What changed in this filing

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Item 1. Financial Statements

2021-07-30 compared with 2021-04-28 · 477 added, 283 removed, 692 unchanged (52% of the section changed)

4 unchanged sentences

Three Months Ended

Six Months Ended

$ 2,205  

$ 1,078  

$ 4,468  

$ 3,004  

Costs and expenses

6 unchanged sentences

( 10 )  

Earnings before interest and income taxes

( 29 )  

Earnings (loss) before interest and income taxes

( 112 )  

Loss on extinguishment of debt

( 24 )  

Interest income

Interest expense

Earnings before income taxes

Income tax expense (benefit)

Earnings (loss) before income taxes

( 147 )  

Income tax expense

Equity in earnings of affiliates

Net income (loss)

( 173 )  

Noncontrolling interests net income

Redeemable noncontrolling interests net loss

Net income attributable to the parent company

Net income per share available to common stockholders

Redeemable noncontrolling interests net income (loss)

Net income (loss) attributable to the parent company

$ ( 174 )  

Net income (loss) per share available to common stockholders

$ 0.37  

Diluted  

$ ( 1.20 )  

$ 0.85  

$ 0.36  

$ ( 1.20 )  

$ 0.85  

Weighted-average common shares outstanding

Diluted  

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

3 unchanged sentences

Three Months Ended

Six Months Ended

Net income (loss)

$ ( 173 )  

Other comprehensive income (loss), net of tax:

2 unchanged sentences

Defined benefit plans

Other comprehensive loss

Other comprehensive income (loss)

Total comprehensive income (loss)

Comprehensive loss attributable to noncontrolling interests

Comprehensive loss attributable to redeemable noncontrolling interests

( 152 )  

Comprehensive (income) loss attributable to noncontrolling interests

Comprehensive (income) loss attributable to redeemable noncontrolling interests

Comprehensive income (loss) attributable to the parent company

$ ( 158 )  

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

3 unchanged sentences

Current assets

Cash and cash equivalents  

Marketable securities  

Cash and cash equivalents

Marketable securities

Accounts receivable

Trade, less allowance for doubtful accounts of $6 in 2021 and $7 in 2020  

Inventories  

Other current assets  

Trade, less allowance for doubtful accounts of $6 in 2021 and $7 in 2020

Other current assets

Total current assets

Goodwill  

Intangibles  

Deferred tax assets  

Other noncurrent assets  

Investments in affiliates  

Operating lease assets  

Property, plant and equipment, net  

Deferred tax assets

Other noncurrent assets

Investments in affiliates

Operating lease assets

Property, plant and equipment, net

$ 7,679  

2 unchanged sentences

Current liabilities

Short-term debt  

Current portion of long-term debt  

Accounts payable  

Accrued payroll and employee benefits  

Taxes on income  

Current portion of operating lease liabilities  

Other accrued liabilities  

Short-term debt

Current portion of long-term debt

Accounts payable

Accrued payroll and employee benefits

Taxes on income

Current portion of operating lease liabilities

Other accrued liabilities

Total current liabilities

Long-term debt, less debt issuance costs of $26 in 2021 and $27 in 2020  

Noncurrent operating lease liabilities  

Pension and postretirement obligations  

Other noncurrent liabilities  

Long-term debt, less debt issuance costs of $29 in 2021 and $27 in 2020

Noncurrent operating lease liabilities

Pension and postretirement obligations

Other noncurrent liabilities

Total liabilities

Commitments and contingencies (Note 14)

Redeemable noncontrolling interests  

Parent company stockholders' equity

Preferred stock, 50,000,000 shares authorized, $0.01 par value, no shares outstanding  

Common stock, 450,000,000 shares authorized, $0.01 par value, 145,142,687 and 144,515,658 shares outstanding  

Additional paid-in capital  

Retained earnings  

Treasury stock, at cost ( 10,657,998 and 10,442,582 shares)  

Preferred stock, 50,000,000 shares authorized, $0.01 par value, no shares outstanding

Common stock, 450,000,000 shares authorized, $0.01 par value, 145,227,689 and 144,515,658 shares outstanding

Additional paid-in capital

Retained earnings

Treasury stock, at cost ( 10,658,640 and 10,442,582 shares)

( 161 )  

Accumulated other comprehensive loss  

( 1,007 )  

Total parent company stockholders' equity

Noncontrolling interests  

Total liabilities and equity

5 unchanged sentences

(In millions)

Three Months Ended

Six Months Ended

Operating activities

Net income (loss)

Amortization of deferred financing charges

Redemption premium on debt

Write-off of deferred financing costs

Earnings of affiliates, net of dividends received

1 unchanged sentence

Deferred income taxes

( 28 )  

Pension expense, net

1 unchanged sentence

Change in working capital

( 239 )  

Net cash provided by (used in) operating activities

1 unchanged sentence

Purchases of property, plant and equipment

( 133 )  

Acquisition of businesses, net of cash acquired

( 18 )  

Proceeds from sale of subsidiary, net of cash disposed

Purchases of marketable securities

( 16 )  

Proceeds from sales and maturities of marketable securities

Settlement of terminated fixed-to-fixed cross currency swap

( 22 )  

Settlements of undesignated derivatives

Net cash used in investing activities

( 180 )  

Financing activities

2 unchanged sentences

Repayment of long-term debt

( 803 )  

Redemption premium on debt

( 21 )  

Deferred financing payments

( 13 )  

Dividends paid to common stockholders

( 29 )  

Distributions to noncontrolling interests

Sale of interest to noncontrolling shareholder

Contributions from noncontrolling interests

Payments to acquire noncontrolling interests

Net cash provided by (used in) financing activities

( 71 )  

Net increase (decrease) in cash, cash equivalents and restricted cash

( 157 )  

Cash, cash equivalents and restricted cash –

42 unchanged sentences

2020 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 impairment charge recorded for the Commercial Vehicle reporting unit during the quarter ended March 31, 2020, $ 20 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 was not required.

