ACCELERATING
Dana Holding Corporation
2015 Annual Report
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OUR VISION
To be the global technology leader in effi cient power conveyance
and energy-management solutions that enable our customers
to achieve their sustainability objectives.
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FINANCIAL SUMMARY
For the year ended Dec. 31, 2015
$ in millions except per share amounts
Annual Operating Results
Sales
Net Income Attributable to Dana1
Adjusted EBITDA2
Margin
Diluted Adjusted Earnings per Share3
Capital Spend
Free Cash Flow 2
Employees at Year End
Major Facilities at Year End
2015
$6,060
$159
$652
10.8%
$1.74
$260
$146
23,100
90
2014
$6,617
$319
$746
11.3%
$1.99
$234
$276
22,600
90
Balance Sheet
Total Cash and Marketable Securities: $953
Net Debt: $643
Liquidity 2: $1,205
Sales
Adjusted EBITDA Margin
Free Cash Flow 2,4
and Capital Spending
Capital spending
Free cash fl ow
Diluted Adjusted EPS 3
1 2015 includes net charges of $68 relating to an impairment of a 50-percent-owned equity affi liate and an impairment charge for certain assets associated with a distressed supplier relationship in Brazil. 2014 includes a tax benefi t of
$179 for partial release of U.S. income tax valuation allowances and net charges of $138 relating to loss on divestiture of Venezuela operations, settlement of pension liabilities, and loss on debt extinguishment.
2 See Pages 30 and 31 of Dana’s 2015 Form 10-K, included herein, for explanation and reconciliation of non-GAAP fi nancial measures, adjusted EBITDA and free cash fl ow, and Dana’s calculation of liquidity.
3 Diluted adjusted EPS is a non-GAAP fi nancial measure, which we have defi ned as adjusted net income divided by adjusted diluted shares. See the “Quarterly Financial Information and Reconciliations of Non-GAAP Information” on
Dana’s Investor Relations website at www.dana.com/investors for explanation and calculation of diluted adjusted EPS.
4 Includes $150 voluntary U.S. pension contribution in 2012.
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DANA AT A GLANCE
Light Vehicle Driveline Technologies
Commercial Vehicle Driveline Technologies
Dana is a world-leading supplier of light-vehicle driveline
Dana is one of the world’s premier providers of driveline
technologies, producing complete drivetrain systems and
and tire-management systems, as well as genuine service
components for passenger cars, CUVs, SUVs, vans, and
parts for medium- and heavy-duty commercial vehicles.
light trucks. Dana works collaboratively with original-
Our cutting-edge Spicer® innovations increase fuel effi ciency
equipment manufacturers and the aftermarket to deliver
and decrease weight while reducing maintenance and total
Dana axles, Spicer® propshafts, and complete systems
cost of ownership.
with best-in-class effi ciency.
Off-Highway Driveline Technologies
Power Technologies Group
Dana delivers fully optimized Spicer® drivetrain systems and
Dana provides Victor Reinz® sealing solutions and Long®
individual product solutions to customers in construction,
thermal-management technologies to help reduce fuel
agriculture, material-handling, underground-mining, and
consumption and emissions, while improving vehicle durability
forestry markets. We bring our global expertise to the local
and performance. Our engineers anticipate industry trends
level with technologies customized to individual requirements
to provide innovation, value, and quality in every technology,
through a network of strategically located technology centers,
and our strong engineering know-how leads to high product
manufacturing locations, and distribution facilities.
performance, fl exibility, and speed to market.
G L O B A L S A L E S
As of December 31, 2015
One of the ways we
create value is by
locating our technical
and manufacturing
resources wherever
customers need
us globally.
Charts to the right represent
consolidated sales only.
Markets
Regions
Customers
Light Vehicle
Heavy Vehicle
Off-Highway
54%
27%
19%
North America
Europe
Asia Pacifi c
South America
53%
29%
12%
6%
Ford
FCA*
PACCAR
Nissan
Tata
GM
Deere
Toyota
Ab Volvo
Daimler
Others
20%
9%
8%
4%
4%
4%
3%
2%
2%
2%
42%
* Sales to Fiat Chrysler Automobiles
include sales to Hyundai Mobis.
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C O R E T E C H N O L O G I E S
Driveline Technologies
Sealing Solutions
Thermal Management
Brands: Spicer ®, Dana, GWB ®,
VariGlide®, Spicer® Rui Ma™
Brands: Victor Reinz ®,
Glaser ®, Magnum®
Brands:
Long®, TruCool®
Axles, driveshafts, off-highway
Gaskets and seals, transmission
Transmission and engine oil cooling,
transmissions, tire management,
separator plates, plastic cam cover
battery and electronics cooling,
and complete driveline systems
and oil pan modules, heat shields,
charge air cooling, and exhaust-gas
and fuel-cell plates
heat recovery
M A R K E T B R E A D T H
Micro Cars
Passenger Cars
CUVs/SUVs
Minivans
Pickup Trucks
Cargo Vans
Delivery Trucks
Buses and RVs
Cement Mixers
Refuse Haulers
Heavy-Duty Trucks
Fork Lifts
Telehandlers
Reach Stackers
Rough Terrain
Cranes
Tractors
Wheel Loaders
Log Skidders
Single Drum
Rollers
Wheeled
Excavators
Harvesters and
Combines
Mining Trucks
Load-Haul
Dump Trucks
Mining Drills
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Dear Fellow Shareholder,
Since joining Dana in August, I have been impressed by the commitment and dedication of
so many colleagues to position the company for sustained success. These efforts are paying
dividends, both in our performance and with our customers. Thanks to teamwork and tenacity,
Dana is very well positioned to accelerate our success through our technological leadership and
a robust strategy for profi table growth.
A strong indicator of our success is our sustained fi nancial strength amid challenging economic environments. We recorded our fi fth consecutive year of
double-digit margins with adjusted EBITDA for the year of $652 million, or 10.8 percent, on nearly $6.1 billion in sales.
We embrace our role in a rapidly changing world and differentiate our company by delivering cutting-edge innovations that help our customers expedite the
introduction of new products, manage the complexity of integration, capitalize on the expanding regulatory environment, support global platforms, improve
vehicle effi ciency, and reduce the total cost of ownership for end-users.
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Although not apparent in our revenue fi gures, we are growing the business.
Our strong balance sheet and free cash fl ow of nearly $150 million in 2015
Adjusting for the effects of currency translation and a divestiture, we grew
provides us with ready access to capital and the footing we need to take
the underlying base business in 2015 – despite a Brazilian market that is
advantage of opportunities, both organic and inorganic.
severely depressed. Further, three of our four business segments combined
to drive organic growth of 5 percent while delivering higher margins over
the previous year. Sales in our Commercial Vehicle group were impacted
by a weak Brazilian market and a major initiative to reorganize its supply
base. With that initiative now complete, the business is better positioned for
success going forward.
We will capitalize on new opportunities and challenges in 2016 by focusing
on a culture that helps our people succeed with integrity, is committed
to optimizing product design and minimizing waste, and aligns profi table
growth with exceptional customer service.
Additionally, we increased our quarterly dividend rate by 20 percent over
the previous year, while also repurchasing $311 million of common stock.
This brings our total shares repurchased to $1.4 billion since program
inception in October 2012. Highly confi dent in the long-term prospects of
the business, in January our Board of Directors authorized the repurchase of
an additional $300 million of common shares through 2017.
Our strong position further validates the approaches we have taken to
maintain our margins while fortifying our product portfolio.
Leveraging Our Talent to Cultivate Innovations
While some competitors have languished in the face of continued
Accelerating Our Progress
Dana’s success is directly attributable to the more than 23,000 employees
who collaborate with nearly 3,500 original-equipment and aftermarket
customers in 130 countries. Our people delve into the challenges faced
by our customers, joining forces to address their issues and providing the
optimal solution for each unique challenge.
To support our employees, their families, and our communities, we promote
a safe, healthy environment in which the highest ethical behavior is a
priority. Our people emphasize working together – without ego or politics –
bolstered by the freedom and support needed to challenge the status quo
and fi nd innovative solutions.
Our investment in our people coincides with our commitment to research
and development, which delivers an enviable roster of solutions and a
considerable competitive advantage. In 2015, we boosted our investment
in engineering to $183 million, the sixth consecutive yearly increase.
As a result, Dana engineers are creating and inventing – with 2015
patent applications up 53 percent over the previous year.
We are also actively engaged in improving our skills and processes through
the Dana Operating System, which drives daily activities and encourages
manufacturing excellence. These projects, workshops, and trainings
increased by more than 55 percent last year.
headwinds, Dana has strengthened its position thanks to a committed team
that extends from our experienced leadership to the talented front-line
employees who produce real-world solutions.
Addressing their specifi c end markets, our four business units exhibit
boundless entrepreneurial enthusiasm and capitalize on cross-business-
segment synergies to reduce cost and improve performance.
The strength of this approach is refl ected in our 2016-2018 sales backlog
of $750 million, which has grown 10 percent over the three-year backlog
we announced last year. Not only have we extended our reach through new
programs in each of our businesses, but our growth has been bolstered by
our people’s diligence to drive value in key replacement programs, as well.
On behalf of the Board of Directors and the thousands of Dana employees
around the globe, I thank you for placing your trust in us as we leverage
more than a century of technological leadership, a deep and wide global
footprint, a proven process to drive sustained manufacturing excellence,
and an outstanding human capital advantage to create vehicle applications
that will accelerate our own performance while enhancing the prosperity of
our customers.
Sincerely,
Bolstering Our Financial Position
James K. Kamsickas
Dana has undergone a remarkable transformation through a disciplined
President and Chief Executive Offi cer
approach that produces consistent returns for our shareholders while
providing the fl exibility we need to seize new opportunities.
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SOLUTION-DRIVEN
TECHNOLOGIES
Dana endeavors to position itself at the forefront of technology’s leading edge. Each day,
our engineers are identifying solutions to challenges faced by customers on six continents.
Dana cooling technology named 2016
Automotive News PACE Awards fi nalist
Spicer® AdvanTEK® Dual Range Disconnect™
technology drives line-haul truck effi ciency
Representing one of the most prestigious industry honors,
Dana’s Spicer® AdvanTEK® Dual Range Disconnect™ tandem
Dana’s Long® two-sided chip cooling technology was
axle technology combines the best of both 6x2 and 6x4 axle
named a fi nalist for the 2016 Automotive News PACE
confi gurations for Class 8 line-haul applications. Optimized for
Awards. The integrated cooling plate offers superior heat
trucks that implement engine downspeeding, this innovation
transfer, temperature management, and cooling abilities
improves effi ciency without sacrifi cing performance by
within a lightweight, compact, and cost-effective design.
seamlessly combining the traction and dependability offered
This marks the fi fth consecutive year that Dana has been
by a 6x4 with the reduced drivetrain losses and improved
a PACE Awards fi nalist.
fuel economy of a 6x2.
Dana’s two-sided chip cooling technology enhances the
In environments where additional traction is needed, Spicer
heat transfer of power inverter devices, accommodating
AdvanTEK Dual Range Disconnect technology allows the
the high-power, high-heat demands of electric and hybrid
tandem axle to operate as a 6x4, with a traditional starting
vehicles. This innovation improves the ability to transfer high
ratio that delivers the optimal tractive effort needed. As the
power between batteries and motors. In 2015, Dana earned
truck nears highway speed, the inter-axle shaft is disconnected
the Automotive News PACE Innovation Partnership Award
from the power divider, allowing the axle to operate in a more
for our collaboration with Audi in developing partially coated
effi cient 6x2 mode. At the same time, the forward axle is
multi-layer-steel transmission valve body separator plates.
shifted to a faster ratio.
This can improve overall powertrain system effi ciency from
2 to 5 percent compared with conventional
6x4 tandem axles paired with
overdrive transmissions.
Long® two-sided
chip cooling
technology
Spicer® AdvanTEK®
Dual Range Disconnect™
technology
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Dana and Manitou devise telehandler concept
Dana sourced on global disconnecting
with Spicer® PowerBoost® technology
all-wheel-drive program
Analyses by Dana and Manitou Group have shown promising
One of Dana’s latest technologies – our disconnecting all-
results in the companies’ development of the Manitou MLT960
wheel-drive (AWD) system – delivers the improved safety and
Eco-Booster 6-tonne telehandler equipped with Dana’s Spicer®
traction global light-vehicle customers seek, while providing
PowerBoost® hydraulic-hybrid powertrain technology.
the fuel effi ciency of a front-wheel-drive system.
