Dana Holding Corporation Reports 2009 Results
MAUMEE, Ohio, Feb. 24, 2010 -- -- Operational profit improvements of more than $500 million
substantially offset 35% sales decline
-- Achieved full-year adjusted EBITDA of $326 million
-- Delivered key financial objectives - positive cash, cost reductions,
and margin improvements - in difficult environment
-- Accomplished sequential improvement in sales and adjusted EBITDA from
third quarter of 2009
-- Increased total cash to $947 million, reduced net debt by $418 million
in 2009
Dana Holding Corporation today announced its full-year and fourth-quarter 2009 results.
(Logo: http://www.newscom.com/cgi-bin/prnh/19990903/DANA)
Operating improvements of more than $500 million from margin improvements, cost reductions, and other factors largely offset lower profits resulting from a 35-percent decline in full-year sales, which was due to substantially lower industry production volumes in 2009. As a result, adjusted EBITDA was $326 million, down just $23 million compared to 2008. Full-year 2009 sales were $5,228 million, down $2,867 million from the prior year.
Dana significantly improved margins over 2008, despite the reduced production volumes in 2009. Fourth-quarter 2009 adjusted EBITDA margin was 7.7 percent, compared with fourth-quarter 2008 adjusted EBITDA of 0.3 percent. Cost reduction efforts contributed approximately $300 million to the full-year 2009 improvement.
In 2009, Dana narrowed its net loss by $291 million compared to the prior year, after excluding a one-time gain of $754 million in 2008 recognized in connection with the application of fresh start accounting. The company reported a net loss of $431 million in 2009, which included fourth-quarter after-tax charges of $153 million related to the planned divestiture of its Structural Products business to Metalsa, S.A. de C.V.
At December 31, 2009, Dana had increased its cash position by $170 million to $947 million; improved total liquidity by $215 million to $1,094 million; reduced total debt by $248 million to $1,003 million; and reduced net debt by $418 million to $56 million, all compared to respective 2008 year-end totals.
"In spite of a substantial downturn in our markets, the Dana team delivered solid cash generation and vital cost reductions and margin improvements," said Dana President and Chief Executive Officer Jim Sweetnam. "These achievements helped dampen the negative impacts of the broader marketplace and provide a solid base for improvement in 2010.
"Our team is managing aggressively through a difficult period and delivering on our commitments," he added. "Much more work lies ahead, but as we begin to see modest increases in vehicle production across our segments and regions, we also see opportunities to take advantage of our improving competitive position and renewed focus on product development."
Fourth-Quarter Results
Sales for the fourth quarter of 2009 were $1,493 million, which compares with $1,521 million for the same period in 2008. Fourth-quarter adjusted EBITDA was $115 million, a significant improvement over $4 million reported for the final three months of 2008.
In the fourth quarter of 2009, the company narrowed its net loss to $236 million, compared with a net loss of $249 million for the same period in 2008, despite the inclusion of the net charges of $153 million associated with the anticipated sale of the Structures business.
Dana Breaks Ground for New Gear Manufacturing & Testing Center in India
Earlier this month, Dana and its Indian joint venture partner Anand Automotive Systems broke ground for a new hypoid gear manufacturing facility and testing center in Chakan, India. Located on the same site as Dana's existing Spicer India operations, the new facility adds to Dana's already substantial presence in India, which currently includes 10 operations. Dana and its JV partner will invest $35 million to $40 million over the next several years to build the 50,000 sq. ft. facility, which is expected to open in late 2011. The facility will employ approximately 130 people and produce 240,000 gear sets annually at full capacity. The expanded product capability provided by the facility will enable Dana to better address customer demands for improved efficiency, power density, fuel economy, torque-carrying capacity, and weight reduction.
Dana to Host Fourth-Quarter Conference Call at 10:30 a.m. Today
Dana will discuss its full-year and fourth-quarter results in a conference call at 10:30 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. # 53634802). International locations should call 1-706-758-0054 (Conference I.D. # 53634802). Please ask for the Dana Holding Corporation Financial Webcast and Conference Call. Phone registration will be available beginning at 10 a.m. EST. 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 Conference I.D. # 53634802. 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 11 months ended December 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 12 months ended December 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 2008.
