What changed in this filing

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Item 1. Financial Statements

2022-10-27 compared with 2022-08-03 · 192 added, 80 removed, 787 unchanged (26% of the section changed)

4 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Costs and expenses

3 unchanged sentences

Restructuring charges, net

Impairment of goodwill

Other income (expense), net

Earnings before interest and income taxes

Earnings (loss) before interest and income taxes

Loss on extinguishment of debt

1 unchanged sentence

Interest expense

Earnings before income taxes

Earnings (loss) before income taxes

Income tax expense

Equity in earnings (loss) of affiliates

Net income (loss)

Noncontrolling interests net income

Redeemable noncontrolling interests net loss

Net income attributable to the parent company

Net income per share available to common stockholders

Net income (loss) attributable to the parent company

Net income (loss) per share available to common stockholders

Weighted-average common shares outstanding

4 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Net income (loss)

Other comprehensive income (loss), net of tax:

2 unchanged sentences

Defined benefit plans

Other comprehensive income (loss)

Other comprehensive loss

Total comprehensive income (loss)

Comprehensive (income) loss attributable to noncontrolling interests

Comprehensive (income) loss attributable to redeemable noncontrolling interests

Comprehensive loss attributable to redeemable noncontrolling interests

Comprehensive income (loss) attributable to the parent company

3 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

Net income (loss)

Amortization of deferred financing charges

4 unchanged sentences

Deferred income taxes

Impairment of goodwill

Change in working capital

3 unchanged sentences

Acquisition of businesses, net of cash acquired

Investments in affiliates

Proceeds from sale of subsidiary, net of cash disposed

Purchases of marketable securities

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

11 unchanged sentences

Contributions from redeemable noncontrolling interests

Deconsolidation of non-wholly owned subsidiary

Payments to acquire noncontrolling interests

48 unchanged sentences

A portion of this adjustment relates to prior periods.

We concluded that the correction of this error is not material to the financial statements for the quarter ended March 31, 2022 or any prior periods.  

We concluded that the correction of this error was 

not material to the financial statements for the quarter ended March 31, 2022 or any prior periods.  

Recently issued accounting pronouncements

6 unchanged sentences

Disclosures by Business Entities about Government Assistance . This guidance requires annual disclosures about the nature of certain government assistance received, the accounting policy used to account for the transactions, the location in the financial statements where such transactions were recorded and significant terms and conditions associated with such transactions. The guidance is effective for annual periods beginning after December 15, 2021, with early adoption permitted.

We do not expect adoption of this guidance to have a material impact on our consolidated financial statements.

In September 2022, the FASB issued ASU 

2022 - 04,  

Supplier Finance Programs . This guidance enhances the transparency of supplier finance programs which includes disclosing information about the key terms of the program, outstanding confirmed amounts as of the end of the period, a rollforward of such amounts during each annual period, and a description of where in the financial statements outstanding amounts are presented.

The guidance becomes effective January 1, 2023.

We are currently assessing the impact of the guidance on our consolidated financial statements.

Pi Innovo Holding Limited  —

5 unchanged sentences

Goodwill —

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.

We did not identify any events or circumstances during the first six months of 2022  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.

The change in the carrying amount of goodwill in 2022  is due to currency fluctuation.

Our goodwill is tested for impairment annually as of October 31 for all of our reporting units, and more frequently if events or circumstances warrant such a review. We estimate the fair value of the reporting units using discounted cash flow projections. In determining the fair value of the reporting units, we make significant assumptions and estimates about the extent and timing of future cash flows, including revenue growth rates, projected segment EBITDA, discount rates, and terminal growth rates.

If the estimated fair value of the reporting unit exceeds its carrying value, the goodwill is considered 

not to be impaired.

If the carrying value of the reporting unit exceeds its estimated fair value, a goodwill impairment charge is recorded for the difference, with the impairment loss limited to the total amount of goodwill allocated to that reporting unit.

We evaluated macro-economic conditions during the third quarter of 2022, including the impact of the Federal Reserve further increasing the risk-free interest rate, as well as the negative impact of sustained higher commodity costs, non-material cost increases and operational inefficiencies attributable to continued global supply chain disruptions.

