Dana Holding Corporation Reports Third-Quarter 2008 Results
PRNewswire-FirstCall
TOLEDO, Ohio
(NYSE:DAN)
Nov 6, 2008
TOLEDO, Ohio, Nov. 6 /PRNewswire-FirstCall/ -- Dana Holding Corporation (NYSE: DAN) today announced its third-quarter 2008 results.
(Logo: http://www.newscom.com/cgi-bin/prnh/19990903/DANA ) Third-quarter developments included:
-- Sales of $1,929 million, a 9-percent decrease compared with 2007, primarily because of lower vehicle production in North America;
-- Net loss of $271 million, including $123 million of non-cash goodwill and other impairment charges. This compares with a third-quarter 2007 net loss of $69 million;
-- Earnings before interest, taxes, depreciation, amortization, and restructuring (EBITDA) of $15 million, compared with $126 million in 2007; and
-- Strong cash balance of $1.0 billion and total liquidity of $1.3 billion at September 30, 2008. Net debt was $380 million.
Additional Actions Planned
"The economic and market challenges we've faced all year were particularly difficult in the third quarter," said Executive Chairman John Devine. "The combination of lower industry volumes and peaking steel prices hit us sharply this quarter.
"Dana is planning up to 10 additional plant closures in 2009 and 2010, and we will reduce our workforce this year by 5,000 versus the previously announced 3,000. We regret having to take such actions, but they are necessary to size the company to lower industry volumes."
Three-Month Results
Third-quarter EBITDA of $15 million was $111 million below 2007 results for the same period. Lower production and higher steel costs of $140 million more than account for this reduction. Results also included higher pricing, cost savings, and unfavorable currency changes.
At September 30, 2008, cash balances remained strong at $1.0 billion, with available global liquidity of $1.3 billion. Despite lower sales and EBITDA, free cash flow of a negative $151 million for the third quarter was about the same as that during the same period in 2007.
Dana's liquidity has been strengthened by a $180 million draw-down in October under its existing $650 million secured revolving credit facility.
Nine-Month Results
Sales for the nine months ended September 30, 2008, were $6,574 million, which compares to $6,564 million for the same period in 2007. Year to date, the company reported net income of $274 million compared with a net loss of $294 million for the same period in 2007. The nine-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.
Year-to-date EBITDA of $290 million compares to $373 million for the same period in 2007, as the earnings reduction related to lower North American vehicle production and higher steel costs more than offset cost reduction actions and pricing improvements.
Outlook
Based on current production estimates, Dana expects full-year 2008 sales of approximately $8,200 million and EBITDA of approximately $300 million.
"The second half of this year has been extremely challenging with sharply lower North American vehicle production, volatile steel prices, and turmoil in the financial markets," said Jim Yost, executive vice president and chief financial officer. "With respect to our credit facility, Dana is in compliance with financial covenants through September 30, 2008; however, we will not be able to comply with these requirements, as presently structured, at December 31, 2008. We expect to complete an amendment to the facility with our lenders in the next few weeks."
In 2009 Dana expects to improve EBITDA by at least $150 million, primarily through pricing actions and cost reductions, and is targeting break-even or better free cash flow.
Devine added, "I am pleased with the progress our people have made in rebuilding Dana, despite the difficult environment. We have much to do, but our team is focused on the changes needed to reposition Dana for improved profitability and growth."
