What changed in this filing

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Item 1. Financial Statements

2023-04-28 compared with 2022-10-27 · 160 added, 382 removed, 597 unchanged (48% of the section changed)

4 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Costs and expenses

3 unchanged sentences

Restructuring charges, net

Impairment of goodwill

Other income (expense), net

Earnings (loss) before interest and income taxes

Loss on extinguishment of debt

Earnings before interest and income taxes

Interest income

Interest expense

Earnings (loss) before income taxes

Earnings before income taxes

Income tax expense

Equity in earnings (loss) of affiliates

Net income (loss)

Equity in earnings of affiliates

Noncontrolling interests net income

Redeemable noncontrolling interests net loss

Net income (loss) attributable to the parent company

Net income (loss) per share available to common stockholders

Net income attributable to the parent company

Net income per share available to common stockholders

Weighted-average common shares outstanding

4 unchanged sentences

Three 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 loss

Total comprehensive income (loss)

Comprehensive (income) loss attributable to noncontrolling interests

Other comprehensive income

Total comprehensive income

Comprehensive income attributable to noncontrolling interests

Comprehensive loss attributable to redeemable noncontrolling interests

Comprehensive income (loss) attributable to the parent company

Comprehensive income 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

Cash and cash equivalents

Marketable securities

Accounts receivable

9 unchanged sentences

$ 7,449  

Liabilities and equity

Liabilities, redeemable noncontrolling interests and equity

Current liabilities

19 unchanged sentences

Retained earnings

Treasury stock, at cost ( 13,469,842 and 11,661,591 shares)

( 216 )  

Treasury stock, at cost ( 447,594 and zero shares)

Accumulated other comprehensive loss

9 unchanged sentences

(In millions)

Nine Months Ended

September 30,

Three 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

Impairment of goodwill

Pension expense, net

Change in working capital

Net cash provided by operating activities

Net cash used in operating activities

Investing activities

Purchases of property, plant and equipment

Acquisition of businesses, net of cash acquired

Investments in affiliates

Proceeds from sale of subsidiary, net of cash disposed

Proceeds from sale of property, plant and equipment

Purchases of marketable securities

Proceeds from sales of marketable securities

Proceeds from maturities of marketable securities

Settlement of terminated fixed-to-fixed cross currency swap

Settlements of undesignated derivatives

Net cash used in investing activities

3 unchanged sentences

Repayment of long-term debt

Redemption premium on debt

Deferred financing payments

3 unchanged sentences

Contributions from redeemable noncontrolling interests

Deconsolidation of non-wholly owned subsidiary

Payments to acquire noncontrolling interests

Net cash provided by (used in) financing activities

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

Net cash provided by financing activities

Net decrease in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash –

17 unchanged sentences

Pension and Postretirement Benefit Plans

Marketable Securities

Financing Agreements

23 unchanged sentences

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

During the first quarter of 2022, we identified an error related to certain intercompany inventory transfers that were not appropriately eliminated and recorded an adjustment of $ 8 to cost of sales.

A portion of this adjustment relates to 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

In October 2021, the FASB issued Accounting Standards Update (ASU) 2021 - 08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers .

The guidance is intended to provide clarification on how to account for contract assets acquired via business combination, which will generally be at the same value as recognized by the acquiree assuming the acquiree followed US GAAP.

The guidance becomes effective January 1, 2023.

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

In November 2021, the FASB issued ASU 

2021 - 10,  

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  —

On March 1, 2021, we acquired the remaining 51 % ownership interest in Pi Innovo Holding Limited (Pi Innovo). Pi Innovo designs, develops and manufactures electronic control units spanning a range of applications and industries. The acquisition of the remaining ownership interest provided us with a 100 % ownership interest in Pi Innovo.

The total purchase consideration of $ 35 is comprised of $ 18 of cash paid at closing and the $ 17 fair value of our previously held equity method investment in Pi Innovo.

The results of operations of the business are reported within our Commercial Vehicle operating segment.

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

On January 1, 2023 we adopted 

Accounting Standards Update (ASU) 2022 - 04, Supplier Finance Programs which requires annual and interim disclosures for entities that use supplier finance programs in connection with the purchase of goods and services.

Adoption of this new standard did not affect the recognition, measurement or financial statement presentation of supplier finance program obligations.

Certain of our subsidiaries have entered into paying agency agreements with third -party administrators.

