What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-10-26 compared with 2021-07-30 · 194 added, 172 removed, 997 unchanged (27% of the section changed)

4 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

$ 2,204  

10 unchanged sentences

( 33 )  

( 29 )  

Earnings (loss) before interest and income taxes

( 112 )  

Earnings before interest and income taxes

Loss on extinguishment of debt

( 24 )  

Interest income

1 unchanged sentence

Earnings (loss) before income taxes

( 147 )  

Income tax expense

1 unchanged sentence

Net income (loss)

( 173 )  

Noncontrolling interests net income

Redeemable noncontrolling interests net income (loss)

Net income (loss) attributable to the parent company

Redeemable noncontrolling interests net loss

( 10 )  

Net income (loss) attributable to the parent company

Net income (loss) per share available to common stockholders

11 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Net income (loss)

$ ( 173 )  

Other comprehensive income (loss), net of tax:

Currency translation adjustments

( 25 )  

( 11 )  

Hedging gains and losses

( 10 )  

Defined benefit plans

Other comprehensive income (loss)

Total comprehensive income (loss)

( 30 )  

( 10 )  

Total comprehensive income (loss)

Comprehensive (income) loss attributable to noncontrolling interests

Comprehensive (income) loss attributable to redeemable noncontrolling interests

Comprehensive income (loss) attributable to the parent company

( 15 )  

Comprehensive loss attributable to redeemable noncontrolling interests

Comprehensive income (loss) attributable to the parent company

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

47 unchanged sentences

(In millions)

Six Months Ended

Nine Months Ended

September 30,

Operating activities

4 unchanged sentences

Earnings of affiliates, net of dividends received

( 11 )  

Stock compensation expense

Deferred income taxes

( 28 )  

Pension expense, net

2 unchanged sentences

( 501 )  

Net cash provided by (used in) operating activities

Net cash provided by operating activities

Investing activities

3 unchanged sentences

( 18 )  

Investments in affiliates

( 23 )  

Proceeds from sale of subsidiary, net of cash disposed

1 unchanged sentence

( 25 )  

Proceeds from sales and maturities of marketable securities

Proceeds from sales of marketable securities

Proceeds from maturities of marketable securities

Settlement of terminated fixed-to-fixed cross currency swap

15 unchanged sentences

Distributions to noncontrolling interests

( 10 )  

Sale of interest to noncontrolling shareholder

Contributions from noncontrolling interests

Deconsolidation of non-wholly owned subsidiary

Payments to acquire noncontrolling interests

Repurchases of common stock

( 23 )  

Net cash provided by (used in) financing activities

5 unchanged sentences

Effect of exchange rate changes on cash balances

( 16 )  

Cash, cash equivalents and restricted cash –

72 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 six months of 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 that required an interim impairment test since our last annual test.

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

13 unchanged sentences

Currency impact

Balance, June 30, 2021

( 10 )  

Balance, September 30, 2021

Components of other intangible assets — 

June 30, 2021

September 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 

June 30, 2021 were as follows:

September 30, 2021 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, 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 September 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.

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 

Net restructuring charges of $ 1 and $ 2  in the 

third quarter of 

2021  and 

2020  and $ 2  and $ 21 in the nine months ended 

September 30, 2021  and 

2020  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.

1 unchanged sentence

Employee Termination Benefits

Balance, March 31, 2021

Balance, June 30, 2021

Charges to restructuring

1 unchanged sentence

Cash payments

Balance, June 30, 2021

Balance, September 30, 2021

Balance, December 31, 2020

3 unchanged sentences

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.

Balance, September 30, 2021

At September 30, 2021 , the accrued employee termination benefits include costs to reduce approximately 300 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, 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 September 30, 2021 .

Expense Recognized

6 unchanged sentences

Inventory components at —

June 30, 2021

September 30, 2021

December 31, 2020

2 unchanged sentences

Inventory reserves

( 78 )  

$ 1,435  

$ 1,149  

Cash, cash equivalents and restricted cash at —

June 30, 2021

September 30, 2021

December 31, 2020

June 30, 2020

September 30, 2020

December 31, 2019

5 unchanged sentences

Common stock —

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

Our Board of Directors declared a cash dividend of ten cents per share of common stock in the first, second and third  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 June 30, 2021 .

Under the program, we spent $ 23 to repurchase 1,000,000 shares of our common stock during the third quarter of 2021 through open market transactions.

Approximately $ 127  remained available for future share repurchases as of September 30, 2021 .

