What changed in this filing

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Item 1. Financial Statements

2020-10-28 compared with 2020-07-30 · 176 added, 206 removed, 974 unchanged (28% of the section changed)

4 unchanged sentences

Three Months Ended

Six Months Ended

$ 1,078  

$ 2,306  

$ 3,004  

$ 4,469  

Nine Months Ended

September 30,

Costs and expenses

4 unchanged sentences

Impairment of goodwill

( 51 )  

Pension settlement charge

( 258 )  

Other income (expense), net  

( 10 )  

Earnings (loss) before interest and income taxes

( 112 )  

( 95 )  

( 65 )  

Write-off deferred financing costs  

Other income (expense), net

Earnings before interest and income taxes

Write-off deferred financing costs

Interest income

Interest expense

Loss before income taxes

( 147 )  

( 126 )  

( 127 )  

Earnings (loss) before income taxes

Income tax expense (benefit)

( 52 )  

Equity in earnings of affiliates

Net income (loss)

( 173 )  

( 66 )  

( 135 )  

Noncontrolling interests net income  

Redeemable noncontrolling interests net income (loss)  

( 21 )  

Noncontrolling interests net income

Redeemable noncontrolling interests net loss

Net income (loss) attributable to the parent company

$ ( 174 )  

$ ( 68 )  

$ ( 116 )  

Net income (loss) per share available to common stockholders

$ ( 1.20 )  

$ ( 0.47 )  

$ ( 0.80 )  

$ 0.21  

$ ( 1.20 )  

$ ( 0.47 )  

$ ( 0.80 )  

$ 0.21  

Weighted-average common shares outstanding

4 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Net income (loss)

$ ( 173 )  

$ ( 66 )  

$ ( 135 )  

Other comprehensive income (loss), net of tax:

Currency translation adjustments

( 147 )  

Hedging gains and losses

1 unchanged sentence

Other comprehensive income (loss)

( 101 )  

Total comprehensive income (loss)

( 152 )  

( 236 )  

Comprehensive (income) loss attributable to noncontrolling interests

1 unchanged sentence

Comprehensive income (loss) attributable to the parent company

$ ( 158 )  

$ ( 211 )  

The accompanying notes are an integral part of the consolidated financial statements.

2 unchanged sentences

(In millions, except share and per share amounts)

September 30,

Current assets

50 unchanged sentences

(In millions)

Six Months Ended

Nine Months Ended

September 30,

Operating activities

8 unchanged sentences

Change in working capital

Net cash provided by (used in) operating activities

Net cash provided by operating activities

Investing activities

12 unchanged sentences

Distributions to noncontrolling interests

Sale of interest to noncontrolling shareholder

Contributions from noncontrolling interests

46 unchanged sentences

2019 Form 10 -K).

During the second quarter of 2020, we identified an error in the loss attributable to redeemable noncontrolling interests due to incorrectly excluding the share of the goodwill impairment charge related to the redeemable noncontrolling interests. Of the $ 48 million impairment charge recorded for the Commercial Vehicle reporting unit during the three months ended March 31, 2020 , $ 20 million should have been attributable to the redeemable noncontrolling interests.

During the second quarter of 2020, we identified an error in the loss attributable to redeemable noncontrolling interests due to incorrectly excluding the share of the goodwill impairment charge related to the redeemable noncontrolling interests. Of the $ 48 million impairment charge recorded for the Commercial Vehicle reporting unit during the quarter ended March 31, 2020, $ 20 million should have been attributable to the redeemable noncontrolling interests.

We concluded that the error was not material to the financial statements for the quarter ended March 31, 2020 and therefore, amendment of the previously filed Quarterly Report on Form 10 -Q for the quarter ended March 31, 2020 is not required.

37 unchanged sentences

The adoption resulted in a noncash cumulative effect adjustment to retained earnings on our opening consolidated balance sheet as of January 1, 2020. 

We also adopted the following standard during the first six months of 2020 , which did not have a material impact on our financial statements or financial statement disclosures:

We also adopted the following standard during the first nine months of 2020 , which did not have a material impact on our financial statements or financial statement disclosures:

Effective Date

32 unchanged sentences

During March 2020, we acquired the remaining noncontrolling interests in Ashwoods held by employee shareholders.