This release refers to adjusted EBITDA, which we've defined to be earnings before interest, taxes, depreciation, amortization, non-cash equity grant expense, restructuring expense, and other nonrecurring items (gain/loss on debt extinguishment or divestitures, impairment, etc). Adjusted EBITDA is a non-GAAP financial measure, and the measure currently being used by Dana as the primary measure of its operating segment performance. 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 adjusted EBITDA, which is a performance measure that excludes depreciation and amortization, the comparability of results is enhanced. Management also believes that adjusted EBITDA is an important measure since the financial covenants of our primary debt agreements are adjusted EBITDA-based, and our management incentive performance programs are based, in part, on adjusted EBITDA. Because it is a non-GAAP measure, adjusted 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 adjusted 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. Based in Maumee, Ohio, the company employs approximately 24,000 people in 26 countries and reported 2009 sales of $5.2 billion. For more information, please visit: www.dana.com.
DANA HOLDING CORPORATION
Consolidated Statement of Operation (Unaudited)
For the Three Months Ended December 31, 2009 and 2008
Three Months Ended
December 31,
------------
2009 2008
---- ----
Net sales $1,493 $1,521
Costs and expenses
Cost of sales 1,387 1,541
Selling, general and administrative
expenses 96 67
Amortization of intangibles 18 17
Restructuring charges, net 25 53
Impairment of goodwill (11)
Impairment of long-lived assets 150 4
Other expense, net (2) (1)
--- ---
Loss before interest, reorganization items
and income taxes (185) (151)
Interest expense 31 43
Reorganization items 3
--- ---
Loss before income taxes (216) (197)
Income tax expense (12) (51)
Equity in earnings of affiliates (7) (1)
--- ---
Net loss (235) (249)
Less: Noncontrolling interests net income 1
--- ---
Net loss attributable to the parent company (236) (249)
Preferred stock dividend requirements 8 8
--- ---
Net loss available to common stockholders $(244) $(257)
===== =====
Net loss per share available to parent
company stockholders:
Basic $(2.02) $(2.57)
Diluted $(2.02) $(2.57)
Average common shares outstanding
Basic 139 100
Diluted 139 100
DANA HOLDING CORPORATION
Consolidated Statement of Operations
For the Years Ended December 31, 2009 and 2008
Dana Prior Dana
Eleven Months One Month
Dana Combined(1) Ended Ended
Year Ended December 31, December 31, January 31,
2009 2008 2008 2008
---- ---- ---- ----
Net sales $5,228 $8,095 $7,344 $751
Costs and expenses
Cost of sales 4,985 7,815 7,113 702
Selling,
general and
administrative
expenses 313 337 303 34
Amortization
of intangibles 71 66 66
Restructuring
charges, net 118 126 114 12
Impairment
of goodwill 169 169
Impairment of
long-lived
assets 156 14 14
Other income, net 98 61 53 8
--- --- --- ---
Income (loss) from
continuing operations
before interest,
reorganization items
and income taxes (317) (371) (382) 11
Interest expense 139 150 142 8
Reorganization items (2) 123 25 98
Fresh start accounting
adjustments 1,009 1,009
----- ----- ----- -----
Income (loss) from
continuing operations
before income taxes (454) 365 (549) 914
Income tax benefit
(expense) 27 (306) (107) (199)
Equity in earnings of
affiliates (9) (9) (11) 2
--- --- --- ---
Income (loss) from
continuing operations (436) 50 (667) 717
Loss from discontinued
operations (10) (4) (6)
--- --- --- ---
Net income (loss) (436) 40 (671) 711
Less:
Noncontrolling
interests
net income
(loss) (5) 8 6 2
--- --- --- ---
Net income (loss)
attributable to
the parent company (431) 32 (677) 709
Preferred stock
dividend requirements 32 29 29
--- --- --- ---
Net income (loss)
available to
common stockholders $(463) $3 $(706) $709
===== === ===== ====
Income (loss) per
share from continuing
operations available
to parent company
stockholders:
Basic $(4.19) $(7.02) $4.77
Diluted $(4.19) $(7.02) $4.75
Loss per share from
discontinued
operations
attributable
to parent company
stockholders:
Basic $- $(0.04) $(0.04)
Diluted $- $(0.04) $(0.04)
Net income (loss) per
share available to
parent company
stockholders:
Basic $(4.19) $(7.06) $4.73
Diluted $(4.19) $(7.06) $4.71
Average common
shares outstanding
Basic 110 100 150
Diluted 110 100 150
(1) See "Non-GAAP Measures" in body of press release for comments
regarding the presentation of combined information for the year
ended December 31, 2008.
DANA HOLDING CORPORATION
Consolidated Balance Sheet
As of December 31, 2009 and 2008
December 31,
------------
Assets 2009 2008
---- ----
Current assets
Cash and cash equivalents $947 $777
Accounts receivable
Trade, less allowance for doubtful accounts
of $18 in 2009 and $23 in 2008 728 764
Other 141 164
Inventories 608 869
Other current assets 59 52
Current assets held for sale 99 121
--- ---
Total current assets 2,582 2,747
Goodwill 111 108
Intangibles 438 515
Investments and other assets 233 200
Investments in affiliates 112 119
Property, plant and equipment, net 1,484 1,636
Non-current assets held for sale 104 282
--- ---
Total assets $5,064 $5,607
====== ======
Liabilities and equity
Current liabilities
Notes payable, including current portion of
long-term debt $34 $70
Accounts payable 601 759
Accrued payroll and employee benefits 103 112
Accrued restructuring costs 29 65
Taxes on income 40 93
Other accrued liabilities 270 258
Current liabilities held for sale 79 89
--- ---
Total current liabilities 1,156 1,446
Long-term debt 969 1,181
Deferred employee benefits and other non-
current liabilities 1,160 845
Commitments and contingencies
----- -----
Total liabilities 3,285 3,472
Parent company stockholders' equity
Preferred stock, 50,000,000 shares authorized
Series A, $0.01 par value, 2,500,000 issued
and outstanding 242 242
Series B, $0.01 par value, 5,400,000 issued
and outstanding 529 529
Common stock, $0.01 par value, 450,000,000
authorized, 139,414,149 issued and outstanding 1 1
Additional paid-in capital 2,580 2,321
Accumulated deficit (1,169) (706)
Accumulated other comprehensive loss (504) (359)
---- ----
Total parent company stockholders' equity 1,679 2,028
Noncontrolling interests 100 107
--- ---
Total equity 1,779 2,135
----- -----
Total liabilities and equity $5,064 $5,607
====== ======
DANA HOLDING CORPORATION
Consolidated Statement of Cash Flows (Unaudited)
For the Three Months Ended December 31, 2009 and 2008
Three Months Ended
December 31,
------------
2009 2008
---- ----
Cash flows - operating activities
Net loss $(235) $(249)
Depreciation 80 75
Amortization of intangibles 22 21
Amortization of deferred financing charges
and original issue discount 7 7
Impairment of goodwill, intangibles,
investments and other assets 150 (7)
Deferred income taxes 11 40
Loss on extinguishment of debt 10
Change in accounts receivable 22 409
Change in inventories 35 70
Change in accounts payable 13 (216)
Change in other current assets and
liabilities (25) (93)
Other, net 40 (31)
--- ---
Net cash flows provided by operating
activities (1) 120 36
--- ---
Cash flows - investing activities
Purchases of property, plant and equipment(1) (25) (86)
Proceeds from sale of businesses and assets 14
Other (2) (1)
--- ---
Net cash flows used in investing activities (27) (73)
--- ---
Cash flows - financing activities
Net change in short-term debt 4
Deferred financing payments (24)
Proceeds from long-term debt 22
Repayment of long-term debt (17) (153)
Proceeds from issuance of common stock 33
Dividends paid to noncontrolling interests (1)
Other 1 (3)
--- ---
Net cash flows provided by (used in) financing
activities 39 (177)
--- ----
Net increase (decrease) in cash and cash
equivalents 132 (214)
Cash and cash equivalents - beginning of
period 814 1,007
Effect of exchange rate changes on cash
balances 1 (16)
--- ---
Cash and cash equivalents - end of period $947 $777
==== ====
(1) Free cash flow of $95 in 2009 and ($50) in 2008 is the sum of net
cash provided by operating activities reduced by the purchases of
property, plant and equipment.
DANA HOLDING CORPORATION
Consolidated Statement of Cash Flows
For the Years Ended December 31, 2009 and 2008
Dana Prior Dana
Eleven Months One Month
Dana Combined(1) Ended Ended
Year Ended December 31, December 31, January 31,
2009 2008 2008 2008
---- ---- ---- ----
Cash flows - operating
activities
Net income (loss) $(436) $40 $(671) $711
Depreciation 311 292 269 23
Amortization of
intangibles 86 81 81
Amortization of
inventory valuation 49 49
Amortization of
deferred financing
charges and original
issue discount 34 27 27
Impairment of goodwill,
intangibles,
investments and other
assets 156 183 183
Deferred income taxes (20) 213 22 191
(Gain) loss on
extinguishment of debt (35) 10 10
Reorganization:
Reorganization items
net of cash payments (4) 55 (24) 79
Payment of claims (2) (100) (100)
Payments to VEBAs (2) (788) (733) (55)
Gain on settlement of
liabilities subject to
compromise (27) (27)
Fresh start adjustments (1,009) (1,009)
Pension contributions
in excess of expense (5) (38) (36) (2)
Change in accounts
receivable 107 434 512 (78)
Change in inventories 299 (34) (6) (28)
Change in accounts
payable (184) (210) (227) 17
Change in accrued
payroll and employee
benefits (80) (67) (79) 12
Change in accrued
income taxes (41) (42) (40) (2)
Change in other current
assets and liabilities (7) (124) (142) 18
Other, net 27 36 8 28
--- --- --- ---
Net cash flows provided
by (used in) operating
activities (2) 208 (1,019) (897) (122)
--- ------ ---- ----
Cash flows - investing
activities
Purchases of property,
plant and equipment (2) (99) (250) (234) (16)
Proceeds from sale of
businesses and assets 3 19 14 5
Change in restricted cash 93 93
Other (2) (6) (1) (5)
--- --- --- ---
Net cash flows provided
by (used in) investing
activities (98) (144) (221) 77
--- ---- ---- ---
Cash flows - financing
activities
Net change in short-
term debt (36) (88) (70) (18)
Proceeds from Exit
Facility debt 1,430 80 1,350
Deferred financing
payments (1) (66) (26) (40)
Proceeds from long-
term debt 27
Repayment of long-term
debt (214) (164) (164)
Net proceeds from
issuance of common
stock 250
Dividends paid to
preferred stockholders (18) (18)
Dividends paid to
noncontrolling
interests (5) (8) (7) (1)
Proceeds from
(repayment of) debtor-
in-possession
facility (900) (900)
Payment of DCC Medium
Term Notes (136) (136)
Original issue discount
payment (114) (114)
Issuance of Series A
and Series B preferred
stock 771 771
Other 11 (2) (2)
--- --- --- ---
Net cash flows provided
by (used in) financing
activities 32 705 (207) 912
--- --- ---- ---
Net increase (decrease)
in cash and cash
equivalents 142 (458) (1,325) 867
Cash and cash
equivalents -
beginning of period 777 1,271 2,147 1,271
Effect of exchange rate
changes on cash
balances 28 (40) (45) 5
Net change in cash of
discontinued
operations 4 4
--- --- --- ---
Cash and cash
equivalents - end of
period $947 $777 $777 $2,147
==== ==== ==== ======
(1) See "Non-GAAP Measures" in body of press release for comments
regarding the presentation of combined information for the year
ended December 31, 2008.
(2) Free cash flow of $109 in 2009 and ($381) in 2008 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
Segment Sales & Adjusted EBITDA (Unaudited)
For the Three Months Ended December 31, 2009 and 2008
Three Months Ended
December 31,
------------
SALES 2009 2008
---- ----
Light Vehicle Driveline $595 $508
Sealing 158 134
Thermal 53 42
Structures 189 159
Commercial Vehicle 288 321
Off-Highway 210 358
Other (1)
---- ----
Total Sales $1,493 $1,521
====== ======
Adjusted EBITDA
Light Vehicle Driveline $52 $(17)
Sealing 10 (6)
Thermal 5 (1)
Structures 15 (8)
Commercial Vehicle 28 3
Off-Highway 11 10
---- ----
Segment EBITDA 121 (19)
Shared services and
administrative (7) (7)
Other income, net 3 30
Foreign exchange not in
segments (2)
--- ---
Adjusted EBITDA $115 $4
==== ===
DANA HOLDING CORPORATION
Segment Sales and Adjusted EBITDA
For the Years Ended December 31, 2009 and 2008
Dana Prior Dana
Eleven Months One Month
Dana Combined(1) Ended Ended
Year Ended December 31, December 31, January 31,
SALES 2009 2008 2008 2008
---- ---- ---- ----
Light Vehicle
Driveline $2,021 $2,884 $2,603 $281
Sealing 535 705 641 64
Thermal 179 259 231 28
Structures 592 876 786 90
Commercial Vehicle 1,051 1,572 1,442 130
Off-Highway 850 1,794 1,637 157
Other 5 4 1
--- --- --- ---
Total Sales $5,228 $8,095 $7,344 $751
====== ====== ====== ====
Adjusted EBITDA
Light Vehicle
Driveline $131 $89 $79 $10
Sealing 21 50 44 6
Thermal 8 6 3 3
Structures 35 41 37 4
Commercial Vehicle 81 56 50 6
Off-Highway 38 116 102 14
--- --- --- ---
Segment EBITDA 314 358 315 43
Shared services and
administrative (22) (26) (23) (3)
Other income
(expense), net 33 20 22 (2)
Foreign exchange
not in segments 1 (3) (3)
--- --- --- ---
Adjusted EBITDA $326 $349 $311 $38
==== ==== ==== ===
(1) See "Non-GAAP Measures" in body of press release for comments
regarding the presentation of combined information for the year
ended December 31, 2008.
DANA HOLDING CORPORATION
Reconciliation of Segment and Adjusted EBITDA to Loss
from Continuing Operations Before Income Taxes
For the Three Months Ended December 31, 2009 and 2008
Three Months Ended
December 31,
------------
2009 2008
---- ----
Segment EBITDA $121 $(19)
Shared services and administrative (7) (7)
Other income, net 3 30
Foreign exchange not in segments (2)
--- ---
Adjusted EBITDA 115 4
Depreciation (80) (75)
Amortization (22) (21)
Restructuring (25) (53)
Impairment (150) 7
Reorganization items, net (3)
Loss on extinguishment of debt (10)
Strategic transaction expenses (12) (3)
Loss on sale of assets, net (6) (3)
Stock compensation expense (6) (2)
Foreign exchange on intercompany loans and
market value adjustments on forwards (5) (7)
Interest expense (31) (43)
Interest income 6 12
--- ---
Loss from continuing operations
before income taxes $(216) $(197)
===== =====
DANA HOLDING CORPORATION
Reconciliation of Segment and Adjusted EBITDA to Income (Loss)
from Continuing Operations Before Income Taxes
For the Years Ended December 31, 2009 and 2008
Dana Prior Dana
Eleven Months One Month
Dana Combined (1) Ended Ended
Year Ended December 31, December 31, January 31,
2009 2008 2008 2008
---- ---- ---- ----
Segment EBITDA $314 $358 $315 $43
Shared services
and administrative (22) (26) (23) (3)
Other income
(expense), net 33 20 22 (2)
Foreign exchange
not in segments 1 (3) (3)
--- --- --- ---
Adjusted EBITDA 326 349 311 38
Depreciation (311) (292) (269) (23)
Amortization (86) (130) (130)
Restructuring (118) (126) (114) (12)
DCC EBIT (2) (2)
Impairment (156) (183) (183)
Reorganization
items, net 2 (123) (25) (98)
Gain (loss) on
extinguishment
of debt 35 (10) (10)
Strategic
transaction
expenses (16) (10) (10)
Loss on sale of
assets, net (8) (10) (10)
Stock
compensation
expense (13) (6) (6)
Foreign exchange
on intercompany
loans and market
value adjustments
on forwards 6 (3) (7) 4
Interest expense (139) (150) (142) (8)
Interest income 24 52 48 4
Fresh start
accounting
adjustments 1,009 1,009
----- ----- ----- -----
Income (loss)
from continuing
operations before
income taxes $(454) $365 $(549) $914
===== ==== ===== ====
Net cash flows
provided by (used
in) operating
activities $208 $(1,019) $(897) $(122)
Bankruptcy
emergence
payments 888 833 55
Purchases of
property, plant
and equipment (99) (250) (234) (16)
--- ---- ---- ---
Free cash flow $109 $(381) $(298) $(83)
==== ===== ===== ====
(1) See "Non-GAAP Measures" in body of press release for comments
regarding the presentation of combined information for the year
ended December 31, 2008.
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