In accordance with ASC Topic 250, "Accounting Changes and Error Corrections," we corrected the error of the prior period by revising the then year-to-date consolidated financial statements.

The first quarter of 2020 presented herein has been revised in this filing. The following historical consolidated financial information includes both the consolidated financial information “as previously reported”

in our Quarterly Report on Form 10 -Q for the quarter ended March 31, 2020, as well as the consolidated financial information “as revised”

to reflect the correction of the error.

Period Ended March 31, 2020

As Previously Reported  

(unaudited)  

Consolidated Statement of Operations  

Net income  

Noncontrolling interests net income

Redeemable noncontrolling interests net loss

( 20 )  

Net income attributable to the parent company

Net income per share available to common stockholders

$ 0.26  

$ 0.14  

$ 0.40  

$ 0.26  

$ 0.14  

$ 0.40  

Consolidated Statement of Comprehensive Income  

Total comprehensive loss  

$ ( 84 )  

Comprehensive loss attributable to noncontrolling interests  

Comprehensive (income) loss attributable to redeemable noncontrolling interests  

Comprehensive income (loss) attributable to the parent company  

$ ( 73 )  

Period Ended March 31, 2020

As Previously Reported  

Consolidated Balance Sheet

Redeemable noncontrolling interests

$ ( 20 )  

Retained earnings

Certain prior year amounts have been reclassified to conform to the current presentation.

Recently adopted accounting pronouncements

30 unchanged sentences

Our goodwill is tested for impairment annually as of October 31 for all of our reporting units, and more frequent if events or circumstances warrant such a review.

No impairment charge was recorded in connection with our annual goodwill impairment test performed as of October 31, 2020 and we did not identify any events or circumstances during the first quarter 2021 that required an interim impairment test.

No impairment charge was recorded in connection with our annual goodwill impairment test performed as of October 31, 2020 and we did not identify any events or circumstances during the first six months of 2021 that required an interim impairment test.

We expect that the fair value of our reporting units will continue to exceed their carrying values in future periods.

11 unchanged sentences

Balance, December 31, 2020

Acquisitions  

( 11 )  

Currency impact  

Balance, March 31, 2021

Currency impact

Balance, June 30, 2021

Components of other intangible assets — 

March 31, 2021

June 30, 2021

December 31, 2020

20 unchanged sentences

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

March 31, 2021 were as follows:

June 30, 2021 were as follows:

Light Vehicle —

1 unchanged sentence

$ 80 , Off-Highway —

$ 144  and Power Technologies —

$ 141 and Power Technologies —

Amortization expense related to amortizable intangible assets — 

Three Months Ended

Six Months Ended

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 March 31, 2021 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 June 30, 2021 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.

5 unchanged sentences

Restructuring expense includes costs associated with current and previously announced actions and is comprised of contractual and noncontractual separation costs and exit costs, including certain operating costs of facilities that we are in the process of closing.

Net restructuring charges of $ 1  and $ 3  in the 

first quarters of 

There were no net restructuring charges for the 

second quarter of 2021 .

Net restructuring charges of $ 16  in the 

second quarter of 

2020  and $ 1 and $ 19 in the first half of 

2021  and 

2 unchanged sentences

Employee Termination Benefits

Balance, March 31, 2021

Charges to restructuring

Adjustments of accruals

Cash payments

Balance, June 30, 2021

Balance, December 31, 2020

Charges to restructuring

Cash payments  

Currency impact  

Balance, March 31, 2021

At March 31, 2021 , the accrued employee termination benefits include costs to reduce approximately 500 employees to be completed over the next year.

Adjustments of accruals

Cash payments

Currency impact

Balance, June 30, 2021

At June 30, 2021 , 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 March 31, 2021 .

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, 2021 .

Expense Recognized

6 unchanged sentences

Inventory components at —

March 31, 2021

June 30, 2021

December 31, 2020

Raw materials  

Work in process and finished goods  

Inventory reserves  

Raw materials

Work in process and finished goods

Inventory reserves

( 78 )  

2 unchanged sentences

Cash, cash equivalents and restricted cash at —

March 31, 2021

June 30, 2021

December 31, 2020

March 31, 2020

June 30, 2020

December 31, 2019

Cash and cash equivalents  

Restricted cash included in other current assets  

Restricted cash included in other noncurrent assets  

Cash and cash equivalents

Restricted cash included in other current assets

Restricted cash included in other noncurrent assets

Total cash, cash equivalents and restricted cash

1 unchanged sentence

Common stock —

Our Board of Directors declared a cash dividend of ten cents per share of common stock in the first quarter of 2021.

Our Board of Directors declared a cash dividend of ten cents per share of common stock in the first and second quarters of 2021.

Dividends accrue on restricted stock units (RSUs) granted under our stock compensation program and will be paid in cash or additional units when the underlying units vest.

2 unchanged sentences

our Board of Directors approved an extension of our existing common stock share repurchase program through December 31, 2023.

Approximately $ 150 remained available for future share repurchases as of March 31, 2021 .

Approximately $ 150 remained available for future share repurchases as of June 30, 2021 .

Changes in equity —

Three Months Ended March 31,

Three Months Ended June 30,

Additional Paid-In Capital

3 unchanged sentences

Non-controlling Interests

Balance, December 31, 2020

Balance, March 31, 2021

$ 2,415  

2 unchanged sentences

$ 1,870  

Other comprehensive income (loss)

Common stock dividends

( 15 )  

Distributions to noncontrolling interests

Sale of noncontrolling interests

Redeemable noncontrolling interests adjustment to redemption value

Stock compensation

Balance, June 30, 2021

$ 2,420  

$ ( 161 )  

$ ( 1,007 )  

$ 1,939  

Balance, March 31, 2020

$ 2,391  

$ ( 156 )  

$ ( 1,098 )  

$ 1,880  

Net income (loss)

( 174 )  

Other comprehensive income

Distributions to noncontrolling interests

Purchase of noncontrolling interests

Stock compensation

Balance, June 30, 2020

$ 2,390  

Common stock dividends  

$ ( 156 )  

Redeemable noncontrolling interests adjustment to redemption value  

$ ( 1,082 )  