See Hydro-Québec relationship discussion below for details of subsequent changes in our ownership interest in Ashwoods.

The pro forma effects of this acquisition would not materially impact our reported results for any period presented, and as a result no pro forma financial information is presented.

Nordresa —

36 unchanged sentences

Goodwill recognized in this transaction is primarily attributable to synergies expected to arise after the acquisition and the assembled workforce and is not deductible for tax purposes.

We used a combination of the discounted cash flow, an income approach, and the guideline public company method, a market approach, to value our previously held equity method investment in PEPS.

We used a combination of the discounted cash flow method, an income approach, and the guideline public company method, a market approach, to value our previously held equity method investment in PEPS.

The fair value assigned to intangibles includes $ 10 allocated to customer relationships.

47 unchanged sentences

Three Months Ended

Six Months Ended

June 30, 2019

$ 2,306  

Nine Months Ended

September 30, 2019

$ 2,164  

Net income (loss)

$ 6,778  

31 unchanged sentences

We completed numerous acquisitions in 2018 and 2019 that are included in our Commercial Vehicle and Off-Highway reporting units. These acquisitions were recorded on the balance sheet at their estimated acquisition date fair values and therefore had no cushion of fair value over their carrying value.

As a result of the effect of COVID- 19 on our expected future operating cash flows, a decrease in our share price which reduced our market capitalization below the book value of net assets and lower cushion in our expected reporting unit fair values as a result of the recent acquisitions, we determined certain impairment triggers had occurred.

As a result of the effect of the COVID- 19 pandemic on our expected future operating cash flows, a decrease in our share price which reduced our market capitalization below the book value of net assets and lower cushion in our expected reporting unit fair values as a result of the recent acquisitions, we determined certain impairment triggers had occurred in the first quarter of 2020.

Accordingly, we performed interim impairment analyses at each of our reporting units as of March 31, 2020.

6 unchanged sentences

The reduction in fair values, and the corresponding impairment charges, were primarily driven by the negative effect of the COVID- 19 pandemic on each reporting unit’s near-term cash flows. The remaining balance of goodwill for the Commercial Vehicle and Off-Highway reporting units continues to be at risk for impairment.

A prolonged shutdown due to COVID- 19 or a significant reduction in demand caused by decreased consumer confidence and spending following the pandemic may result in the need to recognize an additional impairment charge in the Commercial Vehicle or Off-Highway reporting units.

The remaining change in the carrying amount of goodwill in 2020 is primarily due to the acquisition of Ashwoods and currency fluctuation.

New shutdowns due to the COVID- 19 pandemic or a significant reduction in demand caused by decreased consumer confidence and spending following the pandemic may result in the need to recognize an additional impairment charge in the Commercial Vehicle or Off-Highway reporting units.

The remaining change in the carrying amount of goodwill in 2020 is primarily due to the acquisition of Ashwoods, measurement period adjustments for the Nordresa acquisition and currency fluctuation.

See Note 2 for additional information on recent acquisitions.

5 unchanged sentences

Currency impact

Balance, June 30, 2020

Balance, September 30, 2020

Components of other intangible assets — 

June 30, 2020

September 30, 2020

December 31, 2019

13 unchanged sentences

The net carrying amounts of intangible assets, other than goodwill, attributable to each of our operating segments at 

June 30, 2020 were as follows:

September 30, 2020 were as follows:

Light Vehicle —

4 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Charged to cost of sales

1 unchanged sentence

Total amortization

The following table provides the estimated aggregate pre-tax amortization expense related to intangible assets for each of the next five years based on June 30, 2020 exchange rates.

The following table provides the estimated aggregate pre-tax amortization expense related to intangible assets for each of the next five years based on September 30, 2020 exchange rates.

Actual amounts may differ from these estimates due to such factors as currency translation, customer turnover, impairments, additional intangible asset acquisitions and other events.

6 unchanged sentences

Net restructuring charges of $ 2 and $ 5  in the 

second quarters of 

third quarters of 

2020  and 

and $ 19 and $ 18 in the first half of 2020 and 2019 were comprised of severance and benefit costs related to integration of recent acquisitions, headcount reductions across our operations and exit costs related to previously announced actions.