Dana to Host Third-Quarter Conference Call at 10 a.m. Today
Dana will discuss its third-quarter results in a conference call at 10 a.m. EST 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. # 68867352). International locations should call 1- 706-758-0054 (Conference I.D. # 68867352). 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 68867352. 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 eight months ended September 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 nine months ended September 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 nine months 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 32,000 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 September 30, 2008 and 2007
Three Months Ended
September 30,
Dana Prior Dana
2008 2007
Net sales $1,929 $2,130
Costs and expenses
Cost of sales 1,896 2,017
Selling, general and
administrative
expenses 87 79
Amortization of
intangibles 18
Realignment charges,
net 16 6
Impairment of goodwill 105
Impairment of assets 3
Other income, net 2 30
Income (loss) from
continuing operations
before interest,
reorganization items and
income taxes (194) 58
Interest expense
(contractual interest of
$54 for the three months
ended September 30, 2007) 37 27
Reorganization items, net 1 98
Loss from continuing
operations before income
taxes (232) (67)
Income tax benefit
(expense) (24) 3
Minority interests (1) (4)
Equity in earnings of
affiliates (13) 4
Loss from continuing
operations (270) (64)
Loss from discontinued
operations (1) (5)
Net loss (271) (69)
Preferred stock dividend
requirements 8
Net loss available to
common stockholders $(279) $(69)
Net loss from continuing
operations:
Basic $(2.78) $(0.42)
Diluted $(2.78) $(0.42)
Net loss from discontinued
operations
Basic $(0.01) $(0.04)
Diluted $(0.01) $(0.04)
Net loss available to
common stockholders
Basic $(2.79) $(0.46)
Diluted $(2.79) $(0.46)
Average common shares
outstanding:
Basic 100 150
Diluted 100 150
DANA HOLDING CORPORATION
Consolidated Statement of Operations (Unaudited)
For the Nine Months Ended September 30, 2008 and 2007
Prior
Dana Prior Combined Dana
Eight Dana Nine Nine
Months One Month Months Months
Ended Ended Ended Ended
September January September September
30, 31, 30, 30,
2008 2008 2008 (1) 2007
Net sales $5,823 $751 $6,574 $6,564
Costs and expenses
Cost of sales 5,579 702 6,281 6,201
Selling, general and
administrative
expenses 236 34 270 263
Amortization of
intangibles 49 49
Realignment charges,
net 61 12 73 159
Impairment of goodwill 180 180
Impairment of assets 10 10
Other income, net 54 8 62 108
Income (loss) from
continuing operations
before interest,
reorganization items
and income taxes (238) 11 (227) 49
Interest expense
(contractual interest of
$17 for the one month
ended January 31, 2008 and
$159 for the nine months
ended September 30, 2007) 99 8 107 78
Reorganization items, net 22 98 120 173
Fresh start accounting
adjustments 1,009 1,009
Income (loss) from
continuing operations
before income taxes (359) 914 555 (202)
Income tax expense (56) (199) (255) (15)
Minority interests (6) (2) (8) (10)
Equity in earnings of
affiliates (10) 2 (8) 22
Income (loss) from
continuing operations (431) 715 284 (205)
Loss from discontinued
operations (4) (6) (10) (89)
Net income (loss) (435) 709 274 (294)
Preferred stock dividend
requirements 21 21
Net income (loss) available
to common stockholders $(456) $709 $253 $(294)
Net income (loss) from
continuing operations:
Basic $(4.52) $4.77 $(1.36)
Diluted $(4.52) $4.75 $(1.36)
Net loss from discontinued
operations
Basic $(0.04) $(0.04) $(0.60)
Diluted $(0.04) $(0.04) $(0.60)
Net income (loss) available
to common stockholders:
Basic $(4.56) $4.73 $(1.96)
Diluted $(4.56) $4.71 $(1.96)
Average common shares
outstanding:
Basic 100 150 150
Diluted 100 150 150
(1) See "Non-GAAP Measures" in body of press release for
comments regarding the presentation of combined information
for the nine months ended September 30, 2008
DANA HOLDING CORPORATION
Consolidated Balance Sheet (Unaudited)
At September 30, 2008 and December 31, 2007
Dana Prior Dana
September 30, December 31,
Assets 2008 2007
Current assets
Cash and cash equivalents $1,007 $1,271
Restricted cash 93
Accounts receivable
Trade, less allowance
for doubtful accounts
of $23 in 2008 and
$22 in 2007 1,205 1,197
Other 219 295
Inventories
Raw materials 413 331