$ 1,720  

Six Months Ended June 30,

Additional Paid-In Capital

Retained Earnings

Treasury Stock

Accumulated Other Comprehensive Loss

Non-controlling Interests

Balance, December 31, 2020

$ 2,408  

$ ( 156 )  

$ ( 1,026 )  

$ 1,834  

Other comprehensive income (loss)

( 11 )  

Common stock dividends

( 29 )  

Distributions to noncontrolling interests

Sale of noncontrolling interests

Redeemable noncontrolling interests adjustment to redemption value

Stock compensation

Stock withheld for employee taxes  

Balance, March 31, 2021

Stock withheld for employee taxes

Balance, June 30, 2021

$ 2,420  

7 unchanged sentences

$ 1,968  

Adoption of ASU 2016-13 credit losses, January 1, 2020  

Net income (loss)

( 116 )  

Other comprehensive loss

4 unchanged sentences

Distributions to noncontrolling interests

Purchase of noncontrolling interests

Stock compensation

Stock withheld for employee taxes  

Balance, March 31, 2020

Stock withheld for employee taxes

Balance, June 30, 2020

$ 2,390  

7 unchanged sentences

Accumulated Other Comprehensive Loss

Balance, December 31, 2020

Balance, March 31, 2021

$ ( 806 )  

$ ( 8 )  

$ ( 230 )  

Other comprehensive income (loss):

2 unchanged sentences

Reclassification of amount to net income (a)

( 50 )  

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

Tax (expense) benefit  

Other comprehensive income (loss)

Other comprehensive income

Balance, June 30, 2021

$ ( 789 )  

$ ( 226 )  

Balance, March 31, 2020

2 unchanged sentences

$ ( 240 )  

Balance, December 31, 2019

Other comprehensive income (loss):

Currency translation adjustments

Holding gains and losses

( 17 )  

Reclassification of amount to net income (a)

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

Other comprehensive income

Balance, June 30, 2020

$ ( 855 )  

$ ( 236 )  

Parent Company Stockholders

Foreign Currency Translation

Defined Benefit Plans

Accumulated Other Comprehensive Loss

Balance, December 31, 2020

$ ( 802 )  

$ ( 233 )  

Other comprehensive income (loss):

Currency translation adjustments

( 143 )  

Holding gains and losses

2 unchanged sentences

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

Tax (expense) benefit  

Other comprehensive income (loss)

Balance, June 30, 2021

$ ( 789 )  

Balance, March 31, 2020

$ ( 226 )  

Balance, December 31, 2019

$ ( 714 )  

$ ( 30 )  

$ ( 243 )  

Other comprehensive income (loss):

Currency translation adjustments

( 141 )  

Holding gains and losses

Reclassification of amount to net income (a)

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

Tax (expense) benefit

Other comprehensive income (loss)

( 141 )  

Balance, June 30, 2020

$ ( 855 )  

$ ( 236 )  

(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.

4 unchanged sentences

and Dana TM4 USA, LLC and indirect 45 % ownership interests in Dana (Beijing) Electric Motor Co., Ltd., Dana TM4 Italia S.r.l., Ashwoods Innovations Ltd.

and Dana TM4 Private Limited (together Dana TM4 ). Hydro-Québec may put all, and not less than all, of its ownership interests in Dana TM4 to Dana at fair value any time after June 22, 2021.

and Dana TM4 Private Limited (together Dana TM4 ). Hydro-Québec may put all, and not less than all, of its ownership interests in Dana TM4 to Dana at fair value.

See Note 2 for additional information.

2 unchanged sentences

In determining fair value using discounted cash flow projections, we make significant assumptions and estimates about the extent and timing of future cash flows, including revenue growth 

rates, projected EBITDA, discount rates, terminal growth rates and exit multiples. See Note 1 for additional information on the correction of the error in net loss attributable to redeemable noncontrolling interests. 

rates, projected EBITDA, discount rates, terminal growth rates and exit multiples. 

Reconciliation of changes in redeemable noncontrolling interests —

Three Months Ended

Six Months Ended

Balance, beginning of period

Capital contribution from redeemable noncontrolling interest  

Adjustment to redemption value  

Capital contribution from redeemable noncontrolling interest

Sale of redeemable noncontrolling interest

Adjustment to redemption value

Comprehensive income (loss) adjustments:

Net loss attributable to redeemable noncontrolling interests

Other comprehensive income attributable to redeemable noncontrolling interests  

Net income (loss) attributable to redeemable noncontrolling interests

Other comprehensive income (loss) attributable to redeemable noncontrolling interests

Balance, end of period

2 unchanged sentences

Three Months Ended

Net income available to common stockholders - Numerator basic and diluted

Six Months Ended

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

$ ( 174 )  

Weighted-average common shares outstanding - Basic

2 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 0.9  million and 0.6  million CSEs from the calculation of diluted earnings per share for the first quarters of 

We excluded 0.8  million and 1.6  million CSEs from the calculation of diluted earnings per share for the second quarters of 

2021 and 

2020  as the effect of including them would have been anti-dilutive.

2020  and excluded 0.9  million and 1.2  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 0.1 million and 0.4  million for the second quarter and year-to-date periods of 2020 since there was no net income available to common stockholders for those periods.

Stock Compensation

12 unchanged sentences

The estimated volatility of 62.8 % was based on observed historical volatility of daily stock returns for the 3 -year period preceding the grant date. 

We received $ 4 of cash from the exercise of stock options related to 0.2 million shares.

We paid $ 2  of cash to settle RSUs.

We issued 0.5  million and 0.1  million shares of common stock based on the vesting of RSUs and PSUs during 2021 .

We recognized stock compensation expense of $ 5  and $ 4  during the 

first quarters of 

During 2021, we received $ 5  of cash from the exercise of stock options related to 0.3 million shares, paid $ 2  of cash to settle RSUs and issued 0.5  million and 0.1  million shares of common stock based on the vesting of RSUs and PSUs, respectively.