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, 2021

Balance, June 30, 2021

$ 2,420  

3 unchanged sentences

Other comprehensive income (loss)

( 28 )  

Common stock dividends

1 unchanged sentence

Distributions to noncontrolling interests

Sale of noncontrolling interests

Redeemable noncontrolling interests adjustment to redemption value

Stock compensation

Balance, June 30, 2021

Deconsolidation of non-wholly owned subsidiary

Common stock share repurchases

( 23 )  

Stock compensation

Balance, September 30, 2021

$ 2,425  

1 unchanged sentence

$ ( 1,035 )  

Balance, March 31, 2020

$ 1,912  

Balance, June 30, 2020

$ 2,390  

1 unchanged sentence

$ ( 1,082 )  

Net income (loss)

$ 1,720  

3 unchanged sentences

Stock compensation

Balance, June 30, 2020

Balance, September 30, 2020

$ 2,392  

2 unchanged sentences

$ 1,793  

Six Months Ended June 30,

Nine Months Ended September 30,

Additional Paid-In Capital

8 unchanged sentences

$ 1,834  

Other comprehensive income (loss)

Other comprehensive loss

( 11 )  

2 unchanged sentences

Distributions to noncontrolling interests

( 10 )  

Sale of noncontrolling interests

Redeemable noncontrolling interests adjustment to redemption value

( 10 )  

Deconsolidation of non-wholly owned subsidiary

Common stock share repurchases

( 23 )  

Stock compensation

Stock withheld for employee taxes

Balance, June 30, 2021

Balance, September 30, 2021

$ 2,425  

10 unchanged sentences

( 71 )  

Other comprehensive loss

( 95 )  

Other comprehensive income (loss)

( 83 )  

2 unchanged sentences

Distributions to noncontrolling interests

( 10 )  

Purchase of noncontrolling interests

1 unchanged sentence

Stock withheld for employee taxes

Balance, June 30, 2020

Balance, September 30, 2020

$ 2,392  

7 unchanged sentences

Accumulated Other Comprehensive Loss

Balance, March 31, 2021

$ ( 806 )  

Balance, June 30, 2021

$ ( 789 )  

2 unchanged sentences

Currency translation adjustments

( 23 )  

Holding gains and losses

Reclassification of amount to net income (a)

( 24 )  

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

Other comprehensive income

Balance, June 30, 2021

Other comprehensive income (loss)

( 23 )  

Balance, September 30, 2021

$ ( 812 )  

Balance, March 31, 2020

$ ( 1 )  

$ ( 222 )  

Balance, June 30, 2020

$ ( 855 )  

$ ( 236 )  

Other comprehensive income (loss):

5 unchanged sentences

Other comprehensive income

Balance, June 30, 2020

Balance, September 30, 2020

$ ( 848 )  

9 unchanged sentences

Currency translation adjustments

( 10 )  

Holding gains and losses

3 unchanged sentences

Other comprehensive income (loss)

Balance, June 30, 2021

( 10 )  

Balance, September 30, 2021

$ ( 812 )  

$ ( 1 )  

$ ( 222 )  

Balance, December 31, 2019

6 unchanged sentences

Holding gains and losses

( 29 )  

Reclassification of amount to net income (a)

3 unchanged sentences

( 134 )  

Balance, June 30, 2020

Balance, September 30, 2020

$ ( 848 )  

6 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.

and Dana TM4 India 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.

5 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Balance, beginning of period

3 unchanged sentences

Comprehensive income (loss) adjustments:

Net income (loss) attributable to redeemable noncontrolling interests

Net loss attributable to redeemable noncontrolling interests

( 10 )  

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

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

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

2021 and 

2020  and excluded 0.8  million and 1.3  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.

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 that period.

Stock Compensation

1 unchanged sentence

(In millions)

$ 23.47  

$ 26.81  

* Weighted-average per share

8 unchanged sentences

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 

We recognized stock compensation expense of $ 6 and $ 2  during the 

third quarters of 

2021 and 

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 .

2020  and expense of $ 15 and $ 5  during the respective year-to-date periods. At September 30, 2021 , the total unrecognized compensation cost related to the nonvested awards granted and expected to vest was $ 29 .

This cost is expected to be recognized over a weighted-average period of 1.7  years.

3 unchanged sentences

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.

At September 30, 2021, there were 6.0  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.