Testing of the Spicer PowerBoost technology on this hybrid
While standard AWD enhances traction, fuel economy
telehandler indicates a reduced fuel consumption, averaging
is compromised. As such, Dana’s disconnecting AWD
15 percent across a range of duty cycles when compared
system rapidly connects and disconnects the rear wheels
with the standard MLT960 confi guration. Optimizing the
only as required, which provides best-in-class effi ciency.
performance of the machine minimizes total cost of ownership
This performance-enabling innovation disconnects when not
while reducing the environmental impact. Ideally suited
in use to maximize effi ciency when the AWD is not required,
for hydrostatically driven drivetrains, Spicer PowerBoost
reconnecting as needed for enhanced mobility. As the AWD
technology uses an advanced energy-management system
market grows, this technology will help expand Dana’s
to evaluate the levels of power needed in the entire vehicle.
infl uence in the passenger car and small SUV categories.
Spicer® PowerBoost®
system
Dana’s disconnecting
AWD technology
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MOVING FORWARD
In the past year, Dana has found success on a number of different fronts.
Across various platforms, our company has devised new ways to help
our customers take vehicle performance to higher levels.
Spicer® steer axles featured on three
Lightweight beam for Spicer® D-Series and
“Tractor of the Year” winners
E-Series steer axles improves performance
Dana’s driveline solutions for the agricultural industry earned
Improving the maintenance and safety of vehicles without
recognition at Agritechnica 2015, the world’s largest exhibition
compromising payload and fuel economy, Spicer® D-Series
of agricultural equipment. Three “Tractor of the Year 2016”
and E-Series steer axles help truck owners seeking to offset
award recipients featured Spicer® steer axles. Emphasizing
the added weight of today’s emissions systems. Spicer
performance, fuel effi ciency, maneuverability, and operator
D-Series steer axles feature an integrated air disc brake
comfort, these tractors include:
Fendt 1050 Vario
Earned top honors in the principal “Tractor of the Year” division.
Features the new Spicer Model 990 suspended steer axle.
Massey Ferguson 5713SL
Inaugural winner in the “Best Utility Tractor” competition.
Features the new Spicer modular steer axle.
Valtra N174 V
knuckle that lets fl eets specify air disc brakes with no net
increase in weight over most S-cam drum brake axle systems.
This innovation eliminates up to 76 pounds (34.5 kg)
from the steer axle assembly. The lightweight
E-Series steel-forged beam design cuts
35 pounds (15.9 kg) from the axle
with no sacrifi ce in strength or
braking performance. The axles
are targeted for on-highway,
city delivery, and bus chassis
Placed fi rst in the “Golden Tractor for the Design” category.
applications.
Features the new Spicer modular steer axle.
Spicer® lightweight
E-Series steer axle
Spicer® Model 990
suspended steer axle
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Dana opens advanced gear
manufacturing facility in Thailand
Dana named 2015’s “Best Battery
Solution Provider” in China
Established to support the light-vehicle market in Thailand and
In recognition of Dana’s innovations and contributions to
the broader Asia Pacifi c region, Dana announced the opening
thermal-management technologies for hybrid-electric
of a new advanced gear manufacturing facility in September
and battery-electric vehicles, the China Decision Makers
2015. The facility in Rayong supports increased regional
demand for Spicer® gears by providing customers in the region
with access to Dana’s global manufacturing resources and
techn
technical expertise at a local level.
Consultancy named Dana the Best Battery Solution Provider
of the Year for 2015.
Through the Long® brand of thermal-management
technologies, Dana works with manufacturers of vehicles,
Expan
Expanding Dana’s overall gear development and manufacturing
electronics, and batteries to develop innovations for the
capab
capabilities, the 70,000-square-foot (6,450-square-meter)
next generation of hybrid, battery, and fuel-cell vehicles.
facilit
facility represents Dana’s fourth Thailand facility and is
Dana produces customizable components for cooling systems,
equip
equipped to produce Spicer® AdvanTEK® hypoid or spiral
designed to optimize the effi cient operation of electrical
bevel
bevel ring and pinion gear sets. It enables Dana to support
systems, extend battery life, and allow faster battery charging.
Thaila
Thailand’s domestic and export markets for growing
regio
regional demands from automakers such as Ford, Mazda,
Nissa
Nissan, and Suzuki.
Long® battery and
power electronics
cooling technologies
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INNOVATING
FOR TOMORROW
In the years to come, Dana will continue to introduce new solutions that
solve mobility challenges for vehicle manufacturers around the globe.
Dana’s robust axles and propshafts
chosen for Jeep® Wrangler
Jeep® and Dana have forged a storied, 75-year
relationship, as Dana has been supplying driveline
products for the Jeep Wrangler since the Willys MA
Downsized, turbocharged engines
enhanced by Dana innovations
Vehicle manufacturers are increasingly seeking to improve fuel
economy and reduce emissions while still providing the power
drivers require. As a result, there is growing global demand for
was fi rst introduced in 1941. Today, Dana has been
downsized, turbocharged engines that provide more power at
selected to provide the axles and propshafts for
low vehicle speeds.
the 2018 Jeep Wrangler. Dana will supply updated
versions of its industry-proven Dana 30™ and Dana 44™
front and rear axles with AdvanTEK® gearing, which
deliver increased power density in a smaller package.
The Spicer® propshaft will feature weight-optimized,
high-strength steel tubing, as well as Dana’s newly
designed constant-velocity joint.
Dana innovations such as water-cooled charge air cooling,
engine oil coolers, transmission oil coolers, and heat shields
are helping to meet this emerging industry need. By providing
OEMs with solutions that offer signifi cant value – including
disruptive technologies such as battery cooling and fuel cells –
Dana’s thermal-management expertise is positioning the
company at the forefront of engine-cooling innovation.
Dana 30™ and Dana 44™
front and rear axles
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Spicer® optimized tire-pressure management
Dana Rexroth advances R3
system provides superior mobility technology
hydromechanical-variable transmission
For decades, Dana’s tire-management innovations have
Improving fuel economy while maintaining performance,
optimized the performance of the world’s most advanced
Dana Rexroth Transmission Systems engineers have
military and vocational vehicles. Dana is bringing the benefi ts
completed fi nal validation testing of the R3 hydromechanical-
of this battle-tested technology to commercial vehicles
variable transmission (HVT), with the start of production
worldwide – helping to enhance safety and uptime, while
expected in late 2016. This follows the launch of the HVT R2
improving fuel economy by up to 2 percent and tire life by up
platform. A product of the Dana/Bosch Rexroth joint venture,
to 15 percent.
The completely automated Spicer® optimized tire-pressure
management system saves time and money by automatically
maintaining target tire pressure for drive and steer axles.
Unlike manual pressure checks, or tire-pressure monitoring
systems that simply report data, fl eets will be able to identify
their target pressure and be assured that tires are performing
optimally at all times.
Dana Rexroth HVTs signifi cantly reduce fuel consumption
by decreasing engine speeds throughout the duty cycle and
at idle, to speeds as low as 650 RPM. These HVTs enable
responsive, precise vehicle positioning with a stepless drive,
offering improved acceleration while maintaining tractive effort.
Both versions of HVT technology from Dana Rexroth feature a
modular design that can be adapted for various off-highway
equipment applications.
Dana Rexroth R3 HVT
transmission
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DANA LEADERSHIP
Board of Directors
James K. Kamsickas
Joseph C. Muscari
Mr. Kamsickas, 49, is President, Chief Executive Offi cer,
Mr. Muscari, 69, is the Chairman of Dana’s Board of
and a Director of Dana Holding Corporation. With more
Directors. He was appointed Chairman and Chief
than a quarter century of global automotive and
Executive Offi cer of Minerals Technologies Inc. (MTI),
business experience, he joined Dana in August 2015
a global mineral company, in 2014. Previously, he
after serving as President, CEO, and a Director of
was Executive Chairman of MTI from 2013 to 2014
International Automotive Components (IAC) Group
and was its Chairman and Chief Executive Offi cer
for more than eight years. Prior to that, he spent
from 2007 to 2013. He has served as a Director of
18 years at Lear Corporation in numerous domestic
MTI since 2005. For the prior 37 years, Mr. Muscari
and international positions, ultimately as head of its
was employed at Alcoa Inc., where he held a number
Interior Systems Division. Mr. Kamsickas serves on
of executive positions, including Executive Vice
the Board of Trustees of The Manufacturers Alliance
President and Chief Financial Offi cer. Mr. Muscari is
for Productivity and Innovation.
also a member of the board of EnerSys. He serves as
James K. Kamsickas
Virginia A. Kamsky
Ms. Kamsky, 62, has been Chairman and Chief
Chair of the Audit committee and is a member of the
Virginia A. Kamsky
Compensation committee.
Executive Offi cer of Kamsky Associates, Inc., a strategic
Mark A. Schulz
advisory fi rm, since 1980. She also served as Executive
Mr. Schulz, 63, is Chief Executive Offi cer of M.A.
Vice President of Foamex International, Inc., and in
Schulz & Associates, LLC, a management consulting
various leadership roles at Chase Manhattan Bank.
fi rm, and a founding partner of Fontinalis Partners,
Ms. Kamsky serves as a White House appointee on
a transportation technology strategic investment
the Secretary of the Navy Advisory Panel and has
fi rm. After 35 years in various global roles, he retired
Terrence J. Keating
served on the boards of the following publicly traded
from the Ford Motor Company in 2007, where he
companies: Spectrum Brands Holdings, Inc.; W.R. Grace
most recently served as the President of International
and Company; Sealed Air Corporation; Shorewood
Operations. Mr. Schulz has been a member of several
Packing Corporation; Foamex International Inc.;
boards, including the National Committee of United
Tecumseh Products Company; Tate & Lyle PLC; and
States-China Relations, United States-China Business
Olin Corporation. Ms. Kamsky serves as Chair of the
Council, and National Bureau of Asian Research. He
Nominating and Corporate Governance committee.
is currently a board member of PACCAR Inc. and
Terrence J. Keating
Mr. Keating, 66, was Chairman of Accuride Corporation,
a manufacturer and supplier of commercial-vehicle
previously served as a board member of YRC Worldwide
Inc. He serves on the Audit committee, as well as the
Nominating and Corporate Governance committee.
components, from 2007 to 2009. He served as Chief
Keith E. Wandell
Executive Offi cer of Accuride from 2002 to 2006 and
Mr. Wandell, 66, served as President and Chief
President from 2002 to 2005. He is currently a board
Executive Offi cer of Harley-Davidson, Inc., a global
member of Chart Industries, Inc., and previously served
motorcycle manufacturer, from 2009 to 2015 and as
on the board of A. M. Castle & Co. Mr. Keating sits on
its Chairman from 2012 to 2015. He previously served
the Nominating and Corporate Governance committee,
as President and Chief Operating Offi cer of Johnson
as well as the Audit committee.
R. Bruce McDonald
Mr. McDonald, 55, has been Executive Vice President
and Vice Chairman of Johnson Controls, Inc., a global
manufacturer of automotive, power, and building
solutions, since 2014. He served as Executive
Vice President and Chief Financial Offi cer from
2005 to 2014. Before joining Johnson Controls
as Vice President and Corporate Controller in
2001, he was Vice President for Finance at
TRW Automotive. Mr. McDonald serves on the
Audit and Compensation committees.
Controls, Inc., from 2006 to 2009, and Executive Vice
President and President of the Automotive & Battery
division from 2003 to 2006. Mr. Wandell was a board
member of Harley-Davidson, Inc. and is currently a
member of the boards of Constellation Brands, Inc.,
and Dover Corporation, as well as Chairman of Exide
Mark A. Schulz
Technologies. Mr. Wandell serves as Chair of the
Compensation committee for Dana.
Keith E. Wandell
Executive
Leadership
Team
Aziz S. Aghili
President, Off-Highway
Driveline Technologies
Jeffrey S. Bowen
Chief Administrative
Offi cer
George T. Constand
Chief Technical and
Quality Offi cer
Rodney R. Filcek
Senior Vice President,
Interim Chief Financial
Offi cer, and Chief
Accounting Offi cer
James K. Kamsickas
President and Chief
Executive Offi cer
Marc S. Levin
Senior Vice President,
General Counsel, and
Secretary
R. Bruce McDonald
Dwayne E. Matthews
President, Power
Technologies
Robert D. Pyle
President, Light Vehicle
Driveline Technologies
Joseph C. Muscari
Mark E. Wallace
Executive Vice President
and Group President,
On-Highway Driveline
Technologies
47372.indd 14
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FORM
10-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-K
Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Fiscal Year Ended: December 31, 2015
Commission File Number: 1-1063
Dana Holding Corporation
(Exact name of registrant as specified in its charter)
Delaware
(State of incorporation)
3939 Technology Drive, Maumee, OH
(Address of principal executive offices)
26-1531856
(IRS Employer Identification Number)
43537
(Zip Code)
Registrant’s telephone number, including area code: (419) 887-3000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, par value $0.01 per share
Name of each exchange on which registered
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes
No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes
No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90 days. Yes
No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405) during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes
No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is
not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a
smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company”
in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
No
The aggregate market value of the common stock held by non-affiliates of the registrant computed by reference to the closing
price of the common stock on June 30, 2015 was $3,289,900,525.