2019  and $ 21 and $ 23  in the nine months ended September 30 of 2020 and 2019 were comprised of severance and benefit costs related to integration of recent acquisitions, headcount reductions across our operations and exit costs related to previously announced actions.

Accrued restructuring costs and activity —

Employee Termination Benefits

Balance, March 31, 2020

Balance, June 30, 2020

Charges to restructuring

1 unchanged sentence

Cash payments

Balance, June 30, 2020

Balance, September 30, 2020

Balance, December 31, 2019

2 unchanged sentences

Cash payments

Balance, June 30, 2020

At June 30, 2020 , the accrued employee termination benefits include costs to reduce approximately 400 employees to be completed over the next year.

Balance, September 30, 2020

At September 30, 2020 , the accrued employee termination benefits include costs to reduce approximately 400 employees to be completed over the next year.

Cost to complete —

The following table provides project-to-date and estimated future restructuring expenses for completion of our approved restructuring initiatives for our business segments at June 30, 2020 .

The following table provides project-to-date and estimated future restructuring expenses for completion of our approved restructuring initiatives for our business segments at September 30, 2020 .

Expense Recognized

3 unchanged sentences

Commercial Vehicle

Power Technologies  

The future cost to complete includes estimated separation costs, primarily those associated with one -time benefit programs, and exit costs through 2021, equipment transfers and other costs which are required to be recognized as closures are finalized or as incurred during the closure.

1 unchanged sentence

Inventory components at —

June 30, 2020

September 30, 2020

December 31, 2019

3 unchanged sentences

Cash, cash equivalents and restricted cash at —

June 30, 2020

September 30, 2020

December 31, 2019

June 30, 2019

September 30, 2019

December 31, 2018

9 unchanged sentences

On December 11, 2019 our Board of Directors approved an extension of our existing common stock share repurchase program through December 31, 2021.

Approximately $ 150 remained available for future share repurchases as of June 30, 2020 .

Approximately $ 150 remained available for future share repurchases as of September 30, 2020 .

Changes in equity —

Three Months Ended June 30,

Three Months Ended September 30,

Additional Paid-In Capital

3 unchanged sentences

Non-controlling Interests

Balance, March 31, 2020

Net income (loss)

Balance, June 30, 2020

Other comprehensive income

2 unchanged sentences

Stock compensation

Balance, September 30, 2020

Balance, June 30, 2019

Balance, March 31, 2019

Net income (loss)

Other comprehensive income

Other comprehensive loss

Common stock dividends

Distributions to noncontrolling interests

Increase from business combination

Stock compensation

Balance, June 30, 2019

Six Months Ended June 30,

Balance, September 30, 2019

Nine Months Ended September 30,

Additional Paid-In Capital

6 unchanged sentences

Net income (loss)

Other comprehensive loss

Other comprehensive income (loss)

Common stock dividends

3 unchanged sentences

Stock withheld for employee taxes

Balance, June 30, 2020

Balance, September 30, 2020

Balance, December 31, 2018

7 unchanged sentences

Stock withheld for employee taxes

Balance, June 30, 2019

Balance, September 30, 2019

Changes in each component of accumulated other comprehensive income (AOCI) of the parent —

3 unchanged sentences

Accumulated Other Comprehensive Loss

Balance, March 31, 2020

Balance, June 30, 2020

Other comprehensive income (loss):

4 unchanged sentences

Other comprehensive income

Balance, September 30, 2020

Balance, June 30, 2019

Balance, March 31, 2019

Other comprehensive income (loss):

2 unchanged sentences

Reclassification of amount to net income (a)

Net actuarial gains

Reclassification adjustment for net actuarial losses included in net periodic benefit cost (b)

Other comprehensive income

Balance, June 30, 2019

Other comprehensive income (loss)

Balance, September 30, 2019

Parent Company Stockholders

10 unchanged sentences

Other comprehensive income (loss)

Balance, June 30, 2020

Balance, September 30, 2020

Balance, December 31, 2018

5 unchanged sentences

Reclassification adjustment for net actuarial losses included in net periodic benefit cost (b)

Other comprehensive income

Balance, June 30, 2019

Other comprehensive income (loss)

Balance, September 30, 2019

(a) Realized gains and losses from currency-related forward contracts associated with forecasted transactions or from other derivative instruments treated as cash flow hedges are reclassified from AOCI into the same line item in the consolidated statement of operations in which the underlying forecasted transaction or other hedged item is recorded.