We recognized stock compensation expense of $ 4 and a stock compensation credit of $ 1 during the 

second quarters of 

2021 and 

At March 31, 2021 , the total unrecognized compensation cost related to the nonvested awards granted and expected to vest was $ 36 .

2020  and expense of $ 9  and $ 3 during the respective year-to-date periods. At June 30, 2021 , the total unrecognized compensation cost related to the nonvested awards granted and expected to vest was $ 31 .

This cost is expected to be recognized over a weighted-average period of 2.1  years.

On April 21, 2021, our stockholders approved the 2021 Omnibus Incentive Plan (the Plan), replacing the 2017 Omnibus Incentive Plan (the Prior Plan).

The Plan authorizes the grant of stock options, stock appreciation rights (SARs), RSUs and PSUs through April 2031.

The maximum aggregate number of shares of common stock that may be issued under the Plan is 3.5 million shares of common stock plus the number of shares that remained available for new grants under the Prior Plan.

Cash-settled awards do not count against the number of shares available for award under the Plan.

At June 30, 2021, there were 5.8  million shares available for future grants.

Shares of common stock to be issued under the Plan are made available from authorized and unissued Dana common stock.

Pension and Postretirement Benefit Plans

2 unchanged sentences

Components of net periodic benefit cost (credit) — 

Three Months Ended March 31,

Three Months Ended June 30,

Interest cost

2 unchanged sentences

Net periodic benefit cost (credit)

Six Months Ended June 30,

Interest cost

Expected return on plan assets

( 13 )  

( 17 )  

Amortization of net actuarial loss

Net periodic benefit cost (credit)

$ ( 2 )  

$ ( 1 )  

The service cost components of net periodic pension and OPEB costs are included in cost of sales and selling, general and administrative expenses as part of compensation cost and are eligible for capitalization in inventory and other assets.

1 unchanged sentence

Marketable Securities

March 31, 2021

June 30, 2021

December 31, 2020

1 unchanged sentence

Gains (Losses)

Certificates of deposit - Current marketable securities

Corporate securities - Noncurrent marketable securities

Certificates of deposit

Corporate securities

Total current marketable securities

Noncurrent marketable securities - Corporate securities

Certificates of deposit maturing in 

one  year or less total $ 26  at 

March 31, 2021.

one  year or less total $ 24 at 

June 30, 2021 .

We held $ 16  of convertible notes receivable from our investment in Hyliion Inc.

4 unchanged sentences

2,988,229  common shares of HYLN.

Our investment in Hyliion is included in noncurrent marketable securities and carried at fair value with changes in fair value included in other income (expense), net.

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.

Our investment in Hyliion is included in current marketable securities at June 30, 2021 and noncurrent marketable securities at December 31, 2020, and is carried at fair value with changes in fair value included in other income (expense), net.

The strategic partnership with Hyliion established Dana as the preferred supplier for e-propulsion systems to Hyliion as long as Dana maintained a minimum equity investment in Hyliion;

in the second quarter of 2021, the partnership arrangement was modified whereby a minimum equity investment was no longer required, thereby we have reclassified our investment to current assets on the balance sheet. 

Financing Agreements

1 unchanged sentence

Interest Rate

March 31, 2021

June 30, 2021

December 31, 2020

3 unchanged sentences

Senior Notes due November 15, 2027

Senior Notes due June 15, 2028 5.625 %  

Senior Notes due June 15, 2028

Senior Notes due July 15, 2029

Senior Notes due September 1, 2030

Term B Facility

9 unchanged sentences

See Note 13  for additional information.

Interest on the senior notes is payable semi-annually and interest on the Term Facility B is payable quarterly.

Interest on the senior notes is payable semi-annually and interest on the Term B Facility is payable quarterly.

Other indebtedness includes the note payable to the former owners of S.M.E.

S.p.A., borrowings from various financial institutions, finance lease obligations and the unamortized fair value adjustment related to a terminated interest rate swap.

See Note 13  for additional information on the terminated interest rate swap.

Senior notes activity —

In June 2020, we completed the sale of $ 400 in senior unsecured notes ( June 2028 Notes) at 5.625 %.

The June 2028 Notes rank equally with Dana's other unsecured senior notes.

Interest on the notes is payable on December 15 and June 15 of each year, beginning on December 15, 2020.

The June 2028 Notes will mature on June 15, 2028.

Net proceeds of the offering totaled $ 395 .

Financing costs of $ 5 were recorded as deferred costs and are being amortized to interest expense over the life of the notes.

The proceeds from the offering were used to pay down outstanding borrowings under our Revolving Facility and for general corporate purposes.

Also, we completed the sale of an additional $ 100 of November 2027 Notes at 5.375 %.

The November 2027 Notes rank equally with Dana’s other unsecured senior notes.

Interest on the notes is payable on May 15 and November 15 of each year, beginning on November 15, 2020.

The November 2027 Notes will mature on November 15, 2027.

S.p.A., borrowings from various financial institutions, and finance lease obligations.

Senior notes activity — On May 28, 2021, Dana Financing Luxembourg S.à

(Dana Financing), a wholly-owned subsidiary of Dana, completed the sale of €325 ( $396 as of May 28, 2021) in senior unsecured notes ( July 2029 Notes) at 3.000 %.

The July 2029 Notes are fully and unconditionally guaranteed by Dana.

The July 2029 Notes rank equally with Dana's other unsecured senior notes.

Interest on the notes is payable on January 15 and July 15 of each year, beginning on January 15, 2022.

The July 2029 Notes will mature on July 15, 2029.

Net proceeds of the offering totaled €320 ( $391 as of May 28, 2021).

Financing costs of €5 ($ 6  as of May 28, 2021) were recorded as deferred costs and are being amortized to interest expense over the life of the notes.

The proceeds from the offering were used to redeem all of our June 2026 Notes.

On June 10, 2021 we redeemed all of our June 2026 Notes at a price equal to 103.25 % plus accrued and unpaid interest.

The $ 16 loss on extinguishment of debt includes the $ 12 redemption premium and the $ 4 write-off of previously deferred financing costs associated with the June 2026 Notes.