APPLICABLE ONLY TO CORPORATE ISSUERS:
There were 149,370,259 shares of the registrant's common stock outstanding at February 5, 2016.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive Proxy Statement to be delivered to stockholders in connection with the Annual Meeting of
Stockholders to be held on April 28, 2016 are incorporated by reference into Part III.
DANA HOLDING CORPORATION
FORM 10-K
YEAR ENDED DECEMBER 31, 2015
Table of Contents
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
Selected Financial Data
Management's Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures about Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services
Exhibits and Financial Statement Schedules
Pages
1
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10
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PART I
Item 1
Item 1A
Item 1B
Item 2
Item 3
PART II
Item 5
Item 6
Item 7
Item 7A
Item 8
Item 9
Item 9A
Item 9B
PART III
Item 10
Item 11
Item 12
Item 13
Item 14
PART IV
Item 15
Signatures
Exhibit Index
Exhibits
i
Forward-Looking Information
Statements in this report (or otherwise made by us or on our behalf) that are not entirely historical constitute “forward-
looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking
statements can often be identified by words such as “anticipates,” “expects,” “believes,” “intends,” “plans,” "predicts," "seeks,"
“estimates,” “projects,” “outlook,” "may," "will," "should," "would," "could," "potential," "continue," "ongoing" and similar
expressions, variations or negatives of these words. These statements represent the present expectations of Dana Holding
Corporation and its consolidated subsidiaries (Dana) based on our current information and assumptions. Forward-looking
statements are inherently subject to risks and uncertainties. Our plans, actions and actual results could differ materially from
our present expectations due to a number of factors, including those discussed below and elsewhere in this report and in our
other filings with the Securities and Exchange Commission (SEC). All forward-looking statements speak only as of the date
made and we undertake no obligation to publicly update or revise any forward-looking statement to reflect events or
circumstances that may arise after the date of this report.
ii
PART I
(Dollars in millions, except per share amounts)
Item 1. Business
General
Dana Holding Corporation (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
our customer base includes virtually every major vehicle manufacturer in the global light vehicle, medium/heavy vehicle and
off-highway markets. We employ approximately 23,100 people, operate in 25 countries and have 90 major facilities around the
world.
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.
Overview of our Business
We have aligned our organization around four operating segments: Light Vehicle Driveline Technologies (Light Vehicle),
Commercial Vehicle Driveline Technologies (Commercial Vehicle), Off-Highway Driveline Technologies (Off-Highway) and
Power Technologies. These operating segments have global responsibility and accountability for business commercial activities
and financial performance.
External sales by operating segment for the years ended December 31, 2015, 2014 and 2013 are as follows:
Light Vehicle
Commercial Vehicle
Off-Highway
Power Technologies
Total
2015
2014
2013
Dollars
$ 2,482
1,533
1,040
1,005
$ 6,060
% of
Dollars
Total
40.9% $ 2,496
1,838
25.3%
1,231
17.2%
1,052
16.6%
$ 6,617
% of
Dollars
Total
37.7% $ 2,549
1,860
27.8%
1,330
18.6%
1,030
15.9%
$ 6,769
% of
Total
37.7%
27.5%
19.6%
15.2%
Refer to Segment Results of Operations in Item 7 and Note 18 to our consolidated financial statements in Item 8 for further
financial information about our operating segments.
1
Our business is diversified across end-markets, products and customers. The following table summarizes the markets,
products and largest customers of each of our operating segments.
Segment
Light Vehicle
Commercial Vehicle
Off-Highway
Power Technologies
Markets
Products
Front axles
Rear axles
Driveshafts
Differentials
Torque couplings
Modular assemblies
Light vehicle market:
Light trucks (full frame)
Sport utility vehicles
Crossover utility vehicles
Vans
Passenger cars
Medium/heavy vehicle market: Steer axles
Drive axles
Medium duty trucks
Driveshafts
Heavy duty trucks
Buses
Tire inflation systems
Specialty vehicles
Off-Highway market:
Construction
Earth moving
Agricultural
Mining
Forestry
Rail
Material handling
Light vehicle market
Medium/heavy vehicle market Cover modules
Off-Highway market
Front axles
Rear axles
Driveshafts
Transmissions
Torque converters
Tire inflation systems
Electronic controls
Gaskets
Heat shields
Engine sealing systems
Cooling
Heat transfer products
Largest
Customers
Ford Motor Company
Hyundai Mobis
Tata Motors
Nissan Motor Company
General Motors Company
Toyota Motor Company
PACCAR
Ford Motor Company
AB Volvo
Daimler AG
Navistar International Corporation
Deere & Company
AGCO Corporation
Manitou Group
Oshkosh Corporation
Terex Corporation
Ford Motor Company
General Motors Company
Volkswagen AG
Caterpillar Inc.
Cummins Inc.
Geographic Operations
We maintain administrative and operational organizations in North America, Europe, South America and Asia Pacific to
support our operating segments, assist with the management of affiliate relations and facilitate financial and statutory reporting
and tax compliance on a worldwide basis. Our operations are located in the following countries:
North America
Europe
South America
Asia Pacific
Canada
Mexico
United States
Belgium
France
Germany
Hungary
Italy
Russia
South Africa
Spain
Sweden
Switzerland
United Kingdom
Argentina
Brazil
Colombia
Ecuador
Australia
China
India
Japan
South Korea
Taiwan
Thailand
Our non-U.S. subsidiaries and affiliates manufacture and sell products similar to those we produce in the United States.
Operations outside the U.S. may be subject to a greater risk of changing political, economic and social environments, changing
governmental laws and regulations, currency revaluations and market fluctuations than our domestic operations. See the
discussion of risk factors in Item 1A.
Sales reported by our non-U.S. subsidiaries comprised $3,255 of our 2015 consolidated sales of $6,060. A summary of
sales and long-lived assets by geographic region can be found in Note 18 to our consolidated financial statements in Item 8.
2
Customer Dependence
We are largely dependent on light vehicle, medium- and heavy-duty vehicle and off-highway original equipment
manufacturer (OEM) customers. Ford Motor Company (Ford) was the only individual customer accounting for 10% or more of
our consolidated sales in 2015. As a percentage of total sales from operations, our sales to Ford were approximately 20% in
2015, 18% in 2014 and 18% in 2013 and our sales to PACCAR, our second largest customer, were approximately 8% in 2015,
9% in 2014 and 8% in 2013. Hyundai Mobis, Nissan Motor Corporation and Tata Motors were our third, fourth and fifth largest
customers in 2015. Our 10 largest customers collectively accounted for approximately 58% of our sales in 2015.
Loss of all or a substantial portion of our sales to Ford or other large volume customers would have a significant adverse
effect on our financial results until such lost sales volume could be replaced and there is no assurance that any such lost volume
would be replaced.
Sources and Availability of Raw Materials
We use a variety of raw materials in the production of our products, including steel and products containing steel, stainless
steel, forgings, castings and bearings. Other commodity purchases include aluminum, brass, copper and plastics. These
materials are typically available from multiple qualified sources in quantities sufficient for our needs. However, some of our
operations remain dependent on single sources for certain raw materials.
While our suppliers have generally been able to support our needs, our operations may experience shortages and delays in
the supply of raw material from time to time, due to strong demand, capacity limitations, short lead times, production schedule
increases from our customers and other problems experienced by the suppliers. A significant or prolonged shortage of critical
components from any of our suppliers could adversely impact our ability to meet our production schedules and to deliver our
products to our customers in a timely manner.
Seasonality
Our businesses are generally not seasonal. However, in the light vehicle market, our sales are closely related to the
production schedules of our OEM customers and those schedules have historically been weakest in the third quarter of the year
due to a large number of model year change-overs that occur during this period. Additionally, third-quarter production
schedules in Europe are typically impacted by the summer vacation schedules and fourth-quarter production is affected globally
by year-end holidays.
Backlog
A substantial amount of the new business we are awarded by OEMs is granted well in advance of a program launch. These
awards typically extend through the life of the given program. This backlog of new business does not represent firm orders. We
estimate future sales from new business using the projected volume under these programs.
Competition
Within each of our markets, we compete with a variety of independent suppliers and distributors, as well as with the in-
house operations of certain OEMs. With a renewed focus on product innovation, we differentiate ourselves through efficiency
and performance, reliability, materials and processes, sustainability and product extension.
3
The following table summarizes our principal competitors by operating segment.
Light Vehicle
Segment
Commercial Vehicle
Off-Highway
Power Technologies
Intellectual Property
Principal Competitors
ZF Friedrichshafen AG
GKN plc
American Axle & Manufacturing Holdings, Inc.
Magna International Inc.
Wanxiang Group Corporation
Hitachi Automotive Systems, Ltd.
IFA ROTORION Holding GmbH
Neapco, LLC
Vertically integrated OEM operations
Meritor, Inc.
American Axle & Manufacturing Holdings, Inc.
Hendrickson (a subsidiary of the Boler Company)
Klein Products Inc.
Tirsan Kardan
Vertically integrated OEM operations
Carraro Group
ZF Friedrichshafen AG
GKN plc
Kessler + Co.
Meritor, Inc.
YTO Group
Comer Industries
Hema Endustri A.S.
Vertically integrated OEM operations
ElringKlinger AG
Federal-Mogul Corporation
Freudenberg NOK Group
MAHLE GmbH
Modine Manufacturing Company
Valeo Group
YinLun Co., LTD
Denso Corporation
Our proprietary driveline and power technologies product lines have strong identities in the markets we serve. Throughout
these product lines, we manufacture and sell our products under a number of patents that have been obtained over a period of
years and expire at various times. We consider each of these patents to be of value and aggressively protect our rights
throughout the world against infringement. We are involved with many product lines and the loss or expiration of any particular
patent would not materially affect our sales and profits.
We own or have licensed numerous trademarks that are registered in many countries, enabling us to market our products
worldwide. For example, our Spicer®, Victor Reinz® and Long® trademarks are widely recognized in their market segments.
Engineering and Research and Development
Since our introduction of the automotive universal joint in 1904, we have been focused on technological innovation. Our
objective is to be an essential partner to our customers and we remain highly focused on offering superior product quality,
technologically advanced products, world-class service and competitive prices. To enhance quality and reduce costs, we use
statistical process control, cellular manufacturing, flexible regional production and assembly, global sourcing and extensive
employee training.
4
We engage in ongoing engineering and research and development activities to improve the reliability, performance and
cost-effectiveness of our existing products and to design and develop innovative products that meet customer requirements for
new applications. We are integrating related operations to create a more innovative environment, speed product development,
maximize efficiency and improve communication and information sharing among our research and development operations. At
December 31, 2015, we had eight stand-alone technical and engineering centers with additional research and development
activities carried out at eight additional sites. Our research and development costs were $75 in 2015, $72 in 2014 and $64 in
2013. Total engineering expenses including research and development were $183 in 2015, $176 in 2014 and $165 in 2013.
Our research and development activities continue to improve customer value. For all of our markets, this means drivelines
with higher torque capacity, reduced weight and improved efficiency. End-use customers benefit by having vehicles with better
fuel economy and reduced cost of ownership. We are also developing a number of power technologies products for vehicular
and other applications that will assist fuel cell, battery and hybrid vehicle manufacturers in making their technologies
commercially viable in mass production.
Employees
The following table summarizes our employees by operating segment.
Segment
Light Vehicle
Commercial Vehicle
Off-Highway
Power Technologies
Technical and administrative
Total
Environmental Compliance
Employees
9,500
4,800
2,700
4,900
1,200
23,100
We make capital expenditures in the normal course of business as necessary to ensure that our facilities are in compliance
with applicable environmental laws and regulations. The cost of environmental compliance has not been a material part of
capital expenditures and did not have a material adverse effect on our earnings or competitive position in 2015.
Available Information
Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those
reports filed pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 as amended (Exchange Act) are available,
free of charge, on or through our Internet website at http://www.dana.com/investors as soon as reasonably practicable after we
electronically file such materials with, or furnish them to, the SEC. We also post our Corporate Governance Guidelines,
Standards of Business Conduct for Members of the Board of Directors, Board Committee membership lists and charters,
Standards of Business Conduct and other corporate governance materials on our Internet website. Copies of these posted
materials are also available in print, free of charge, to any stockholder upon request from: Dana Holding Corporation, Investor
Relations, P.O. Box 1000, Maumee, Ohio 43537, or via telephone in the U.S. at 800-537-8823 or e-mail at
InvestorRelations@dana.com. The inclusion of our website address in this report is an inactive textual reference only and is not
intended to include or incorporate by reference the information on our website into this report.
