Item 1. Financial Statements
ITEM 1. FINANCIAL STATEMENTS
Dana Incorporated
Consolidated Statement of Operations (Unaudited)
(In millions, except per share amounts)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2024
2023
2024
2023
Net sales
$
2,476
$
2,669
$
7,949
$
8,061
Costs and expenses
Cost of sales
2,231
2,433
7,205
7,325
Selling, general and administrative expenses
130
126
401
410
Amortization of intangibles
3
3
10
10
Restructuring charges, net
24
17
41
21
Gain (loss) on disposal group previously held for sale
4
( 26
)
Other income (expense), net
( 4
)
1
( 4
)
10
Earnings before interest and income taxes
88
91
262
305
Loss on extinguishment of debt
( 1
)
Interest income
4
5
10
14
Interest expense
40
41
118
114
Earnings before income taxes
52
55
154
204
Income tax expense
43
33
134
118
Equity in earnings of affiliates
2
3
7
6
Net income
11
25
27
92
Less: Noncontrolling interests net income
7
8
17
17
Less: Redeemable noncontrolling interests net loss
( 2
)
( 13
)
( 2
)
Net income attributable to the parent company
$
4
$
19
$
23
$
77
Net income per share available to common stockholders
Basic
$
0.03
$
0.13
$
0.16
$
0.53
Diluted
$
0.03
$
0.13
$
0.16
$
0.53
Weighted-average common shares outstanding
Basic
145.0
144.3
144.9
144.2
Diluted
145.1
144.7
145.0
144.5
The accompanying notes are an integral part of the consolidated financial statements.
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Dana Incorporated
Consolidated Statement of Comprehensive Income (Unaudited)
(In millions)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2024
2023
2024
2023
Net income
$
11
$
25
$
27
$
92
Other comprehensive income (loss), net of tax:
Currency translation adjustments
14
( 24
)
( 52
)
( 6
)
Hedging gains and losses
( 7
)
( 21
)
( 35
)
( 3
)
Defined benefit plans
1
( 1
)
6
Other comprehensive income (loss)
8
( 46
)
( 81
)
( 9
)
Total comprehensive income (loss)
19
( 21
)
( 54
)
83
Less: Comprehensive income attributable to noncontrolling interests
( 7
)
( 7
)
( 16
)
( 16
)
Less: Comprehensive loss attributable to redeemable noncontrolling interests
4
17
4
Comprehensive income (loss) attributable to the parent company
$
12
$
( 24
)
$
( 53
)
$
71
The accompanying notes are an integral part of the consolidated financial statements.
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Dana Incorporated
Consolidated Balance Sheet (Unaudited)
(In millions, except share and per share amounts)
September 30,
December 31,
2024
2023
Assets
Current assets
Cash and cash equivalents
$ 419 $ 529
Accounts receivable
Trade, less allowance for doubtful accounts of $ 11 in 2024 and $ 16 in 2023
1,463 1,371
Other
227 280
Inventories
1,714 1,676
Other current assets
231 247
Total current assets
4,054 4,103
Goodwill
263 263
Intangibles
160 182
Deferred tax assets
518 516
Other noncurrent assets
176 140
Investments in affiliates
126 123
Operating lease assets
304 327
Property, plant and equipment, net
2,258 2,311
Total assets
$ 7,859 $ 7,965
Liabilities, redeemable noncontrolling interests and equity
Current liabilities
Short-term debt
$ 23 $ 22
Current portion of long-term debt
212 35
Accounts payable
1,689 1,756
Accrued payroll and employee benefits
269 288
Taxes on income
62 86
Current portion of operating lease liabilities
44 42
Other accrued liabilities
417 373
Total current liabilities
2,716 2,602
Long-term debt, less debt issuance costs of $ 21 in 2024 and $ 24 in 2023
2,436 2,598
Noncurrent operating lease liabilities
270 284
Pension and postretirement obligations
323 334
Other noncurrent liabilities
366 319
Total liabilities
6,111 6,137
Commitments and contingencies (Note 13)
Redeemable noncontrolling interests
205 191
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, 144,978,881 and 144,386,484 shares outstanding
2 2
Additional paid-in capital
2,274 2,255
Retained earnings
283 317
Treasury stock, at cost ( 831,871 and 474,981 shares)
( 13 ) ( 9 )
Accumulated other comprehensive loss
( 1,066 ) ( 990 )
Total parent company stockholders' equity
1,480 1,575
Noncontrolling interests
63 62
Total equity
1,543 1,637
Total liabilities, redeemable noncontrolling interests and equity
$ 7,859 $ 7,965
The accompanying notes are an integral part of the consolidated financial statements.
