Dana Holding Corporation Reports Second-Quarter 2008 Results
PRNewswire-FirstCall
TOLEDO, Ohio
(NYSE:DAN)
Aug 7, 2008
TOLEDO, Ohio, Aug. 7 /PRNewswire-FirstCall/ -- Dana Holding Corporation (NYSE: DAN) has announced its second-quarter 2008 results.
(Logo: http://www.newscom.com/cgi-bin/prnh/19990903/DANA ) Second-quarter highlights include: -- Sales of $2,333 million, a 2-percent increase compared to 2007, primarily because of currency effects; -- Net loss of $140 million, including an $82 million non-cash impairment charge. This compares to a net loss of $133 million in the second quarter of 2007; -- Earnings before interest, taxes, depreciation, amortization, and restructuring (EBITDA) of $128 million, compared with $143 million in 2007; -- Strong cash balance of $1.2 billion and total liquidity of $1.6 billion at June 30, 2008; and -- Free cash flow of $38 million. Dana Making Progress in Turnaround
"We are making progress in our turnaround despite unprecedented headwinds in North America," said Executive Chairman John Devine. "The combination of much lower production volumes and higher steel costs has put considerable pressure on our 2008 operating results.
"But we are working to offset these challenges through pricing, additional restructuring, and cost reductions," he added. "And we remain focused on our game plan to turn around Dana by rebuilding the management team, improving operations, tightening our strategic direction, and employing a strong balance sheet."
Added Chief Executive Officer Gary Convis, "For the near term, we continue to scale our North American operations - through facility consolidations and workforce reductions - to reflect a market that's very different than what was expected just six months ago. This will necessitate the reduction of approximately 3,000 positions over the course of 2008, including the planned reduction of 500 salaried positions announced last week. At the same time, we are experiencing modest employment growth in the markets where our business is performing better.
"Longer term, we're picking up speed with introducing what is essentially a new way of managing our business, manufacturing our products, and measuring our performance worldwide," he added. "The new Dana Operating System is already enabling our people to drive improved product quality, customer satisfaction, and financial performance."
Business Highlights
Total EBITDA of $128 million in the second quarter was $15 million below 2007 results for the same period. This primarily reflected higher steel costs of $25 million (net of recovery actions), lower North American production of $22 million, unfavorable currency effects of $26 million, and reduced non- steel pricing of $6 million. These negative developments were partially offset by cost savings of $64 million.
At June 30, 2008, cash balances remained strong at $1.2 billion, with available global liquidity of $1.6 billion. Free cash flow was $38 million for the second quarter, which was largely achieved through reduced working capital of $69 million during the period.
Six-Month Results
Sales for the six months ended June 30, 2008 were $4,645 million which compares to $4,434 million for the same period in 2007. For the first six months of 2008, the company reported net income of $545 million compared to a net loss of $225 million for the same period in 2007. The six-month 2008 results include a net gain of $754 million recognized in connection with the company's emergence from bankruptcy and application of fresh start accounting in January.
EBITDA of $275 for the first six months of 2008 improved from the $247 million for the same period in 2007, as cost reduction actions initiated during the first half of 2008, combined with previously achieved annual cost savings and pricing improvements more than offset the earnings reduction attributable to lower North American production levels and higher steel costs.
Dana to Host Second-Quarter Conference Call at 10 a.m. Today
Dana will discuss its second-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. # 55462661). International locations should call 1- 706-758-0054 (Conference I.D. # 55462661). 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 55462661. A webcast replay will also be available after 5 p.m. today, and may be accessed via the Dana Investor Web site.
Non-GAAP Measures
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 five months ended June 30, 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 six months ended June 30, 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 half 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.
