DANA Inc 10-Q

ITEM 1. FINANCIAL STATEMENTS   Dana Incorporated Consolidated Statement of Operations (Unaudited) (In millions, except per share amounts)       Three Months Ended     Six Months Ended       June 30,     June 30,       2023     2022     2023     2022   Net sales   $ 2,748     $ 2,586     $ 5,392     $ 5,066   Costs and expenses                                 Cost of sales     2,477       2,403       4,892       4,686   Selling, general and administrative expenses     144       130       284       260   Amortization of intangibles     4       3       7       7   Restructuring charges, net     3       1       4           Other income (expense), net     4       10       9       12   Earnings before interest and income taxes     124       59       214       125   Loss on extinguishment of debt     ( 1 )             ( 1 )         Interest income     5       2       9       4   Interest expense     39       32       73       63   Earnings before income taxes     89       29       149       66   Income tax expense     55       18       85       36   Equity in earnings (loss) of affiliates     2       ( 1 )     3           Net income     36       10       67       30   Less: Noncontrolling interests net income     5       3       9       7   Less: Redeemable noncontrolling interests net income (loss)     1       ( 1 )             ( 2 ) Net income attributable to the parent company   $ 30     $ 8     $ 58     $ 25                                     Net income per share available to common stockholders                                 Basic   $ 0.21     $ 0.06     $ 0.40     $ 0.17   Diluted   $ 0.21     $ 0.06     $ 0.40     $ 0.17                                     Weighted-average common shares outstanding                                 Basic     144.3       143.4       144.1       143.8   Diluted     144.4       143.7       144.3       144.6     The accompanying notes are an integral part of the consolidated financial statements.   3 Table of Contents     Dana Incorporated Consolidated Statement of Comprehensive Income (Unaudited) (In millions)       Three Months Ended     Six Months Ended       June 30,     June 30,       2023     2022     2023     2022   Net income   $ 36     $ 10     $ 67     $ 30   Other comprehensive income (loss), net of tax:                                 Currency translation adjustments     ( 7 )     ( 91 )     18       ( 52 ) Hedging gains and losses     3       1       18       ( 3 ) Defined benefit plans             3       1       4   Other comprehensive income (loss)     ( 4 )     ( 87 )     37       ( 51 ) Total comprehensive income (loss)     32       ( 77 )     104       ( 21 ) Less: Comprehensive income attributable to noncontrolling interests     ( 5 )     ( 1 )     ( 9 )     ( 5 ) Less: Comprehensive loss attributable to redeemable noncontrolling interests             7               8   Comprehensive income (loss) attributable to the parent company   $ 27     $ ( 71 )   $ 95     $ ( 18 )   The accompanying notes are an integral part of the consolidated financial statements.   4 Table of Contents     Dana Incorporated Consolidated Balance Sheet (Unaudited) (In millions, except share and per share amounts)       June 30,     December 31,       2023     2022   Assets                 Current assets                 Cash and cash equivalents   $ 484     $ 425   Accounts receivable                 Trade, less allowance for doubtful accounts of $ 12 in 2023 and $ 11 in 2022     1,581       1,374   Other     288       202   Inventories     1,731       1,609   Other current assets     247       219   Total current assets     4,331       3,829   Goodwill     262       259   Intangibles     192       201   Deferred tax assets     425       397   Other noncurrent assets     106       123   Investments in affiliates     135       136   Operating lease assets     326       311   Property, plant and equipment, net     2,269       2,193   Total assets   $ 8,046     $ 7,449                     Liabilities, redeemable noncontrolling interests and equity                 Current liabilities                 Short-term debt   $ 35     $ 52   Current portion of long-term debt     32       8   Accounts payable     1,966       1,838   Accrued payroll and employee benefits     256       214   Taxes on income     95       54   Current portion of operating lease liabilities     35       36   Other accrued liabilities     301       277   Total current liabilities     2,720       2,479   Long-term debt, less debt issuance costs of $ 26 in 2023 and $ 22 in 2022     2,587       2,348   Noncurrent operating lease liabilities     287       277   Pension and postretirement obligations     306       298   Other noncurrent liabilities     252       249   Total liabilities     6,152       5,651   Commitments and contingencies (Note 12)                     Redeemable noncontrolling interests     213       195   Parent company stockholders' equity                 Preferred stock, 50,000,000 shares authorized, $ 0.01 par value, no shares outstanding     —       —   Common stock, 450,000,000 shares authorized, $ 0.01 par value, 144,334,974 and 143,366,482 shares outstanding     2       2   Additional paid-in capital     2,244       2,229   Retained earnings     349       321   Treasury stock, at cost ( 449,505 and zero shares)     ( 8 )       Accumulated other comprehensive loss     ( 964 )     ( 1,001 ) Total parent company stockholders' equity     1,623       1,551   Noncontrolling interests     58       52   Total equity     1,681       1,603   Total liabilities, redeemable noncontrolling interests and equity   $ 8,046     $ 7,449     The accompanying notes are an integral part of the consolidated financial statements.   5 Table of Contents     Dana Incorporated Consolidated Statement of Cash Flows (Unaudited) (In millions)       Six Months Ended       June 30,       2023     2022   Operating activities                 Net income   $ 67     $ 30   Depreciation     186       182   Amortization     11       11   Amortization of deferred financing charges     3       3   Write-off of deferred financing costs     1           Earnings of affiliates, net of dividends received     ( 3 )     29   Stock compensation expense     14       8   Deferred income taxes     ( 30 )     ( 42 ) Pension expense, net     2           Change in working capital     ( 172 )     ( 84 ) Other, net     7       ( 1 ) Net cash provided by operating activities     86       136   Investing activities                 Purchases of property, plant and equipment     ( 242 )     ( 206 ) Proceeds from sale of property, plant and equipment     2           Acquisition of business, net of cash acquired             ( 1 ) Purchases of marketable securities             ( 13 ) Proceeds from sales of marketable securities             10   Settlements of undesignated derivatives     ( 4 )     ( 7 ) Other, net     ( 1 )     2   Net cash used in investing activities     ( 245 )     ( 215 ) Financing activities                 Net change in short-term debt     ( 17 )     214   Proceeds from long-term debt     458       2   Repayment of long-term debt     ( 204 )     ( 5 ) Deferred financing payments     ( 9 )         Dividends paid to common stockholders     ( 29 )     ( 29 ) Repurchases of common stock             ( 25 ) Distributions to noncontrolling interests     ( 3 )     ( 2 ) Contributions from redeemable noncontrolling interests     17       7   Payments to acquire noncontrolling interests             ( 4 ) Other, net     ( 4 )     ( 6 ) Net cash provided by financing activities     209       152   Net increase in cash, cash equivalents and restricted cash     50       73   Cash, cash equivalents and restricted cash – beginning of period     442       287   Effect of exchange rate changes on cash balances     11       ( 20 ) Cash, cash equivalents and restricted cash – end of period (Note 4)   $ 503     $ 340                     Non-cash investing activity                 Purchases of property, plant and equipment held in accounts payable   $ 75     $ 69     The accompanying notes are an integral part of the consolidated financial statements.   