Item 1A. Risk Factors
We are impacted by events and conditions that affect the light vehicle, medium/heavy vehicle and off-highway markets
that we serve, as well as by factors specific to Dana. Among the risks that could materially adversely affect our business,
financial condition or results of operations are the following, many of which are interrelated.
Risk Factors Related to the Markets We Serve
Failure to sustain a continuing economic recovery in the United States and elsewhere could have a substantial adverse effect
on our business.
5
Our business is tied to general economic and industry conditions as demand for vehicles depends largely on the strength of
the economy, employment levels, consumer confidence levels, the availability and cost of credit and the cost of fuel. These
factors have had and could continue to have a substantial impact on our business.
We expect global market conditions to result in overall comparable sales in 2016. We expect the North America economic
climate will continue to be modestly strong to stable with light vehicle demand levels continuing to be strong, while the
medium/heavy truck market is expected to be weaker and the off-highway market remains relatively stable at already weak
levels. Although the rate of growth in the Asia Pacific region has slowed, we expect overall economic improvement in the on-
highway markets in 2016, with off-highway segment demand continuing to be weak. The economy in Europe is expected to
improve modestly, with on-highway markets being slightly stronger while the off-highway market remains weak but stable.
The South America countries where we do business are expected to remain relatively weak across all our markets in 2016.
Adverse developments in the economic conditions of these markets could reduce demand for new vehicles, causing our
customers to reduce their vehicle production and, as a result, demand for our products would be adversely affected.
Adverse global economic conditions could also cause our customers and suppliers to experience severe economic
constraints in the future, including bankruptcy, which could have a material adverse impact on our financial position and results
of operations.
We could be adversely impacted by the loss of any of our significant customers, changes in their requirements for our products
or changes in their financial condition.
We are reliant upon sales to several significant customers. Sales to our ten largest customers accounted for 58% of our
overall sales in 2015. Changes in our business relationships with any of our large customers or in the timing, size and
continuation of their various programs could have a material adverse impact on us.
The loss of any of these customers, the loss of business with respect to one or more of their vehicle models on which we
have high component content, or a significant decline in the production levels of such vehicles would negatively impact our
business, results of operations and financial condition. Pricing pressure from our customers also poses certain risks. Inability on
our part to offset pricing concessions with cost reductions would adversely affect our profitability. We are continually bidding
on new business with these customers, as well as seeking to diversify our customer base, but there is no assurance that our
efforts will be successful. Further, to the extent that the financial condition of our largest customers deteriorates, including
possible bankruptcies, mergers or liquidations, or their sales otherwise decline, our financial position and results of operations
could be adversely affected.
We may be adversely impacted by changes in international legislative and political conditions.
We operate in 25 countries around the world and we depend on significant foreign suppliers and customers. Further, we
have several growth initiatives that are targeting emerging markets like China and India. Legislative and political activities
within the countries where we conduct business, particularly in emerging markets and less developed countries, could adversely
impact our ability to operate in those countries. The political situation in a number of countries in which we operate could
create instability in our contractual relationships with no effective legal safeguards for resolution of these issues, or potentially
result in the seizure of our assets. Through January 23, 2015, we operated in Venezuela where government exchange controls
and policies placed restrictions on our ability to operate effectively and repatriate funds. Our risk associated with operating in
this country was eliminated with the divestiture of our operations in Venezuela on January 23, 2015. However, we expect to
continue exporting product to Venezuela, and our ability to do so effectively could be adversely impacted by Venezuela
government policies. We operate in Argentina, where trade-related initiatives and other government restrictions limit our
ability to optimize operating effectiveness. At December 31, 2015, our net asset exposure related to Argentina was
approximately $21, including $11 of net fixed assets.
We may be adversely impacted by the strength of the U.S. dollar relative to the currencies in the other countries in which we do
business.
Approximately 54% of our sales in 2015 were from operations located in countries other than the U.S. Currency variations
can have an impact on our results (expressed in U.S. dollars). Currency variations can also adversely affect margins on sales of
our products in countries outside of the U.S. and margins on sales of products that include components obtained from affiliates
or other suppliers located outside of the U.S. Strengthening of the U.S. dollar against the euro and currencies of other countries
in which we have operations has had and could continue to have an adverse affect our results reported in U.S. dollars. We use a
combination of natural hedging techniques and financial derivatives to mitigate foreign currency exchange rate risks. Such
6
hedging activities may be ineffective or may not offset more than a portion of the adverse financial impact resulting from
currency variations.
We may be adversely impacted by new laws, regulations or policies of governmental organizations related to increased fuel
economy standards and reduced greenhouse gas emissions, or changes in existing ones.
The markets and customers we serve are subject to substantial government regulation, which often differs by state, region
and country. These regulations, and proposals for additional regulation, are advanced primarily out of concern for the
environment (including concerns about global climate change and its impact) and energy independence. We anticipate that the
number and extent of these regulations, and the costs to comply with them, will increase significantly in the future.
In the U.S., vehicle fuel economy and greenhouse gas emissions are regulated under a harmonized national program
administered by the National Highway Traffic Safety Administration and the Environmental Protection Agency. Other
governments in the markets we serve are also creating new policies to address these same issues, including the European
Union, Brazil, China and India. These government regulatory requirements could significantly affect our customers by altering
their global product development plans and substantially increasing their costs, which could result in limitations on the types of
vehicles they sell and the geographical markets they serve. Any of these outcomes could adversely affect our financial position
and results of operations.
Company-Specific Risk Factors
We have taken, and continue to take, cost-reduction actions. Although our process includes planning for potential negative
consequences, the cost-reduction actions may expose us to additional production risk and could adversely affect our sales,
profitability and ability to attract and retain employees.
We have been reducing costs in all of our businesses and have discontinued product lines, exited businesses, consolidated
manufacturing operations and positioned operations in lower cost locations. The impact of these cost-reduction actions on our
sales and profitability may be influenced by many factors including our ability to successfully complete these ongoing efforts,
our ability to generate the level of cost savings we expect or that are necessary to enable us to effectively compete, delays in
implementation of anticipated workforce reductions, decline in employee morale and the potential inability to meet operational
targets due to our inability to retain or recruit key employees.
We operate as a holding company and depend on our subsidiaries for cash to satisfy the obligations of the holding company.
Dana Holding Corporation is a holding company. Our subsidiaries conduct all of our operations and own substantially all of
our assets. Our cash flow and our ability to meet our obligations depend on the cash flow of our subsidiaries. In addition, the
payment of funds in the form of dividends, intercompany payments, tax sharing payments and otherwise may be subject to
restrictions under the laws of the countries of incorporation of our subsidiaries or the by-laws of the subsidiary.
Labor stoppages or work slowdowns at Dana, key suppliers or our customers could result in a disruption in our operations and
have a material adverse effect on our businesses.
We and our customers rely on our respective suppliers to provide parts needed to maintain production levels. We all rely on
workforces represented by labor unions. Workforce disputes that result in work stoppages or slowdowns could disrupt
operations of all of these businesses, which in turn could have a material adverse effect on the supply of, or demand for, the
products we supply our customers.
We could be adversely affected if we are unable to recover portions of commodity costs (including costs of steel, other raw
materials and energy) from our customers.
We continue to work with our customers to recover a portion of our material cost increases. While we have been successful
in the past recovering a significant portion of such cost increases, there is no assurance that increases in commodity costs will
not adversely impact our profitability in the future.
We could be adversely affected if we experience shortages of components from our suppliers or if disruptions in the supply
chain lead to parts shortages for our customers.
A substantial portion of our annual cost of sales is driven by the purchase of goods and services. To manage and minimize
these costs, we have been consolidating our supplier base. As a result, we are dependent on single sources of supply for some
7
components of our products. We select our suppliers based on total value (including price, delivery and quality), taking into
consideration their production capacities and financial condition, and we expect that they will be able to support our needs.
However, there is no assurance that adverse financial conditions, including bankruptcies of our suppliers, reduced levels of
production, natural disasters or other problems experienced by our suppliers will not result in shortages or delays in their
supply of components to us or even in the financial collapse of one or more such suppliers. If we were to experience a
significant or prolonged shortage of critical components from any of our suppliers, particularly those who are sole sources, and
were unable to procure the components from other sources, we would be unable to meet our production schedules for some of
our key products and to ship such products to our customers in a timely fashion, which would adversely affect our sales,
profitability and customer relations.
Adverse economic conditions, natural disasters and other factors can similarly lead to financial distress or production
problems for other suppliers to our customers which can create disruptions to our production levels. Any such supply-chain
induced disruptions to our production are likely to create operating inefficiencies that will adversely affect our sales,
profitability and customer relations.
During 2013, we advised one of our largest suppliers that we did not intend to extend our existing contractual relationship
beyond the contract expiration date of December 31, 2014. As a consequence, we established relationships with alternative
suppliers. During the first half of 2015 as we transitioned to new suppliers, we were challenged with relatively high levels of
demand in the market segment supported by these suppliers. This resulted in increased costs in the first half of 2015.
Additionally, our inability to fully satisfy customer demands led to some lost business with a significant customer. There is a
risk that our operating results and customer relationships could be adversely impacted if other supplier transitions are not
completed effectively.
In 2014, the financial condition of a major supplier to our South America operations led to them pursuing legal
reorganization. As more fully described in Note 2 of the consolidated financial statements in Item 8, in 2015, legal actions were
required to maintain the supply of product from this supplier that was necessary to satisfy our customer commitments.
Although we are currently operating under an arrangement with this supplier that is providing us with the required supply, we
have incurred additional costs and there is continued uncertainty whether we will be able to maintain cost effective,
uninterrupted supply. Our future operating results and customer relationships could be adversely impacted depending on the
actions required to maintain existing product supply and the outcome of this supplier's legal reorganization. Our Commercial
Vehicle operating segment had sales $98 and $225 in 2015 and 2014 attributable to axles and parts sourced from this supplier.
We use important intellectual property in our business. If we are unable to protect our intellectual property or if a third party
makes assertions against us or our customers relating to intellectual property rights, our business could be adversely affected.
We own important intellectual property, including patents, trademarks, copyrights and trade secrets, and are involved in
numerous licensing arrangements. Our intellectual property plays an important role in maintaining our competitive position in a
number of the markets that we serve. Our competitors may develop technologies that are similar or superior to our proprietary
technologies or design around the patents we own or license. Further, as we expand our operations in jurisdictions where the
protection of intellectual property rights is less robust, the risk of others duplicating our proprietary technologies increases,
despite efforts we undertake to protect them. Developments or assertions by or against us relating to intellectual property rights,
and any inability to protect these rights, could materially adversely impact our business and our competitive position.
We could encounter unexpected difficulties integrating acquisitions and joint ventures.
We acquired businesses and invested in joint ventures in 2012 and 2011, and we expect to complete additional investments
in the future that complement or expand our businesses. The success of this strategy will depend on our ability to successfully
complete these transactions or arrangements, to integrate the businesses acquired in these transactions and to develop
satisfactory working arrangements with our strategic partners in the joint ventures. We could encounter unexpected difficulties
in completing these transactions and integrating the acquisitions with our existing operations. We also may not realize the
degree or timing of benefits anticipated when we entered into a transaction.
Several of our joint ventures operate pursuant to established agreements and, as such, we do not unilaterally control the
joint venture. There is a risk that the partners’ objectives for the joint venture may not be aligned, leading to potential
differences over management of the joint venture that could adversely impact its financial performance and consequent
contribution to our earnings. Additionally, inability on the part of our partners to satisfy their contractual obligations under the
agreements could adversely impact our results of operations and financial position.
8
We could be adversely impacted by the costs of environmental, health, safety and product liability compliance.
Our operations are subject to environmental laws and regulations in the U.S. and other countries that govern emissions to
the air; discharges to water; the generation, handling, storage, transportation, treatment and disposal of waste materials; and the
cleanup of contaminated properties. Historically, other than an U.S. Environmental Protection Agency settlement as part of our
bankruptcy proceedings, environmental costs related to our former and existing operations have not been material. However,
there is no assurance that the costs of complying with current environmental laws and regulations, or those that may be adopted
in the future, will not increase and adversely impact us.
There is also no assurance that the costs of complying with current laws and regulations, or those that may be adopted in
the future, that relate to health, safety and product liability matters will not adversely impact us. There is also a risk of warranty
and product liability claims, as well as product recalls, if our products fail to perform to specifications or cause property
damage, injury or death, and a risk that asbestos-related product liability claims could result in increased liabilities at Dana
Companies, LLC, a wholly owned subsidiary. (See Notes 14 and 15 to our consolidated financial statements in Item 8 for
additional information on product liabilities and warranties.)