Work in process and
finished goods 587 481
Assets of discontinued
operations 24
Other current assets 95 100
Total current
assets 3,526 3,792
Goodwill 117 349
Intangibles 599 1
Investments and other assets 255 348
Investments in affiliates 143 172
Property, plant and
equipment, net 1,915 1,763
Total assets $6,555 $6,425
Liabilities and
stockholders' equity
(deficit)
Current liabilities
Notes payable, including
current portion of long-
term debt $67 $283
Debtor-in-possession
financing 900
Accounts payable 1,047 1,072
Accrued payroll and employee
benefits 211 258
Liabilities of discontinued
operations 9
Taxes on income 124 12
Other accrued liabilities 353 418
Total current
liabilities 1,802 2,952
Liabilities subject to
compromise 3,511
Deferred employee benefits
and other non-current
liabilities 851 630
Long-term debt 1,320 19
Minority interest in
consolidated subsidiaries 110 95
Commitments and
contingencies
Total liabilities 4,083 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, 100,036,390
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 2,318 202
Accumulated deficit (456) (468)
Accumulated other
comprehensive loss (162) (666)
Total
stockholders'
equity (deficit) 2,472 (782)
Total liabilities
and stockholders'
equity $6,555 $6,425
DANA HOLDING CORPORATION
Consolidated Statement of Cash Flows (Unaudited)
For the Three Months Ended September 30, 2008 and 2007
Three Months Ended
Dana Prior Dana
September 30, September 30,
2008 2007
Cash flows - operating
activities
Net loss $(271) $(69)
Depreciation 75 70
Amortization of intangibles 22
Amortization of deferred
financing charges and
original issue discount 6
Impairment of goodwill and
other assets 123 3
Minority interest 1 (6)
Reorganization:
Payment of claims (1) (3)
Reorganization items net
of cash payments (1) 52
Loss on sale of businesses
and assets 8
Change in working capital (44) (119)
Other, net 10 (28)
Net cash flows used in
operating activities (1) (82) (89)
Cash flows - investing
activities
Purchases of property, plant
and equipment (1) (72) (54)
Proceeds from sale of
businesses and assets 90
Change in restricted cash 91
Other 4 36
Net cash flows provided by
(used in) investing
activities (68) 163
Cash flows - financing
activities
Net change in short-term
debt 14 47
Payment of DCC Medium Term
Notes (129)
Deferred financing fees (1)
Repayment of Exit Facility
debt (4)
Preferred dividends paid (7)
Other 7 2
Net cash flows provided by
(used in) financing
activities 9 (80)
Net increase (decrease) in
cash and cash equivalents (141) (6)
Cash and cash equivalents -
beginning of period 1,191 1,001
Effect of exchange rate
changes on cash balances (43) 33
Net change in cash of
discontinued operations 7
Cash and cash equivalents -
end of period $1,007 $1,035
(1) Free cash flow of ($151) in 2008 and $(143) 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 Nine Months Ended September 30, 2008 and 2007
Nine Months
Ended September 30, 2008
Prior
Dana Prior Combined Dana
Eight Dana Nine Nine
Months One Month Months Months
Ended Ended Ended Ended
September January September September
30, 31, 30, 30,
2008 2008 2008 (1) 2007
Cash flows - operating
activities
Net income (loss) $(435) $709 $274 $(294)
Depreciation 195 23 218 209
Amortization of intangibles 60 60
Amortization of inventory
valuation 15 15
Amortization of deferred
financing charges and
original issue discount 17 17
Impairment of goodwill and
other assets 205 205 3
Non-cash portion of U.K.
pension charge 60
Minority interest 6 2 8
Deferred income taxes (38) 191 153 (60)
Reorganization:
Gain on settlement of
liabilities subject to
compromise (27) (27)
Payment of claims (2) (100) (100)
Reorganization items net of
cash payments (24) 79 55 59
Fresh start adjustments (1,009) (1,009)
Payments to VEBAs (2) (733) (55) (788) (27)
Loss on sale of businesses and
assets 1 7 8
Change in working capital (111) (61) (172) (183)
Other, net 9 19 28 (8)
Net cash flows used in
operating activities (2) (933) (122) (1,055) (241)
Cash flows - investing
activities
Purchases of property, plant
and equipment (2) (148) (16) (164) (148)
Proceeds from sale of
businesses and assets 5 5 511
Change in restricted cash 93 93 3
Other (5) (5) 61
Net cash flows provided by
(used in) investing
activities (148) 77 (71) 427
Cash flows - financing
activities
Proceeds from (repayment of)