6 Table of Contents     Dana Incorporated Index to Notes to Consolidated Financial Statements     1. Organization and Summary of Significant Accounting Policies     2. Goodwill and Other Intangible Assets     3. Restructuring of Operations     4. Supplemental Balance Sheet and Cash Flow Information     5. Stockholders' Equity     6. Redeemable Noncontrolling Interests     7. Earnings per Share     8. Stock Compensation     9. Pension and Postretirement Benefit Plans     10. Financing Agreements     11. Fair Value Measurements and Derivatives     12. Commitments and Contingencies     13. Warranty Obligations     14. Income Taxes     15. Other Income (Expense), Net     16. Revenue from Contracts with Customers     17. Segments     18. Equity Affiliates   7 Table of Contents   Notes to Consolidated Financial Statements (Unaudited) (In millions, except share and per share amounts)     Note 1. Organization and Summary of Significant Accounting Policies   General   Dana Incorporated (Dana) is headquartered in Maumee, Ohio and was incorporated in Delaware in 2007. As a global provider of high technology driveline (axles, driveshafts and transmissions); sealing and thermal-management products; and motors, power inverters, and control systems for electric vehicles our customer base includes virtually every major vehicle manufacturer in the global light vehicle, medium/heavy vehicle and off-highway markets.   The terms "Dana," "we," "our" and "us," when used in this report, are references to Dana. These references include the subsidiaries of Dana unless otherwise indicated or the context requires otherwise.   Summary of significant accounting policies   Basis of presentation — Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information. These statements are unaudited, but in the opinion of management include all adjustments (consisting only of normal recurring adjustments) necessary for a fair statement of the results for the interim periods. The results reported in these consolidated financial statements should not necessarily be taken as indicative of results that may be expected for the entire year. The financial information included herein should be read in conjunction with the consolidated financial statements in Item 8 of our Annual Report on Form 10 -K for the year ended December 31,   2022 (the  2022 Form 10 -K). Certain prior year amounts have been reclassified to conform to the current presentation.   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. As of  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:   Standard   Effective Date ASU 2021 - 08   Accounting for Contract Assets and Contract Liabilities from Contracts with Customers   January 1, 2023     8 Table of Contents     Note 2. Goodwill and Other Intangible Assets   Changes in the carrying amount of goodwill by segment  —        Off-Highway   Balance, December 31, 2022   $ 259   Currency impact     3   Balance, June 30, 2023   $ 262     Components of other intangible assets —              June 30, 2023     December 31, 2022       Weighted Average Useful Life (years)     Gross Carrying Amount     Accumulated Impairment and Amortization     Net Carrying Amount     Gross Carrying Amount     Accumulated Impairment and Amortization     Net Carrying Amount   Amortizable intangible assets                                                       Core technology   8     $ 158     $ ( 121 )   $ 37     $ 156     $ ( 116 )   $ 40   Trademarks and trade names   13       29       ( 15 )     14       29       ( 13 )     16   Customer relationships   8       501       ( 433 )     68       498       ( 425 )     73   Non-amortizable intangible assets                                                       Trademarks and trade names           73               73       72               72             $ 761     $ ( 569 )   $ 192     $ 755     $ ( 554 )   $ 201     The net carrying amounts of intangible assets, other than goodwill, attributable to each of our operating segments at  June 30, 2023 were as follows: Light Vehicle — $ 15 , Commercial Vehicle — $ 63 , Off-Highway — $ 110  and Power Technologies — $ 4 .   Amortization expense related to amortizable intangible assets —        Three Months Ended     Six Months Ended       June 30,     June 30,       2023     2022     2023     2022   Charged to cost of sales   $ 2     $ 2     $ 4     $ 4   Charged to amortization of intangibles     4       3       7       7   Total amortization   $ 6     $ 5     $ 11     $ 11     9 Table of Contents     Note 3. 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. Restructuring expense includes costs associated with current and previously announced actions and is comprised of contractual and noncontractual separation costs and exit costs.   Accrued restructuring costs and activity —       Employee Termination Benefits     Exit Costs     Total   Balance, March 31, 2023   $ 2     $ —     $ 2   Charges to restructuring     2       1       3   Cash payments     ( 2 )     ( 1 )     ( 3 ) Balance, June 30, 2023   $ 2     $ —     $ 2                             Balance, December 31, 2022   $ 2     $ —     $ 2   Charges to restructuring     2       2       4   Cash payments     ( 2 )     ( 2 )     ( 4 ) Balance, June 30, 2023   $ 2     $ —     $ 2     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.     Note 4. Supplemental Balance Sheet and Cash Flow Information   Inventory components at —       June 30, 2023     December 31, 2022   Raw materials   $ 710     $ 679   Work in process and finished goods     1,021       930   Total   $ 1,731     $ 1,609     Cash, cash equivalents and restricted cash at —       June 30, 2023     December 31, 2022     June 30, 2022     December 31, 2021   Cash and cash equivalents   $ 484     $ 425     $ 321     $ 268   Restricted cash included in other current assets     8       7       8       9   Restricted cash included in other noncurrent assets     11       10       11       10   Total cash, cash equivalents and restricted cash   $ 503     $ 442     $ 340     $ 287       Note 5. Stockholders’ Equity   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 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.   