On May 13, 2021, we redeemed $ 254 of our December 2024 Notes pursuant to a tender offer at a weighted average price equal to 102.000 % plus accrued and unpaid interest.

On May 17, 2021, we called the remaining $ 171 of our December 2024 Notes at a price equal to 101.833 % plus accrued and unpaid interest.

The $ 8 loss on extinguishment of debt recorded in May 2021 includes the redemption premium of $ 8 and the write-off of $ 3 of previously deferred financing costs associated with the December 2024 Notes.

These charges were partially offset by the recognition of $ 3 related to an unamortized fair value adjustment associated with a fixed-to-floating interest rate swap that was terminated in 2015.

On May 13, 2021, we completed the sale of $ 400 in senior unsecured notes (the September 2030 Notes) at 4.25 %.

The September 2030 Notes rank equally with Dana's other unsecured senior notes.

Interest on the notes is payable on March 1 and September 1 of each year, beginning on September 1, 2021.

The September 2030 Notes will mature on September 1, 2030.

Net proceeds of the offering totaled $ 395 .

Financing costs of $ 5 were recorded as deferred costs and are being amortized to interest expense over the life of the notes.

The proceeds from the offering were used for general corporate purposes.

Proceeds from the offering will be used to finance or refinance, in whole or in part, recently completed or future eligible green projects related to clean transportation, renewable energy, sustainable water and wastewater management, and green buildings.

We may redeem some or all of the senior notes at the following redemption prices (expressed as percentages of principal amount), plus accrued and unpaid interest to the redemption date, if redeemed during the 12 -month period commencing on the anniversary date of the senior notes in the year set forth below:

19 unchanged sentences

100.000 %  

Prior to June 1, 2021, we may redeem some or all of the June 2026 Notes at a redemption price of 100.000 % of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, to the redemption date plus a “make-whole”

We have not separated the make-whole premium from the underlying debt instrument to account for it as a derivative instrument as the economic characteristics and the risks of this embedded derivative are clearly and closely related to the economic characteristics and risks of the underlying debt.

100.000 %  

At any time prior to May 1, 2024, we may redeem up to 40% of the aggregate principal amount of the September 2030 Notes in an amount not to exceed the amount of proceeds of one or more equity offerings, at a price equal to 104.250 % of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, provided that at least 50 % of the aggregate principal amount of the September 2030 Notes remains outstanding after the redemption.

Prior to May 1, 2026, we may redeem some or all of the September 2030 Notes at a redemption price equal to 100 % of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, to the redemption date plus a “make-whole”

premium. We have not separated the make-whole premium from the underlying debt instrument to account for it as a derivative instrument as the economic characteristics and the risks of this embedded derivative are clearly and closely related to the economic characteristics and risks of the underlying debt.

At any time prior to July 15, 2024, we may redeem up to 40% of the aggregate principal amount of the July 2029 Notes in an amount not to exceed the amount of proceeds of one or more equity offerings, at a price equal to 103.000 % of the principal amount thereof, plus accrued and unpaid interest, if any, to the redemption date, provided that at least 50 % of the aggregate principal amount of the July 2029 Notes remain outstanding after the redemption. 

Prior to July 15, 2024, we may also redeem some or all of the July 2029 Notes at a redemption price equal to 100 % of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, to the redemption date plus a “make-whole”

At any time prior to November 15, 2022, we may redeem up to 35% of the aggregate principal amount of the November 2027 Notes in an amount not to exceed the amount of proceeds of one or more equity offerings, at a price equal to 105.375 % of the principal amount thereof, plus accrued and unpaid interest, if any, to the redemption date, provided that at least 50 % of the original aggregate principal amount of the November 2027 Notes remains outstanding after the redemption.

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Credit agreement —

On December 31, 2020, we fully paid down the Term A Facility. We wrote off $ 3 of previously deferred financing costs associated with the Term A Facility.

On December 31, 2020, we fully paid down the Term A Facility.

We wrote off $ 3 of previously deferred financing costs associated with the Term A Facility.

On March 25, 2021, we amended our credit and guaranty agreement, increasing the Revolving Facility to $ 1,150 and extending the maturity to March 25, 2026.

We recorded deferred fees of $ 2 related to the amendment. The deferred fees are being amortized over the life of the applicable facilities.

We recorded deferred fees of $ 2 related to the amendment.

The deferred fees are being amortized over the life of the applicable facilities.

Deferred financing costs on our Revolving Facility are included in other noncurrent assets.

The Term B Facility will mature on February 28, 

We may prepay some or all of the amounts under the Term B Facility without penalty.

The Term Facility B and the Revolving Facility are guaranteed by all of our wholly-owned domestic subsidiaries subject to certain exceptions (the guarantors) and are secured by a first -priority lien on substantially all of the assets of Dana and the guarantors, subject to certain exceptions.

The Term B Facility will mature on February 28, 2026.

We may prepay some or all of the amounts under the Term B Facility without penalty.

The Term B Facility and the Revolving Facility are guaranteed by all of our wholly-owned domestic subsidiaries subject to certain exceptions (the guarantors) and are secured by a first -priority lien on substantially all of the assets of Dana and the guarantors, subject to certain exceptions.

Advances under the Revolving Facility bear interest at a floating rate based on, at our option, the base rate or Eurodollar rate (each as described in the credit agreement) plus a margin as set forth below:

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

The interest rate on the Term B Facility was 2.359 %, inclusive of the applicable margins, as of March 31, 2021 .

The interest rate on the Term B Facility was 2.354 %, inclusive of the applicable margins, as of June 30, 2021 .

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

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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.

March 31, 2021 , we had no outstanding borrowings under the Revolving Facility and had utilized $ 21 for letters of credit.

We had availability at March 31, 2021 under the Revolving Facility of $ 1,129  after deducting the letters of credit.

June 30, 2021 , we had no outstanding borrowings under the Revolving Facility and had utilized $ 21 for letters of credit.

We had availability at June 30, 2021 under the Revolving Facility of $ 1,129  after deducting the letters of credit.