Forward-Looking Statements
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 (Unaudited) For the Three Months Ended June 30, 2008 and 2007 Three Months Ended June 30, Dana Prior Dana 2008 2007 Net sales $2,333 $2,289 Costs and expenses Cost of sales 2,206 2,141 Selling, general and administrative expenses 84 88 Amortization of intangibles 19 Realignment charges, net 40 134 Impairment of goodwill 75 Impairment of intangible assets 7 Other income, net 20 32 Loss from continuing operations before interest, reorganization items and income taxes (78) (42) Interest expense (contractual interest of $17 for the one month ended January 31, 2008 and $55 for the three months ended June 30, 2007 35 28 Reorganization items, net 12 38 Loss from continuing operations before income taxes (125) (108) Income tax expense (12) (3) Minority interests (3) (4) Equity in earnings of affiliates 2 10 Loss from continuing operations (138) (105) Loss from discontinued operations (2) (28) Net loss (140) (133) Preferred stock dividend requirements 8 Net loss available to common stockholders $(148) $(133) Net loss from continuing operations: Basic $(1.46) $(0.70) Diluted $(1.46) $(0.70) Net loss from discontinued operations Basic $(0.01) $(0.19) Diluted $(0.01) $(0.19) Net loss available to common stockholders Basic $(1.47) $(0.89) Diluted $(1.47) $(0.89) Average common shares outstanding: Basic 100 150 Diluted 160 150 DANA HOLDING CORPORATION Consolidated Statement of Operations (Unaudited) For the Six Months Ended June 30, 2008 and 2007 Prior Prior Dana Dana Combined Dana Five One Six Six Months Month Months Months Ended Ended Ended Ended June 30, Jan. 31, June 30, June 30, 2008 2008 2008 (1) 2007 Net sales $3,894 $751 $4,645 $4,434 Costs and expenses Cost of sales 3,683 702 4,385 4,184 Selling, general and administrative expenses 149 34 183 184 Amortization of intangibles 31 31 Realignment charges, net 45 12 57 153 Impairment of goodwill 75 75 Impairment of intangible assets 7 7 Other income, net 52 8 60 78 Income (loss) from continuing operations before interest, reorganization items and income taxes (44) 11 (33) (9) Interest expense (contractual interest of $17 for the one month ended January 31, 2008 and $105 for the six months ended June 30, 2007) 62 8 70 51 Reorganization items, net 21 98 119 75 Fresh start accounting adjustments 1,009 1,009 Income (loss) from continuing operations before income taxes (127) 914 787 (135) Income tax expense (32) (199) (231) (18) Minority interests (5) (2) (7) (6) Equity in earnings of affiliates 3 2 5 18 Income (loss) from continuing operations (161) 715 554 (141) Loss from discontinued operations (3) (6) (9) (84) Net income (loss) (164) 709 545 (225) Preferred stock dividend requirements 13 13 Net income (loss) available to common stockholders $(177) $709 $532 $(225) Net income (loss) from continuing operations: Basic $(1.74) $4.77 $(0.94) Diluted $(1.74) $4.75 $(0.94) Net loss from discontinued operations Basic $(0.02) $(0.04) $(0.56) Diluted $(0.02) $(0.04) $(0.56) Net income (loss) available to common stockholders: Basic $(1.76) $4.73 $(1.50) Diluted $(1.76) $4.71 $(1.50) Average common shares outstanding: Basic 100 150 150 Diluted 160 150 150 (1) See "Non-GAAP Measures" in body of press release for comments regarding the presentation of combined information for the six months ended June 30, 2008 DANA HOLDING CORPORATION Consolidated Balance Sheet (Unaudited) At June 30, 2008 and December 31, 2007 Dana Prior Dana June 30, December 31, Assets 2008 2007 Current assets Cash and cash equivalents $1,191 $1,271 Restricted cash 93 Accounts receivable Trade, less allowance for doubtful accounts of $21 in 2008 and $20 in 2007 1,431 1,197 Other 295 295 Inventories Raw materials 401 331 Work in process and finished goods 640 481 Assets of discontinued operations 24 Other current assets 147 100 Total current assets 4,105 3,792 Goodwill 248 349 Intangibles 649 1 Investments and other assets 269 348 Investments in affiliates 172 172 Property, plant and equipment, net 