Share repurchase program — On February 16, 2021  our Board of Directors approved an extension of our existing common stock share repurchase program through December 31, 2023. 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, 2023 .   10 Table of Contents   Changes in equity —   2023   Common Stock     Additional Paid-In Capital     Retained Earnings     Treasury Stock     Accumulated Other Comprehensive Loss     Non-controlling Interests     Total Equity   Balance, December 31, 2022   $ 2     $ 2,229     $ 321     $ —     $ ( 1,001 )   $ 52     $ 1,603   Net income                     28                       4       32   Other comprehensive income                                     40               40   Common stock dividends and dividend equivalents                     ( 15 )                             ( 15 ) Distributions to noncontrolling interests                                             ( 1 )     ( 1 ) Redeemable noncontrolling interests adjustment to redemption value                     ( 1 )                             ( 1 ) Stock compensation             8                                       8   Stock withheld for employees taxes                             ( 8 )                     ( 8 ) Balance, March 31, 2023     2       2,237       333       ( 8 )     ( 961 )     55       1,658   Net income                     30                       5       35   Other comprehensive loss                                     ( 3 )             ( 3 ) Common stock dividends and dividend equivalents                     ( 14 )                             ( 14 ) Distributions to noncontrolling interests                                             ( 2 )     ( 2 ) Purchase of noncontrolling interests                                                     —   Stock compensation             7                                       7   Balance, June 30, 2023     2       2,244       349       ( 8 )     ( 964 )     58       1,681     2022   Common Stock     Additional Paid-In Capital     Retained Earnings     Treasury Stock     Accumulated Other Comprehensive Loss     Non-controlling Interests     Total Equity   Balance, December 31, 2021   $ 2     $ 2,427     $ 662     $ ( 184 )   $ ( 985 )   $ 53     $ 1,975   Net income                     17                       4       21   Other comprehensive income                                     36               36   Common stock dividends and dividend equivalents                     ( 14 )                             ( 14 ) Common stock repurchases                             ( 25 )                     ( 25 ) Distributions to noncontrolling interests                                             ( 1 )     ( 1 ) Purchases of noncontrolling interests                                             ( 1 )     ( 1 ) Redeemable noncontrolling interests adjustment to redemption value                     ( 1 )                             ( 1 ) Stock compensation             4                                       4   Stock withheld for employees taxes                             ( 7 )                     ( 7 ) Balance, March 31, 2022     2       2,431       664       ( 216 )     ( 949 )     55       1,987   Net income                     8                       3       11   Other comprehensive loss                                     ( 79 )     ( 2 )     ( 81 ) Common stock dividends and dividend equivalents                     ( 15 )                             ( 15 ) Distributions to noncontrolling interests                                             ( 1 )     ( 1 ) Purchases of noncontrolling interests                                             ( 1 )     ( 1 ) Redeemable noncontrolling interests adjustment to redemption value                     ( 1 )                             ( 1 ) Stock compensation             4                                       4   Balance, June 30, 2022     2       2,435       656       ( 216 )     ( 1,028 )     54       1,903     11 Table of Contents   Changes in each component of accumulated other comprehensive income (loss) (AOCI) of the parent —       Parent Company Stockholders   2023   Foreign Currency Translation     Hedging     Defined Benefit Plans     Accumulated Other Comprehensive Loss   Balance, December 31, 2022   $ ( 895 )   $ 21     $ ( 127 )   $ ( 1,001 ) Currency translation adjustments     24                       24   Holding gains and losses             16               16   Reclassification adjustment for net actuarial losses included in net periodic benefit cost (b)                     1       1   Tax expense             ( 1 )             ( 1 ) Other comprehensive income     24       15       1       40   Balance, March 31, 2023     ( 871 )     36       ( 126 )     ( 961 ) Currency translation adjustments     ( 6 )                     ( 6 ) Holding gains and losses             10               10   Reclassification of amount to net income (a)             ( 7 )             ( 7 ) Reclassification adjustment for net actuarial losses included in net periodic benefit cost (b)                     1       1   Tax expense                     ( 1 )     ( 1 ) Other comprehensive income (loss)     ( 6 )     3       —       ( 3 ) Balance, June 30, 2023     ( 877 )     39       ( 126 )     ( 964 )       Parent Company Stockholders   2022   Foreign Currency Translation     Hedging     Defined Benefit Plans     Accumulated Other Comprehensive Loss   Balance, December 31, 2021   $ ( 809 )   $ 4     $ ( 180 )   $ ( 985 ) Currency translation adjustments     39                       39   Holding gains and losses             19               19   Reclassification of amount to net income (a)             ( 22 )             ( 22 ) Reclassification adjustment for net actuarial losses included in net periodic benefit cost (b)                     2       2   Tax expense             ( 1 )     ( 1 )     ( 2 ) Other comprehensive income (loss)     39       ( 4 )     1       36   Balance, March 31, 2022     ( 770 )     —       ( 179 )     ( 949 ) Currency translation adjustments     ( 83 )                     ( 83 ) Holding gains and losses             42               42   Reclassification of amount to net income (a)             ( 39 )             ( 39 ) Reclassification adjustment for net actuarial losses included in net periodic benefit cost (b)                     4       4   Tax expense             ( 2 )     ( 1 )     ( 3 ) Other comprehensive income     ( 83 )     1       3       ( 79 ) Balance, June 30, 2022     ( 853 )     1       ( 176 )     ( 1,028 )     (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. See Note 11  for additional details. (b) See Note 9  for additional details.   12 Table of Contents     Note 6. Redeemable Noncontrolling Interests   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 interests reflected as of the balance sheet date are the greater of the redeemable noncontrolling interest balances adjusted for comprehensive income (loss) items and distributions or the redemption 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. In determining fair value using discounted cash flow projections, we make significant assumptions and estimates about the extent and timing of future cash flows, including revenue growth rates, projected EBITDA, discount rates and terminal growth rates.    