3 unchanged sentences

Components of net periodic benefit cost (credit) — 

Three Months Ended June 30,

Three Months Ended September 30,

Interest cost

2 unchanged sentences

Net periodic benefit cost (credit)

Six Months Ended June 30,

Nine Months Ended September 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

June 30, 2021

September 30, 2021

December 31, 2020

7 unchanged sentences

one  year or less total $ 18 at 

June 30, 2021 .

September 30, 2021 .

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

3 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 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.

2,988,229  common shares of HYLN. Our investment in Hyliion was carried at fair value with changes in fair value included in other income (expense), net.

Our investment in Hyliion was included in noncurrent marketable securities at December 31, 2020.

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. 

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

Financing Agreements

1 unchanged sentence

Interest Rate

June 30, 2021

September 30, 2021

December 31, 2020

63 unchanged sentences

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.

31 unchanged sentences

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 2.354 %, inclusive of the applicable margins, as of June 30, 2021 .

The interest rate on the Term B Facility was 2.34 %, inclusive of the applicable margins, as of September 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:

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, 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.

September 30, 2021 , we had $ 52 of outstanding borrowings under the Revolving Facility and had utilized $ 21 for letters of credit.

We had availability at September 30, 2021 under the Revolving Facility of $ 1,077  after deducting outstanding borrowings and the letters of credit.

Bridge facility —

5 unchanged sentences

Debt covenants —

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

At September 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

June 30, 2021  

December 31, 2020  

September 30, 2021

December 31, 2020

Certificates of deposit

1 unchanged sentence

Available-for-sale securities

Marketable securities

Available-for-sale securities

Other noncurrent assets

16 unchanged sentences

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

June 30, 2021

September 30, 2021

December 31, 2020

3 unchanged sentences

Long-term debt

$ 2,348  

$ 2,444  

$ 2,376  

$ 2,475  

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, 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.

As of September 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.

6 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, 2021 :

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

Underlying Financial Instrument

Derivative Financial Instrument

Notional Amount  

Traded Amount

April 2025 Notes

5.75 %  

Luxembourg Intercompany Notes

3.70 %  

5.38 %  

Undesignated 2026 Swap

6.50 %  

Undesignated Offset 2026 Swap

3.13 %  

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.

11 unchanged sentences

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 :

The total notional amount of outstanding foreign currency forward contracts, involving the exchange of various currencies, was $ 393 at September 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 $ 1,106 at September 30, 2021 and $ 1,118 at December 31,  

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

Notional Amount (U.S.

3 unchanged sentences

Mexican peso, Canadian dollar

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

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

British pound

6 unchanged sentences

Chinese renminbi

dollar, eruo, Canadian dollar

dollar, euro, Canadian dollar

Total forward contracts

1 unchanged sentence

Total currency derivatives

$ 1,472  

Designated cash flow hedges —

6 unchanged sentences

Deferred Gain (Loss) in AOCI

June 30, 2021

September 30, 2021

December 31, 2020

Gain (loss) expected to be reclassified into income in one year or less  

Forward Contracts

1 unchanged sentence

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

Three Months Ended September 30, 2021

Derivatives Designated as Cash Flow Hedges

9 unchanged sentences

Amount of (gain) loss reclassified from AOCI into income

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

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

$ 4,468  

$ 3,965  

(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, 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

3 unchanged sentences

Amount of (gain) loss reclassified from AOCI into income

Six Months Ended June 30, 2020

Nine 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

$ 3,004  

$ 2,808  

(Gain) or loss on cash flow hedging relationships

10 unchanged sentences

Derivatives Not Designated as Hedging Instruments

Three Months Ended June 30, 2021

Three Months Ended June 30, 2020

Three Months Ended September 30, 2021

Three Months Ended September 30, 2020

Location of Gain or (Loss) Recognized in Income

2 unchanged sentences

Foreign currency forward contracts

$ (16 )  

$ (2 ) Other income (expense), net

1 unchanged sentence

Derivatives Not Designated as Hedging Instruments

Six Months Ended June 30, 2021

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2021

Nine Months Ended September 30, 2020

Location of Gain or (Loss) Recognized in Income

10 unchanged sentences

Product liabilities —

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,  

Accrued product liability costs were $ 2  at September 30, 2021 and $ 1  at December 31,  

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

Accrued environmental liabilities were $ 9  at September 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

Nine Months Ended

September 30,

Balance, beginning of period

2 unchanged sentences

Settlements of warranty claims

( 10 )  

( 13 )  

( 10 )  

Currency impact

8 unchanged sentences

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

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.