debtor-in-possession facility (900) (900) 200
Net change in short-term debt (74) (18) (92) 19
Payment of DCC Medium Term
Notes (136) (136) (129)
Proceeds from Exit Facility
debt 80 1,350 1,430
Original issue discount fees (114) (114)
Deferred financing fees (2) (40) (42)
Repayment of Exit Facility
debt (11) (11)
Issuance of Series A and
Series B preferred stock 771 771
Preferred dividends paid (18) (18)
Other (5) (1) (6)
Net cash flows provided by
(used in) financing
activities (30) 912 882 90
Net increase (decrease) in
cash and cash equivalents (1,111) 867 (244) 276
Cash and cash equivalents -
beginning of period 2,147 1,271 1,271 704
Effect of exchange rate
changes on cash balances (29) 5 (24) 61
Net change in cash of
discontinued operations 4 4 (6)
Cash and cash equivalents -
end of period $1,007 $2,147 $1,007 $1,035
(1) See "Non-GAAP Measures" in body of press release for comments
regarding the presentation of combined information for the nine
months ended September 30, 2008
(2) Free cash flow of ($331) in 2008 and $(362) 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
Reconciliation of EBITDA to Income (Loss) from
Continuing Operations Before Income Taxes
Three Months Ended
September 30,
Dana Prior Dana
2008 2007
ASG
Light Axle $13 $29
Driveshaft 30 26
Sealing 16 14
Thermal (1) 4
Structures 6 22
Eliminations and
other (2)
Total ASG 62 95
HVSG
Commercial Vehicle 1 17
Off-Highway 22 36
Eliminations and
other (3)
Total HVSG 23 50
Segment EBITDA 85 145
Shared services and
administrative (39) (33)
Other expense, net (21) (5)
Foreign exchange not
in segments (10) 19
EBITDA 15 126
Depreciation (74) (69)
Amortization (22)
Realignment (16) (6)
DCC EBIT (5)
Goodwill impairment (105)
Impairment of assets (3)
Reorganization
items, net (1) (98)
Interest expense (37) (27)
Interest income 11 12
Loss from continuing
operations before
income taxes $(232) $(67)
DANA HOLDING CORPORATION
Reconciliation of EBITDA to Income (Loss) from
Continuing Operations Before Income Taxes
Nine Months
Ended September 30, 2008
Prior Prior
Dana Dana Combined Dana
Eight One Nine Nine
Months Month Months Months
Ended Ended Ended Ended
September January September September
30, 31, 30, 30,
2008 2008 2008 (1) 2007
ASG
Light Axle $65 $8 $73 $76
Driveshaft 101 12 113 76
Sealing 57 7 64 54
Thermal 7 3 10 18
Structures 52 5 57 80
Eliminations and other (7) (3) (10) (16)
Total ASG 275 32 307 288
HVSG
Commercial Vehicle 24 4 28 47
Off-Highway 104 15 119 123
Eliminations and other (4) (4) (7)
Total HVSG 124 19 143 163
Segment EBITDA 399 51 450 451
Shared services and
administrative (105) (13) (118) (118)
Other expense, net (43) (43) (1)
Foreign exchange not
in segments (3) 4 1 41
EBITDA 248 42 290 373
Depreciation (194) (23) (217) (208)
Amortization (75) (75)
Realignment (61) (12) (73) (159)
DCC EBIT (2) (2) 14
Goodwill impairment (180) (180)
Impairment of assets (10) (10)
Reorganization items,
net (22) (98) (120) (173)
Interest expense (99) (8) (107) (78)
Interest income 36 4 40 29
Fresh start accounting
adjustments 1,009 1,009
Income (loss) from
continuing operations
before income taxes $(359) $914 $555 $(202)
(1) See "Non-GAAP Measures" in body of press release for comments
regarding the presentation of combined information for the nine months
ended September 30, 2008
DANA HOLDING CORPORATION
Reconciliation of EBITDA to Income (Loss) from Continuing
Operations Before Income Taxes and Free Cash Flow to
Cash From (Used By) Operations
Combined
Projected
Nine Months Full Year
Ended Ended
September 30, December 31,
2008 2008
EBITDA $290 $300
Depreciation (217) (291)
Amortization (75) (97)
Realignment (73) (100)
DCC EBIT (2) (2)
Goodwill impairment (180) (180)
Impairment of assets (10) (10)
Reorganization items, net (120) (122)
Interest expense (107) (151)
Interest income 40 52
Fresh start accounting
adjustments 1,009 1,009
Income from continuing
operations before income
taxes $555 $408
Net cash flows used in
operating activities $(1,056) $ (938 - 988)
Purchases of property,
plant and equipment (164) (250)
Bankruptcy emergence
payments 888 888
Free cash flow $(332) $ (300 - 350)
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SOURCE: Dana Holding Corporation
CONTACT: Investors, Karen Crawford, +1-419-535-4635, or Media, Chuck
Hartlage, +1-419-535-4728
Web site: http://www.dana.com/
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