2,039 1,763 Total assets $7,482 $6,425 Liabilities and stockholders' equity (deficit) Current liabilities Notes payable, including current portion of long-term debt $62 $283 Debtor-in-possession financing 900 Accounts payable 1,203 1,072 Accrued payroll and employee benefits 265 258 Liabilities of discontinued operations 9 Taxes on income 160 12 Other accrued liabilities 501 418 Total current liabilities 2,191 2,952 Liabilities subject to compromise 3,511 Deferred employee benefits and other non-current liabilities 879 630 Long-term debt 1,318 19 Minority interest in consolidated subsidiaries 115 95 Commitments and contingencies Total liabilities 4,503 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, 99,735,387 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 2,310 202 Accumulated deficit (177) (468) Accumulated other comprehensive income (loss) 74 (666) Total stockholders' equity (deficit) 2,979 (782) Total liabilities and stockholders' equity (deficit) $7,482 $6,425 DANA HOLDING CORPORATION Consolidated Statement of Cash Flows (Unaudited) For the Three Months Ended June 30, 2008 and 2007 Three Months Ended Dana Prior Dana June 30, June 30, 2008 2007 Cash flows - operating activities Net income (loss) $(140) $(133) Depreciation 72 69 Amortization of intangibles 23 Amortization of inventory valuation Amortization of deferred financing charges and original issue discount 7 Impairment of goodwill and other intangible assets 82 Non-cash portion of U.K. pension charge 60 Minority interest 3 6 Reorganization: Gain on settlement of liabilities subject to compromise Payment of claims (1) (9) Reorganization items net of cash payments (5) (20) Fresh start adjustments Payments to VEBAs (27) Loss (gain) on sale of businesses and assets (22) Change in working capital 69 (12) Other, net (26) (56) Net cash flows provided by (used in) operating activities (1) 76 (135) Cash flows - investing activities Purchases of property, plant and equipment (1) (47) (55) Proceeds from sale of businesses and assets 93 Change in restricted cash (88) Other (12) 40 Net cash flows provided by (used in) investing activities (59) (10) Cash flows - financing activities Proceeds from (repayment of) debtor- in-possession facility Net change in short-term debt (81) (93) Payment of DCC Medium Term Notes Proceeds from Exit Facility debt Original issue discount fees Deferred financing fees (1) Repayment of Exit Facility debt (3) Issuance of Series A and Series B preferred stock Preferred dividends paid (11) Other (7) (2) Net cash flows provided by (used in) financing activities (103) (95) Net increase (decrease) in cash and cash equivalents (86) (240) Cash and cash equivalents - beginning of period 1,283 1,250 Effect of exchange rate changes on cash balances (6) 11 Net change in cash of discontinued operations (5) Cash and cash equivalents - end of period $1,191 $1,016 (1) Free cash flow of $38 in 2008 and $(190) in 2007 is the sum of net cash provided by (used in) operating activities (excluding claims payments) reduced by the purchases of property, plant and equipment. DANA HOLDING CORPORATION Consolidated Statement of Cash Flows (Unaudited) For the Six Months Ended June 30, 2008 and 2007 Six Months Ended June 30, 2008 Prior Prior Dana Dana Combined Dana Five One Six Six Months Month Months Months Ended Ended Ended Ended June 30, Jan. 31, June 30, June 30, 2008 2008 2008 (1) 2007 Cash flows - operating activities Net income (loss) $(164) $709 $545 $(225) Depreciation 120 23 143 139 Amortization of intangibles 38 38 Amortization of inventory valuation 15 15 Amortization of deferred financing charges and original issue discount 11 11 Impairment of goodwill and other intangible assets 82 82 Non-cash portion of U.K. pension charge 60 Minority interest 5 2 7 6 Deferred income taxes (17) 191 174 (7) Reorganization: Gain on settlement of liabilities subject to compromise (27) (27) Payment of claims (97) (97) Reorganization items net of cash payments (23) 79 56 7 Fresh start adjustments (1,009) (1,009) Payments