A failure of our information technology infrastructure could adversely impact our business and operations.
We recognize the increasing volume of cyber attacks and employ commercially practical efforts to provide reasonable
assurance that the risks of such attacks are appropriately mitigated. Each year, we evaluate the threat profile of our industry to
stay abreast of trends and to provide reasonable assurance our existing countermeasures will address any new threats identified.
Despite our implementation of security measures, our IT systems and those of our service providers are vulnerable to
circumstances beyond our reasonable control including acts of terror, acts of government, natural disasters, civil unrest and
denial of service attacks which may lead to the theft of our intellectual property, trade secrets or business disruption. To the
extent that any disruption or security breach results in a loss or damage to our data or an inappropriate disclosure of
confidential information, it could cause significant damage to our reputation, affect our relationships with our customers,
suppliers and employees, lead to claims against the company and ultimately harm our business. Additionally, we may be
required to incur significant costs to protect against damage caused by these disruptions or security breaches in the future.
We participate in certain multi-employer pension plans which are not fully funded.
We contribute to certain multi-employer defined benefit pension plans for our union-represented employees in the U.S. in
accordance with our collective bargaining agreements. Contributions are based on hours worked except in cases of layoff or
leave where we generally contribute based on 40 hours per week for a maximum of one year. The plans are not fully funded as
of December 31, 2015. We could be held liable to the plans for our obligation, as well as those of other employers, due to our
participation in the plans. Contribution rates could increase if the plans are required to adopt a funding improvement plan, if the
performance of plan assets does not meet expectations or as a result of future collectively bargained wage and benefit
agreements. (See Note 10 to our consolidated financial statements in Item 8 for additional information on multi-employer
pension plans.)
Changes in interest rates and asset returns could increase our pension funding obligations and reduce our profitability.
We have unfunded obligations under certain of our defined benefit pension and other postretirement benefit plans. The
valuation of our future payment obligations under the plans and the related plan assets are subject to significant adverse
changes if the credit and capital markets cause interest rates and projected rates of return to decline. Such declines could also
require us to make significant additional contributions to our pension plans in the future. A material increase in the unfunded
obligations of these plans could also result in a significant increase in our pension expense in the future.
We may incur additional tax expense or become subject to additional tax exposure.
Our provision for income taxes and the cash outlays required to satisfy our income tax obligations in the future could be
adversely affected by numerous factors. These factors include changes in the level of earnings in the tax jurisdictions in which we
operate, changes in the valuation of deferred tax assets, changes in our plans to repatriate the earnings of our non-U.S. operations
to the U.S. and changes in tax laws and regulations. Our income tax returns are subject to examination by federal, state and local
tax authorities in the U.S. and tax authorities outside the U.S. The results of these examinations and the ongoing assessments of
our tax exposures could also have an adverse effect on our provision for income taxes and the cash outlays required to satisfy our
income tax obligations.
9
Our ability to utilize our net operating loss carryforwards may be limited.
Net operating loss carryforwards (NOLs) approximating $729 were available at December 31, 2015 to reduce future U.S.
income tax liabilities. Our ability to utilize these NOLs may be limited as a result of certain change of control provisions of the
U.S. Internal Revenue Code of 1986, as amended (Code). Of this amount, NOLs of approximately $594 are treated as losses
incurred before the change of control upon emergence from Chapter 11 and are limited to annual utilization of $84. The balance
of our NOLs, treated as incurred subsequent to the change in control, is not subject to limitation as of December 31, 2015.
However, there can be no assurance that trading in our shares will not effect another change in control under the Code, which
would further limit our ability to utilize our available NOLs. Such limitations may cause us to pay income taxes earlier and in
greater amounts than would be the case if the NOLs were not subject to limitation.
Risk Factors Related to our Securities
Provisions in our Restated Certificate of Incorporation and Bylaws may discourage a takeover attempt.
Certain provisions of our Restated Certificate of Incorporation and Bylaws, as well as the General Corporation Law of the
State of Delaware, may have the effect of delaying, deferring or preventing a change in control of Dana. Such provisions,
including those governing the nomination of directors, limiting who may call special stockholders’ meetings and eliminating
stockholder action by written consent, may make it more difficult for other persons, without the approval of our board of
directors, to make a tender offer or otherwise acquire substantial amounts of common stock or to launch other takeover
attempts that a stockholder might consider to be in such stockholder’s best interest.
Item 1B. Unresolved Staff Comments
-None-
Item 2. Properties
Type of Facility
North
America
Europe
South
America
Asia
Pacific
Total
Light Vehicle
Manufacturing/Distribution
Commercial Vehicle
Manufacturing/Distribution
Off-Highway
Manufacturing/Distribution
Power Technologies
Manufacturing/Distribution
Technical and Engineering Centers
Corporate and other
Administrative Offices
Technical and Engineering Centers - Multiple Segments
13
8
2
12
3
2
2
42
5
3
3
4
8
4
19
8
9
4
2
2
1
3
21
30
19
12
18
3
3
5
90
We operate in 25 countries and have 90 major facilities housing manufacturing and distribution operations, technical and
engineering centers and administrative offices. In addition to the eight stand-alone technical and engineering centers in the table
above, we have eight technical and engineering centers housed within manufacturing sites. We lease 32 of these facilities and a
portion of four others and own the remainder. We believe that all of our property and equipment is properly maintained.
Our corporate headquarters facilities are located in Maumee, Ohio. This facility and other facilities in the greater Detroit,
Michigan and Maumee, Ohio areas house functions that have global or North American regional responsibility for finance and
accounting, treasury, risk management, legal, human resources, procurement and supply chain management, communications
and information technology.
10
Item 3. Legal Proceedings
We are a party to various pending judicial and administrative proceedings that arose in the ordinary course of business.
After reviewing the currently pending lawsuits and proceedings (including the probable outcomes, reasonably anticipated costs
and expenses and our established reserves for uninsured liabilities), we do not believe that any liabilities that may result from
these proceedings are reasonably likely to have a material adverse effect on our liquidity, financial condition or results of
operations. Legal proceedings are also discussed in Notes 2 and 14 to our consolidated financial statements in Item 8.
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Market information — Our common stock trades on the New York Stock Exchange (NYSE) under the symbol "DAN." The
following table shows the high and low prices of our common stock as reported by the NYSE for each of our fiscal quarters
during 2015 and 2014.
Fourth quarter
Third quarter
Second quarter
First quarter
2015
2014
High
Low
High
Low
$
$
18.12
20.81
22.73
23.48
$
13.01
15.33
20.35
20.04
$
22.36
24.82
24.48
23.28
16.81
18.93
20.60
18.06
Holders of common stock — Based on reports by our transfer agent, there were approximately 3,720 registered holders of our
common stock on February 5, 2016.
Stockholder return — The following graph shows the cumulative total shareholder return for our common stock since
December 31, 2010. The graph compares our performance to that of the Standard & Poor’s 500 Stock Index (S&P 500) and the
Dow Jones US Auto Parts Index. The comparison assumes $100 was invested at the closing price on December 31, 2010. Each
of the returns shown assumes that all dividends paid were reinvested.
Performance chart
11
Index
Dana Holding Corporation
S&P 500
Dow Jones US Auto Parts Index
12/31/2010
100.00
$
100.00
100.00
12/31/2011
74.70
$
102.11
88.21
12/31/2012
96.66
$
118.45
98.71
12/31/2013
121.92
$
156.82
154.04
12/31/2014
135.84
$
178.29
170.42
12/31/2015
89.58
$
180.75
164.10
Dividends — We declared and paid quarterly common stock dividends in 2015 and 2014, raising the dividend from five cents
to six cents per share in the second quarter of 2015.
Issuer's purchases of equity securities — On July 30, 2014, our Board of Directors approved an expansion of our existing share
repurchase program from $1,000 to $1,400. We repurchased shares utilizing available excess cash either in the open market or
through privately negotiated transactions. The stock repurchases were subject to prevailing market conditions and other
considerations. Under the program, we used cash of $66 to repurchase shares of our common stock during the fourth quarter of
2015.
The following table shows repurchases of our common stock for each calendar month in the quarter ended December 31,
2015.
Calendar Month
October
November
December
Class or
Series of
Securities
Common
Common
Number
of Shares
Purchased
2,948,254
981,954
Average
Price Paid
per Share
16.75
$
16.80
$
Number of
Shares Purchased as
Part of Publicly
Announced Plans
or Programs
2,948,254
981,954
Approximate
Dollar Value of
Shares that May Yet
be Purchased Under
the Plans or Programs
17
$
—
$
—
$
Our Board of Directors approved an expansion of our existing common stock share repurchase program from $1,400 to
$1,700 on January 11, 2016. The share repurchase program expires on December 31, 2017.
Annual meeting — We will hold an annual meeting of stockholders on April 28, 2016.
12
Item 6. Selected Financial Data
Operating Results
Net sales
Income from continuing operations before income taxes
Income from continuing operations
Income (loss) from discontinued operations
Net income
Net income attributable to the parent company
Preferred stock dividend requirements
Preferred stock redemption premium
Net income (loss) available to common stockholders
Net income (loss) per share available to common stockholders
Basic
Income (loss) from continuing operations
Income (loss) from discontinued operations
Net income (loss)
Diluted
Income (loss) from continuing operations
Income (loss) from discontinued operations
Net income (loss)
Depreciation and amortization of intangibles
Net cash provided by operating activities
Purchases of property, plant and equipment
Financial Position
Cash and cash equivalents and marketable securities
Total assets
Long-term debt, less debt issuance costs
Total debt
Preferred stock
Common stock and additional paid-in capital
Treasury stock
Total parent company stockholders' equity
Book value per share
Common Share Information
Dividends declared per common share
Weighted-average common shares outstanding
Basic
Diluted
Market prices
High
Low
Year Ended December 31,
2015
2014
2013
2012
2011
$
$
$
$
$
$
$
$
$
$
6,060
292
176
4
180
159
—
—
159
0.98
0.02
1.00
0.97
0.02
0.99
174
406
260
953
4,326
1,553
1,575
—
2,313
(1)
728
4.58
$
$
$
$
$
$
$
$
6,617
260
343
(15)
328
319
7
—
312
2.07
(0.10)
1.97
1.93
(0.09)
1.84
213
510
234
1,290
4,905
1,588
1,653
—
2,642
(33)
1,080
6.83
$
$
$
$
$
$
$
$
$
6,769
368
261
(1)
260
7,224
364
315
—
315
$
244
25
232
(13) $
(0.08) $
(0.01)
(0.09)
(0.08) $
(0.01)
(0.09)
262
577
209
1,366
5,103
1,541
1,598
372
2,842
(366)
1,309
8.94
$
$
$
300
31
—
269
1.82
—
1.82
1.40
—
1.40
277
339
164
1,119
5,131
790
891
753
2,670
(25)
1,836
12.41
$
$
$
$
$
$
$
$
7,544
306
240
(8)
232
219
31
—
188
1.34
(0.06)
1.28
1.05
(0.03)
1.02
307
370
196
987
5,262
816
887
753
2,644
(9)
1,730
11.81
0.23
$
0.20
$
0.20
$
0.20
$
—
159.0
160.0
158.0
173.5
146.4
146.4
148.0
214.7
146.6
215.3
$
23.48
13.01
24.82
16.81
$
$
23.46
15.17
16.76
11.13
$
19.35
9.45
Note: In April 2015, the Financial Accounting Standards Board issued guidance which changes the presentation of debt issuance costs. Debt issuance costs
related to term debt will be presented on the balance sheet as a direct deduction from the related debt liability rather than recorded as a separate asset.
The guidance requires retrospective application to all prior periods presented. We have presented $21, $25, $26, $13 and $15 of debt issuance costs as
a direct deduction from long-term debt as of December 31, 2015, 2014, 2013, 2012 and 2011. See Note 1 to our consolidated financial statements in
Item 8 for additional information.
13
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Dollars in millions)
Management's discussion and analysis of financial condition and results of operations should be read in conjunction with
the financial statements and accompanying notes in Item 8.
Management Overview
We are a global provider of high technology driveline, sealing and thermal-management products for virtually every major
vehicle manufacturer in the on-highway and off-highway markets. Our driveline products – axles, driveshafts and transmissions
– are delivered through our Light Vehicle Driveline Technologies (Light Vehicle), Commercial Vehicle Driveline Technologies
(Commercial Vehicle) and Off-Highway Driveline Technologies (Off-Highway) operating segments. Our fourth global
operating segment – Power Technologies – is the center of excellence for the sealing and thermal technologies that span all
customers in our on-highway and off-highway markets. We have a diverse customer base and geographic footprint which
minimizes our exposure to individual market and segment declines. In 2015, 53% of our sales came from North American
operations and 47% from operations throughout the rest of the world. Our sales by operating segment were Light Vehicle –
41%, Commercial Vehicle – 25%, Off-Highway – 17% and Power Technologies – 17%.