Reconciliation of changes in redeemable noncontrolling interests —       Three Months Ended     Six Months Ended       June 30,     June 30,       2023     2022     2023     2022   Balance, beginning of period   $ 206     $ 200     $ 195     $ 198   Capital contribution from redeemable noncontrolling interest     7       5       17       7   Adjustment to redemption value           1       1       2   Comprehensive income (loss) adjustments:                                 Net income (loss) attributable to redeemable noncontrolling interests     1       ( 1 )           ( 2 ) Other comprehensive loss attributable to redeemable noncontrolling interests     ( 1 )     ( 6 )           ( 6 ) Balance, end of period   $ 213     $ 199     $ 213     $ 199       Note 7. Earnings per Share   Reconciliation of the numerators and denominators of the earnings per share calculations —        Three Months Ended     Six Months Ended       June 30,     June 30,       2023     2022     2023     2022   Net income available to common stockholders - Numerator basic and diluted   $ 30     $ 8     $ 58     $ 25                                     Denominator:                                 Weighted-average common shares outstanding - Basic     144.3       143.4       144.1       143.8   Employee compensation-related shares, including stock options     0.1       0.3       0.2       0.8   Weighted-average common shares outstanding - Diluted     144.4       143.7       144.3       144.6     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 2 .0  million and 0.6  million CSEs from the calculation of diluted earnings per share for the second quarters of  2023 and  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.   13 Table of Contents     Note 8. Stock Compensation   The Compensation Committee of our Board of Directors approved the grant of RSUs and performance share units (PSUs) shown in the table below during 2023 .        Granted     Grant Date       (In millions)     Fair Value*   RSUs     1.2     $ 18.44   PSUs     0.6     $ 19.56   * Weighted-average per share   We calculated the fair value of the RSUs at grant date based on the closing market price of our common stock at the date of grant. The number of PSUs that ultimately vest is contingent on achieving specified financial targets and specified total shareholder return targets relative to peer companies. For the portion of the award based on financial metrics, we estimated the fair value of the PSUs at grant date based on the closing market price of our common stock at the date of grant adjusted for the value of assumed dividends over the period because the awards are not dividend protected. For the portion of the award based on shareholder returns, we estimated the fair value of the PSUs at grant date using various assumptions as part of a Monte Carlo simulation. The expected term represents the period from the grant date to the end of the three -year performance period. The risk-free interest rate of 4.28 % was based on U.S. Treasury constant maturity rates at the grant date. The dividend yield of 2.5 % was calculated using our historical approach calculated by dividing the expected annual dividend by the average stock price over the prior year. 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 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 $ 8  and $ 4  during the  second quarters of  2023 and  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.     Note 9. Pension and Postretirement Benefit Plans   We have a number of defined contribution and defined benefit, qualified and nonqualified, pension plans covering eligible employees. Other postretirement benefits (OPEB), including medical and life insurance, are provided for certain employees upon retirement.   Components of net periodic benefit cost (credit) —        Pension     OPEB       2023     2022     2023     2022   Three Months Ended June 30,   U.S.     Non-U.S.     U.S.     Non-U.S.     Non-U.S.     Non-U.S.   Interest cost   $ 7     $ 3     $ 4     $ 1     $ —     $ 1   Expected return on plan assets     ( 7 )     ( 1 )     ( 7 )                         Service cost             2               2                   Amortization of net actuarial loss     2               2       2       ( 1 )         Net periodic benefit cost (credit)   $ 2     $ 4     $ ( 1 )   $ 5     $ ( 1 )   $ 1                                                     Six Months Ended June 30,                                                 Interest cost   $ 14     $ 6     $ 8     $ 3     $ 1     $ 1   Expected return on plan assets     ( 15 )     ( 2 )     ( 14 )     ( 1 )                 Service cost             3               4                   Amortization of net actuarial loss     4               4       3       ( 2 )     ( 1 ) Net periodic benefit cost (credit)   $ 3     $ 7     $ ( 2 )   $ 9     $ ( 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.   14 Table of Contents     Note 10. Financing Agreements   Long-term debt at —     Interest Rate     June 30, 2023     December 31, 2022   Senior Notes due April 15, 2025 5.750 % *   $ 200     $ 400   Senior Notes due November 15, 2027 5.375 %       400       400   Senior Notes due June 15, 2028 5.625 %       400       400   Senior Euro Notes due July 15, 2029 3.000 %       355       348   Senior Notes due September 1, 2030 4.250 %       400       400   Senior Euro Notes due July 15, 2031 8.500 %       464         Senior Notes due February 15, 2032 4.500 %       350       350   Other indebtedness         76       80   Debt issuance costs         ( 26 )     ( 22 )           2,619       2,356   Less: Current portion of long-term debt         32       8   Long-term debt, less debt issuance costs       $ 2,587     $ 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 %. See Note 11  for additional information.   Interest on the senior notes is payable semi-annually. 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.   15 Table of Contents   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  — We may redeem some or all of the senior notes at the following redemption prices (expressed as percentages of principal amount), plus accrued and unpaid interest to the redemption date, if redeemed during the 12 -month period commencing on the anniversary date of the senior notes in the year set forth below:       Redemption Price       April     November     June     July     September     July     February   Year   2025 Notes     2027 Notes     2028 Notes     2029 Notes     2030 Notes     2031 Notes     2032 Notes   2022     101.438 %     102.688 %                                         2023     100.000 %     101.344 %     102.813 %                                 2024     100.000 %     100.000 %     101.406 %     101.500 %                         2025             100.000 %     100.000 %     100.750 %                         2026             100.000 %     100.000 %     100.000 %     102.125 %     104.250 %         2027                     100.000 %     100.000 %     101.417 %     102.125 %     102.250 % 2028                             100.000 %     100.708 %     100.000 %     101.500 % 2029                                     100.000 %     100.000 %     100.750 % 2030                                             100.000 %     100.000 % 2031                                                     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.  