DANA HOLDING CORP (DAN) filed Quarterly Report for the period ended 2009-09-30.
DANA HOLDING CORP 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 and engine manufacturer in the global automotive commercial vehicle and off-highway markets. Dana Holding Corp has a market cap of $778.4 million; its shares were traded at around $5.8 with and P/S ratio of 0.1.
Highlight of Business Operations:
On September 29, 2009, we completed an underwritten offering of 34 million shares of common stock at $6.75 per share for proceeds of $217, net of underwriting commissions and related offering expenses. The equity offering also provided the underwriters with an over-allotment option to purchase an additional 5 million shares. That purchase was completed on October 5, 2009, generating net proceeds of $33. We used $98 of the September proceeds and $15 of the October proceeds to repay third party debt principal. These offerings significantly improved our liquidity as discussed below in “Liquidity.”
Our LVD margin improved to 5.6% of sales from 0.5% of sales in 2008, an increase of $28. Lower sales volume reduced margins by about $38. More than offsetting this margin loss was $20 from improved pricing and $46 from cost reductions and other items. In our Sealing segment, margin declined by $7, principally due to lower sales volume. Thermal and Structures margins increased by $4 and $5, respectively, as conversion cost savings and improved pricing more than offset the impact from lower sales levels.
In our Commercial Vehicle segment, gross margin improved to 10.1% of sales from 3.4% in 2008, an increase of $13. The margin reduction of approximately $21 attributable to lower sales was more than offset by margin improvements of $7 from pricing actions and $27 of cost reduction contributions, primarily from conversion cost savings and lower material cost. Of our businesses, the Off-Highway segment experienced the largest percentage decline in sales; down 57% from 2008, leading to their overall margin decease of $9. Reduced margin of about $30 from lower sales levels was partially offset by increased pricing of $7, lower warranty expense of $8, and contributions from cost reductions and other items of $6
Other Income, Net — Other income, net for the third quarter of 2009 was $10 as compared to $2 for the corresponding period of 2008. Other income in 2009 benefited from net currency transaction gains of $3 as compared to losses of $7 in 2008. Year-over-year other income was reduced by lower interest income of $5 and a net charge of $5 associated with debt reduction actions in the third quarter of 2009.
Interest Expense — Interest expense includes the costs associated with the Exit Financing facility and other debt agreements which are described in Note 14 of the notes to our consolidated financial statements in Item 1 of Part I. Interest expense in the third quarters of 2009 and 2008 includes $3 and $4 of amortized OID and $6 and $2 of debt issuance costs. Also included is $2 and $3 of other non-cash interest expense associated primarily with the accretion of certain liabilities that were recorded at discounted values in connection with the adoption of fresh start accounting upon emergence from Chapter 11.
As described in Note 19 of the notes to our consolidated financial statements in Item 1 of Part I, an exception occurs when there is pre-tax income in categories such as other comprehensive income. As a result of having other comprehensive income in the third quarter of 2009, we recognized a benefit of $14 on pre-tax losses of continuing operations in the U.S. The valuation allowance impacts in the above-mentioned countries were the primary factors causing the tax benefit of $9 for the three months ended September 30, 2009 to differ from an expected tax benefit of $17 at a U.S. Federal statutory rate of 35%. For 2008, the valuation allowances, the fresh start adjustments and the impairment of goodwill were the primary factors which caused the tax expense of $24 to differ from an expected tax benefit of $76 at the U.S. Federal statutory rate of 35%.
DAN is in the portfolios of David Einhorn of Greenlight Capital Inc, David Tepper of APPALOOSA MANAGEMENT LP.
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