7 unchanged sentences

Redeemable noncontrolling interests reflected as of the balance sheet date are the greater of the redeemable noncontrolling interest balances adjusted for comprehensive income items and distributions or the redemption values.

Redeemable noncontrolling interest adjustments of redemption value are recorded in retained earnings. See Note 1 for additional information on the correction of the error in net income (loss) attributable to redeemable noncontrolling interests. 

Redeemable noncontrolling interest adjustments of redemption value are recorded in retained earnings. See Note 1 for additional information on the correction of the error in net loss attributable to redeemable noncontrolling interests. 

Reconciliation of changes in redeemable noncontrolling interests —

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Balance, beginning of period

Capital contribution from redeemable noncontrolling interest  

Sale of redeemable noncontrolling interest

Comprehensive income (loss) adjustments:

Net income (loss) attributable to redeemable noncontrolling interests  

( 21 )  

Net loss attributable to redeemable noncontrolling interests

Other comprehensive income (loss) attributable to redeemable noncontrolling interests

3 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Net income (loss) available to common stockholders - Numerator basic and diluted

3 unchanged sentences

The share count for diluted earnings per share is computed on the basis of the weighted-average number of common shares outstanding plus the effects of dilutive common stock equivalents (CSEs) outstanding during the period.

We excluded 1.6 million and 0.3  million CSEs from the calculation of diluted earnings per share for the second quarters of 

We excluded 1.6 million and 0.6  million CSEs from the calculation of diluted earnings per share for the third quarters of 

2020 and 

2019  and excluded 1.2  million and 0.4 million of CSEs for the respective year-to-date periods as the effect of including them would have been anti-dilutive.

In addition, we excluded CSEs that satisfied the definition of potentially dilutive shares of 0.1 million and 0.8 million for the second quarters of 2020 and 2019 and excluded 0.4 million for the year-to-date 2020 period since there was no net income available to common stockholders for these periods.

2019  and excluded 1.3  million and 0.2  million of CSEs for the respective year-to-date periods as the effect of including them would have been anti-dilutive.

In addition, we excluded CSEs that satisfied the definition of potentially dilutive shares of 0.5  million for the year-to-date 2020 period since there was no net income available to common stockholders for these periods.

Stock Compensation

7 unchanged sentences

We issued 0.5  million and 0.3  million shares of common stock based on the vesting of RSUs and PSUs during 2020 .

We recognized a stock compensation credit of $ 1  and expense of $ 5  during the 

second quarters of 

We recognized stock compensation expense of $ 2  and $ 5  during the 

third quarters of 

2020 and 

2019  and expense of $ 5  and $ 15  during the respective year-to-date periods.

At June 30, 2020 , the total unrecognized compensation cost related to the nonvested awards granted and expected to vest was $ 24 .

At September 30, 2020 , the total unrecognized compensation cost related to the nonvested awards granted and expected to vest was $ 20 .

This cost is expected to be recognized over a weighted-average period of 1.9  years.

3 unchanged sentences

Components of net periodic benefit cost — 

Three Months Ended June 30,

Three Months Ended September 30,

Interest cost

3 unchanged sentences

Net periodic benefit cost

Six Months Ended June 30,

Nine Months Ended September 30,

Interest cost

5 unchanged sentences

The non-service components are reported in other income (expense), net and are not eligible for capitalization.

Pension expense for 

2020  decreased versus the same period in 

2019 as a result of a lower interest expense.

Plan termination —

10 unchanged sentences

Interest Rate

June 30, 2020

September 30, 2020

December 31, 2019

90 unchanged sentences

We have elected to pay interest on our advances under the Term Facilities at the Eurodollar Rate.

The interest rate on the Term A Facility was 2.750 % and the Term B Facility was 2.430 %, inclusive of the applicable margins, as of June 30, 2020 .

The interest rate on the Term A Facility was 2.750 % and the Term B Facility was 2.400 %, inclusive of the applicable margins, as of September 30, 2020 .