Prior to July 15, 2024, we may also redeem some or all of the July 2029 Notes at a redemption price equal to 100 % of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, to the redemption date plus a “make-whole” 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 May 1, 2024, we may redeem up to 40% of the aggregate principal amount of the September 2030 Notes in an amount not to exceed the amount of proceeds of one or more equity offerings, at a price equal to 104.250 % of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, provided that at least 50 % of the aggregate principal amount of the September 2030 Notes remains outstanding after the redemption. Prior to May 1, 2026, we may redeem some or all of the September 2030 Notes at a redemption price equal to 100 % of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, to the redemption date plus a “make-whole” premium. We have not separated the make-whole premium from the underlying debt instrument to account for it as a derivative instrument as the economic characteristics and the risks of this embedded derivative are clearly and closely related to the economic characteristics and risks of the underlying debt.   At any time prior to July 15, 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” 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 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. Prior to February 15, 2027, we may redeem some or all of the February 2032 Notes at a redemption price equal to 100 % of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, to the redemption date plus a “make-whole” premium. We have not separated the make-whole premium from the underlying debt instrument to account for it as a derivative instrument as the economic characteristics and the risks of this embedded derivative are clearly and closely related to the economic characteristics and risks of the underlying debt.   Credit agreement — 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. 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.   16 Table of Contents   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:       Margin   Total Net Leverage Ratio   Base Rate     SOFR Rate   Less than or equal to 1.00:1.00     0.25 %     1.25 % Greater than 1.00:1.00 but less than or equal to 2.00:1.00     0.50 %     1.50 % Greater than 2.00:1.00     0.75 %     1.75 %   Commitment fees are applied based on the average daily unused portion of the available amounts under the Revolving Facility as set forth below:   Total Net Leverage Ratio   Commitment Fee   Less than or equal to 1.00:1.00     0.250 % Greater than 1.00:1.00 but less than or equal to 2.00:1.00     0.375 % Greater than 2.00:1.00     0.500 %   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 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.   At  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 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.     Note 11. Fair Value Measurements and Derivatives   In measuring the fair value of our assets and liabilities, we use market data or assumptions that we believe market participants would use in pricing an asset or liability including assumptions about risk when appropriate. Our valuation techniques include a combination of observable and unobservable inputs.   Fair value measurements on a recurring basis — Assets and liabilities that are carried in our balance sheet at fair value are as follows:                 Fair Value   Category   Balance Sheet Location   Fair Value Level     June 30, 2023     December 31, 2022   Currency forward contracts                           Cash flow hedges   Accounts receivable - Other   2     $ 47     $ 26   Cash flow hedges   Other accrued liabilities   2       7       4   Undesignated   Accounts receivable - Other   2       3       2   Undesignated   Other accrued liabilities   2       8       7   Currency swaps                           Cash flow hedges   Other noncurrent assets   2       8       17   Undesignated   Other noncurrent liabilities   2       9       11     Fair Value Level 2 assets and liabilities reflect the use of significant other observable inputs.   Fair value of financial instruments — The financial instruments that are not carried in our balance sheet at fair value are as follows:               June 30, 2023     December 31, 2022       Fair Value Level   Carrying Value     Fair Value     Carrying Value     Fair Value   Long-term debt     2     $ 2,571     $ 2,348     $ 2,304     $ 2,010     17 Table of Contents   Foreign currency derivatives — Our foreign currency derivatives include forward contracts associated with forecasted transactions, primarily involving the purchases and sales of inventory, as well as currency swaps associated with certain recorded external notes payable and intercompany loans receivable and payable. Periodically, our foreign currency derivatives also include net investment hedges of certain of our investments in foreign operations.   We have executed fixed-to-fixed cross-currency swaps in conjunction with the issuance of certain notes to eliminate the variability in the functional-currency-equivalent cash flows due to changes in exchange rates associated with the forecasted principal and interest payments. All of the underlying designated financial instruments 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 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     Derivative Financial Instrument   Description   Type   Face Amount     Rate     Notional Amount     Traded Amount     Inflow Rate     Outflow Rate   April 2025 Notes   Payable   $ 200       5.75 %   $ 200     € 185       5.75 %     3.85 % Luxembourg Intercompany Notes   Receivable   € 93       3.85 %   $ 100     € 93       5.75 %     3.85 % Luxembourg Intercompany Notes   Receivable   € 278       3.70 %   € 278     $ 300       5.38 %     3.70 % Undesignated 2026 Swap                       $ 188     € 169       6.50 %     5.14 % Undesignated Offset 2026 Swap                       € 169     $ 188       3.13 %     6.50 %   The designated swaps are expected to be highly effective in offsetting the corresponding currency-based changes in cash outflows related to the underlying designated financial instruments. Based on our qualitative assessment that the critical terms of the underlying designated financial instruments and the associated swaps match and that all other required criteria have been met, we do not expect to incur any ineffectiveness. As effective cash flow hedges, changes in the fair value of the swaps will be recorded in OCI during each period. Additionally, to the extent the swaps remain effective, the appropriate portion of AOCI will be reclassified to earnings each period as an offset to the foreign exchange gain or loss resulting from the remeasurement of the underlying designated financial instruments. See Note 10  for additional information about the April 2025 Notes. To the extent the swaps are no longer effective, changes in their fair values will be recorded in earnings.   