Bridge facility —

5 unchanged sentences

Debt covenants —

At March 31, 2021 , we were in compliance with the covenants of our financing agreements.

At June 30, 2021 , we were in compliance with the covenants of our financing agreements.

Under the Term B Facility, 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 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 2.00  to 1.00.

6 unchanged sentences

Fair Value Level

March 31, 2021  

June 30, 2021  

December 31, 2020  

Certificates of deposit  

Marketable securities  

Available-for-sale securities  

Other noncurrent assets  

Certificates of deposit

Marketable securities

Available-for-sale securities

Marketable securities

Available-for-sale securities

Other noncurrent assets

Currency forward contracts

Cash flow hedges  

Accounts receivable - Other  

Cash flow hedges  

Other accrued liabilities  

Undesignated  

Accounts receivable - Other  

Undesignated  

Other accrued liabilities  

Interest rate collars  

Other accrued liabilities  

Cash flow hedges

Accounts receivable - Other

Cash flow hedges

Other accrued liabilities

Accounts receivable - Other

Other accrued liabilities

Interest rate collars

Other accrued liabilities

Currency swaps

Cash flow hedges  

Other noncurrent liabilities  

Cash flow hedges

Other noncurrent liabilities

Fair Value Level 1 assets and liabilities reflect quoted prices in active markets.

2 unchanged sentences

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

March 31, 2021

June 30, 2021

December 31, 2020

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

As of March 31, 2021 , no fixed-to-floating interest rate swaps remain outstanding.

However, a $ 3  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 March 31, 2021 .

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 ended 

March 31, 2021 .

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

As of June 30, 2021 , no fixed-to-floating interest rate swaps are outstanding. We have outstanding interest rate collars with a notional value of $ 425 that will mature in December 2021.

For interest rate collars, no payments or receipts are exchanged unless interest rates rise or fall in excess of a predetermined ceiling or floor rate.

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We have executed fixed-to-fixed cross-currency swaps in conjunction with the issuance of certain notes to eliminate the variability in the functional-currency-equivalent cash flows due to changes in exchange rates associated with the forecasted principal and interest payments.

All of the underlying designated financial instruments, and any subsequent replacement debt, have been designated as the hedged items in each respective cash flow hedge relationship, as shown in the table below.

Designated as cash flow hedges of the forecasted principal and interest payments of the underlying designated financial instruments, or subsequent replacement debt, all of the swaps economically convert the underlying designated financial instruments into the functional currency of each respective holder.

All of the underlying designated financial instruments have been designated as the hedged items in each respective cash flow hedge relationship, as shown in the table below.

Designated as cash flow hedges of the forecasted principal and interest payments of the underlying designated financial instruments all of the swaps economically convert the underlying designated financial instruments into the functional currency of each respective holder.

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 March 31, 2021 :

The following fixed-to-fixed cross-currency swaps were outstanding at June 30, 2021 :

Underlying Financial Instrument

Derivative Financial Instrument

Designated Notional Amount  

Notional Amount  

Traded Amount

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5.75 %  

June 2026 Notes

Luxembourg Intercompany Notes

3.70 %  

5.38 %  

Luxembourg Intercompany Notes

Undesignated 2026 Swap

6.50 %  

Undesignated Offset 2026 Swap

3.13 %  

All of the swaps are expected to be highly effective in offsetting the corresponding currency-based changes in cash outflows related to the underlying designated financial instruments.

Based on our qualitative assessment that the critical terms of all of the underlying designated financial instruments and all of the associated swaps match and that all other required criteria have been met, we do not expect to incur any ineffectiveness.

The designated swaps are expected to be highly effective in offsetting the corresponding currency-based changes in cash outflows related to the underlying designated financial instruments.

Based on our qualitative assessment that the critical terms of the underlying designated financial instruments and the associated swaps match and that all other required criteria have been met, we do not expect to incur any ineffectiveness.

As effective cash flow hedges, changes in the fair value of the swaps will be recorded in OCI during each period.

Additionally, to the extent the swaps remain effective, the appropriate portion of AOCI will be reclassified to earnings each period as an offset to the foreign exchange gain or loss resulting from the remeasurement of the underlying designated financial instruments.

See Note 12  for additional information about the April 2025 Notes and the June 2026 Notes.

See Note 12  for additional information about the April 2025 Notes.

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 $ 422 at March 31, 2021 and $ 386 at December 31,  

The total notional amount of outstanding foreign currency swaps, including the fixed-to-fixed cross-currency swaps, was $ 1,101  at March 31, 2021 and $ 1,118 at December 31,  

The following currency derivatives were outstanding at March 31, 2021 :

We had previously entered into fixed-to-fixed cross currency swaps as a hedge against our June 2026 Notes. 

In June 2021, we elected to redeem all of the June 2026 Notes and de-designated the fixed-to-fixed cross currency swaps.

See Note 12 for additional information about the extinguishment of the June 2026 Notes. 

As the forecasted payments subject to the hedge will no longer occur in the forecasted periods, we reclassified $ 9 of previously deferred losses from AOCI into other income (expense), net. 

We settled $ 187 of the $ 375 notional value resulting in a net cash outflow of $ 22 . 

The remaining $ 188 continues to remain outstanding and we have entered into an offsetting swap to hedge against future fair value adjustments which will be included in earnings.

The fair value of the remaining $ 188 will be settled with the counterparty over the life of the swap through the difference in the euro denominated inflow and outflow rates which are settled on June 15 and December 15 each year through June 2026.

The total notional amount of outstanding foreign currency forward contracts, involving the exchange of various currencies, was $ 355 at June 30, 2021 and $ 386 at December 31,  

The total notional amount of outstanding foreign currency swaps, including the fixed-to-fixed cross-currency swaps, was $ 1,117  at June 30, 2021 and $ 1,118 at December 31,  

The following currency derivatives were outstanding at June 30, 2021 :

Notional Amount (U.S.