Commitment fees are applied based on the average daily unused portion of the available amounts under the Revolving Facility as set forth below:

6 unchanged sentences

We pay a fee for issued and undrawn letters of credit in an amount per annum equal to the applicable margin for Eurodollar rate advances based on a quarterly average availability under issued and undrawn letters of credit under the Revolving Facility and a per annum fronting fee of 0.125 %, payable quarterly.

June 30, 2020 , we had no outstanding borrowings under the Revolving Facility and had utilized $ 21 for letters of credit.

We had availability at June 30, 2020 under the Revolving Facility of $ 979 after deducting the letters of credit.

September 30, 2020 , we had no outstanding borrowings under the Revolving Facility and had utilized $ 21 for letters of credit.

We had availability at September 30, 2020 under the Revolving Facility of $ 979 after deducting the letters of credit.

Bridge facility —

5 unchanged sentences

Debt covenants —

At June 30, 2020 , we were in compliance with the covenants of our financing agreements.

Under the Term Facilities, Revolving Facility and the senior notes, we are required to comply with certain incurrence-based covenants customary for facilities of these types and, in the case of the Term A Facility and Revolving Facility, a maintenance covenant tested on the last day of each fiscal quarter requiring us to maintain a first lien net leverage ratio not to exceed 2.50 to 1.00 for the quarter ending June 30, 2020.

At September 30, 2020 , we were in compliance with the covenants of our financing agreements.

Fair Value Measurements and Derivatives

5 unchanged sentences

Fair Value Level

June 30, 2020

September 30, 2020

December 31, 2019

17 unchanged sentences

The financial instruments that are not carried in our balance sheet at fair value are as follows:

June 30, 2020

September 30, 2020

December 31, 2019

2 unchanged sentences

Carrying Value

Term Facility

Other indebtedness*

The carrying value includes the unamortized portion of a fair value adjustment related to a terminated interest rate swap at both dates.

Long term debt

Interest rate derivatives —

Our portfolio of derivative financial instruments periodically includes interest rate swaps and interest rate collars designed to mitigate our interest rate risk.

As of June 30, 2020 , no fixed-to-floating interest rate swaps remain outstanding.

However, a $ 4  fair value adjustment to the carrying amount of our December 2024 Notes, associated with a fixed-to-floating interest rate swap that had been executed but was subsequently terminated during 2015, remains deferred at June 30, 2020 .

As of September 30, 2020 , no fixed-to-floating interest rate swaps remain outstanding.

This amount is being amortized as a reduction of interest expense through the period ending December 2024, the scheduled maturity date of the December 2024 Notes.

The amount amortized as a reduction of interest expense was not material during the 

three months and six months ended 

June 30, 2020 .

three months and nine months ended 

September 30, 2020 .

We have outstanding interest rate collars with a notional value of $ 425 that will mature in December 2021.

7 unchanged sentences

The impact of the interest rate differential between the inflow and outflow rates on all fixed-to-fixed cross-currency swaps is recognized during each period as a component of interest expense.

The following fixed-to-fixed cross-currency swaps were outstanding at June 30, 2020 :

The following fixed-to-fixed cross-currency swaps were outstanding at September 30, 2020 :

Underlying Financial Instrument

11 unchanged sentences

To the extent the swaps are no longer effective, changes in their fair values will be recorded in earnings.

The total notional amount of outstanding foreign currency forward contracts, involving the exchange of various currencies, was $ 263 at June 30, 2020 and $ 508 at December 31,  

The total notional amount of outstanding foreign currency swaps, including the fixed-to-fixed cross-currency swaps, was $ 1,091 at June 30, 2020 and $ 1,090  at December 31,  

The following currency derivatives were outstanding at June 30, 2020 :

The total notional amount of outstanding foreign currency forward contracts, involving the exchange of various currencies, was $ 263 at September 30, 2020 and $ 508 at December 31,  

The total notional amount of outstanding foreign currency swaps, including the fixed-to-fixed cross-currency swaps, was $ 1,105 at September 30, 2020 and $ 1,090  at December 31,  

The following currency derivatives were outstanding at September 30, 2020 :

Notional Amount (U.S.