The total notional amount of outstanding foreign currency forward contracts, involving the exchange of various currencies, was $ 662 at June 30, 2023 and $ 608 at December 31,   2022 . 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,   2022 .   The following currency derivatives were outstanding at June 30, 2023 :           Notional Amount (U.S. Dollar Equivalent)       Functional Currency   Traded Currency   Designated     Undesignated     Total     Maturity U.S. dollar   Mexican peso, Thai baht   $ 170     $ 32     $ 202     Jun-2024 Euro   U.S. 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, South African rand     191       59       250     Sep-2027 British pound   U.S. dollar, euro     1       6       7     Sep-2023 South African rand   U.S. dollar, euro, Thai baht             13       13     Aug-2023 Canadian dollar   U.S. dollar             12       12     Jul-2023 Brazilian real   U.S. dollar, euro     54       15       69     Mar-2024 Indian rupee   U.S. dollar, euro, British pound             95       95     Jun-2024 Chinese renminbi   U.S. dollar, euro, Canadian dollar             10       10     Jul-2023 Australian dollar   U.S. dollar, euro             1       1     Jul-2023 Mexican peso   U.S. dollar             3       3     Jul-2023 Total forward contracts         416       246       662                                         U.S. dollar   euro     303       184       487     Nov-2027 Euro   U.S. dollar     300       188       488     Jun-2026 Total currency swaps         603       372       975       Total currency derivatives       $ 1,019     $ 618     $ 1,637         18 Table of Contents   Designated cash flow hedges — With respect to contracts designated as cash flow hedges, changes in fair value during the period in which the contracts remain outstanding are reported in OCI to the extent such contracts remain effective. Effectiveness is measured by using regression analysis to determine the degree of correlation between the change in the fair value of the derivative instrument and the change in the associated foreign currency exchange rates. Changes in fair value of contracts not designated as cash flow hedges or as net investment hedges are recognized in other income (expense), net in the period in which the changes occur. Realized gains and losses from currency-related forward contracts associated with forecasted transactions or from other derivative instruments, including those that have been designated as cash flow hedges and those that have not been designated, are recognized in the same line item in the consolidated statement of operations in which the underlying forecasted transaction or other hedged item is recorded. Accordingly, amounts are potentially recorded in sales, cost of sales or, in certain circumstances, other income (expense), net.   The following table provides a summary of deferred gains (losses) reported in AOCI as well as the amount expected to be reclassified to income in one year or less:       Deferred Gain (Loss) in AOCI       June 30, 2023     December 31, 2022     Gain (loss) expected to be reclassified into income in one year or less   Forward Contracts   $ 28     $ 11     $ 28   Cross-Currency Swaps     13       11           Total   $ 41     $ 22     $ 28     The following table provides a summary of the location and amount of gains or losses recognized in the consolidated statement of operations associated with cash flow hedging relationships:       Three Months Ended     Six Months Ended       June 30,     June 30,   Derivatives Designated as Cash Flow Hedges   2023     2022     2023     2022   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                                 Net sales   $ 2,748     $ 2,586     $ 5,392     $ 5,066   Cost of sales     2,477       2,403       4,892       4,686   Other income (expense), net     4       10       9       12   (Gain) or loss on cash flow hedging relationships                                 Foreign currency forwards                                 Amount of (gain) loss reclassified from AOCI into income                                 Cost of sales     ( 8 )     ( 1 )     ( 13 )     ( 2 ) Other income (expense), net     ( 3 )     ( 2 )     ( 5 )     ( 4 ) Cross-currency swaps                                 Amount of (gain) loss reclassified from AOCI into income                                 Other income (expense), net     5       ( 36 )     12       ( 55 )   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.   Certain of our hedges of forecasted transactions have not formally been designated as cash flow hedges. As undesignated forward contracts, the changes in the fair value of such contracts are included in earnings for the duration of the outstanding forward contract. Any realized gain or loss on the settlement of such contracts is recognized in the same period and in the same line item in the consolidated statement of operations as the underlying transaction. The following table provides a summary of the location and amount of gains or losses recognized in the consolidated statement of operations associated with undesignated hedging relationships.       Three Months Ended     Six Months Ended       June 30,     June 30,   Derivatives Not Designated as Hedging Instruments   2023     2022     2023     2022   Gain or (loss) recognized in income                                 Foreign currency forward contracts                                 Cost of sales   $ 1     $ 1     $ —     $ 1   Other income (expense), net   $ ( 10 )   $ ( 3 )   $ ( 7 )   $ ( 9 )   Net investment hedges — We periodically designate derivative contracts or underlying non-derivative financial instruments as net investment hedges. With respect to contracts designated as net investment hedges, we apply the forward method, but for non-derivative financial instruments designated as net investment hedges, we apply the spot method. Under both methods, we report changes in fair value in the cumulative translation adjustment (CTA) component of OCI during the period in which the contracts remain outstanding to the extent such contracts and non-derivative financial instruments remain effective.   19 Table of Contents     Note 12. Commitments and Contingencies   Product liabilities — Accrued product liability costs were de minimis at June 30, 2023 and de minimis at December 31,   2022 . Amounts recognized as recoverable from third parties were de minimis at June 30, 2023 and de minimis at December 31,   2022 . Payments made to claimants precede recovery of amounts from third parties, and may result in recoverable amounts in excess of the total liability. We estimate these liabilities based on current information and assumptions about the value and likelihood of the claims against us.   Environmental liabilities — Accrued environmental liabilities were $ 6  at June 30, 2023 and $ 8  at December 31,   2022 . We consider the most probable method of remediation, current laws and regulations and existing technology in estimating our environmental liabilities.   