Operational and Strategic Initiatives
Over the past several years, we have significantly improved our overall financial position — improving the overall
profitability of our business, simplifying our capital structure, maintaining strong cash flows and addressing structural costs.
We have also strengthened our leadership team and streamlined our operating segments to focus on our core competencies of
driveline technologies, sealing systems and thermal management. As a result, we believe that we are well-positioned to place
increasing focus on profitable growth and shareholder returns.
Shareholder returns and capital structure actions — When evaluating capital structure initiatives, we balance our growth
opportunities and shareholder value initiatives with maintaining a strong balance sheet and access to capital. Our strong
financial position in recent years enabled us to simplify our capital structure while providing returns to our common
shareholders in the form of cash dividends and reduction in the number of common share equivalents outstanding. During
2013, we redeemed our Series A preferred stock, the equivalent of 21 million common shares on an as converted basis, for
$474. In 2014, we exercised our option to convert all remaining outstanding preferred shares to common shares. In 2014, our
Board of Directors approved the expansion of our share repurchase program from $1,000 to $1,400. In 2015, we used $311
under this program to repurchase common shares, bringing the total shares repurchased since program inception to 67 million,
inclusive of the common share equivalent reduction resulting from redemption of preferred shares. In January 2016, our Board
of Directors approved the expansion of our share repurchase program from $1,400 to $1,700. Additionally, we declared and
paid quarterly common stock dividends over the past four years, raising the dividend from five cents to six cents per share in
the second quarter of 2015.
In December 2014 and the first quarter of 2015, we completed the redemption of our senior notes maturing in 2019,
replacing them with senior notes having lower interest rates and maturing in 2024. Additionally, in the fourth quarter of 2014,
we completed a voluntary program offered to deferred vested salaried participants in our U.S. pension plans. With this program,
we reduced plan benefit obligations by $171 with lump sum payments of $133 from plan assets.
Technology leadership — With a clear focus on market-based value drivers, global-mega trends and customer sustainability
objectives and requirements, we are driving innovation to create differentiated value for our customers, enabling a “market
pull” product pipeline. Our sealing and thermal engine expertise provides us with early insight into some of the critical design
factors important to our customers. When combined with our drivetrain expertise, we are able to collaborate with our customers
on complete power conveyance solutions, from the engine through the vehicle driveline. We are committed to making
investments and diversifying our product offerings to strengthen our competitive position in our core driveline, sealing and
thermal technologies businesses, creating value for our customers through improved fuel efficiency, emission control, electric
and hybrid electric solutions, durability and cost of ownership, software integration and systems solutions. Our industry leading
electronically actuated disconnecting all wheel drive technology, which we believe is the most fuel efficient rapidly
disconnecting system in the market, was recently selected by one of our major customers for a significant new global vehicle
platform - opening up new commercial channels for us in the passenger car, crossover and sport utility vehicle markets. A
strategic alliance with Fallbrook Technologies Inc. (Fallbrook) provides us the opportunity to leverage leading edge
continuously variable planetary (CVP) technology into the development of advanced drivetrain and transmission solutions for
customers in our end markets.
14
Additional engineering and operational investment is being channeled into reinvigorating our product portfolio and
capitalizing on technology advancement opportunities. Combined engineering centers of our Light Vehicle and Commercial
Vehicle segments allow us the opportunity to better share technologies among these businesses. New engineering facilities in
India and China were opened in the past few years and are now on line, more than doubling our engineering presence in the
Asia Pacific region with state-of-the-art development and test capabilities that globally support each of our businesses.
Additionally, in 2014, we opened a new technology center in Cedar Park, Texas to support our CVP technology development
initiatives.
Geographic expansion — Our manufacturing and technology center footprint positions us to support customers globally - an
important factor as many of our customers are increasingly focused on common powertrain solutions for global platforms.
While growth opportunities are present in each region of the world, we have a primary focus on building our presence and local
capability in the Asia Pacific region, especially India and China. In addition to new engineering facilities in those countries,
new gear manufacturing facilities were recently established in India and Thailand. We have expanded our China off-highway
activities and we believe there is considerable opportunity for growth in this market.
Aftermarket opportunities — We have a global group dedicated to identifying and developing aftermarket growth opportunities
that leverage the capabilities within our existing businesses – targeting increased future aftermarket sales.
Selective acquisitions — Our current acquisition focus is to identify “bolt-on” or adjacent acquisition opportunities that have a
strategic fit with our existing core businesses, particularly opportunities that support our growth initiatives and enhance the
value proposition of our customer product offerings. Any potential acquisition will be evaluated in the same manner we
currently consider customer program opportunities – with a disciplined financial approach designed to ensure profitable
growth.
New commercial channels — In each of our operating segments, we have customer, geographic and product growth
opportunities. By leveraging our relentless pursuit of customer satisfaction, innovative technology and differentiated products,
we believe there are opportunities to open new, as well as further penetrate existing, commercial channels.
Manufacturing excellence/cost management — Although we have taken significant strides to improve our profitability and
margins, particularly through streamlining and rationalizing our manufacturing activities and administrative support processes,
we believe additional opportunities remain to further improve our financial performance. We have ramped up our material cost
efforts to ensure that we are rationalizing our supply base and obtaining appropriate competitive pricing. We have embarked on
information technology initiatives to reduce and streamline systems and supporting costs. With a continued emphasis on
process improvements and productivity throughout the organization, we expect cost reductions to continue contributing to
future margin improvement.
Divestitures
Disposal of operations in Venezuela — The operating, political and economic environment in Venezuela in recent years was
very challenging. Foreign exchange controls restricted our ability to import required parts and material and satisfy the related
U.S. dollar obligations. Production activities were curtailed for most of 2014 as our major original equipment customers
suspended production, with a limited amount of activity coming back on line later in the year. Our sales in Venezuela during
2014 approximated $110 as compared to $170 in 2013. Results of operations were adversely impacted by the reduced
production levels making break-even operating performance a significant challenge. Further, devaluations of the bolivar along
with other foreign exchange developments provided added volatility to results of operations and increased uncertainty around
future performance.
In December 2014, we entered into an agreement to divest our operations in Venezuela (the disposal group) to an
unaffiliated company for no consideration. We completed the divestiture in January 2015. In connection with the divestiture,
we entered into a supply and technology agreement whereby Dana will supply product and technology to the operations at
competitive market prices. Dana has no obligations to otherwise provide support to the operations. The disposal group was
classified as held for sale at December 31, 2014, and we recognized a net charge of $77 – an $80 loss to adjust the carrying
value of the net assets to fair value less cost to sell, with a reduction of $3 for the noncontrolling interest share of the loss.
These assets and liabilities were presented as held for sale on our December 31, 2014 balance sheet. Upon completion of the
divestiture of the disposal group in January 2015, we recognized a gain of $5 on the derecognition of the noncontrolling interest
in a former Venezuelan subsidiary in other income, net. We also credited other comprehensive loss attributable to the parent for
$10 and other comprehensive loss attributable to noncontrolling interests for $1 to eliminate the unrecognized pension expense
recorded in accumulated other comprehensive loss. See Note 2 to our consolidated financial statements in Item 8 for additional
information. With the completion of the sale in January 2015, Dana has no remaining investment in Venezuela.
15
Divestiture of Structural Products Business — In 2010, we completed the sale of substantially all of the assets of our Structural
Products business to Metalsa S.A. de C.V. (Metalsa). We had received cash proceeds of $134 by the end of 2011, excluding
amounts related to working capital adjustments and tooling. The parties reached a final agreement on disputed issues in May
2014, resulting in the receipt of additional cash proceeds of $9 and a charge of $1 to other expense. Prior to the third quarter of
2012, Structural Products was reported as an operating segment of continuing operations. With the cessation of the retained
operations in the third quarter of 2012, we began reporting the activities relating to the Structural Products business as
discontinued operations.
Segments
We manage our operations globally through four operating segments. Our Light Vehicle and Power Technologies segments
primarily support light vehicle original equipment manufacturers (OEMs) with products for light trucks, SUVs, CUVs, vans
and passenger cars. The Commercial Vehicle segment supports the OEMs of on-highway commercial vehicles (primarily trucks
and buses), while our Off-Highway segment supports OEMs of off-highway vehicles (primarily wheeled vehicles used in
construction, mining and agricultural applications).
Trends in Our Markets
Global Vehicle Production
(Units in thousands)
North America
Light Truck (Full Frame)
Light Vehicle Engines
Medium Truck (Classes 5-7)
Heavy Truck (Class 8)
Agricultural Equipment
Construction/Mining Equipment
Europe (including Eastern Europe)
Light Truck
Light Vehicle Engines
Medium/Heavy Truck
Agricultural Equipment
Construction/Mining Equipment
South America
Light Truck
Light Vehicle Engines
Medium/Heavy Truck
Agricultural Equipment
Construction/Mining Equipment
Asia-Pacific
Light Truck
Light Vehicle Engines
Medium/Heavy Truck
Agricultural Equipment
Construction/Mining Equipment
North America
Dana 2016 Outlook
2015
4,250 to 4,300
15,500 to 16,000
230 to 240
240 to 260
55 to 60
155 to 165
8,800 to 8,900
22,500 to 23,000
440 to 445
200 to 205
300 to 305
950 to 1,000
2,500 to 2,550
80 to 90
30 to 35
10 to 15
24,000 to 25,000
48,500 to 49,500
1,400 to 1,450
655 to 690
400 to 420
4,123
15,355
235
322
58
158
8,525
22,617
438
202
299
948
2,486
86
32
13
24,031
47,060
1,378
676
405
Actual
2014
3,834
15,119
226
297
64
158
7,790
21,510
397
220
301
1,146
3,176
167
43
17
22,337
46,497
1,573
710
509
2013
3,632
14,233
201
245
75
157
7,276
20,836
400
244
298
1,302
3,775
218
54
20
20,515
45,213
1,522
788
555
Light vehicle markets — Improving economic conditions during the past three years have contributed to increased light vehicle
sales and production levels in North America. Release of built-up demand to replace older vehicles, greater availability of
credit, stronger consumer confidence and other factors have combined to stimulate new vehicle sales. Light vehicle sales in
2015 increased about 6% from 2014, with sales that year being up 6% from 2013. Many of our programs are focused in the full
frame light truck segment. Sales in this segment were especially strong the past two years, being up about 9% in 2015 and 8%
in 2014. Light vehicle production levels were reflective of the stronger vehicle sales. Production of approximately 17.5 million
16
light vehicles in 2015 was 3% higher than in 2014, after increased production of about 5% the preceding year. Light vehicle
engine production was similarly higher, up 2% in 2015 and 6% in 2014. In the key full frame light truck segment, production
levels increased about 8% in 2015 compared with an increase of 6% in 2014. Days’ supply of total light vehicles in the U.S. at
the end of December 2015 was around 61 days, comparable with the number of days at the end of 2014 and down slightly from
64 days at the end of 2013. In the full frame light truck segment, an inventory level of 62 days at the end of 2015 compares
favorably with 63 days at the end of 2014 and 67 days at the end of 2013.
Looking ahead to 2016, we believe the North American markets will continue to be relatively strong. Reduced
unemployment levels, low fuel prices and stable consumer confidence are expected to provide a favorable economic climate.
Our current outlook for 2016 light vehicle engine production is 15.5 to 16.0 million units, a 1 to 4% increase over 2015, with
full frame light truck production expected to be in the range of 4.25 to 4.3 million units, an increase of about 3 to 4% from
2015.
Medium/heavy vehicle markets — Similar to the light vehicle market, the commercial vehicle segment benefited from an
improving North America economy in recent years, leading to increased medium duty Classes 5-7 truck production the past
three years. After increasing 12% in 2014, medium duty production increased another 4% in 2015. In the Class 8 segment, after
declining 12% in 2013, production levels increased about 21% in 2014 as confidence in a sustained stronger economy took
hold. That continued in 2015, as production climbed about 8% to around 322,000 units.
Orders for Class 8 trucks weakened some in the fourth quarter of 2015, which led to customers pulling back some on
production near the end of the quarter and into the first month of 2016. Combined with the strong production level in 2015,
inventory levels are higher and customers are being somewhat cautious about 2016 production levels. At present, we expect
Class 8 production in the region to be in the range of 240,000 to 260,000 units, a decrease of around 19 to 25% from 2015.