2 unchanged sentences

Traded Currency

Mexican peso, euro, Thai baht

dollar, Canadian dollar, Hungarian forint, British pound, Swiss franc, Indian rupee, Russian ruble, Mexican peso, Australian dollar, Singapore dollar

Mexican peso, euro

dollar, Canadian dollar, Hungarian forint, British pound, Swiss franc, Indian rupee, Russian ruble, Mexican peso, Australian dollar, Singapore dollar, Japanese yen, Chinese renminbi

British pound

South African rand

dollar, Thai baht

Canadian dollar

14 unchanged sentences

Deferred Gain (Loss) in AOCI

June 30, 2020

September 30, 2020

December 31, 2019

3 unchanged sentences

The following table provides a summary of the location and amount of gains or losses recognized in the consolidated statement of operations associated with cash flow hedging relationships:

Three Months Ended June 30, 2020

Three Months Ended September 30, 2020

Derivatives Designated as Cash Flow Hedges

2 unchanged sentences

Total amounts of income and expense line items presented in the consolidated statement of operations in which the effects of cash flow hedges are recorded

$ 1,078  

$ 1,088  

(Gain) or loss on cash flow hedging relationships

Foreign currency forwards

Amount of (gain) loss reclassified from AOCI into income  

Cross-currency swaps

Amount of (gain) loss reclassified from AOCI into income  

Six Months Ended June 30, 2020

Derivatives Designated as Cash Flow Hedges  

Net sales  

Cost of sales  

Other income (expense), net  

Amount of (gain) loss reclassified from AOCI into income

Nine Months Ended September 30, 2020

Derivatives Designated as Cash Flow Hedges

Cost of sales

Other income (expense), net

Total amounts of income and expense line items presented in the consolidated statement of operations in which the effects of cash flow hedges are recorded

$ 3,004  

$ 2,808  

(Gain) or loss on cash flow hedging relationships

3 unchanged sentences

Amount of (gain) loss reclassified from AOCI into income

Three Months Ended June 30, 2019

Three Months Ended September 30, 2019

Derivatives Designated as Cash Flow Hedges

2 unchanged sentences

Total amounts of income and expense line items presented in the consolidated statement of operations in which the effects of cash flow hedges are recorded

$ 2,306  

$ 1,980  

(Gain) or loss on cash flow hedging relationships

Foreign currency forwards  

Amount of (gain) loss reclassified from AOCI into income  

Foreign currency forwards

Amount of (gain) loss reclassified from AOCI into income

Cross-currency swaps

Amount of (gain) loss reclassified from AOCI into income

Six Months Ended June 30, 2019

Derivatives Designated as Cash Flow Hedges  

Net sales  

Cost of sales  

Other income (expense), net  

Nine Months Ended September 30, 2019

Derivatives Designated as Cash Flow Hedges

Cost of sales

Other income (expense), net

Total amounts of income and expense line items presented in the consolidated statement of operations in which the effects of cash flow hedges are recorded

$ 4,469  

$ 3,843  

(Gain) or loss on cash flow hedging relationships

10 unchanged sentences

Derivatives Not Designated as Hedging Instruments

Three Months Ended June 30, 2020

Three Months Ended June 30, 2019

Three Months Ended September 30, 2020

Three Months Ended September 30, 2019

Location of Gain or (Loss) Recognized in Income

Foreign currency forward contracts

Cost of sales

Foreign currency forward contracts

Other income (expense), net

1 unchanged sentence

Derivatives Not Designated as Hedging Instruments

Six Months Ended June 30, 2020

Six Months Ended June 30, 2019

Nine Months Ended September 30, 2020

Nine Months Ended September 30, 2019

Location of Gain or (Loss) Recognized in Income

Foreign currency forward contracts

Cost of sales

Foreign currency forward contracts

( 12 )  

Other income (expense), net

6 unchanged sentences

Product liabilities —

Accrued product liability costs were $ 2  at June 30, 2020 and $ 10  at December 31,  

We had also recognized amounts recoverable from third parties of $ 13  at June 30, 2020 and $ 13  at December 31,  

Accrued product liability costs were $ 1  at September 30, 2020 and $ 10  at December 31,  

We had also recognized amounts recoverable from third parties of $ 14  at September 30, 2020 and $ 13  at December 31,  

Payments made to claimants precede recovery of amounts from third parties, and may result in recoverable amounts in excess of the total liability.