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Mexican peso, Canadian dollar

dollar, Hungarian forint, British pound, Swiss franc, Indian rupee, Mexican peso, Australian dollar, Chinese renminbi, Brazilian real

dollar, Hungarian forint, British pound, Swiss franc, Indian rupee, Mexican peso, Australian dollar, Chinese renminbi, Brazilian real, Japanese yen, New Zealand dollar

British pound

South African rand  

dollar, euro, Thai baht  

Thai baht  

dollar, euro  

Swedish krona

South African rand

dollar, euro, Thai baht

Canadian dollar

2 unchanged sentences

Chinese renminbi

Canadian dollar, euro

Australian dollar  

dollar, euro  

dollar, eruo, Canadian dollar

Total forward contracts

2 unchanged sentences

$ 1,472  

$ 1,523  

Designated cash flow hedges —

6 unchanged sentences

Deferred Gain (Loss) in AOCI

March 31, 2021

June 30, 2021

December 31, 2020

1 unchanged sentence

Forward Contracts

Collar  

Cross-Currency Swaps  

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, 2021

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

$ 2,205  

$ 1,953  

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 March 31, 2021

(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, 2021

Derivatives Designated as Cash Flow Hedges

6 unchanged sentences

Foreign currency forwards

Amount of (gain) loss reclassified from AOCI into income  

Cross-currency swaps

Amount of (gain) loss reclassified from AOCI into income  

Three Months Ended March 31, 2020

Amount of (gain) loss reclassified from AOCI into income

Three Months Ended June 30, 2020

Derivatives Designated as Cash Flow Hedges

5 unchanged sentences

(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, 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

Foreign currency forwards

Amount of (gain) loss reclassified from AOCI into income

Cross-currency swaps

Amount of (gain) loss reclassified from AOCI into income

The amounts reclassified from AOCI into income for the cross-currency swaps represent an offset to a foreign exchange loss on our foreign currency-denominated intercompany and external debt instruments.

5 unchanged sentences

Derivatives Not Designated as Hedging Instruments

Three Months Ended March 31, 2021

Three Months Ended March 31, 2020

Three Months Ended June 30, 2021

Three Months Ended June 30, 2020

Location of Gain or (Loss) Recognized in Income

1 unchanged sentence

$ (5 ) Cost of sales

Foreign currency forward contracts  

$ (16 )  

Other income (expense), net

Amount of Gain (Loss) Recognized in Income

Derivatives Not Designated as Hedging Instruments

Six Months Ended June 30, 2021

Six Months Ended June 30, 2020

Location of Gain or (Loss) Recognized in Income

Foreign currency forward contracts

Cost of sales

Foreign currency forward contracts

$ (14 )  

6 unchanged sentences

Product liabilities —

Accrued product liability costs were $ 1  at March 31, 2021 and $ 1  at December 31,  

We had also recognized amounts recoverable from third parties of $ 11  at March 31, 2021 and $ 11  at December 31,  

Accrued product liability costs were $ 1  at June 30, 2021 and $ 1  at December 31,  

We had also recognized amounts recoverable from third parties of $ 11  at June 30, 2021 and $ 11  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 $ 9  at March 31, 2021 and $ 10  at December 31,  

Accrued environmental liabilities were $ 9  at June 30, 2021 and $ 10  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

Balance, beginning of period

Amounts accrued for current period sales  

Adjustments of prior estimates  

Settlements of warranty claims  

Currency impact  

Amounts accrued for current period sales

Adjustments of prior estimates

Settlements of warranty claims

( 10 )  

( 13 )  

( 10 )  

Currency impact

Balance, end of period

3 unchanged sentences

criterion for the recognition of deferred tax assets.

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 of up to approximately $ 50 related to subsidiaries in Germany 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 $ 22  and an income tax benefit of $ 16  for the first three months ended March 31, 

2021 and 

2020 , respectively. Our effective tax rates were 29 % and ( 80 )% for the first  

three months of 2021 and 

We reported an income tax expense of $ 14  and $ 34 for the second quarters of 2021 and 2020 and income tax expense of $ 36  and $ 18  for the respective year-to-date periods. Our effective tax rates were 27 % and ( 14 )% for the first  

six months of 2021 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.

1 unchanged sentence

based on reduced income projections, and tax expense of $ 4 to record valuation allowances in foreign jurisdictions due to reduced income projections.

Excluding these items, the effective tax rate would be 23 % for the 

three -month period.

Excluding these items, the effective tax rate would have been 

8 % for the 

six -month period.

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

8 unchanged sentences

Three Months Ended

Non-service cost components of pension and OPEB costs  

Six Months Ended

Non-service cost components of pension and OPEB costs

$ ( 3 )  

Government grants and incentives  

Foreign exchange gain  

Strategic transaction expenses  

Loss on investment in Hyliion  

$ ( 3 )  

Loss on disposal group held for sale  

Other, net  

$ ( 5 )  

Government grants and incentives

Foreign exchange gain

Strategic transaction expenses

Gain (loss) on investment in Hyliion

( 14 )  

Loss on disposal group held for sale

Loss on de-designation of fixed-to-fixed cross currency swaps

Other income (expense), net

$ ( 10 )  

$ ( 1 )  

$ ( 29 )  

Foreign exchange gains and losses on cross-currency intercompany loan balances that are not of a long-term investment nature are included above.

1 unchanged sentence

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 2021 were primarily attributable to our pending acquisition of a portion of the thermal-management business of Modine Manufacturing Company and certain other strategic initiatives.

Strategic transaction expenses in 2021 were primarily attrib utable to our pursuit of the acquisition of a portion of the thermal-management business of Modine Manufacturing Company and certain other strategic initiatives.

Strategic transaction expenses in 2020 were primarily attributable to the acquisitions of the Oerlikon Drive Systems segment of the Oerlikon Group (ODS) and Nordresa Motors, Inc.

5 unchanged sentences

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

Our investment in Hyliion is included in noncurrent marketable securities and carried at fair value with changes in fair value included in net income.

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.

In conjunction with our acquisition of ODS, we acquired a controlling financial interest in a joint venture in China. We are required to divest of our interest in this joint venture as it violates competitive restrictions of another of our China joint venture shareholder agreements. During the first quarter of 2021, we recorded an impairment charge of $ 7 , as we determined the carrying value of the disposal group exceeded its fair value less costs to sell. The disposal group has net assets of $ 2  as of March 31, 2021. 

Individual asset and liability balances are not material and therefore the amounts have not been segregated as held for sale on our consolidated balance sheet. We completed the disposal of this business in April 2021.

Our investment in Hyliion is included in marketable securities and carried at fair value with changes in fair value included in net income.

See Note 11 for additional information.

We had previously entered into fixed-to-fixed cross currency swaps as a hedge against our June 2026 Notes.

In June 2021, we redeemed all of the June 2026 Notes and de-designated the fixed-to-fixed cross currency swaps.

See Note 13 for additional information.

In conjunction with our acquisition of ODS, we acquired a controlling financial interest in a joint venture in China. We were required to divest our interest in this joint venture as it violates competitive restrictions of another of our China joint venture shareholder agreements. During the first quarter of 2021, we recorded an impairment charge of $ 7 , as we determined the carrying value of the disposal group exceeded its fair value less costs to sell. The disposal group had net assets of $ 2  as of March 31, 2021. 

Individual asset and liability balances were not material and therefore the amounts were not segregated as held for sale on our consolidated balance sheet. We completed the disposal of this business in April 2021.

Revenue from Contracts with Customers

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We continually seek new business opportunities and at times provide incentives to our customers for new program awards.

We evaluate the underlying economics of each payment made to our customers to determine the proper accounting by understanding the nature of the payment, the rights and obligations in the contract, 

and other relevant facts and circumstances.

We evaluate the underlying economics of each payment made to our customers to determine the proper accounting by understanding the nature of the payment, the rights and obligations in the contract, and other relevant facts and circumstances.

Upfront payments to our customers are capitalized if we determine that the payments are incremental and incurred only if the new business is obtained and we expect to recover these amounts from the customer over the term of the new business program.

We recognize a reduction to 

revenue as products that the upfront payments are related to are transferred to the customer, based on the total amount of products expected to be sold over the term of the program. We evaluate the amounts capitalized each period for recoverability and expense any amounts that are no longer expected to be recovered.

We had $ 9  and $ 8  recorded in other current assets and $ 45  and $ 45  recorded in other noncurrent assets at March 31, 2021 

and December 31, 2020.

We recognize a reduction to revenue as products that the upfront payments are related to are transferred to the customer, based on the total amount of products expected to be sold over the term of the program. We evaluate the amounts capitalized each period for recoverability and expense any amounts that are no longer expected to be recovered.

We had $ 8  and $ 8  recorded in other current assets and $ 43  and $ 45  recorded in other noncurrent assets at June 30, 2021  and December 31, 2020 .

Certain of our customer contracts include rebate incentives.

5 unchanged sentences

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

Contract liabilities were $ 29  and $ 27  at March 31, 2021 and December 31,  

Contract liabilities were $ 28  and $ 27  at June 30, 2021 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 March 31, 2021

Three Months Ended June 30, 2021

Light Vehicle

5 unchanged sentences

$ 2,205  

Three Months Ended March 31, 2020

Six Months Ended June 30, 2021

North America

$ 1,332  

$ 2,107  

South America

$ 1,881  

$ 1,304  

$ 4,468  

Three Months Ended June 30, 2020

North America

South America

$ 1,078  

Six Months Ended June 30, 2020

North America

$ 1,461  

South America

$ 1,145  

$ 3,004  

We are a global provider of high-technology products to virtually every major vehicle manufacturer in the world.

11 unchanged sentences

Our segments are charged for corporate and other shared administrative costs. Segment EBITDA may not be comparable to similarly titled measures reported by other companies.

During the second quarter of 2021, we realigned certain of our Indian operations previously reported in our Commercial Vehicle operating segment to be reported within our Off-Highway operating segment and we realigned certain of our Brazilian operations previously reported in our Off-Highway operating segment to be reported within our Commercial Vehicle operating segment.

Prior period amounts have been recast to conform with our current operating segment reporting structure.

Segment information —

Three Months Ended March 31,

Three Months Ended June 30,

External Sales

12 unchanged sentences

$ 1,078  

Six Months Ended June 30,

Light Vehicle

$ 1,881  

$ 1,145  

Commercial Vehicle

Power Technologies

Eliminations and other

( 183 )  

( 103 )  

$ 4,468  

$ 3,004  

Reconciliation of segment EBITDA to consolidated net income 

Three Months Ended

Six Months Ended

Segment EBITDA

Corporate expense and other items, net  

Depreciation  

$ ( 3 )  

Amortization  

Non-service cost components of pension and OPEB costs  

Restructuring charges, net  

Stock compensation expense  

Strategic transaction expenses  

Loss on investment in Hyliion  

Corporate expense and other items, net

( 92 )  

Impairment of goodwill  

Loss on disposal group held for sale  

Other items  

Earnings before interest and income taxes

( 84 )  

( 180 )  

( 12 )  

Non-service cost components of pension and OPEB costs

Restructuring charges, net

( 16 )  

Stock compensation expense

Strategic transaction expenses

Gain (loss) on investment in Hyliion

( 14 )  

Impairment of goodwill

Loss on disposal group held for sale

Loss on de-designation of fixed-to-fixed cross currency swaps

Earnings (loss) before interest and income taxes

( 112 )  

Loss on extinguishment of debt

( 24 )  

Interest income

Interest expense

Earnings before income taxes

Income tax expense (benefit)

Earnings (loss) before income taxes

( 147 )  

Income tax expense

Equity in earnings of affiliates

Net income (loss)

$ ( 173 )  

Equity Affiliates

We have a number of investments in entities that engage in the manufacture and supply of vehicular parts (primarily axles, axle housings and driveshafts) and electronic control units.

Equity method investments exceeding $5 at March 31, 2021 — 

Equity method investments exceeding $5 at June 30, 2021 — 

Ownership Percentage

11 unchanged sentences

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