We reported an income tax expense of $ 20  and $ 16  for the third  quarters of 2021 and 2020 and income tax expense of $ 56  and $ 34  for the respective year-to-date periods. Our effective tax rates were 28 % and ( 46 )% for the first  

nine months of 2021 and 

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 have been 

8 % for the 

six -month period.

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.

Excluding these items, the effective tax rate would have been ( 45 )% for the 

nine -month period.

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

3 unchanged sentences

Government grants and incentives

Foreign exchange gain

Foreign exchange gain (loss)

Strategic transaction expenses

Gain (loss) on investment in Hyliion

( 11 )  

Loss on investment in Hyliion

( 20 )  

Loss on disposal group held for sale

15 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 marketable securities and carried at fair value with changes in fair value included in net income.

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

During the third quarter of 2021, we sold all of our Hyliion shares.

See Note 11 for additional information.

4 unchanged sentences

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.

During October 2021, 

we signed a definitive sale-leaseback agreement on three of our U.S.

manufacturing facilities. We will receive proceeds of $ 78 from the sale of the properties, which have a carrying value of $ 8 , resulting in a $ 70 gain on the sale transaction.

The initial term of the leaseback is 20 years and has eight 5 -year renewal options.

The renewal options are not reasonably assured of being executed and will not be included in the initial measurement of the right-of-use asset and lease liability.

The leases on these facilities will be classified as operating leases with annual lease expense of $ 6 and total committed lease payments of $ 119 over the initial 20 -year lease term.

We expect the transaction to close in December 2021.

Revenue from Contracts with Customers

11 unchanged sentences

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 .

We had $ 8  and $ 8  recorded in other current assets and $ 40  and $ 45  recorded in other noncurrent assets at September 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 $ 28  and $ 27  at June 30, 2021 and December 31,  

Contract liabilities were $ 37 and $ 27  at September 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 June 30, 2021

Three Months Ended September 30, 2021

Light Vehicle

5 unchanged sentences

$ 2,204  

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

North America

5 unchanged sentences

$ 1,931  

Three Months Ended June 30, 2020

$ 6,672  

Three Months Ended September 30, 2020

North America

$ 1,069  

South America

$ 1,994  

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

North America

$ 1,518  

$ 2,530  

South America

1 unchanged sentence

$ 1,435  

$ 4,998  

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

14 unchanged sentences

Segment information —

Three Months Ended June 30,

Three Months Ended September 30,

External Sales

12 unchanged sentences

$ 1,994  

Six Months Ended June 30,

Nine Months Ended September 30,

Light Vehicle

10 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Segment EBITDA

$ ( 3 )  

Corporate expense and other items, net

5 unchanged sentences

Restructuring charges, net

( 16 )  

Stock compensation expense

( 15 )  

Strategic transaction expenses

Gain (loss) on investment in Hyliion

( 11 )  

Amounts attributable to previously divested/closed operations

Loss on investment in Hyliion

( 20 )  

Impairment of goodwill

1 unchanged sentence

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

Earnings (loss) before interest and income taxes

( 112 )  

Earnings before interest and income taxes

Loss on extinguishment of debt

( 24 )  

Interest income

1 unchanged sentence

Earnings (loss) before income taxes

( 147 )  

Income tax expense

1 unchanged sentence

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 June 30, 2021 — 

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

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

Ownership Percentage

2 unchanged sentences

Axles India Limited

Tai Ya Investment (HK) Co., Limited

All others as a group

2 unchanged sentences

Investments in affiliates

On July 29, 2021, we acquired a 1 % ownership interest in Switch Mobility Limited (Switch) for $ 18 .

Our investment in Switch will be carried at cost and included in the net assets of our Commercial Vehicle operating segment.

On July 7, 2021, we sold a portion of our ownership interest in Tai Ya Investment (HK) Co., Limited (Tai Ya) to China Motor Corporation (CMC), reducing our ownership interest in Tai Ya to 50 %.

In conjunction with the decrease in our ownership interest, the Tai Ya shareholders agreement was amended, eliminating our controlling financial interest in Tai Ya.

Upon our loss of control, we recognized a de minimis loss to other income (expense), net on the deconsolidation of Tai Ya.

The $ 4  fair value of our retained interest in Tai Ya was determined based on the share sale to CMC.

Our retained investment in Tai Ya is being accounted for by applying the equity method.

Our equity method investment in Tai Ya is included in the net assets of our Light Vehicle operating segment.

On March 1, 2021, we acquired the remaining 51 % ownership interest in Pi Innovo Holdings Limited (Pi Innovo).

3 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