1 unchanged sentence

Environmental liabilities —

Accrued environmental liabilities were $ 12  at June 30, 2020 and $ 13  at December 31,  

Accrued environmental liabilities were $ 10  at September 30, 2020 and $ 13  at December 31,  

We consider the most probable method of remediation, current laws and regulations and existing technology in estimating our environmental liabilities.

16 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Balance, beginning of period

9 unchanged sentences

Consequently, there is no income tax expense or benefit recognized on the pre-tax income or losses in these jurisdictions as valuation allowances are adjusted to offset the associated tax expense or benefit.

We believe it is reasonably possible that valuation allowances up to $ 25 related to a subsidiary in Australia will be released in the next twelve months.

We record interest and penalties related to uncertain tax positions as a component of income tax expense.

Net interest expense for the periods presented herein is not significant.

We reported an income tax expense of $ 34  and income tax benefit of $ 52  for the 

second  quarters of  

We reported an income tax expense of $ 16  and $ 5  for the 

third  quarters of  

2020 and 

2019  and income tax expense of $ 18  and income tax benefit of $ 32 for the respective year-to-date periods. Our effective tax rates were ( 14 )% and 291 % for the first  

six months of 2020 and 

2019  and income tax expense of $ 34  and income tax benefit of $ 27  for the respective year-to-date periods. Our effective tax rates were ( 46 )% and ( 28 )% for the first  

nine months of 2020 and 

In the second quarter of 2020 we recorded an income tax expense of $ 56 for valuation allowances in foreign jurisdictions due to reduced income projections. During the first  quarter of 2020 , a pre-tax goodwill impairment charge of $ 51  with an associated income tax benefit of $ 1  was recorded.

Also, during the first  quarter of 2020, we recorded tax benefits of $ 37  related to tax actions that adjusted federal tax credits, tax expense of $ 2 to record additional valuation allowance in the U.S.

based on reduced income projections, and tax expense of $ 4 to record valuation allowances in foreign jurisdictions due to reduced income projections. During the second quarter of 2019, a pre-tax pension settlement charge of $ 258 with an associated income tax benefit of $ 9 was recorded. Also, during the second quarter of 2019, we recorded tax benefits of $ 48 related to tax actions that adjusted federal tax credits and $ 30 related to the development of a tax planning strategy which reduced valuation allowances on existing federal tax credits.

Also, during the first  quarter of 2020, we recorded tax benefits of $ 37  related to tax actions that adjusted federal tax credits, tax expense of $ 2  to record additional valuation allowance in the U.S.

based on reduced income projections, and tax expense of $ 4 to record valuation allowances in foreign jurisdictions due to reduced income projections. During the third quarter of 2019, we recognized a benefit of $ 22 for the release of a valuation allowance in a subsidiary in Brazil based on the recent history of profitability and increased income projections.

In the second quarter of 2019, a pre-tax pension settlement charge of $ 258 with an associated income tax benefit of $ 9 was recorded. Also, during the second quarter of 2019, we recorded tax benefits of $ 48 related to tax actions that adjusted federal tax credits and $ 30 related to the development of a tax planning strategy which reduced valuation allowances on existing federal tax credits.

During the first quarter of 2019, we recognized a benefit of $ 22 related to the release of valuation allowances in the U.S.

4 unchanged sentences

2020  and 2019  

six -month periods, respectively.

nine -month periods, respectively.

Our effective income tax rates vary from the U.S.

8 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Non-service cost components of pension and OPEB costs

9 unchanged sentences

Strategic transaction expenses relate primarily to costs incurred in connection with acquisition and divestiture related activities, including costs to complete the transaction and post-closing integration costs.

Strategic transaction expenses in 2020 were primarily attributable to the acquisitions of ODS and Nordresa.

Strategic transaction expenses in 2020 were primarily attributable to the acquisitions of ODS and Nordresa and certain other strategic initiatives.

Strategic transaction expenses in 2019 were primarily attributable to the acquisition of ODS.

1 unchanged sentence

During the first quarter of 2019, we won a legal judgment regarding the methodology used to calculate PIS/COFINS tax in Brazil.

Included in other noncurrent assets in our September 30, 2020 balance sheet are $ 16 of convertible notes receivable from our investment in Hyliion Inc. On October 1, 2020, Hyliion completed its merger with Tortoise Acquisition Corp. The business combination will result in the combined company being renamed Hyliion Holdings Corp., with its common stock being listed on the New York Stock Exchange under the ticker symbol HYLN.

