What changed in this filing

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Item 1. Financial Statements

2023-07-28 compared with 2023-04-28 · 195 added, 60 removed, 697 unchanged (27% of the section changed)

4 unchanged sentences

Three Months Ended

Six Months Ended

Costs and expenses

5 unchanged sentences

Earnings before interest and income taxes

Loss on extinguishment of debt

Interest income

2 unchanged sentences

Income tax expense

Equity in earnings of affiliates

Equity in earnings (loss) of affiliates

Noncontrolling interests net income

Redeemable noncontrolling interests net loss

Redeemable noncontrolling interests net income (loss)

Net income attributable to the parent company

6 unchanged sentences

Three Months Ended

Six Months Ended

Other comprehensive income (loss), net of tax:

2 unchanged sentences

Defined benefit plans

Other comprehensive income

Total comprehensive income

Other comprehensive income (loss)

Total comprehensive income (loss)

Comprehensive income attributable to noncontrolling interests

Comprehensive loss attributable to redeemable noncontrolling interests

Comprehensive income attributable to the parent company

Comprehensive income (loss) attributable to the parent company

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

49 unchanged sentences

(In millions)

Three Months Ended

Six Months Ended

Operating activities

Amortization of deferred financing charges

Write-off of deferred financing costs

Earnings of affiliates, net of dividends received

3 unchanged sentences

Change in working capital

Net cash used in operating activities

Net cash provided by operating activities

Investing activities

1 unchanged sentence

Proceeds from sale of property, plant and equipment

Acquisition of business, net of cash acquired

Purchases of marketable securities

Proceeds from sales of marketable securities

Settlements of undesignated derivatives

Net cash used in investing activities

10 unchanged sentences

Net cash provided by financing activities

Net decrease in cash, cash equivalents and restricted cash

Net increase in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash –

51 unchanged sentences

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:

June 30, 2023 and December 31, 2022, we had $ 65  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 six  months of 2023, which did not have a material impact on our financial statements or financial statement disclosures:

Effective Date

7 unchanged sentences

Currency impact

Balance, March 31, 2023

Balance, June 30, 2023

Components of other intangible assets — 

March 31, 2023

June 30, 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 

March 31, 2023 were as follows:

June 30, 2023 were as follows:

Light Vehicle —

4 unchanged sentences

Three Months Ended

Six Months Ended

Charged to cost of sales

6 unchanged sentences

Employee Termination Benefits

Balance, March 31, 2023

Charges to restructuring

Cash payments

Balance, June 30, 2023

Balance, December 31, 2022

1 unchanged sentence

Cash payments

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.

Balance, June 30, 2023

At June 30, 2023 , the accrued employee termination benefits include costs to reduce less than approximately 100 employees to be completed over the next year.

Supplemental Balance Sheet and Cash Flow Information

Inventory components at —

March 31, 2023

June 30, 2023

December 31, 2022

1 unchanged sentence

Work in process and finished goods

Inventory reserves

$ 1,731  

$ 1,609  

Cash, cash equivalents and restricted cash at —

March 31, 2023

June 30, 2023

December 31, 2022

March 31, 2022

June 30, 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 quarter of 2023.

Our Board of Directors declared a cash dividend of ten cents per share of common stock in the first and second  quarters 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 March 31, 2023 .

Approximately $ 102  remained available for future share repurchases as of June 30, 2023 .

Changes in equity —

17 unchanged sentences

( 961 )  

Other comprehensive loss

Common stock dividends and dividend equivalents

( 14 )  

Distributions to noncontrolling interests

Purchase of noncontrolling interests

Stock compensation

Balance, June 30, 2023

( 964 )  

Additional Paid-In Capital

21 unchanged sentences

( 949 )  

Other comprehensive loss

( 79 )  

Common stock dividends and dividend equivalents

( 15 )  

Distributions to noncontrolling interests

Purchases of noncontrolling interests

Redeemable noncontrolling interests adjustment to redemption value

Stock compensation

Balance, June 30, 2022

( 216 )  

( 1,028 )  

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

13 unchanged sentences

( 126 )  

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 (loss)

Balance, June 30, 2023

( 877 )  

( 126 )  

Parent Company Stockholders

14 unchanged sentences

( 179 )  

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

( 83 )  

Balance, June 30, 2022

( 853 )  

( 176 )  

(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.

9 unchanged sentences

Three Months Ended

Six Months Ended

Balance, beginning of period

2 unchanged sentences

Comprehensive income (loss) adjustments:

Net loss attributable to redeemable noncontrolling interests

Other comprehensive income attributable to redeemable noncontrolling interests

Net income (loss) attributable to redeemable noncontrolling interests

Other comprehensive loss attributable to redeemable noncontrolling interests

Balance, end of period

2 unchanged sentences

Three Months Ended

Six Months Ended

Net income available to common stockholders - Numerator basic and diluted

3 unchanged sentences

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

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

We excluded 2 .0  million and 0.6  million CSEs from the calculation of diluted earnings per share for the second quarters of 

2023 and 

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

2022  and excluded 0.3 million and 0.4 million of CSEs for the respective year-to-date periods as the effect of including them would have been anti-dilutive.

Stock Compensation

14 unchanged sentences

We recognized stock compensation expense of $ 8  and $ 4  during the 

first quarters of 

second quarters of 

2023 and 

2022 , respectively.

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

2022  and expense of $ 14 and $ 8 during the respective year-to-date periods.

At June 30, 2023 , the total unrecognized compensation cost related to the nonvested awards granted and expected to vest was $ 39 .

This cost is expected to be recognized over a weighted-average period of 2.0  years.

3 unchanged sentences

Components of net periodic benefit cost (credit) — 

Three Months Ended March 31,

Three Months Ended June 30,

Interest cost

3 unchanged sentences

$ ( 1 )  

Six Months Ended June 30,

Interest cost

Expected return on plan assets

( 15 )  

( 14 )  

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.

3 unchanged sentences

Interest Rate

March 31, 2023

June 30, 2023

December 31, 2022

4 unchanged sentences

Senior Notes due September 1, 2030

Senior Euro Notes due July 15, 2031

Senior Notes due February 15, 2032

10 unchanged sentences

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 activity 

— On May 24, 2023, Dana Financing Luxembourg S.à.r.l.

(Dana Financing), a wholly-owned subsidiary of Dana, completed the sale of €425 ($ 458 as of May 24, 2023) in senior unsecured notes ( July 2031 Notes) at 8.500 %.

The July 2031 Notes are fully and unconditionally guaranteed by Dana.

The July 2031 Notes were issued through a private placement and will not be registered under the U.S.

Securities Act of 1933, as amended (the Securities Act).

The July 2031 Notes were offered only to qualified institutional buyers in reliance on Rule 144A under the Securities Act and, outside the United States, only to non-U.S.

investors in reliance on Regulation S under the Securities Act.

The July 2031 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, 2024.

The July 2031 Notes will mature on July 15, 2031.

Net proceeds of the offering totaled €419 ($ 451  as of May 24, 2023).

Financing costs of €6 ($ 7  as of May 24, 2023) 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 $ 200 of our April 2025 Notes and to make payments against borrowings on our Revolving Facility.

On June 9, 2023 we redeemed $ 200 of our April 2025 Notes at a price equal to 100.00 % plus accrued and unpaid interest.

The $ 1 loss on extinguishment of debt is comprised of the write-off of previously deferred financing costs associated with the April 2025 Notes.

Senior notes redemption provisions 

21 unchanged sentences

101.417 %  

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.

Prior to June 15, 2023, we may redeem some or all of the June 2028 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.

102.125 %  

100.000 %  

100.708 %  

100.000 %  

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

4 unchanged sentences

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

At any time prior to July 15, 2026, we may redeem up to 40% of the aggregate principal amount of the July 2031 Notes in an amount not to exceed the amount of proceeds of one or more equity offerings, at a price equal to 108.500 % of the principal amount thereof, plus accrued and unpaid interest, if any, to the redemption date, provided that at least 50 % of the aggregate principal amount of the July 2031 Notes remain outstanding after the redemption. 

Prior to July 15, 2026, we may also redeem some or all of the July 2031 Notes at a redemption price equal to 100 % of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, to the redemption date plus a “make-whole”

At any time prior to February 15, 2025, we may redeem up to 40% of the aggregate principal amount of the February 2032 Notes in an amount not to exceed the amount of proceeds of one or more equity offerings, at a price equal to 104.500 % 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 February 2032 Notes remains outstanding after the redemption.

22 unchanged sentences

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.

June 30, 2023 , we had no  outstanding borrowings under the Revolving Facility but we had utilized $ 16  for letters of credit.

We had availability at June 30, 2023 under the Revolving Facility of $ 1,134  after deducting the outstanding letters of credit.

Debt covenants —

At March 31, 2023 , we were in compliance with the covenants of our financing agreements.

At June 30, 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

March 31, 2023  

June 30, 2023  

December 31, 2022  

13 unchanged sentences

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

March 31, 2023

June 30, 2023

December 31, 2022

12 unchanged sentences

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

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

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

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

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

The impact of the interest rate differential between the inflow and outflow rates on fixed-to-fixed cross-currency swaps is recognized during each period as a component of interest expense for hedges of external debt and as a component of other income (expense), net for hedges of intercompany debt.

The following fixed-to-fixed cross-currency swaps were outstanding at June 30, 2023 :

Underlying Financial Instrument

8 unchanged sentences

5.75 %  

Luxembourg Intercompany Notes

3.70 %  

5.38 %  

Undesignated 2026 Swap

8 unchanged sentences

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

The total notional amount of outstanding foreign currency forward contracts, involving the exchange of various currencies, was $ 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 :

The total notional amount of outstanding foreign currency forward contracts, involving the exchange of various currencies, was $ 662 at June 30, 2023 and $ 608 at December 31,  

The total notional amount of outstanding foreign currency swaps, including the fixed-to-fixed cross-currency swaps, was $ 975  at June 30, 2023 and $ 967 at December 31,  

The following currency derivatives were outstanding at June 30, 2023 :

Notional Amount (U.S.

3 unchanged sentences

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

20 unchanged sentences

Deferred Gain (Loss) in AOCI

March 31, 2023

June 30, 2023

December 31, 2022

4 unchanged sentences

Three Months Ended

Six Months Ended

Derivatives Designated as Cash Flow Hedges

2 unchanged sentences

$ 2,586  

$ 5,392  

$ 5,066  

Cost of sales

4 unchanged sentences

Cost of sales

( 13 )  

Other income (expense), net

2 unchanged sentences

Other income (expense), net

( 36 )  

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

4 unchanged sentences

Three Months Ended

Six Months Ended

Derivatives Not Designated as Hedging Instruments

2 unchanged sentences

Cost of sales

$ ( 1 )  

Other income (expense), net

$ ( 10 )  

$ ( 3 )  

$ ( 7 )  

Net investment hedges —

4 unchanged sentences

Product liabilities —

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,  

Accrued product liability costs were de minimis at June 30, 2023 and de minimis at December 31,  

Amounts recognized as recoverable from third parties were de minimis at June 30, 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 $ 7  at March 31, 2023 and $ 8  at December 31,  

Accrued environmental liabilities were $ 6  at June 30, 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

Six Months Ended

Balance, beginning of period

3 unchanged sentences

( 15 )  

( 32 )  

Currency impact

7 unchanged sentences

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

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.

We reported income tax expense of $ 55  and $ 18  for the second quarters of 2023  and 2022 and income tax expense of $ 85 and $ 36 for the respective year-to-date periods.

Our effective tax rates were 57 % and 55 % for the first six months of 2023  and 2022.

 During the second quarter of 2023, we recorded tax expense of $ 19 for income tax reserves associated with prior tax years in foreign jurisdictions. 

Excluding this item, the effective tax rate would have been 44 % for the 2023 six -month period. 

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.

3 unchanged sentences

Three Months Ended

Six Months Ended

Non-service cost components of pension and OPEB costs

$ ( 3 )  

$ ( 6 )  

Government assistance

Foreign exchange gain

Foreign exchange gain (loss)

Strategic transaction expenses

17 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 $ 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 .

We had $ 6  and $ 7  recorded in other current assets and $ 36  and $ 28  recorded in other noncurrent assets at June 30, 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 $ 50  and $ 48  at March 31, 2023 and December 31,  

Contract liabilities were $ 48  and $ 48  at June 30, 2023 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

Light Vehicle

North America

$ 1,368  

$ 1,489  

South America

$ 1,066  

$ 1,028  

$ 2,028  

$ 2,013  

Commercial Vehicle

1 unchanged sentence

South America

$ 1,048  

North America

South America

$ 1,684  

$ 1,512  

Power Technologies

4 unchanged sentences

$ 1,274  

$ 2,449  

$ 2,439  

South America

1 unchanged sentence

$ 2,586  

$ 5,392  

$ 5,066  

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 March 31,

Three Months Ended June 30,

External Sales

5 unchanged sentences

Light Vehicle

$ 1,066  

$ 1,028  

Commercial Vehicle

5 unchanged sentences

$ 2,586  

Six Months Ended June 30,

Light Vehicle

$ 2,028  

$ 2,013  

Commercial Vehicle

Power Technologies

Eliminations and other

( 208 )  

( 196 )  

$ 5,392  

$ 5,066  

Reconciliation of segment EBITDA to consolidated net income 

Three Months Ended

Six Months Ended

Segment EBITDA

1 unchanged sentence

( 94 )  

( 91 )  

( 186 )  

( 11 )  

Non-service cost components of pension and OPEB costs

1 unchanged sentence

Stock compensation expense

( 14 )  

Strategic transaction expenses

Distressed supplier costs

( 12 )  

Earnings before interest and income taxes

Loss on extinguishment of debt

Interest income

2 unchanged sentences

Income tax expense

Equity in earnings of affiliates

Equity in earnings (loss) 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 March 31, 2023 — 

Equity method investments at June 30, 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