $754 million after taxes, reflecting effects of emergence and adoption of fresh start accounting. This compares to a net loss of $92 million in the first quarter of 2007. -- Earnings before interest, taxes, depreciation, amortization, and restructuring (EBITDA) of $148 million, compared with $90 million in 2007. This reflects improved pricing and lower costs. -- Strong liquidity of $1.6 billion at March 31, 2008.
"We are making progress in our turnaround effort despite a tough environment," said Executive Chairman John Devine. "As discussed earlier this year, we have much more to do and remain focused on our top priorities. With a new management team coming together, a strong balance sheet, and a clear sense of urgency, we are committed to repositioning Dana for a strong future."
Added Chief Executive Officer Gary Convis, "As we pursue improved financial performance, we are taking aggressive actions to enhance our operational excellence. Chief among these are the establishment of shared, targeted metrics across all of our businesses; the implementation of the Dana Operating System, a coordinated approach to drive continuous improvement throughout our operations; and the review of our global manufacturing footprint to ensure that we are producing the right products in the right places to best serve the needs of our customers."
Business Segment Highlights
First-quarter EBITDA for Dana's Automotive Systems Group (ASG) totaled $109 million, compared to $72 million in 2007. Sales increased $106 million compared to 2007. Each of the ASG businesses was adversely impacted by the effects of lower North American volume, including the effects of a labor disruption at a major automotive parts supplier. Offsetting the weakness in the North American markets were stronger production levels elsewhere in the world, currency, and benefits from customer pricing actions.
EBITDA for Dana's Heavy Vehicle Systems Group (HVSG) totaled $60 million for the first quarter of 2008, compared to $56 million last year. The group's Commercial Vehicle segment reported a sales decline of 10 percent, primarily because of lower North American production following the buying surge in advance of 2007 emission regulations. The Off-Highway Products segment reported a $95 million increase in sales compared to the first quarter of 2007. Off-Highway sales benefited from increased production, new programs, and currency.
Unprecedented Steel Costs Contribute to Challenging Environment
In addition to vehicle production declines in several North American sectors, Dana's results are being significantly impacted by steel costs. Dana purchases approximately 1.5 million tons of steel and products with significant steel content annually. Average prices for scrap and hot-rolled steel increased by approximately 30 percent during the first quarter of 2008, and prices have continued to climb. While the company has taken certain available measures to mitigate these costs, at average scrap steel prices of $525 per ton for 2008, Dana could experience an adverse impact of $70 million to $100 million on the annual cost of its steel and steel-based products.
Dana to Host First-Quarter Conference Call at 10 a.m. Today
Dana will discuss its first-quarter results in a conference call at 10 a.m. EDT today. Participants may listen to the audio portion of the conference call either through audio streaming online or by telephone. Slide viewing is only available online via a link provided on the Dana Investor Web site. To dial into the conference call, domestic locations should call 1-888-311-4590 (Conference I.D. # 46202470). International locations should call 1-706-758-0054 (Conference I.D. # 46202470). Please ask for the Dana Holding Corporation Financial Webcast and Conference Call. Phone registration will be available beginning at 9:30 a.m. An audio recording of the call will be available after 5 p.m. To access this recording, please dial 1-800-642-1687 (U.S. or Canada) or 1-706-645-9291 (international) and enter the conference I.D. number 46202470. A webcast replay will also be available after 5 p.m. today, and may be accessed via the Dana Investor Web site.
In connection with Dana's emergence from bankruptcy on January 31, 2008 and the application of fresh start accounting in accordance with the provisions of the American Institute of Certified Public Accountants' Statement of Position 90-7, the post-emergence results of the successor company for the two months ended March 31, 2008 and the pre-emergence results of the predecessor company for the one month ended January 31, 2008 are presented separately as successor and predecessor results in the financial statements presented in accordance with generally accepted accounting principles (GAAP). This presentation is required by GAAP as the successor company is considered to be a new entity, and the results of the new entity reflect the application of fresh start accounting. For the readers' convenience and interest in this earnings release, we have combined the separate successor and predecessor periods to derive combined results for the three months ended March 31, 2008. The financial information accompanying this release provides the separate successor and predecessor GAAP results for the applicable periods, along with the combined results described above for the first quarter of 2008.
This release refers to EBITDA, which we've defined to be earnings before interest, taxes, depreciation, amortization and restructuring. EBITDA is a non-GAAP financial measure, and the measure currently being used by Dana as the primary measure of its reportable operating segment performance. EBITDA was selected as the primary measure for operating segment performance as well as a relevant measure of Dana's overall performance given the enhanced comparability and usefulness after application of fresh start accounting. The most significant impact to Dana's ongoing results of operations as a result of applying fresh start accounting is higher depreciation and amortization. By using EBITDA, which is a performance measure that excludes depreciation and amortization, the comparability of results is enhanced. Management also believes that EBITDA is an important measure since the financial covenants of our primary debt agreements are EBITDA-based, and our management incentive performance programs are based, in part, on EBITDA. Because it is a non-GAAP measure, EBITDA should not be considered a substitute for net income or other reported results prepared in accordance with GAAP. The financial information accompanying this release provides a reconciliation of EBITDA for the periods presented to the reported income (loss) from continuing operations before income taxes, which is a GAAP measure.
Certain statements and projections contained in this news release are, by their nature, forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on our current expectations, estimates and projections about our industry and business, management's beliefs, and certain assumptions made by us, all of which are subject to change. Forward-looking statements can often be identified by words such as "anticipates," "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "will," "should," "would," "could," "potential," "continue," "ongoing," similar expressions, and variations or negatives of these words. These forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause our actual results to differ materially and adversely from those expressed in any forward-looking statement. Dana's Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K, and other Securities and Exchange Commission filings discuss important risk factors that could affect our business, results of operations and financial condition. The forward-looking statements in this news release speak only as of this date. Dana does not undertake any obligation to revise or update publicly any forward-looking statement for any reason.
About Dana Holding Corporation
Dana is a world leader in the supply of axles; driveshafts; and structural, sealing, and thermal-management products; as well as genuine service parts. The company's customer base includes virtually every major vehicle manufacturer in the global automotive, commercial vehicle, and off- highway markets, which collectively produce more than 70 million vehicles annually. Based in Toledo, Ohio, the company's operations employ approximately 35,000 people in 26 countries and reported 2007 sales of $8.7 billion. For more information, please visit: http://www.dana.com/.
DANA HOLDING CORPORATION Consolidated Statement of Operations For the Quarters Ended March 31, 2008 and 2007 (Unaudited) Three Months Ended March 31, 2008 Period from Prior Dana Combined Prior Dana February 1 January 1 January 1 Three Months through through through Ended March 31, January 31, March 31, March 31, 2008 2008 2008 (1) 2007 Net sales $1,561 $751 $2,312 $2,145 Costs and expenses Cost of sales 1,477 702 2,179 2,043 Selling, general and administrative expenses 65 34 99 96 Amortization of intangibles 12 12 Realignment charges, net 5 12 17 19 Other income, net 32 8 40 46 Income from continuing operations before interest, reorganization items and income taxes 34 11 45 33 Interest expense (contractual interest of $17 for the one month ended January 31, 2008 and $36 for the three months ended March 31, 2007) 27 8 35 23 Reorganization items, net 9 98 107 37 Fresh start accounting adjustments 1,009 1,009 Income (loss) from continuing operations before income taxes (2) 914 912 (27) Income tax expense (20) (199) (219) (15) Minority interests (2) (2) (4) (2) Equity in earnings of affiliates 1 2 3 8 Income (loss) from continuing operations (23) 715 692 (36) Loss from discontinued operations (1) (6) (7) (56) Net income (loss) (24) 709 685 (92) Preferred stock dividend requirements 5 5 Net income (loss) available to common stockholders $(29) $709 $680 $(92) Net income (loss) from continuing operations: Basic $(0.28) $4.77 $(0.24) Diluted $(0.28) $4.75 $(0.24) Net loss from discontinued operations: Basic $(0.01) $(0.04) $(0.37) Diluted $(0.01) $(0.04) $(0.37) Net income (loss) available to common stockholders: Basic $(0.29) $4.73 $(0.61) Diluted $(0.29) $4.71 $(0.61) Average common shares outstanding - Basic 100 150 150 Average common shares outstanding - Diluted 160 150 150 (1) See pages two and three of the press release for comments regarding the presentation of combined information for the three months ended March 31, 2008. DANA HOLDING CORPORATION Consolidated Balance Sheet At March 31, 2008 and December 31, 2007 (Unaudited) Dana Prior Dana March 31, December 31, Assets 2008 2007 Current assets Cash and cash equivalents $1,283 $1,271 Restricted cash 93 Accounts receivable Trade, less allowance for doubtful accounts of $23 in 2008 and $20 in 2007 1,444 1,197 Other 364 295 Inventories Raw materials 383 331 Work in process and finished goods 634 481 Assets of discontinued operations 24 Other current assets 123 100 Total current assets 4,231 3,792 Goodwill 310 349 Intangibles 678 1 Investments and other assets 252 348 Investments in affiliates 183 172 Property, plant and equipment, net 2,049 1,763 Total assets $7,703 $6,425 Liabilities and stockholders' equity (deficit) Current liabilities Notes payable, including current portion of long-term debt $127 $283 Debtor-in-possession financing 900 Accounts payable 1,214 1,072 Accrued payroll and employee benefits 268 258 Liabilities of discontinued