Effective with the completed merger, our notes receivable were converted into 2,988,229 common shares of HYLN.

Our investment in Hyliion will be included in noncurrent marketable securities and carried at fair value with changes in fair value included in net income in future periods.

The strategic partnership with Hyliion establishes Dana as the preferred supplier for e-propulsion systems to Hyliion as long as Dana maintains a minimum equity investment in Hyliion.

Revenue from Contracts with Customers

14 unchanged sentences

Generally, our contract liabilities turn over frequently given our relatively short production cycles.

Contract liabilities were $ 26  and $ 23  at June 30, 2020 and December 31,  

Contract liabilities were $ 27  and $ 23  at September 30, 2020 and December 31,  

Contract liabilities are included in other accrued liabilities on our consolidated balance sheet.

1 unchanged sentence

The following table disaggregates revenue for each of our operating segments by geographical market:

Three Months Ended June 30, 2020

Three Months Ended September 30, 2020

Light Vehicle

3 unchanged sentences

South America

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

North America

South America

Three Months Ended June 30, 2019

Three Months Ended September 30, 2019

North America

South America

Six Months Ended June 30, 2019

Nine Months Ended September 30, 2019

North America

15 unchanged sentences

Segment information —

Three Months Ended June 30,

Three Months Ended September 30,

External Sales

8 unchanged sentences

Eliminations and other

Six Months Ended June 30,

Nine Months Ended September 30,

Light Vehicle

4 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Segment EBITDA

$ ( 3 )  

Corporate expense and other items, net

2 unchanged sentences

( 257 )  

( 15 )  

Non-service cost components of pension and OPEB costs

1 unchanged sentence

( 21 )  

( 19 )  

Stock compensation expense

1 unchanged sentence

( 15 )  

( 11 )  

Impairment of goodwill

3 unchanged sentences

Pension settlement charges, net

( 258 )  

Earnings (loss) before interest and income taxes

( 112 )  

( 95 )  

( 65 )  

Write-off deferred financing costs

Earnings before interest and income taxes

Write-off deferred financing costs  

Interest income

Interest expense

Loss before income taxes

( 147 )  

( 126 )  

Earnings (loss) before income taxes

( 73 )  

Income tax expense (benefit)

( 52 )  

Equity in earnings of affiliates

1 unchanged sentence

$ ( 90 )  

$ ( 66 )  

$ ( 135 )  

Equity Affiliates

We have a number of investments in entities that engage in the manufacture and supply of vehicular parts (primarily axles, driveshafts, wheel-end braking systems) and motors for electric vehicles and industrial applications.

Equity method investments exceeding $5 at June 30, 2020 — 

We have a number of investments in entities that engage in the manufacture and supply of vehicular parts (primarily axles, axle housings, driveshafts and wheel-end braking systems) and motors for electric vehicles and industrial applications.

Equity method investments exceeding $5 at September 30, 2020 — 

Ownership Percentage

6 unchanged sentences

Investments in affiliates

Summarized financial information for DDAC  — 

Three Months Ended

Nine Months Ended

September 30,

Earnings before income taxes

Dana's equity in earnings of affiliate

On October 1, 2020, we received a $ 4 cash dividend from Bendix Spicer Foundation Brake, LLC (BSFB).

Immediately following the receipt of the cash dividend, we sold our 20 % ownership interest in BSFB to Bendix Commercial Vehicle Systems LLC.

We received $ 51 at closing, consisting of $ 21 in cash, a note receivable of $ 25 and deferred proceeds of $ 5 .

The proceeds received approximated the carrying value of our investment in BSFB.

The note receivable and deferred proceeds are due in one year and bear interest at 1.65 %.

The deferred proceeds are subject to adjustment based on BSFB’s cash, working capital and indebtedness balances as of the closing date.

On October 20, 2020, we acquired a 49 % ownership interest in Pi Innovo Holdings Limited (Pi Innovo) for consideration of $ 17 , using cash on hand.

The consideration paid is subject to adjustment based on cash and working capital balances as of the closing date.

Pi Innovo designs, develops and manufactures electronic control units spanning a range of applications and industries. 

We will account for our investment in Pi Innovo by applying the equity method.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements