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/

Company News On-Call: http://www.prnewswire.com/comp/226839.html


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