These voluntary supply chain finance programs generally give participating suppliers the ability to sell, or otherwise pledge as collateral, their receivables from Dana to the participating financial institutions, at the sole discretion of both the suppliers and financial institutions.

Dana is not a party to the arrangements between the suppliers and the financial institutions.

Dana’s obligations to its suppliers, including amounts due and scheduled payment dates, are not impacted by the suppliers’

decisions to sell, or otherwise pledge as collateral, amounts under these arrangements.

Dana's payment terms to the financial institutions, including the timing and amount of payments, are based on the original supplier invoices.

March 31, 2023 and December 31, 2022, we had $ 62 and $ 81 , respectively, of confirmed obligations presented as accounts payable within total current liabilities on the consolidated balance sheet. 

We also adopted the following standard during the first three months of 2023, which did not have a material impact on our financial statements or financial statement disclosures:

Effective Date

ASU 2021 - 08

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers  

January 1, 2023

Goodwill and Other Intangible Assets

Goodwill —

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 

— 

Light Vehicle

Commercial Vehicle

Power Technologies

Balance, December 31, 2022

( 191 )  

Currency impact

( 10 )  

( 35 )  

Balance, September 30, 2022

Balance, March 31, 2023

Components of other intangible assets — 

September 30, 2022

March 31, 2023

December 31, 2022

21 unchanged sentences

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

September 30, 2022 were as follows:

March 31, 2023 were as follows:

Light Vehicle —

4 unchanged sentences

Three 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 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.

Remainder of 2022

Amortization expense

Restructuring of Operations

Our restructuring activities have historically included rationalizing our operating footprint by consolidating facilities, positioning operations in lower cost locations and reducing overhead costs.

In recent years our focus has been primarily headcount reduction initiatives to reduce operating costs, including actions taken at acquired businesses to rationalize cost structures and achieve operating synergies.

Restructuring expense includes costs associated with current and previously announced actions and is comprised of contractual and noncontractual separation costs and exit costs.

1 unchanged sentence

Employee Termination Benefits

Balance, June 30, 2022

Charges to restructuring

Adjustments of accruals

Cash payments

Currency impact

Balance, September 30, 2022

Balance, December 31, 2022

Charges to restructuring

Adjustments of accruals

Cash payments

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.

Balance, March 31, 2023

At March 31, 2023 , 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 —

September 30, 2022

March 31, 2023

December 31, 2022

2 unchanged sentences

Inventory reserves

( 94 )  

$ 1,723  

$ 1,609  

Cash, cash equivalents and restricted cash at —

September 30, 2022

March 31, 2023

December 31, 2022

September 30, 2021

March 31, 2022

December 31, 2021

5 unchanged sentences

Common stock —

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.

Our Board of Directors declared a cash dividend of ten cents per share of common stock in the first quarter of 2023.

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 September 30, 2022 .

Approximately $ 102  remained available for future share repurchases as of March 31, 2023 .

Changes in equity —

8 unchanged sentences

$ 1,603  

$ 1,975  

Other comprehensive income

1 unchanged sentence

( 15 )  

Common stock share repurchases

( 25 )  

Distributions to noncontrolling interests

Purchase of noncontrolling interests

Redeemable noncontrolling interests adjustment to redemption value

3 unchanged sentences

( 961 )  

( 949 )  

Other comprehensive loss

( 79 )  

Common stock dividends and dividend equivalents

( 15 )  

Distributions to noncontrolling interests

Purchase of noncontrolling interests

Redeemable noncontrolling interests adjustment to redemption value

Stock compensation

Balance, June 30, 2022

( 216 )  

( 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

8 unchanged sentences

$ 1,975  

Other comprehensive loss

( 18 )  

Common stock dividends and dividend equivalents

( 14 )  

Redeemable noncontrolling interests adjustment to redemption value

Stock compensation

Stock withheld for employees taxes

Balance, March 31, 2021

( 161 )  

( 1,044 )  

Other comprehensive income (loss)

Common stock dividends and dividend equivalents

( 15 )  

Distributions to noncontrolling interests

Sale of noncontrolling interests

Redeemable noncontrolling interests adjustment to redemption value

Stock compensation

Balance, June 30, 2021

( 161 )  

( 1,007 )  

Other comprehensive income (loss)

( 28 )  

Other comprehensive income

Common stock dividends and dividend equivalents

( 14 )  

Common stock share repurchases

Common stock repurchases

( 25 )  

Distributions to noncontrolling interests

Purchases of noncontrolling interests

Redeemable noncontrolling interests adjustment to redemption value

Deconsolidation of non-wholly owned subsidiary

Stock compensation

Balance, September 30, 2021

$ 2,425  

$ ( 184 )  

Stock withheld for employees taxes

Balance, March 31, 2022

( 216 )  

10 unchanged sentences

Holding gains and losses

Reclassification of amount to net income (a)

( 22 )  

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

Other comprehensive income (loss)

Other comprehensive income

Balance, March 31, 2023

1 unchanged sentence

( 126 )  

Currency translation adjustments

( 83 )  

Holding gains and losses

Reclassification of amount to net income (a)

( 39 )  

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

Other comprehensive income (loss)

( 83 )  

Balance, June 30, 2022

( 853 )  

( 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)

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

Tax (expense) benefit

Other comprehensive income (loss)

( 22 )  

Balance, March 31, 2021

( 806 )  

( 230 )  

Currency translation adjustments

Holding gains and losses

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, 2021

( 789 )  

( 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 )  

Balance, March 31, 2022

( 770 )  

4 unchanged sentences

Redeemable Noncontrolling Interests

Hydro-Québec holds 45 % redeemable noncontrolling interest in Dana TM4 Inc., Dana TM4 USA, LLC, Dana (Beijing) Electric Motor Co., Ltd., Dana TM4 Italia S.r.l., Ashwoods Innovations Ltd., Dana TM4 India Private Limited and Dana TM4 (Sweden) AB (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. 

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

Hydro-Québec owns a 45 % redeemable noncontrolling interest in Dana TM4 Inc., Dana TM4 Electric Holdings BV and Dana TM4 USA, LLC.

The terms of the joint venture agreement provide Hydro-Québec with the right to put all, and not less than all, of its ownership interests in Dana TM4 Inc., Dana TM4 Electric Holdings BV and Dana TM4 USA, LLC to Dana at fair value.

Redeemable noncontrolling interest adjustments of redemption value are recorded in retained earnings. We estimate the fair value of the redemption value using an income based approach based on discounted cash flow projections.

2 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Balance, beginning of period

3 unchanged sentences

Net loss attributable to redeemable noncontrolling interests

Other comprehensive income (loss) attributable to redeemable noncontrolling interests

Other comprehensive income attributable to redeemable noncontrolling interests

Balance, end of period

2 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

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

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

We excluded 0.2  million and 0.4  million CSEs from the calculation of diluted earnings per share for the first quarters of 

2023 and 

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.

2022  as the effect of including them would have been anti-dilutive.

Stock Compensation

1 unchanged sentence

(In millions)

$ 18.56  

$ 19.57  

* Weighted-average per share

7 unchanged sentences

The estimated volatility of 67.0 % was based on observed historical volatility of daily stock returns for the 3 -year period preceding the grant date. 

During 2022, we paid $ 4  of cash to settle RSUs and issued 0.8  million and 0.1  million shares of common stock based on the vesting of RSUs and PSUs, respectively.

During 2023, we paid $ 5  of cash to settle RSUs and issued 1.2 million shares of common stock based on the vesting of RSUs.

We recognized stock compensation expense of $ 6  and $ 4  during the 

third quarters of 

first quarters of 

2023 and 

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 .

2022 , respectively.

At March 31, 2023 , the total unrecognized compensation cost related to the nonvested awards granted and expected to vest was $ 44 .

This cost is expected to be recognized over a weighted-average period of 2.2  years.

3 unchanged sentences

Components of net periodic benefit cost (credit) — 

Three Months Ended September 30,

Interest cost

Expected return on plan assets

Amortization of net actuarial loss

Net periodic benefit cost (credit)

Nine Months Ended September 30,

Three Months Ended March 31,

Interest cost

2 unchanged sentences

Net periodic benefit cost (credit)

$ ( 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.

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

Marketable Securities

September 30, 2022

December 31, 2021

Gains (Losses)

Certificates of deposit - Current marketable securities

Certificates of deposit maturing in 

one  year or less total $ 13  at 

September 30, 2022 .

Financing Agreements

1 unchanged sentence

Interest Rate

September 30, 2022

March 31, 2023

December 31, 2022

7 unchanged sentences

Debt issuance costs

( 21 )  

Current portion of long-term debt

Long-term debt, less debt issuance costs

$ 2,328  

$ 2,348  

In conjunction with the issuance of the April 2025 Notes we entered into 8 -year fixed-to-fixed cross-currency swaps which have the effect of economically converting the April 2025 Notes to euro-denominated debt at a fixed rate of 3.850 %.

On April 25, 2022, we settled existing fixed-to-fixed cross-currency swaps on $ 100 of the April 2025 Notes.

See Note 13 for additional information.

See Note 11  for additional information.

Interest on the senior notes is payable semi-annually.

Other indebtedness includes the note payable to the former owners of SME S.p.A., borrowings from various financial institutions, and finance lease obligations.

Senior notes activity — 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.

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.

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 November 24, 2021, we completed the sale of $ 350 in senior unsecured notes (the February 2032 Notes) at 4.5 %.

The February 2032 Notes rank equally with Dana’s other unsecured senior notes.

Interest on the notes is payable on February 15 and August 15 of each year, beginning on August 15, 2022.

The February 2032 Notes will mature on February 15, 2032.

Net proceeds of the offering totaled $ 345 .

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

Proceeds from the offering, along with cash on hand, were used to fully pay down the Term B Facility.

See credit agreement discussion below.

Other indebtedness includes a $ 25  note payable to the former shareholders of SME S.p.A., borrowings from various financial institutions and finance lease obligations.

Senior notes redemption provisions 

1 unchanged sentence

Redemption Price

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.

Prior to November 15, 2022, we may redeem some or all of the November 2027 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 %  

101.344 %  

102.813 %  

100.000 %  

101.406 %  

101.500 %  

100.000 %  

100.750 %  

100.000 %  

102.125 %  

100.000 %  

101.417 %  

100.000 %  

100.708 %  

100.000 %  

At any time prior to June 15, 2023, we may redeem up to 35% of the aggregate principal amount of the June 2028 Notes in an amount not to exceed the amount of proceeds of one or more equity offerings, at a price equal to 105.625 % 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 June 2028 Notes remains outstanding after the redemption.

11 unchanged sentences

Credit agreement —

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.

On March 14, 2023, we amended our credit and guaranty agreement, extending its maturity to March 14, 2028.

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

The deferred fees are being amortized over the life of the Revolving Facility.

On November 30, 2021, we fully paid down the Term B Facility.

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

The deferred fees are being amortized over the life of the Revolving Facility. Deferred financing costs on our Revolving Facility are included in other noncurrent assets. 

The Revolving Facility is 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:

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

Total Net Leverage Ratio

Eurodollar Rate

Less than or equal to 1.00:1.00

0.25 %  

Greater than 1.00:1.00 but less than or equal to 2.00:1.00

0.50 %  

Greater than 2.00:1.00

0.75 %  

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

5 unchanged sentences

Up to $ 275 of the Revolving Facility may be applied to letters of credit, which reduces availability.

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.

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.

We pay a fee for issued and undrawn letters of credit in an amount per annum equal to the applicable margin for SOFR 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, 2023 , we had $ 295  of outstanding borrowings under the Revolving Facility and had utilized $ 16  for letters of credit.

We had availability at March 31, 2023 under the Revolving Facility of $ 839  after deducting outstanding borrowings and the letters of credit.

Debt covenants —

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

At March 31, 2023 , 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

September 30, 2022

December 31, 2021

Certificates of deposit

Marketable securities

March 31, 2023  

December 31, 2022  

Currency forward contracts

8 unchanged sentences

Other noncurrent assets

Cash flow hedges

Other noncurrent liabilities

Fair Value Level 2 assets and liabilities reflect the use of significant other observable inputs.

1 unchanged sentence

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

September 30, 2022

March 31, 2023

December 31, 2022

3 unchanged sentences

Long-term debt

$ 2,310  

$ 2,038  

$ 2,304  

$ 2,010  

Foreign currency derivatives —

5 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 September 30, 2022 :

The following fixed-to-fixed cross-currency swaps were outstanding at March 31, 2023 :

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.