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Dana Incorporated
Consolidated Statement of Cash Flows (Unaudited)
(In millions)
Nine Months Ended
September 30,
2024
2023
Operating activities
Net income
$
27
$
92
Depreciation
304
287
Amortization
16
17
Amortization of deferred financing charges
4
4
Write-off of deferred financing costs
1
Earnings of affiliates, net of dividends received
( 4
)
( 4
)
Stock compensation expense
21
19
Deferred income taxes
18
( 46
)
Pension expense, net
1
4
Change in working capital
( 261
)
( 169
)
Loss on disposal group previously held for sale
26
Other, net
( 4
)
( 7
)
Net cash provided by operating activities
148
198
Investing activities
Purchases of property, plant and equipment
( 227
)
( 359
)
Proceeds from sale of property, plant and equipment
7
Settlements of undesignated derivatives
( 5
)
( 10
)
Other, net
20
( 14
)
Net cash used in investing activities
( 205
)
( 383
)
Financing activities
Net change in short-term debt
( 15
)
Proceeds from long-term debt
1
458
Repayment of long-term debt
( 35
)
( 207
)
Deferred financing payments
( 9
)
Dividends paid to common stockholders
( 43
)
( 43
)
Distributions to noncontrolling interests
( 17
)
( 10
)
Collection of note receivable from redeemable noncontrolling interest
11
Contributions from redeemable noncontrolling interests
18
18
Other, net
9
( 3
)
Net cash (used in) provided by financing activities
( 56
)
189
Net (decrease) increase in cash, cash equivalents and restricted cash
( 113
)
4
Cash, cash equivalents and restricted cash – beginning of period
563
442
Effect of exchange rate changes on cash balances
( 15
)
( 6
)
Cash, cash equivalents and restricted cash – end of period (Note 5)
$
435
$
440
Non-cash investing activity
Purchases of property, plant and equipment held in accounts payable
$
53
$
68
The accompanying notes are an integral part of the consolidated financial statements.
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Dana Incorporated
Index to Notes to Consolidated Financial Statements
1.
Organization and Summary of Significant Accounting Policies
2.
Disposal Group Previously Held for Sale
3.
Goodwill and Other Intangible Assets
4.
Restructuring of Operations
5.
Supplemental Balance Sheet and Cash Flow Information
6.
Stockholders' Equity
7.
Redeemable Noncontrolling Interests
8.
Earnings per Share
9.
Stock Compensation
10.
Pension and Postretirement Benefit Plans
11.
Financing Agreements
12.
Fair Value Measurements and Derivatives
13.
Commitments and Contingencies
14.
Warranty Obligations
15.
Income Taxes
16.
Other Income (Expense), Net
17.
Revenue from Contracts with Customers
18.
Segments
19.
Equity Affiliates
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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. Dana is 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 with a customer base that 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, 2023 (the 2023 Form 10 -K). Certain prior year amounts have been reclassified to conform to the current presentation.
Recently adopted accounting pronouncements
We did not adopt any new accounting pronou ncements during the nine months ended September 30, 2024 .
Recently issued accounting pronouncements
We do not expect any recently issued accounting pronouncements to have a material effect on our financial statements.
In November 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023 - 07, Segment Reporting (Topic 280 ). The guidance enhances reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The guidance becomes effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. Adoption of this update will have no impact on our financial statements. We will update our segment disclosure to conform with this update in our 2024 Form 10 -K.
In December 2023, the FASB issued ASU 2023 - 09, Improvements to Income Tax Disclosures. This guidance requires disaggregated income tax disclosures on the rate reconciliation and income taxes paid. The guidance becomes effective for annual periods beginning after December 15, 2024, with early adoption permitted. We are currently evaluating the impact of the guidance on our financial statement disclosures.