operations 9 Taxes on income 142 12 Other accrued liabilities 555 418 Total current liabilities 2,306 2,952 Liabilities subject to compromise 3,511 Deferred employee benefits and other non-current liabilities 907 630 Long-term debt 1,321 19 Minority interest in consolidated subsidiaries 115 95 Commitments and contingencies (Note 16) Total liabilities 4,649 7,207 Preferred stock, 50,000,000 shares authorized Series A, $0.01 par value, 2,500,000 issued and outstanding 242 Series B, $0.01 par value, 5,400,000 issued and outstanding 529 Common stock, $.01 par value, 450,000,000 authorized, 97,971,791 issued and outstanding 1 Prior Dana common stock, $1.00 par value, 350,000,000 authorized, 150,245,250 issued and outstanding 150 Additional paid-in-capital 2,267 202 Retained earnings (deficit) (29) (468) Accumulated other comprehensive income (loss) 44 (666) Total stockholders' equity (deficit) 3,054 (782) Total liabilities and stockholders' equity (deficit) $7,703 $6,425 DANA HOLDING CORPORATION Consolidated Statement of Cash Flows For the Quarters ended March 31, 2008 and 2007 (Unaudited) Three Months Ended March 31, 2008 Period from Prior Dana Combined Prior Dana February 1 January 1 January 1 Three Months through through through Ended March 31, January 31, March 31, March 31, 2008 2008 2008 (1) 2007 Cash flows - operating activities Net income (loss) $(24) $709 $685 $(92) Depreciation and amortization 67 23 90 70 Amortization of inventory valuation 15 15 Minority interest expense 2 2 4 Deferred income taxes (2) 191 189 Reorganization: Gain on settlement of liabilities subject to compromise (27) (27) Payment of claims (88) (88) Reorganization items net of cash payments (18) 79 61 27 Fresh start adjustments (1,009) (1,009) Payments to VEBAs (733) (55) (788) Loss on sales of businesses 1 7 8 14 Change in Working capital (124) (61) (185) (52) Other, net (23) 19 (4) 16 Net cash flows provided by (used in) operating activities (927) (122) (1,049) (17) Cash flows - investing activities Purchases of property, plant and equipment (29) (16) (45) (39) Proceeds from sale of businesses and assets 5 5 328 Change in restricted cash 93 93 Other 8 (5) 3 (15) Net cash flows provided by (used in) investing activities (21) 77 56 274 Cash flows - financing activities Proceeds from (repayment of) debtor-in-possession facility (900) (900) 200 Net change in short-term debt (7) (18) (25) 65 Payment of DCC Medium Term Notes (136) (136) Proceeds from Exit Facility debt 80 1,350 1,430 Original issue discount fees (114) (114) Deferred financing fees (40) (40) Repayment of Exit Facility (4) (4) Issuance of Series A and Series B preferred stock 771 771 Other (5) (1) (6) Net cash flows provided by (used in) financing activities 64 912 976 265 Net increase (decrease) in cash and cash equivalents (884) 867 (17) 522 Cash and cash equivalents - beginning of period 2,147 1,271 1,271 719 Effect of exchange rate changes on cash balances 20 5 25 17 Net change in cash of discontinued operations 4 4 (8) Cash and cash equivalents - end of period $1,283 $2,147 $1,283 $1,250 (1) See pages two and three of the press release for comments regarding the presentation of combined information for the three months ended March 31, 2008. DANA HOLDING CORPORATION SEGMENT EBITDA RECONCILIATION Reconciliation of Segment EBITDA to Income (Loss) from Continuing Operations Before Income Taxes Three Months Ended March 31, 2008 Dana Prior Dana Combined Prior Dana Two Months One Month Three Months Three Months Ended Ended Ended Ended March 31, January 31, March 31, March 31, 2008 2008 2008 (1) 2007 ASG $77 $32 $109 $72 HVSG 41 19 60 56 Segment EBITDA 118 51 169 128 Shared services and administrative (30) (10) (40) (40) Closed operations not in segments 2 (2) (2) Foreign exchange not in segments 15 4 19 4 EBITDA 105 43 148 90 Depreciation (47) (23) (70) (67) Amortization (30) (30) Realignment (5) (12) (17) (19) DCC EBIT 7 Reorganization items, net (9) (98) (107) (37) Interest expense (27) (8) (35) (23) Interest income 11 4 15 8 Fresh start accounting adjustments 1,009 1,009 Other income (loss) (1) (1) 14 Income (loss) from continuing operations before income taxes $(2) $914 $912 $(27) (1) See pages two and three of the press release for comments regarding the presentation of non-GAAP measures and combined information for the three months ended March 31, 2008.Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/19990903/DANA
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SOURCE: Dana Holding Corporation
CONTACT: Investors: Karen Crawford, +1-419-535-4635; Media: Chuck
Hartlage, +1-419-535-4728, both of Dana Holding Corporation
Web site: http://www.dana.com/
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