Guarantee of lease obligations — In connection with the divestiture of our Structural Products business in 2010, leases covering three U.S. facilities were assigned to a U.S. affiliate of Metalsa. Under the terms of the sale agreement, we will guarantee the affiliate’s performance under the leases, which run through June 2025, including approximately $ 6 of annual payments. In the event of a required payment by Dana as guarantor, we are entitled to pursue full recovery from Metalsa of the amounts paid under the guarantee and to take possession of the leased property.   Other legal matters — We are subject to various pending or threatened legal proceedings arising out of the normal course of business or operations. In view of the inherent difficulty of predicting the outcome of such matters, we cannot state what the eventual outcome of these matters will be. However, based on current knowledge and after consultation with legal counsel, we believe that any liabilities that may result from these proceedings will not have a material adverse effect on our liquidity, financial condition or results of operations.     Note 13. Warranty Obligations   We record a liability for estimated warranty obligations at the dates our products are sold. We record the liability based on our estimate of costs to settle future claims. Adjustments to our estimated costs at time of sale are made as claim experience and other new information becomes available. Obligations for service campaigns and other occurrences are recognized as adjustments to prior estimates when the obligation is probable and can be reasonably estimated.   Changes in warranty liabilities —        Three Months Ended     Six Months Ended       June 30,     June 30,       2023     2022     2023     2022   Balance, beginning of period   $ 108     $ 100     $ 108     $ 107   Amounts accrued for current period sales     13       10       23       20   Adjustments of prior estimates                 8       ( 4 ) Settlements of warranty claims     ( 15 )     ( 7 )     ( 32 )     ( 20 ) Currency impact           ( 3 )     ( 1 )     ( 3 ) Balance, end of period   $ 106     $ 100     $ 106     $ 100       Note 14. Income Taxes   We estimate the effective tax rate expected to be applicable for the full fiscal year and use that rate to provide for income taxes in interim reporting periods. We also recognize the tax impact of certain unusual or infrequently occurring items, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, in the interim period in which they occur.   We have generally not recognized tax benefits on losses generated in several entities where the recent history of operating losses does not allow us to satisfy the “more likely than not” criterion for the recognition of deferred tax assets. Consequently, there is no income tax expense or benefit recognized on the pre-tax income or losses in these jurisdictions as valuation allowances are adjusted to offset the associated tax expense or benefit.   We 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 $ 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. and withholding taxes related to repatriations of international earnings. The effective income tax rate may vary significantly due to fluctuations in the amounts and sources, both foreign and domestic, of pretax income and changes in the amounts of non-deductible expenses.   20 Table of Contents     Note 15. Other Income (Expense), Net         Three Months Ended     Six Months Ended       June 30,     June 30,       2023     2022     2023     2022   Non-service cost components of pension and OPEB costs   $ ( 3 )   $ ( 3 )   $ ( 6 )   $ ( 3 ) Government assistance     7             8         Foreign exchange gain (loss)     ( 3 )     1       1       4   Strategic transaction expenses     ( 1 )     ( 1 )     ( 2 )     ( 5 ) Other, net     4       13       8       16   Other income (expense), net   $ 4     $ 10     $ 9     $ 12     Foreign exchange gains and losses on cross-currency intercompany loan balances that are not of a long-term investment nature are included above. Foreign exchange gains and losses on intercompany loans that are permanently invested are reported in OCI.    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 2023 and 2022 were primarily attributable to investigating potential acquisitions and business ventures and other strategic initiatives.     Note 16. Revenue from Contracts with Customers   We generate revenue from selling production parts to original equipment manufacturers (OEMs) and service parts to OEMs and aftermarket customers. While we provide production and service parts to certain OEMs under awarded multi-year programs, these multi-year programs do not contain any commitment to volume by the customer. As such, individual customer releases or purchase orders represent the contract with the customer. Our customer contracts do not provide us with an enforceable right to payment for performance completed to date throughout the contract term. As such, we recognize part sales revenue at the point in time when the parts are shipped, and risk of loss has transferred to the customer. We have elected to continue to include shipping and handling fees billed to customers in revenue, while including costs of shipping and handling in costs of sales. Taxes collected from customers are excluded from revenues and credited directly to obligations to the appropriate government agencies. Payment terms with our customers are established based on industry and regional practices and generally do not exceed 180 days.    We continually seek new business opportunities and at times provide incentives to our customers for new program awards. We evaluate the underlying economics of each payment made to our customers to determine the proper accounting by understanding the nature of the payment, the rights and obligations in the contract, and other relevant facts and circumstances. Upfront payments to our customers are capitalized if we determine that the payments are incremental and incurred only if the new business is obtained and we expect to recover these amounts from the customer over the term of the new business program. We recognize a reduction to revenue as products that the upfront payments are related to are transferred to the customer, based on the total amount of products expected to be sold over the term of the program. We evaluate the amounts capitalized each period for recoverability and expense any amounts that are no longer expected to be recovered. We had $ 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. We estimate expected rebates and accrue the corresponding refund liability, as a reduction of revenue, at the time covered product is sold to the customer based on anticipated customer purchases during the rebate period and contractual rebate percentages. Refund liabilities are included in other accrued liabilities on our consolidated balance sheet. We provide standard fitness for use warranties on the products we sell, accruing for estimated costs related to product warranty obligations at time of sale. See Note 13  for additional information.   