Medium duty production is expected to be relatively comparable with 2015.
Markets Outside of North America
Light vehicle markets — Signs of an improved overall European economy have been evident, albeit mixed at times, during the
past few years. Reflective of a modestly improved economy, light vehicle production levels have increased with light vehicle
engine production being up about 5% in 2015 after increasing 3% in 2014 and light truck production being higher by 9% in
2015 after being up about 7% in 2014. We expect the current economic stability to persist in 2016 with light vehicle engine
and light truck production being comparable to up slightly from 2015. The economic climate in most South America markets
the past three years has been weak, volatile and challenging. After rebounding some in 2013 from a relatively weak 2012, light
truck production declined 12% in 2014 and was down another 17% in 2015. Light vehicle engine production was similarly
down 16% in 2014 and another 22% in 2015. Our current 2016 outlook for light trucks and light vehicle engines has production
being relatively flat with 2015. The Asia Pacific markets have been relatively strong the past few years, principally fueled by
growth in China. Light truck production increased 9% in 2014 and was up another 8% in 2015, while light vehicle engine
production increased 3% in 2014 and another 1% in 2015. We expect to see continued growth in 2016, with year-over-year
light truck production being flat to up 4% and light vehicle engine production being higher by about 3 to 5%.
Medium/heavy vehicle markets — Some of the same factors referenced above that affected light vehicle markets outside of
North America similarly affected the medium/heavy markets. Whereas some modest improvement was reflected in light vehicle
production levels in 2013 and 2014, production levels in the medium/heavy truck market were relatively comparable as
improvement was a little slower to manifest in this market. Signs of a strengthening European market emerged in 2015 with
medium/heavy truck production in 2015 being up about 10% from the preceding year. For 2016, we expect Europe medium/
heavy truck production to be comparable with 2015. South America medium/heavy truck production rebounded some in 2013
from low production levels in 2012, due in part to engine emission changes in Brazil that year. A weakening economic climate
in 2014 in the region, however, led to medium/heavy truck production declining about 23% in 2014. Further weakening in 2015
resulted in a further decline in production, with vehicle build being down about 49% from 2014. Our outlook in South America
for 2016 anticipates persistent economic weakness in the region, with medium/heavy truck production likely to be relatively
flat with 2015. Asia Pacific medium/heavy truck production levels in 2012 and early 2013 were still restrained from the effects
of natural disasters that significantly impacted the region in 2011, along with a sluggish 2012 commercial vehicle market in
China. After strengthening about 2% in 2013, the medium/truck market in Asia Pacific has been sluggish the past two years,
being up a modest 3% in 2014 and declining about 12% in 2015 as a slow down in the China market materialized. While the
China market is expected to be comparable to up modestly in 2016, an improving India market is expected to help improve
production in the region by about 2 to 5% in 2016.
Off-Highway Markets — Our off-highway business has a large presence outside of North America, with more than 75% of its
sales coming from Europe and approximately 12% from South America and Asia Pacific combined. We serve several segments
17
of the diverse off-highway market, including construction, agriculture, mining and material handling. Our largest markets are
the construction/mining and agricultural equipment segments. After experiencing increased global demand in 2011 and 2012,
these markets have been relatively weak the past three years. Global demand in the agriculture market was up about 3% in
2013, but down 11% in 2014 and 7% in 2015. The construction/mining segment weakened about 8% in 2013 and was down
about 4% in 2014 and 11% in 2015. Both markets are expected to remain weak in 2016, with demand levels in the agriculture
segment expected to range from down 3% to up 2% from 2015 and construction/mining segment demand expected to be flat to
up 3% compared to 2015.
Foreign Currency Effects
Weaker international currencies relative to the U.S. dollar had a significant impact on our sales and results of operations in
2015. Approximately 54% of our consolidated sales were outside the U.S., with euro zone countries and Brazil accounting for
approximately 41% and 7% of our non-U.S. sales. Translation of our international activities at average exchange rates in 2015
as compared to average rates in 2014 reduced sales by $516, with $268 attributable to a weaker euro and $91 to a weaker Brazil
real. Our current 2016 sales outlook anticipates additional weakening in international currencies, with an assumed euro/U.S.
dollar rate of 1.08 to 1.05 and U.S. dollar/Brazil real rate of 4.00 to 4.25. A 5% movement on the euro and Brazil real rates
would impact 2016 sales in our outlook by approximately $65 and $10, respectively.
Brazil Market
Reduced market demand resulting from the weak economic environment in Brazil in 2015 has led to production levels in
the light vehicle and medium/heavy duty vehicle markets that are lower by about 22% and 44% from 2014. As a consequence,
sales by our operations in Brazil for 2015 were $240, down from $505 the preceding year. Our medium/heavy duty presence is
particularly significant, with approximately 74% of our Brazil sales originating in our Commercial Vehicle operating segment
in 2015. In response to the challenging economic conditions in this country, we implemented restructuring and other reduction
actions in 2015. As discussed in the Critical Accounting Estimates section of this Item 7 and in Note 2 to our consolidated
financial statements in Item 8, one of our major suppliers is operating with judicial oversight under reorganization proceedings
in Brazil.
Commodity Costs
The cost of our products may be significantly impacted by changes in raw material commodity prices, the most important
to us being those of various grades of steel, aluminum, copper and brass. The effects of changes in commodity prices are
reflected directly in our purchases of commodities and indirectly through our purchases of products such as castings, forgings,
bearings and component parts that include commodities. Most of our major customer agreements provide for the sharing of
significant commodity price changes with those customers. Where such formal agreements are not present, we have historically
been successful implementing price adjustments that largely compensate for the inflationary impact of material costs. Material
cost changes will customarily have some impact on our financial results as customer pricing adjustments typically lag
commodity price changes.
Lower commodity prices decreased our costs by approximately $10 in 2015, while higher commodity prices increased our
costs by approximately $35 in 2014 and $20 in 2013. Material recovery and other pricing actions increased sales by about $1
in 2015, $65 in 2014 and $30 in 2013.
Sales, Earnings and Cash Flow Outlook
Sales
Adjusted EBITDA
Free Cash Flow
2016
Outlook
$5,800 - $6,000
$640 - $670
$160 - $180
2015
2014
2013
$
$
$
6,060
652
146
$
$
$
6,617
746
276
$
$
$
6,769
745
368
Adjusted EBITDA and Free Cash Flow are non-GAAP financial measures. See the Non-GAAP Financial Measures
discussion below for definitions of our non-GAAP financial measures and reconciliations to the most directly comparable U.S.
generally accepted accounting principles (GAAP) measures.
During the past three years, weaker international currencies relative to the U.S. dollar were the most significant factor
reducing our sales. Lower sales attributable to currency over the three-year period approximated $900, with a reduction of more
18
than $500 occurring in 2015. We divested our Venezuela operation in January 2015, which further reduced consolidated sales
by approximately $100. Adjusted for currency and divestiture effects, our sales have been relatively stable. We experienced
uneven end user markets, with some being relatively strong and others somewhat weak, and the conditions across the regions of
the world differing quite dramatically. New business with customers has largely offset the lower sales attributable to overall
weaker end user demand. Our outlook for 2016 includes additional weakening of international currencies in the range of $200
to $300. Increased sales from new business coming on line in 2016 is expected to partially offset the currency related reduction,
with end user market demand remaining relatively comparable to 2015.
Over the past three years, adjusted EBITDA margin as a percent of sales has remained relatively constant at around 11%
despite certain markets being weak and volatile. Where practicable, we have aligned our cost with weaker demand levels in
certain markets. We continue to focus on margin improvement through right sizing and rationalizing our manufacturing
operations, implementing other cost reduction initiatives and ensuring that customer programs are competitively priced. With a
continued focus on cost and new business coming on at competitive rates, we expect to see a slight margin improvement in
2016. Further margin improvement following 2016 is anticipated as we expect to see increased end user demand in certain
markets and we continue to benefit from higher margin on new business coming on line.
Free cash flow generation has been strong the past three years as we benefited from strong earnings and closely managed
working capital and capital spend requirements. Free cash flow in 2013 benefited, in part, from reduced inventory levels and
the receipt of $28 of interest relating to a callable payment-in-kind note receivable. With the sale of this note in 2014, free cash
flow benefited from the additional receipt of $40 of interest. Lower pension contributions, restructuring payments and cash
taxes also benefited free cash flow in 2014, while increased new program launches resulted in higher capital spending. The
lower free cash flow in 2015 is primarily due to lower earnings and increased capital spend to support new program launches,
with lower cash taxes and restructuring payments providing a partial offset. Based on our outlook for 2016, we expect free cash
flow to be in the range of $160 to $180. An increased level of program launches in 2016 is expected to require overall capital
spend of $280 to $300. Net interest will consume cash of around $90, with estimated cash taxes being about $90, restructuring
expenditures about $25 and pension contributions around $15 – all relatively comparable with 2015.
Among our Operational and Strategic Initiatives are increased focus on and investment in product technology – delivering
products and technology that are key to bringing solutions to issues of paramount importance to our customers. This, more than
anything, is what will position us for profitable future growth. Our success on this front is measured, in part, by our sales
backlog which is net new business received that will be launching in the future and adding to our base annual sales. This
backlog of new business does not represent firm orders. At December 31, 2015, our sales backlog of net new business for the
2016 through 2018 period was $750. This current backlog compares to a three-year sales backlog at the end of 2014 that
approximated $680 when adjusted for current exchange rates and market demand – an increase of 10%. The higher returns
associated with this new business are expected to help drive increased future adjusted EBITDA margins.
19
Summary Consolidated Results of Operations (2015 versus 2014)
Consolidated Results of Operations
Net sales
Cost of sales
Gross margin
Selling, general and administrative expenses
Amortization of intangibles
Restructuring charges, net
Impairment of long-lived assets
Loss on disposal group held for sale
Pension settlement charges
Loss on extinguishment of debt
Other income, net
Income from continuing operations before
interest expense and income taxes
Interest expense
Income from continuing operations before
income taxes
Income tax expense (benefit)
Equity in earnings (losses) of affiliates
Income from continuing operations
Income (loss) from discontinued operations
Net income
Less: Noncontrolling interests net income
Net income attributable to the parent company
2015
2014
Dollars
% of
Net Sales
Dollars
% of
Net Sales
85.7%
14.3%
6.2%
$
$
6,060
5,211
849
391
14
15
(36)
(2)
14
405
113
292
82
(34)
176
4
180
21
159
$
86.0%
14.0%
6.5%
$
6,617
5,672
945
411
42
21
(80)
(42)
(19)
48
378
118
260
(70)
13
343
(15)
328
9
319
Increase/
(Decrease)
(557)
$
(461)
(96)
(20)
(28)
(6)
(36)
80
42
17
(34)
27
(5)
32
152
(47)
(167)
19
(148)
12
(160)
$
Sales — The following table shows changes in our sales by geographic region.
North America
Europe
South America
Asia Pacific
Total
2015
2014
Increase/
(Decrease)
$
$
3,210
1,723
377
750
6,060
$
$
3,126
1,978
771
742
6,617
$
$
$
84
(255)
(394)
8
(557) $
Amount of Change Due To
Acquisitions
(Divestitures)
Organic
Change
Currency
Effects
(48) $
(313)
(110)
(45)
(516) $
— $
(107)
(107) $
132
58
(177)
53
66
Sales for 2015 declined $557 or 8% from 2014. Weaker international currencies decreased sales by $516 and the
divestiture of our operations in Venezuela reduced sales by $107. The organic sales increase resulted from stronger overall
volume levels that added $65 and cost recovery pricing which contributed $1.
Stronger light vehicle and light vehicle engine production levels in North America were largely responsible for the 4%
organic sales increase in this region. Full frame light truck production was 8% stronger than last year, while light vehicle
engine production levels were about 2% higher. Increased medium/heavy truck production of about 6% and new customer
programs coming on line over the past year also contributed to increased year-over-year sales. Partially offsetting this stronger
demand and new business was lower sales with a significant Commercial Vehicle segment customer.
Excluding currency effects, principally from a weaker euro and British pound, our sales in Europe were 3% higher than in
2014. Higher sales from increases in light vehicle engine and light truck production of around 5% and 9%, growth in medium/
heavy truck production of about 10% and new customer programs were partially offset by weaker off-highway demand levels.
20
South America sales were reduced by weaker currencies in Brazil, Argentina and Colombia and the divestiture of our
operations in Venezuela. Excluding these effects, sales were down 23% from 2014. The organic sales decrease in the region
was primarily driven by reductions in medium/heavy truck production levels of about 49%, a decline in light truck production
of 17% and weaker off-highway demand. Partially offsetting weaker demand levels in the region were higher sales associated
with light vehicle new business, content increases and cost recovery pricing.