We believe that these conditions were factors in our market capitalization falling below the book value of net assets as of September 30, 2022.

Accordingly, we concluded a triggering event had occurred and performed interim goodwill impairment analyses for our Commercial Vehicle and Off-Highway reporting units.

Based on the results of our interim impairment analyses, we concluded that the carrying value exceeded fair value of our Commercial Vehicle reporting unit and we recorded a goodwill impairment charge of $ 191 , representing a full impairment of goodwill assigned to the Commercial Vehicle reporting unit. Our analysis for the Off-Highway reporting unit indicated that the fair value continues to exceed the carrying value by a substantial amount and, accordingly, 

no  impairment charge was required.

There was no impairment of indefinite-lived intangible assets in any of the periods presented. 

The remaining change in the carrying amount of goodwill in 2022 was due to currency fluctuation.

Changes in the carrying amount of goodwill by segment 

4 unchanged sentences

Balance, December 31, 2021

( 191 )  

Currency impact

Balance, June 30, 2022

( 10 )  

( 35 )  

Balance, September 30, 2022

Components of other intangible assets — 

June 30, 2022

September 30, 2022

December 31, 2021

8 unchanged sentences

Core technology

$ ( 111 )  

$ ( 110 )  

Trademarks and trade names

( 12 )  

Customer relationships

( 415 )  

( 431 )  

Non-amortizable intangible assets

Trademarks and trade names

$ ( 538 )  

$ ( 553 )  

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

June 30, 2022 were as follows:

September 30, 2022 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, 2022 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, 2022 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.

7 unchanged sentences

Employee Termination Benefits

Balance, March 31, 2022

Balance, June 30, 2022

Charges to restructuring

1 unchanged sentence

Cash payments

Balance, June 30, 2022

Currency impact

Balance, September 30, 2022

Balance, December 31, 2021

2 unchanged sentences

Cash payments

Balance, June 30, 2022

At June 30, 2022 , the accrued employee termination benefits include costs to reduce approximately 100 employees to be completed over the next year.

Currency impact

Balance, September 30, 2022

At September 30, 2022 , the accrued employee termination benefits include costs to reduce approximately 100 employees to be completed over the next year.

Supplemental Balance Sheet and Cash Flow Information

Inventory components at —

June 30, 2022

September 30, 2022

December 31, 2021

3 unchanged sentences

Cash, cash equivalents and restricted cash at —

June 30, 2022

September 30, 2022

December 31, 2021

June 30, 2021

September 30, 2021

December 31, 2020

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 2022.

Our Board of Directors declared a cash dividend of ten cents per share of common stock in the first, second and third quarters of 2022.

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.

3 unchanged sentences

Under the program, we spent $ 25  to repurchase 1,483,742  shares of our common stock during the first quarter of 2022  through open market transactions.

Approximately $ 102  remained available for future share repurchases as of June 30, 2022 .

Approximately $ 102  remained available for future share repurchases as of September 30, 2022 .

Changes in equity —

33 unchanged sentences

( 1,028 )  

Net income (loss)

( 88 )  

Other comprehensive loss

( 67 )  

Common stock dividends and dividend equivalents

( 14 )  

Distributions to noncontrolling interests

Redeemable noncontrolling interests adjustment to redemption value

( 63 )  

Stock compensation

Balance, September 30, 2022

$ 2,440  

$ ( 216 )  

$ ( 1,095 )  

$ 1,671  

Additional Paid-In Capital

28 unchanged sentences

( 1,007 )  

Other comprehensive income (loss)

( 28 )  

Common stock dividends and dividend equivalents

( 15 )  

Common stock share repurchases

( 23 )  

Distributions to noncontrolling interests

Redeemable noncontrolling interests adjustment to redemption value

Deconsolidation of non-wholly owned subsidiary

Stock compensation

Balance, September 30, 2021

$ 2,425  

$ ( 184 )  

$ ( 1,035 )  

$ 1,912  

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

26 unchanged sentences

( 176 )  

Currency translation adjustments

( 69 )  

Holding gains and losses

Reclassification of amount to net income (a)

( 42 )  

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

Other comprehensive income (loss)

( 69 )  

Balance, September 30, 2022

$ ( 922 )  

$ ( 175 )  

Parent Company Stockholders

8 unchanged sentences

Reclassification of amount to net income (a)

( 50 )  

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

13 unchanged sentences

( 226 )  

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 (loss)

( 23 )  

Balance, September 30, 2021

$ ( 812 )  

$ ( 1 )  

$ ( 222 )  

(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.

8 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Balance, beginning of period

8 unchanged sentences

Three Months Ended

Six Months Ended

Net income available to common stockholders - Numerator basic and diluted

Nine Months Ended

September 30,

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

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 0.6  million and 0.8 million CSEs from the calculation of diluted earnings per share for the second quarters of 

We excluded 0.4  million and 0.6  million CSEs from the calculation of diluted earnings per share for the third quarters of 

2022 and 

2021  and excluded 0.4  million and 0.9  million of CSEs for the respective year-to-date periods as the effect of including them would have been anti-dilutive.

2021  and excluded 0.2 million and 0.8  million of CSEs for the respective year-to-date periods as the effect of including them would have been anti-dilutive.

In addition, we excluded CSEs that satisfied the definition of potentially dilutive shares of 0.5 million and 0.7 million for the third quarter and year-to-date periods of 2022 because the net loss position made these anti-dilutive.

Stock Compensation

12 unchanged sentences

We recognized stock compensation expense of $ 5  and $ 6  during the 

second quarters of 

third quarters of 

2022 and 

2021  and expense of $ 8  and $ 9 during the respective year-to-date periods.

At June 30, 2022 , the total unrecognized compensation cost related to the nonvested awards granted and expected to vest was $ 31 .

2021  and expense of $ 13  and $ 15  during the respective year-to-date periods.

At September 30, 2022 , the total unrecognized compensation cost related to the nonvested awards granted and expected to vest was $ 26 .

This cost is expected to be recognized over a weighted-average period of 1.8  years.

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

5 unchanged sentences

Marketable Securities

June 30, 2022

September 30, 2022

December 31, 2021

4 unchanged sentences

one  year or less total $ 13  at 

June 30, 2022 .

September 30, 2022 .

Financing Agreements

1 unchanged sentence

Interest Rate

June 30, 2022

September 30, 2022

December 31, 2021

83 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, 2022 , we had $ 195  of outstanding borrowings under the Revolving Facility and had utilized $ 21 for letters of credit.

We had availability at June 30, 2022 under the Revolving Facility of $ 934  after deducting outstanding borrowings and the letters of credit.

September 30, 2022 , we had $ 195  of outstanding borrowings under the Revolving Facility and had utilized $ 21 for letters of credit.

We had availability at September 30, 2022 under the Revolving Facility of $ 934  after deducting outstanding borrowings and the letters of credit.

Debt covenants —

At June 30, 2022 , we were in compliance with the covenants of our financing agreements.

At September 30, 2022 , we were in compliance with the covenants of our financing agreements.

Under the 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, 2022

September 30, 2022

December 31, 2021

17 unchanged sentences

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

June 30, 2022

September 30, 2022

December 31, 2021

10 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, 2022 :

The following fixed-to-fixed cross-currency swaps were outstanding at September 30, 2022 :

Underlying Financial Instrument

19 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 $ 343 at June 30, 2022 and $ 449 at December 31,  

The total notional amount of outstanding foreign currency swaps, including the fixed-to-fixed cross-currency swaps, was $ 956 at June 30, 2022 and $ 1,096 at December 31,  

The following currency derivatives were outstanding at June 30, 2022 :

The total notional amount of outstanding foreign currency forward contracts, involving the exchange of various currencies, was $ 505 at September 30, 2022 and $ 449 at December 31,  

The total notional amount of outstanding foreign currency swaps, including the fixed-to-fixed cross-currency swaps, was $ 926 at September 30, 2022 and $ 1,096 at December 31,  

The following currency derivatives were outstanding at September 30, 2022 :

Notional Amount (U.S.

2 unchanged sentences

Traded Currency

dollar, Australian dollar, Brazilian real, Canadian dollar, Swiss franc, Chinese renminbi, British pound, Hungarian forint, Indian rupee, Mexican peso, Norwegian krone, New Zealand dollar, Swedish krona, South African rand

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

British pound

4 unchanged sentences

Chinese renminbi

dollar, euro, Canadian dollar

dollar, Canadian dollar

Australian dollar

10 unchanged sentences

Deferred Gain (Loss) in AOCI

June 30, 2022

September 30, 2022

December 31, 2021

4 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Derivatives Designated as Cash Flow Hedges

16 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Derivatives Not Designated as Hedging Instruments

3 unchanged sentences

Other income (expense), net

$( 3 )  

$( 16 )  

$( 9 )  

Net investment hedges —

4 unchanged sentences

Product liabilities —

Accrued product liability costs were $ 1  at June 30, 2022 and $ 2  at December 31,  

We had also recognized amounts recoverable from third parties of $ 17  at June 30, 2022 and $ 13  at December 31,  

Accrued product liability costs were $ 1  at September 30, 2022 and $ 2  at December 31,  

We had also recognized amounts recoverable from third parties of $ 17  at September 30, 2022 and $ 13  at December 31,  

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

1 unchanged sentence

Environmental liabilities —

Accrued environmental liabilities were $ 8  at June 30, 2022 and $ 10  at December 31,  

Accrued environmental liabilities were $ 8  at September 30, 2022 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

9 unchanged sentences

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

We believe it is reasonably possible that valuation allowances of up to approximately $ 40 related to the U.S.

will be recorded in the next twelve months.

We believe it is reasonably possible that valuation allowances of up to approximately $ 200  related to U.S.

federal credits and attributes will be recorded 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 income tax expense of $ 18  and $ 14 for the second quarters of 2022 and 2021 and income tax expense of $ 36  and $ 36 for the respective year-to-date periods.

Our effective tax rates were 55 % and 27 % for the first six months of 2022 and 2021.

We reported income tax expense of $ 31 and $ 20 for the third quarters of 2022 and 2021 and income tax expense of $ 67 and $ 56 for the respective year-to-date periods.

Our effective tax rates were ( 103 )% and 28 % for the first nine months of 2022 and 2021.

During the third quarter of 2022, we recorded a pre-tax goodwill impairment charge of $ 191 with an associated income tax benefit of $ 2 .

In addition, we recorded a tax benefit of $ 32 for U.S.

tax credits generated.

Also, during the third quarter of 2022, we recorded tax expense of $ 31 for valuation allowances related to U.S.

states driven by differences between our federal and state tax profile.

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

4 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Non-service cost components of pension and OPEB costs

1 unchanged sentence

Strategic transaction expenses

Gain (loss) on investment in Hyliion

Loss on investment in Hyliion

Loss on disposal group held for sale

30 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 $ 9 and $ 8  recorded in other current assets and $ 33  and $ 38 recorded in other noncurrent assets at June 30, 2022  and December 31, 2021 .

We had $ 9 and $ 8  recorded in other current assets and $ 30  and $ 38 recorded in other noncurrent assets at September 30, 2022  and December 31, 2021 .

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 $ 39  and $ 34 at June 30, 2022 and December 31,  

Contract liabilities were $ 37  and $ 34 at September 30, 2022 and December 31,  

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

2 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Light Vehicle

25 unchanged sentences

Segment information —

Three Months Ended June 30,

Three Months Ended September 30,

External Sales

8 unchanged sentences

Eliminations and other

Six Months Ended June 30,

Nine Months Ended September 30,

Light Vehicle

4 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Segment EBITDA

4 unchanged sentences

Strategic transaction expenses

Gain (loss) on investment in Hyliion

Loss on investment in Hyliion

Impairment of goodwill

Loss on disposal group held for sale

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

Earnings before interest and income taxes

Earnings (loss) before interest and income taxes

Loss on extinguishment of debt

1 unchanged sentence

Interest expense

Earnings before income taxes

Earnings (loss) before income taxes

Income tax expense

Equity in earnings (loss) of affiliates

Net income (loss)

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).

Equity method investments at June 30, 2022 — 

Equity method investments at September 30, 2022 — 

Ownership Percentage

8 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