Note 2. Disposal Group Previously Held for Sale
In February 2024, we entered into a definitive agreement to sell our European hydraulics business to HPIH S.à r.l. We classified the disposal group as held for sale, recognizing a $ 26 loss to date to adjust the carrying value of net assets to fair value less estimated costs to sell. The transaction was not completed by the date set forth in the definitive agreement. The assets of the European hydraulics business are no longer held for sale and have been reclassified as held and used at the lower of their adjusted carrying value or fair value at the date the held for sale criteria was no longer met.
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Note 3. Goodwill and Other Intangible Assets
Changes in the carrying amount of goodwill by segment —
Off-Highway
Balance, December 31, 2023
$ 263
Impaired as part of disposal group previously held for sale (Note 2)
( 2 )
Currency impact
2
Balance, September 30, 2024
$ 263
Components of other intangible assets —
September 30, 2024
December 31, 2023
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 $ 160 $ ( 133 ) $ 27 $ 159 $ ( 126 ) $ 33
Trademarks and trade names
13 25 ( 15 ) 10 29 ( 15 ) 14
Customer relationships
8 497 ( 447 ) 50 503 ( 441 ) 62
Non-amortizable intangible assets
Trademarks and trade names
73 73 73 73
$ 755 $ ( 595 ) $ 160 $ 764 $ ( 582 ) $ 182
Net carrying amounts of intangible assets, other than goodwill, attributable to each of our operating segments—
September 30, 2024
Light Vehicle
$ 11
Commercial Vehicle
54
Off-Highway
92
Power Technologies
3
$ 160
Amortization expense related to amortizable intangible assets —
Three Months Ended
Nine Months Ended
September 30,
September 30,
2024
2023
2024
2023
Charged to cost of sales
$ 2 $ 3 $ 6 $ 7
Charged to amortization of intangibles
3 3 10 10
Total amortization
$ 5 $ 6 $ 16 $ 17
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Note 4. 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. During the third quarter and first nine months of 2024 , our restructuring charges were primarily comprised of separation costs related to rationalizing the global administrative and functional services that support our manufacturing and assembly facilities and technical centers and realignment activities associated with our manufacturing footprint.
Accrued restructuring costs and activity —
Employee Termination Benefits
Exit Costs
Total
Balance, June 30, 2024
$ 16 $ — $ 16
Charges to restructuring
23 2 25
Adjustments of accruals
( 1 ) ( 1 )
Cash payments
( 5 ) ( 2 ) ( 7 )
Balance, September 30, 2024
$ 33 $ — $ 33
Balance, December 31, 2023
$ 10 $ — $ 10
Charges to restructuring
34 8 42
Adjustments of accruals
( 1 ) ( 1 )
Cash payments
( 10 ) ( 8 ) ( 18 )
Balance, September 30, 2024
$ 33 $ — $ 33
At September 30, 2024 , the accrued employee termination benefits include costs to reduce approximately 900 e mployees to be complet ed over the next year.
Note 5. Supplemental Balance Sheet and Cash Flow Information
Supplier finance programs —
As of September 30, 2024 and December 31, 2023 , we had $ 68 and $ 69 , respectively, of confirmed obligations subject to supplier finance programs presented as accounts payable within total current liabilities on the consolidated balance sheet.
Inventory components —
September 30, 2024
December 31, 2023
Raw materials
$ 696 $ 681
Work in process and finished goods
1,018 995
Total
$ 1,714 $ 1,676
Cash, cash equivalents and restricted cash —
September 30, 2024
December 31, 2023
September 30, 2023
December 31, 2022
Cash and cash equivalents
$ 419 $ 529 $ 421 $ 425
Restricted cash included in other current assets
6 23 8 7
Restricted cash included in other noncurrent assets
10 11 11 10
Total cash, cash equivalents and restricted cash
$ 435 $ 563 $ 440 $ 442
Note 6. Stockholders’ Equity
Common stock — Our Board of Directors declared a cash dividend of ten cents per share of common stock in the first, second, and third quarters of 2024. 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.
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Changes in equity —
2024
Common Stock
Additional Paid-In Capital
Retained Earnings
Treasury Stock
Accumulated Other Comprehensive Loss
Non-controlling Interests
Total Equity
Balance, December 31, 2023
$ 2 $ 2,255 $ 317 $ ( 9 ) $ ( 990 ) $ 62 $ 1,637
Net income
3 5 8
Other comprehensive loss
( 17 ) ( 1 ) ( 18 )
Common stock dividends and dividend equivalents
( 15 ) ( 15 )
Distributions to noncontrolling interests
( 1 ) ( 1 )
Redeemable noncontrolling interests adjustment to redemption value
( 8 ) ( 8 )
Stock compensation
5 5
Stock withheld for employee taxes
( 4 ) ( 4 )
Balance, March 31, 2024
2 2,260 297 ( 13 ) ( 1,007 ) 65 1,604
Net income
16 5 21
Other comprehensive loss
( 67 ) ( 67 )
Common stock dividends and dividend equivalents
( 15 ) ( 15 )
Distributions to noncontrolling interests
( 1 ) ( 1 )
Redeemable noncontrolling interests adjustment to redemption value
( 5 ) ( 5 )
Stock compensation
7 7
Balance, June 30, 2024
2 2,267 293 ( 13 ) ( 1,074 ) 69 1,544
Net income
4 7 11
Other comprehensive income
8 8
Common stock dividends and dividend equivalents
( 14 ) ( 14 )
Distributions to noncontrolling interests
( 13 ) ( 13 )
Stock compensation
7 7
Balance, September 30, 2024
$ 2 $ 2,274 $ 283 $ ( 13 ) $ ( 1,066 ) $ 63 $ 1,543
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 employee 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 )
Stock compensation
7 7
Balance, June 30, 2023
2 2,244 349 ( 8 ) ( 964 ) 58 1,681
Net income
19 8 27
Other comprehensive loss
( 43 ) ( 1 ) ( 44 )
Common stock dividends and dividend equivalents
( 15 ) ( 15 )
Distributions to noncontrolling interests
( 7 ) ( 7 )
Stock compensation
5 5
Balance, September 30, 2023
$ 2 $ 2,249 $ 353 $ ( 8 ) $ ( 1,007 ) $ 58 $ 1,647
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Changes in each component of accumulated other comprehensive income (loss) (AOCI) of the parent —
Parent Company Stockholders
2024
Foreign Currency Translation
Hedging
Defined Benefit Plans
Accumulated Other Comprehensive Loss
Balance, December 31, 2023
$ ( 868 ) $ 20 $ ( 142 ) $ ( 990 )
Currency translation adjustments
( 16 ) ( 16 )
Holding gains and losses
9 9
Reclassification of amount to net income (a)
( 11 ) ( 11 )
Reclassification adjustment for net actuarial losses included in net periodic benefit cost (b)
1 1
Other comprehensive income (loss)
( 16 ) ( 2 ) 1 ( 17 )
Balance, March 31, 2024
( 884 ) 18 ( 141 ) ( 1,007 )
Currency translation adjustments
( 45 ) ( 45 )
Holding gains and losses
( 23 ) ( 23 )
Reclassification of amount to net income (a)
( 8 ) ( 8 )
Other
3 3
Reclassification adjustment for net actuarial losses included in net periodic benefit cost (b)
2 2
Tax expense
5 ( 1 ) 4
Other comprehensive income (loss)
( 45 ) ( 26 ) 4 ( 67 )
Balance, June 30, 2024
( 929 ) ( 8 ) ( 137 ) ( 1,074 )
Currency translation adjustments
14 14
Holding gains and losses
( 35 ) ( 35 )
Reclassification of amount to net income (a)
26 26
Reclassification adjustment for net actuarial losses included in net periodic benefit cost (b)
1 1
Tax expense
2 2
Other comprehensive income (loss)
14 ( 7 ) 1 8
Balance, September 30, 2024
$ ( 915 ) $ ( 15 ) $ ( 136 ) $ ( 1,066 )
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 )
Currency translation adjustments
( 21 ) ( 21 )
Holding gains and losses
8 8
Reclassification of amount to net income (a)
( 30 ) ( 30 )
Tax expense
1 ( 1 ) —
Other comprehensive loss
( 21 ) ( 21 ) ( 1 ) ( 43 )
Balance, September 30, 2023
$ ( 898 ) $ 18 $ ( 127 ) $ ( 1,007 )
(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 12 for additional details.
(b) See Note 10 for additional details.
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Note 7. 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. 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.
On May 6, 2024, Hydro-Québec provided Dana with its put notice. Subsequent to May 6, 2024, Dana will no longer attribute net income (loss) and other comprehensive income (loss) items of Dana TM4 Inc., Dana TM4 Electric Holdings BV and Dana TM4 USA, LLC to Hydro-Québec's redeemable noncontrolling interest. Closure of the transaction will proceed in accordance with the provisions of the shareholders agreement.
Reconciliation of changes in redeemable noncontrolling interests —
Three Months Ended
Nine Months Ended
September 30,
September 30,
2024
2023
2024
2023
Balance, beginning of period
$ 205 $ 213 $ 191 $ 195
Capital contribution from redeemable noncontrolling interests
1 18 18
Adjustment to redemption value
13 1
Comprehensive income (loss) adjustments:
Net income (loss) attributable to redeemable noncontrolling interests
( 2 ) ( 13 ) ( 2 )
Other comprehensive loss attributable to redeemable noncontrolling interests
( 2 ) ( 4 ) ( 2 )
Balance, end of period
$ 205 $ 210 $ 205 $ 210
Note 8. Earnings per Share
Reconciliation of the numerators and denominators of the earnings per share calculations —
Three Months Ended
Nine Months Ended
September 30,
September 30,
2024
2023
2024
2023
Net income available to common stockholders - Numerator basic and diluted
$ 4 $ 19 $ 23 $ 77
Denominator:
Weighted-average common shares outstanding - Basic
145.0 144.3 144.9 144.2
Employee compensation-related shares
0.1 0.4 0.1 0.3
Weighted-average common shares outstanding - Diluted
145.1 144.7 145.0 144.5
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 0.5 million and 0.1 million CSEs from the calculation of diluted earnings per share for the third quarters of 2024 and 2023 and excluded 2.4 million and 0.1 million of CSEs for the respective year-to-date periods as the effect of including them would have been anti-dilutive.
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Note 9. 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 the nine months ended September 30, 2024 .
Granted
Grant Date
(In millions)
Fair Value*
RSUs
1.7 $ 13.16
PSUs
0.7 $ 13.23
* 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 4.39 % was based on U.S. Treasury constant maturity rates at the grant date. The dividend yield of 2.7 % 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 47.7 % was based on observed historical volatility of daily stock returns for the 3 -year period preceding the grant date.
During the nine months ended September 30, 2024 , we paid $ 2 of cash to settle RSUs and issued 0.9 million shares of common stock based on the vesting of RSUs. We recognized stock compensation expense of $ 7 and $ 5 in the third quarters of 2024 and 2023 , respectively and expense of $ 21 and $ 19 during the respective year-to-date periods. At September 30, 2024 , the total unrecognized compensation cost related to the nonvested awards granted and expected to vest was $ 33 . This cost is expected to be recognized over a weighted-average period of 1.8 years.
Note 10. 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
2024
2023
2024
2023
Three Months Ended September 30,
U.S.
Non-U.S.
U.S.
Non-U.S.
Non-U.S.
Non-U.S.
Interest cost
$ 7 $ 3 $ 7 $ 4 $ 1 $ 1
Expected return on plan assets
( 7 ) ( 1 ) ( 8 )
Service cost
2 1
Amortization of net actuarial loss (gain)
2 1 1 ( 1 ) ( 1 )
Termination benefit
3
Net periodic benefit cost
$ 5 $ 5 $ — $ 5 $ — $ —
Nine Months Ended September 30,
Interest cost
$ 20 $ 10 $ 21 $ 10 $ 2 $ 2
Expected return on plan assets
( 22 ) ( 3 ) ( 23 ) ( 2 )
Service cost
5 4
Amortization of net actuarial loss (gain)
5 1 5 ( 2 ) ( 3 )
Termination benefit
3
Net periodic benefit cost (credit)
$ 6 $ 13 $ 3 $ 12 $ — $ ( 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.
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Note 11. Financing Agreements
Long-term debt at —
Interest Rate
September 30, 2024
December 31, 2023
Senior Notes due April 15, 2025
5.750 %
* $ 200 $ 200
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 %
362 359
Senior Notes due September 1, 2030
4.250 %
400 400
Senior Euro Notes due July 15, 2031
8.500 %
473 469
Senior Notes due February 15, 2032
4.500 %
350 350
Other indebtedness
84 79
Debt issuance costs
( 21 ) ( 24 )
2,648 2,633
Less: Current portion of long-term debt
212 35
Long-term debt, less debt issuance costs
$ 2,436 $ 2,598
*
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 12 for additional information.
Interest on the senior notes is payable semi-annually. Other indebtedness includes borrowings from various financial institutions and finance lease obligations.
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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
2023
101.344 %
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 %
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.
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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 September 30, 2024 , we had $ 10 of outstanding borrowings under the Revolving Facility and had utilized $ 10 for letters of credit. We had availability at September 30, 2024 under the Revolving Facility of $ 1,130 after deducting outstanding borrowings and letters of credit.
Debt covenants — At September 30, 2024 , 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 12. 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 sheets at fair value are as follows:
Fair Value
Category
Balance Sheet Location
Fair Value Level
September 30, 2024 December 31, 2023
Currency forward contracts
Cash flow hedges
Accounts receivable - Other
2 $ 2 $ 43
Cash flow hedges
Other accrued liabilities
2 25 7
Undesignated
Accounts receivable - Other
2 8 3
Undesignated
Other accrued liabilities
2 4 5
Currency swaps
Cash flow hedges
Other noncurrent liabilities
2 12 11
Undesignated
Other noncurrent liabilities
2 7 9
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 sheets at fair value are as follows:
September 30, 2024
December 31, 2023
Fair Value Level
Carrying Value
Fair Value
Carrying Value
Fair Value
Long-term debt
2 $ 2,568 $ 2,490 $ 2,582 $ 2,495
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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 September 30, 2024 :
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 11 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 $ 1,319 at September 30, 2024 and $ 776 at December 31, 2023 . The total notional amount of outstanding foreign currency swaps, including the fixed-to-fixed cross-currency swaps, was $ 986 at September 30, 2024 and $ 981 at December 31, 2023 .
The following currency derivatives were outstanding at September 30, 2024 :
Notional Amount (U.S. Dollar Equivalent)
Functional Currency
Traded Currency
Designated
Undesignated
Total
Maturity
U.S. dollar
euro, Chinese renminbi, Indian rupee, Mexican peso, Thai baht, South African rand
$ 669 $ 33 $ 702 Dec-2025
Euro
U.S. dollar, Australian dollar, Canadian dollar, Swiss franc, Chinese renminbi, British pound, Hungarian forint, Indian rupee, Mexican peso, Norwegian krone, Swedish krona, South African rand
345 32 377 Sep-2027
Indian rupee
U.S. dollar, euro, British pound
77 77 Jul-2025
Brazilian real
U.S. dollar, euro
62 18 80 Sep-2025
South African rand
U.S. dollar, euro, Thai baht
16 16 Oct-2024
Canadian dollar
U.S. dollar
1 23 24 Oct-2024
Thai baht
U.S. dollar
8 3 11 Sep-2025
British pound
U.S. dollar, euro
10 7 17 Aug-2025
Chinese renminbi
U.S. dollar, euro, Canadian dollar
8 8 Oct-2024
Mexican peso
U.S. dollar
5 5 Oct-2024
Swedish krona
euro
1 1 Oct-2024
Australian dollar
U.S. dollar, euro
1 1 Oct-2024
Total forward contracts
1,095 224 1,319
U.S. dollar
euro
310 188 498 Nov-2027
Euro
U.S. dollar
300 188 488 Jun-2026
Total currency swaps
610 376 986
Total currency derivatives
$ 1,705 $ 600 $ 2,305
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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 the 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
September 30, 2024
December 31, 2023
Gain (loss) expected to be reclassified into income in one year or less
Forward Contracts
$ ( 24 ) $ 20 $ ( 24 )
Cross-Currency Swaps
4 1
Total
$ ( 20 ) $ 21 $ ( 24 )
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