4 unchanged sentences

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

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 $ 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 :

The total notional amount of outstanding foreign currency forward contracts, involving the exchange of various currencies, was $ 697 at March 31, 2023 and $ 608 at December 31,  

The total notional amount of outstanding foreign currency swaps, including the fixed-to-fixed cross-currency swaps, was $ 972 at March 31, 2023 and $ 967 at December 31,  

The following currency derivatives were outstanding at March 31, 2023 :

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, Japanese yen, Mexican peso, Norwegian krone, New Zealand dollar, Swedish krona, South African rand

Mexican peso, Thai baht

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

British pound

1 unchanged sentence

dollar, euro, Thai baht

Canadian dollar

Brazilian real

1 unchanged sentence

Chinese renminbi

dollar, Canadian dollar

dollar, euro, Canadian dollar

Australian dollar

2 unchanged sentences

Total currency derivatives

$ 1,017  

$ 1,669  

Designated cash flow hedges —

6 unchanged sentences

Deferred Gain (Loss) in AOCI

September 30, 2022

March 31, 2023

December 31, 2022

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

Forward Contracts

2 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Derivatives Designated as Cash Flow Hedges

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

$ 2,644  

$ 2,480  

Cost of sales

14 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Derivatives Not Designated as Hedging Instruments

2 unchanged sentences

Cost of sales

$ ( 1 )  

Other income (expense), net

5 unchanged sentences

Product liabilities —

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,  

Accrued product liability costs were de minimis at March 31, 2023 and de minimis at December 31,  

Amounts recognized as recoverable from third parties were de minimis at March 31, 2023 and de minimis 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 September 30, 2022 and $ 10  at December 31,  

Accrued environmental liabilities were $ 7  at March 31, 2023 and $ 8  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

Nine Months Ended

September 30,

Balance, beginning of period

2 unchanged sentences

Settlements of warranty claims

( 17 )  

Currency impact

5 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 $ 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 $ 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.

federal statutory rate of 21 % due to establishment, release, and adjustment of valuation allowances in several countries, nondeductible expenses and deemed income, local tax incentives in several countries, different statutory tax rates outside the U.S.

We reported income tax expense of $ 30  and $ 18  for the first quarter of 2023  and 2022, respectively.

Our effective tax rates were 50 % and 49 % for the first quarter of 2023  and 2022.

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

federal statutory rate of 21 % due to establishment, release and adjustment of valuation allowances in several countries, nondeductible expenses and deemed income, local tax incentives in several countries outside the U.S., different statutory tax rates outside the U.S.

and withholding taxes related to repatriations of international earnings.

2 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Non-service cost components of pension and OPEB costs

$ ( 3 )  

Government assistance

Foreign exchange gain

Strategic transaction expenses

Loss on investment in Hyliion

Loss on disposal group held for sale

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

Other income (expense), net

2 unchanged sentences

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

Strategic transaction expenses in 2022 were primarily attributable to investigating potential acquisitions and business ventures and 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.

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

On October 1, 2020, Hyliion Inc.

completed its merger with Tortoise Acquisition Corp. The business combination resulted in the combined company being renamed Hyliion Holdings Corp.

(Hyliion), with its common stock being listed on the New York Stock Exchange under the ticker symbol HYLN.

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

Our investment in Hyliion 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.

In conjunction with our acquisition of Oerlikon Drive Systems, 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. We completed the disposal of this business in April 2021.

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.

Strategic transaction expenses in 2023 and 2022 were primarily attributable to investigating potential acquisitions and business ventures and other strategic initiatives.

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 $ 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 .

We had $ 7  and $ 7  recorded in other current assets and $ 27  and $ 28  recorded in other noncurrent assets at March 31, 2023  and December 31, 2022 .

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 $ 37  and $ 34 at September 30, 2022 and December 31,  

Contract liabilities were $ 50  and $ 48  at March 31, 2023 and December 31,  

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

2 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Light Vehicle

10 unchanged sentences

North America

$ 1,183  

$ 1,165  

South America

$ 2,644  

$ 2,480  

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

12 unchanged sentences

Segment information —

Three Months Ended September 30,

Three Months Ended March 31,

External Sales

8 unchanged sentences

Eliminations and other

Nine Months Ended September 30,

Light Vehicle

Commercial Vehicle

Power Technologies

Eliminations and other

( 109 )  

( 105 )  

$ 2,644  

$ 2,480  

Reconciliation of segment EBITDA to consolidated net income 

Three Months Ended

Nine Months Ended

September 30,

Segment EBITDA

Corporate expense and other items, net

( 92 )  

Non-service cost components of pension and OPEB costs

2 unchanged sentences

Strategic transaction expenses

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 (loss) before interest and income taxes

Loss on extinguishment of debt

Distressed supplier costs

Earnings before interest and income taxes

Interest income

Interest expense

Earnings (loss) before income taxes

Earnings before income taxes

Income tax expense

Equity in earnings (loss) of affiliates

Net income (loss)

Equity in earnings of affiliates

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 September 30, 2022 — 

Equity method investments at March 31, 2023 — 

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