21 Table of Contents   Contract liabilities are primarily comprised of cash deposits made by customers with cash in advance payment terms. Generally, our contract liabilities turn over frequently given our relatively short production cycles. Contract liabilities were $ 48  and $ 48  at June 30, 2023 and December 31,   2022 . Contract liabilities are included in other accrued liabilities on our consolidated balance sheet.   Disaggregation of revenue —   The following table disaggregates revenue for each of our operating segments by geographical market:       Three Months Ended     Six Months Ended       June 30,     June 30,       2023     2022     2023     2022   Light Vehicle                                 North America   $ 728     $ 777     $ 1,368     $ 1,489   Europe     142       92       274       197   South America     59       49       112       94   Asia Pacific     137       110       274       233   Total   $ 1,066     $ 1,028     $ 2,028     $ 2,013                                     Commercial Vehicle                                 North America   $ 290     $ 252     $ 577     $ 481   Europe     83       71       164       141   South America     98       132       201       248   Asia Pacific     55       52       106       100   Total   $ 526     $ 507     $ 1,048     $ 970                                     Off-Highway                                 North America   $ 89     $ 95     $ 186     $ 178   Europe     593       513       1,166       1,017   South America     6       5       10       9   Asia Pacific     154       155       322       308   Total   $ 842     $ 768     $ 1,684     $ 1,512                                     Power Technologies                                 North America   $ 159     $ 150     $ 318     $ 291   Europe     129       111       263       233   South America     8       7       16       14   Asia Pacific     18       15       35       33   Total   $ 314     $ 283     $ 632     $ 571                                     Total                                 North America   $ 1,266     $ 1,274     $ 2,449     $ 2,439   Europe     947       787       1,867       1,588   South America     171       193       339       365   Asia Pacific     364       332       737       674   Total   $ 2,748     $ 2,586     $ 5,392     $ 5,066       Note 17. Segments   We are a global provider of high-technology products to virtually every major vehicle manufacturer in the world. We also serve the stationary industrial market. Our technologies include drive systems (axles, driveshafts, transmissions, and wheel and track drives); motion systems (winches, slew drives, and hub drives); electrodynamic technologies (motors, inverters, software and control systems, battery-management systems, and fuel cell plates); sealing solutions (gaskets, seals, cam covers, and oil pan modules); thermal-management technologies (transmission and engine oil cooling, battery and electronics cooling, charge air cooling, and thermal-acoustical protective shielding); and digital solutions (active and passive system controls and descriptive and predictive analytics). We serve our global light vehicle, medium/heavy vehicle and off-highway markets through four operating segments – Light Vehicle Drive Systems (Light Vehicle), Commercial Vehicle Drive and Motion Systems (Commercial Vehicle), Off-Highway Drive and Motion Systems (Off-Highway) and Power Technologies, which is the center of excellence for sealing and thermal-management technologies that span all customers in our on-highway and off-highway markets. These operating segments have global responsibility and accountability for business commercial activities and financial performance.   22 Table of Contents   Dana evaluates the performance of its operating segments based on external sales and segment EBITDA. Segment EBITDA is a primary driver of cash flows from operations and a measure of our ability to maintain and continue to invest in our operations and provide shareholder returns. Our segments are charged for corporate and other shared administrative costs. Segment EBITDA may not be comparable to similarly titled measures reported by other companies.   Segment information —       2023     2022   Three Months Ended June 30,   External Sales     Inter-Segment Sales     Segment EBITDA     External Sales     Inter-Segment Sales     Segment EBITDA   Light Vehicle   $ 1,066     $ 46     $ 66     $ 1,028     $ 40     $ 33   Commercial Vehicle     526       31       28       507       28       10   Off-Highway     842       16       131       768       17       100   Power Technologies     314       6       19       283       6       21   Eliminations and other             ( 99 )                     ( 91 )         Total   $ 2,748     $ —     $ 244     $ 2,586     $ —     $ 164                                                     Six Months Ended June 30,                                                 Light Vehicle   $ 2,028     $ 98     $ 115     $ 2,013     $ 88     $ 64   Commercial Vehicle     1,048       63       45       970       58       20   Off-Highway     1,684       33       249       1,512       37       200   Power Technologies     632       14       42       571       13       50   Eliminations and other             ( 208 )                     ( 196 )         Total   $ 5,392     $ —     $ 451     $ 5,066     $ —     $ 334     Reconciliation of segment EBITDA to consolidated net income  —       Three Months Ended     Six Months Ended       June 30,     June 30,       2023     2022     2023     2022   Segment EBITDA   $ 244     $ 164     $ 451     $ 334   Corporate expense and other items, net     ( 1 )     ( 2 )     ( 4 )     ( 2 ) Depreciation     ( 94 )     ( 91 )     ( 186 )     ( 182 ) Amortization     ( 6 )     ( 5 )     ( 11 )     ( 11 ) Non-service cost components of pension and OPEB costs     ( 3 )     ( 3 )     ( 6 )     ( 3 ) Restructuring charges, net     ( 3 )     ( 1 )     ( 4 )         Stock compensation expense     ( 8 )     ( 4 )     ( 14 )     ( 8 ) Strategic transaction expenses     ( 1 )     ( 1 )     ( 2 )     ( 5 ) Distressed supplier costs     ( 4 )             ( 12 )         Other items             2       2       2   Earnings before interest and income taxes     124       59       214       125   Loss on extinguishment of debt     ( 1 )             ( 1 )         Interest income     5       2       9       4   Interest expense     39       32       73       63   Earnings before income taxes     89       29       149       66   Income tax expense     55       18       85       36   Equity in earnings (loss) of affiliates     2       ( 1 )     3       —   Net income   $ 36     $ 10     $ 67     $ 30     23 Table of Contents     Note 18. 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, 2023 —        Ownership Percentage   Investment   Dongfeng Dana Axle Co., Ltd.   50 %   $ 66   ROC-Spicer, Ltd.   50 %     22   Axles India Limited   48 %     13   Tai Ya Investment (HK) Co., Limited   50 %     4   All others as a group         6   Investments in equity affiliates         111   Investments in affiliates carried at cost         24   Investments in affiliates       $ 135     24 Table of Contents