Nine Months Ended
September 30,
September 30,
Derivatives Designated as Cash Flow Hedges
2024
2023
2024
2023
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
$ 2,476 $ 2,669 $ 7,949 $ 8,061
Cost of sales
2,231 2,433 7,205 7,325
Other income (expense), net
( 4 ) 1 ( 4 ) 10
(Gain) or loss on cash flow hedging relationships
Foreign currency forwards
Amount of (gain) loss reclassified from AOCI into income
Cost of sales
( 1 ) ( 11 ) ( 17 ) ( 24 )
Other income (expense), net
3 ( 1 ) 18 ( 6 )
Cross-currency swaps
Amount of (gain) loss reclassified from AOCI into income
Other income (expense), net
24 ( 19 ) 6 ( 7 )
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
Nine Months Ended
September 30,
September 30,
Derivatives Not Designated as Hedging Instruments
2024
2023
2024
2023
Gain (loss) recognized in income
Foreign currency forward contracts
Cost of sales
$ — $ — $ 2 $ —
Other income (expense), net
9 ( 2 ) 10 ( 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. During the second quarter of 2024, we entered into foreign currency forwards with a notional value of $ 100 that we designated as a net investment hedge of the foreign currency exposure related to a China renminbi denominated subsidiary. These forwards will mature in September 2025. During the third quarter of 2024, we entered into foreign currency forwards with a notional value of $ 122 that we designated as a net investment hedge of the foreign currency exposure related to a euro denominated subsidiary. These forwards will mature in November 2025.
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Note 13. Commitments and Contingencies
Environmental liabilities — Accrued environmental liabilities were $ 6 at both September 30, 2024 and December 31, 2023 . 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 the eventual outcome of these matters. 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 14. 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
Nine Months Ended
September 30,
September 30,
2024
2023
2024
2023
Balance, beginning of period
$ 117 $ 106 $ 116 $ 108
Amounts accrued for current period sales
11 14 33 37
Adjustments of prior estimates
2 3 12 11
Settlements of warranty claims
( 19 ) ( 8 ) ( 49 ) ( 40 )
Currency impact
2 ( 1 ) 1 ( 2 )
Balance, end of period
$ 113 $ 114 $ 113 $ 114
Note 15. 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 $ 43 and $ 33 for the third quarters of 2024 and 2023 and income tax expense of $ 134 and $ 118 for the respective year-to-date periods. Our effective tax rates were 87 % and 58 % for the nine months ended September 30, 2024 and 2023 . During the first nine months of 2024, we recorded tax expense of $ 11 for valuation allowances related to foreign jurisdictions and tax expense of $ 11 due to revisions in our assertions on unremitted earnings in foreign jurisdictions. During the first nine months of 2023, we recorded tax expense of $ 19 for income tax reserves associated with prior tax years in foreign jurisdictions. 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.
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Note 16. Other Income (Expense), Net
Three Months Ended
Nine Months Ended
September 30,
September 30,
2024
2023
2024
2023
Non-service cost components of pension and OPEB costs
$ ( 8 ) $ ( 4 ) $ ( 14 ) $ ( 10 )
Government assistance
1 4 4 12
Foreign exchange loss
( 3 ) ( 1 ) ( 7 )
Strategic transaction expenses
( 1 ) ( 2 ) ( 5 ) ( 4 )
Loss on sale of property, plant and equipment
( 1 ) ( 5 ) ( 1 )
Other, net
7 5 23 13
Other income (expense), net
$ ( 4 ) $ 1 $ ( 4 ) $ 10
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 the nine months ended September 30, 2024 and 2023 were primarily attributable to investigating potential acquisitions and business ventures and other strategic initiatives.
Note 17. 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 $ 5 and $ 5 recorded in other current assets and $ 30 and $ 34 recorded in other noncurrent assets at September 30, 2024 and December 31, 2023 .
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 sheets. 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 14 for additional information.
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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 $ 34 and $ 50 at September 30, 2024 and December 31, 2023 . Contract liabilities are included in other accrued liabilities on our consolidated balance sheets.