to VEBAs (733) (55) (788) (27) Loss (gain) on sale of businesses and assets 1 7 8 (8) Change in working capital (55) (61) (116) (64) Other, net (34) 19 (15) (33) Net cash flows provided by (used in) operating activities (851) (122) (973) (152) Cash flows - investing activities Purchases of property, plant and equipment (76) (16) (92) (94) Proceeds from sale of businesses and assets 5 5 421 Change in restricted cash 93 93 (88) Other (4) (5) (9) 25 Net cash flows provided by (used in) investing activities (80) 77 (3) 264 Cash flows - financing activities Proceeds from (repayment of) debtor- in-possession facility (900) (900) 200 Net change in short-term debt (88) (18) (106) (28) 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 (1) (40) (41) Repayment of Exit Facility debt (7) (7) Issuance of Series A and Series B preferred stock 771 771 Preferred dividends paid (11) (11) Other (12) (1) (13) (2) Net cash flows provided by (used in) financing activities (39) 912 873 170 Net increase (decrease) in cash and cash equivalents (970) 867 (103) 282 Cash and cash equivalents - beginning of period 2,147 1,271 1,271 704 Effect of exchange rate changes on cash balances 14 5 19 28 Net change in cash of discontinued operations 4 4 (13) Cash and cash equivalents - end of period $1,191 $2,147 $1,191 $1,001 (1) See "Non-GAAP Measures" in body of press release for comments regarding the presentation of combined information for the six months ended June 30, 2008 DANA HOLDING CORPORATION SEGMENT EBITDA RECONCILIATION (Unaudited) Reconciliation of Segment EBITDA to Income (loss) from Continuing Operations Before Income Taxes Three Months Ended June 30, Dana Prior Dana 2008 2007 ASG Light Axle $32 $35 Driveshaft 45 32 Sealing 26 22 Thermal 4 7 Structures 29 35 Eliminations and other (10) Total ASG 136 $121 HVSG Commercial Vehicle 12 13 Off-Highway 50 46 Eliminations and other (2) (2) Total HVSG 60 57 Total Segment EBITDA 196 178 Shared services and administrative (36) (44) Other income (loss) (24) (9) Foreign exchange not in segments (8) 18 EBITDA 128 143 Depreciation (72) (69) Amortization (23) Realignment (40) (134) DCC EBIT (3) 9 Goodwill impairment (75) Impairment of other intangible assets (7) Reorganization items, net (12) (38) Interest expense (35) (28) Interest income 14 9 Loss from continuing operations before income taxes $(125) $(108) DANA HOLDING CORPORATION SEGMENT EBITDA RECONCILIATION (Unaudited) Reconciliation of Segment EBITDA to Income (loss) from Continuing Operations Before Income Taxes Six Months Ended June 30, 2008 Prior Prior Dana Dana Combined Dana Five One Six Six Months Month Months Months Ended Ended Ended Ended June 30, Jan. 31, June 30, June 30, 2008 2008 2008 (1) 2007 ASG Light Axle $52 $8 $60 $47 Driveshaft 71 12 83 50 Sealing 41 7 48 40 Thermal 8 3 11 14 Structures 46 5 51 58 Eliminations and other (5) (3) (8) (16) Total ASG $213 $32 $245 $193 HVSG Commercial Vehicle 23 4 27 30 Off-Highway 82 15 97 87 Eliminations and other (4) (4) (4) Total HVSG 101 19 120 113 Segment EBITDA 314 51 365 306 Shared services and administrative (67) (13) (80) (85) Other income (21) (21) 4 Foreign exchange not in segments 7 4 11 22 EBITDA 233 42 275 247 Depreciation (120) (23) (143) (139) Amortization (53) (53) Realignment (45) (12) (57) (153) DCC EBIT (2) (2) 19 Goodwill impairment (75) (75) Impairment of other intangible assets (7) (7) Reorganization items, net (21) (98) (119) (75) Interest expense (62) (8) (70) (51) Interest income 25 4 29 17 Fresh start accounting adjustments 1,009 1,009 Income (loss) from continuing operations before income taxes $(127) $914 $787 $(135) (1) See "Non-GAAP Measures" in body of press release for comments regarding the presentation of combined information for the six months ended June 30, 2008
SOURCE: Dana Holding Corporation
CONTACT: Investor: Karen Crawford, +1-419-535-4635, or Media: Chuck
Hartlage, +1-419-535-4728, both of Dana Holding Corporation
Web site: http://www.dana.com/
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