Disaggregation of revenue —
The following table disaggregates revenue for each of our operating segments by geographical market:
Three Months Ended
Nine Months Ended
September 30,
September 30,
2024
2023
2024
2023
Light Vehicle
North America
$ 659 $ 697 $ 2,172 $ 2,065
Europe
152 146 461 420
South America
75 72 213 184
Asia Pacific
147 169 417 443
Total
$ 1,033 $ 1,084 $ 3,263 $ 3,112
Commercial Vehicle
North America
$ 268 $ 290 $ 858 $ 867
Europe
69 70 227 234
South America
114 106 340 307
Asia Pacific
43 69 120 175
Total
$ 494 $ 535 $ 1,545 $ 1,583
Off-Highway
North America
$ 91 $ 88 $ 277 $ 274
Europe
384 496 1,401 1,662
South America
6 7 17 17
Asia Pacific
146 148 459 470
Total
$ 627 $ 739 $ 2,154 $ 2,423
Power Technologies
North America
$ 182 $ 165 $ 562 $ 483
Europe
110 117 341 380
South America
8 8 22 24
Asia Pacific
22 21 62 56
Total
$ 322 $ 311 $ 987 $ 943
Total
North America
$ 1,200 $ 1,240 $ 3,869 $ 3,689
Europe
715 829 2,430 2,696
South America
203 193 592 532
Asia Pacific
358 407 1,058 1,144
Total
$ 2,476 $ 2,669 $ 7,949 $ 8,061
Note 18. 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.
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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 —
2024
2023
Three Months Ended September 30,
External Sales
Inter-Segment Sales
Segment EBITDA
External Sales
Inter-Segment Sales
Segment EBITDA
Light Vehicle
$ 1,033 $ 48 $ 78 $ 1,084 $ 47 $ 75
Commercial Vehicle
494 28 26 535 34 29
Off-Highway
627 20 103 739 13 110
Power Technologies
322 7 26 311 7 28
Eliminations and other
( 103 ) ( 101 )
Total
$ 2,476 $ — $ 233 $ 2,669 $ — $ 242
Nine Months Ended September 30,
Light Vehicle
$ 3,263 $ 147 $ 229 $ 3,112 $ 145 $ 190
Commercial Vehicle
1,545 85 66 1,583 97 74
Off-Highway
2,154 53 334 2,423 46 359
Power Technologies
987 19 75 943 21 70
Eliminations and other
( 304 ) ( 309 )
Total
$ 7,949 $ — $ 704 $ 8,061 $ — $ 693
Reconciliation of segment EBITDA to consolidated net income —
Three Months Ended
Nine Months Ended
September 30,
September 30,
2024
2023
2024
2023
Segment EBITDA
$ 233 $ 242 $ 704 $ 693
Corporate expense and other items, net
( 1 ) ( 5 ) ( 4 )
Depreciation
( 97 ) ( 101 ) ( 304 ) ( 287 )
Amortization
( 5 ) ( 6 ) ( 16 ) ( 17 )
Non-service cost components of pension and OPEB costs
( 8 ) ( 4 ) ( 14 ) ( 10 )
Restructuring charges, net
( 24 ) ( 17 ) ( 41 ) ( 21 )
Stock compensation expense
( 7 ) ( 5 ) ( 21 ) ( 19 )
Strategic transaction expenses
( 1 ) ( 2 ) ( 5 ) ( 4 )
Loss on sale of property, plant and equipment
( 1 ) ( 5 ) ( 1 )
Distressed supplier costs
( 14 ) ( 26 )
Loss on disposal group previously held for sale
4 ( 26 )
Other items
( 6 ) ( 1 ) ( 5 ) 1
Earnings before interest and income taxes
88 91 262 305
Loss on extinguishment of debt
( 1 )
Interest income
4 5 10 14
Interest expense
40 41 118 114
Earnings before income taxes
52 55 154 204
Income tax expense
43 33 134 118
Equity in earnings of affiliates
2 3 7 6
Net income
$ 11 $ 25 $ 27 $ 92
Note 19. Equity Affiliates
We have a number of investments in entities that engage in the manufacture and supply of vehicular parts (primarily axles, axle housings and driveshafts).
Equity method investments at September 30, 2024 —
Ownership Percentage
Investment
Dongfeng Dana Axle Co., Ltd.
50 % $ 54
ROC-Spicer, Ltd.
50 % 22
Axles India Limited
48 % 15
Tai Ya Investment (HK) Co., Limited
50 % 5
All others as a group
6
Investments in equity affiliates
102
Investments in affiliates carried at cost
24
Investments in affiliates
$ 126
23
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