Asia Pacific sales in 2015 were up slightly from 2014. The organic sales increase of 7% in the region was driven
principally by stronger light vehicle and medium/heavy truck sales volumes in Thailand and India and increased off-highway
sales levels in our operation in China.
Cost of sales and gross margin — Cost of sales for 2015 declined $461, or 8%, when compared to 2014. Similar to our
reduction in sales, the change was due primarily to currency effects with a partial offset provided by higher sales volumes. Cost
of sales as a percent of sales in 2015 was 30 basis points higher than last year. In addition to the benefit of stronger volume
levels in some of our markets, savings from material cost reduction initiatives reduced cost by $48, with lower commodity
costs contributing an additional $14. These favorable impacts on cost of sales were more than offset by an increase in warranty
expense of $11, costs attributed to supply chain disruptions in our Commercial Vehicle segment of $16, an increase in
engineering and product development expense of $7, an increase in environmental remediation expense of $8, higher costs in
certain markets where we were unable to effectively flex our cost with lower demand levels and other inflationary cost
increases.
Gross margin of $849 in 2015 was $96 lower than last year, representing 14.0% of sales in 2015 as compared to 14.3% of
sales in 2014. The 30 basis point decrease in gross margin was principally driven by the net effect of the cost factors referenced
above, partially offset by a nominal pricing and cost recovery benefit.
Selling, general and administrative expenses (SG&A) — SG&A expenses in 2015 were $391 (6.5% of sales) as compared to
$411 (6.2% of sales) in 2014. Salary and benefits expenses in 2015 were $15 lower than in 2014 primarily due to lower
anticipated payouts under various annual incentive programs, while selling expense and other discretionary spending declined
$5.
Amortization of intangibles — The reduction of $28 in amortization of intangibles is primarily attributable to certain customer
related intangibles becoming fully amortized.
Restructuring charges — Restructuring charges of $15 in 2015 included $12 of employee separation costs and $3 of exit costs.
The majority of the separation cost was attributable to headcount reductions in our Brazil operations, primarily in our
Commercial Vehicle segment, in response to significantly lower demand levels. The exit costs in 2015 were primarily related to
activities associated with previously announced facility closure and realignment actions. The restructuring charges of $21 in
2014 primarily represented the impact of headcount reduction initiatives in our Commercial Vehicle and Light Vehicle
businesses in South America and Europe, including the closure of our Commercial Vehicle foundry in Argentina and other
severance and exit costs associated with previously announced initiatives.
Impairment charges — Reference is made to Note 2 of the consolidated financial statements in Item 8 for discussion of
charges recognized in connection with an impairment of long-lived assets attributable to an exclusive supply relationship with a
South American supplier.
Other income, net — The following table shows the major components of other income, net.
Interest income
Government grants and incentives
Foreign exchange gain (loss)
Gain on derecognition of noncontrolling interest
Strategic transaction expenses
Insurance and other recoveries
Gain on sale of marketable securities
Recognition of unrealized gain on payment-in-kind note receivable
Amounts attributable to previously divested/closed operations
Other
Other income, net
21
2015
2014
$
$
$
13
3
(20)
5
(4)
4
1
1
11
14
$
15
4
11
(3)
2
2
17
48
During 2015, net foreign exchange loss primarily reflects the adverse impact of settlements of certain Mexican peso and
euro forward contracts driven by the strengthening of the U.S. dollar. Net foreign exchange gain in 2014 resulted in large part
from favorable currency movement on an intercompany loan that was fully paid in the first half of 2014. As described in Notes
1 and 7 to the consolidated financial statements in Item 8, devaluation of the Venezuelan bolivar, net of transactional gains,
resulted in a net foreign currency gain of $2 in 2014. Upon completion of the divestiture of our operations in Venezuela in
January 2015, we recognized a $5 gain on the derecognition of the noncontrolling interest in one of our former Venezuelan
subsidiaries. See Notes 2 and 17 to our consolidated financial statements in Item 8 for additional information. The January
2014 sale of a payment-in-kind note resulted in the recognition of $2 of unrealized gain that arose following the valuation of
the note below its callable value at emergence from bankruptcy. During 2015, we reached a $3 settlement with an insurance
carrier for the recovery of previously incurred legal costs, while 2014 included a payment of $2 from the liquidation
proceedings of an insolvent insurer carrier. Additionally, as part of correcting overstatements of our pension obligations and
goodwill in 2014, we credited other income, net for $6 to effectively reverse a portion of the write-off of goodwill assigned to
our former Driveshaft segment in 2008. See Note 1 to our consolidated financial statements in Item 8 for additional
information.
Loss on extinguishment of debt — Actions to refinance a portion of our long-term debt that commenced in last year's fourth
quarter were completed in the first quarter of 2015, with expense recognized for the call premium incurred and write-off of
unamortized financing costs associated with debt extinguished in this year's first quarter.
Interest expense — Interest expense was $113 and $118 in 2015 and 2014. The impact of higher average debt levels was more
than offset by a lower average effective interest rate. As discussed in Note 12 to our consolidated financial statements in Item 8,
we completed the sale of $425 of 5.5% senior unsecured notes in December 2014 and redeemed $400 of 6.5% senior unsecured
notes during the four-month period ended March 2015. Average effective interest rates, inclusive of amortization of debt
issuance costs, approximated 6.6% and 6.9% in 2015 and 2014.
Income tax expense (benefit) — Income tax expense of our continuing operations was $82 in 2015 and a benefit of $70 in 2014.
The effective income tax rates vary from the U.S. federal statutory rate of 35% primarily due to valuation allowances in several
countries, nondeductible expenses, different statutory rates outside the U.S. and withholding taxes. During 2015, we completed
an intercompany transfer of an affiliate’s stock and certain operating assets, as discussed in Note 16 of the consolidated
financial statements in Item 8. In conjunction with this transaction, we released $66 of valuation allowance on U.S. deferred tax
assets and recognized $23 of tax expense related to the stock sale and $2 of amortization of a prepaid tax asset created as a part
of the transaction. We also established a valuation allowance of $15 against the deferred tax assets of a South American
subsidiary. During 2014, we released valuation allowance of $179 related to the intercompany transaction discussed above that
was partially offset by a valuation allowance adjustment related to the $80 charge recorded in connection with the divestiture of
our Venezuelan operations. Excluding these items, the effective tax rate was 37% in 2015 as compared to 33% in 2014. The
main driver of the increase is related to the jurisdictional mix of the earnings of our non-U.S. operations.
In the U.S. and certain other countries, our recent history of operating losses does not allow us to satisfy the “more likely
than not” criterion for recognition of deferred tax assets. Therefore, there is generally no income tax recognized on the pre-tax
income or losses in these jurisdictions as valuation allowance adjustments offset the associated tax effects. See Note 16 to our
consolidated financial statements in Item 8 for a discussion of the factors considered in our evaluation of the valuation
allowances against our U.S. deferred tax assets.
Equity in earnings (losses) of affiliates — Equity investments provided a net loss of $34 in 2015 and earnings of $13 in 2014.
Our equity in earnings from Bendix Spicer Foundation Brake, LLC were $11 in 2015 and $10 in 2014. Our share of Dongfeng
Dana Axle Co., Ltd.'s (DDAC) operating results were a loss of $7 in 2015 and earnings of $5 in 2014. During the fourth quarter
of 2015, we determined that we had an other-than-temporary decrease in the carrying value of our DDAC investment and
recorded a $39 impairment charge. See Note 19 to our consolidated financial statements in Item 8.
Income (loss) from discontinued operations — Income (loss) from discontinued operations activity relates to our Structural
Products business. See Note 2 to our consolidated financial statements in Item 8.
Noncontrolling interests net income — As more fully discussed in Note 1 to our consolidated financial statements in Item 8, the
first quarter of 2015 included $9 for correction of previously reported noncontrolling interests net income.
22
Segment Results of Operations (2015 versus 2014)
Light Vehicle
2014
Volume and mix
Performance
Venezuelan divestiture
Currency effects
2015
Segment
EBITDA
Margin
10.0%
Segment
EBITDA
250
$
34
(22)
262
$
10.6%
Sales
2,496
200
(12)
(107)
(95)
2,482
$
$
Light Vehicle sales in 2015 were reduced by currency translation effects, primarily as a result of a weaker British pound
sterling, Brazil real, Argentina peso, Thailand baht and South African rand, and the divestiture of our Venezuela operations in
January 2015. Sales, exclusive of currency and divestiture effects, were 8% higher in 2015 than in 2014. The volume related
increases were driven in part by stronger production levels. North America full frame light truck production in 2015 was up 8%
from the same period of 2014, and light truck production in Europe and Asia Pacific was stronger by 9% and 8%. Light Vehicle
volume increases in 2015 also benefited from new customer programs that came on line over the past couple years.
Light Vehicle segment EBITDA of $262 in 2015 is $12 higher than 2014 as the benefit of stronger sales volumes was
partially offset by currency effect. In addition to reductions resulting from translation of international results at weaker
exchange rates relative to the U.S. dollar, we experienced increased year-over-year transactional currency losses of $10 on non-
functional currency denominated activities and intercompany balances. Performance-related segment EBITDA was neutral,
with $33 from material cost savings and lower commodity costs being offset by $12 due to lower pricing, a $4 increase in
warranty costs, a $2 increase in program launch costs, an additional $2 of engineering and product development expense, net of
customer reimbursement, and other items.
Commercial Vehicle
2014
Volume and mix - Brazil
Volume and mix - All other
Performance
Currency effects
2015
Sales
1,838
(166)
(19)
24
(144)
1,533
$
$
Segment
EBITDA
172
$
(35)
(9)
(11)
(17)
100
$
Segment
EBITDA
Margin
9.4%
6.5%
The currency related reduction in sales was primarily due to a weaker euro, Brazil real and Mexico peso. After adjusting
for the effects of currency, 2015 sales in our Commercial Vehicle segment decreased 9% compared to 2014. Weaker end market
demand in Brazil where year-over-year medium/heavy truck production was down 44% reduced sales by $166. The remaining
volume reduction is primarily attributable to lower sales of about $100 from lost market share with a major customer due to
residual effects of the supply chain inefficiencies that impacted our performance in the first half of 2015. Partially offsetting
this was higher sales from stronger production levels in North America where year-over-year medium/heavy truck production
was up about 6%. Pricing recoveries provided a partial offset to the currency and volume impacts on 2015 sales.
Commercial Vehicle segment EBITDA of $100 was $72 lower than in 2014. Weaker Brazil market demand contributed
$35, with an additional $9 resulting from net lower sales elsewhere, principally in North America as a result of the above-
mentioned market share reduction with a major customer. Year-over-year performance-related segment EBITDA includes a
benefit of $25 for increased pricing/recoveries and material cost savings and lower commodity costs of $5. These benefits were
more than offset by increased warranty expense of $16, higher supplier transition costs of $8 and other cost increases.
23
Off-Highway
2014
Volume and mix
Performance
Currency effects
2015
Sales
1,231
(25)
(1)
(165)
1,040
$
$
Segment
EBITDA
169
$
(10)
14
(26)
147
$
Segment
EBITDA
Margin
13.7%
14.1%
Reduced year-over-year sales due to currency effects resulted principally from a weaker euro. Currency-adjusted sales for
2015 were down slightly from 2014. New business gains in this business are largely offsetting the impact of continued
weakness in global end-market demand.
Off-Highway segment EBITDA of $147 in 2015 was down $22 from 2014. Currency effects are the primary driver of the
reduced EBITDA, reflecting a weaker euro and other international currencies. The performance-related segment EBITDA
improvement is primarily attributable to material cost savings of $18 and lower warranty expense of $3 which is partially offset
by increases in other costs.
Power Technologies
2014
Volume and mix
Performance
Currency effects
2015
Sales
1,052
75
(10)
(112)
1,005
$
$
Segment
EBITDA
154
$
15
2
(22)
149
$
Segment
EBITDA
Margin
14.6%
14.8%
Power Technologies primarily serves the light vehicle market but also sells product to the medium/heavy truck and off-
highway markets. A weaker euro and Canadian dollar were the primary drivers of the reduced sales due to currency. Net of
currency effects, sales in 2015 increased about 6% compared to 2014, principally from stronger market demand. Increases in
year-over-year light vehicle engine build of 2% in North America and 5% in Europe were the primary drivers of the volume
increase.
Segment EBITDA of $149 in 2015 was $5 lower than 2014, due principally to currency effects. The performance-related
improvement in 2015 segment EBITDA was primarily driven by lower warranty expense of $7 and higher material cost savings
of $6, partially offset by pricing actions which reduced segment earnings by $10.
24
Summary Consolidated Results of Operations (2014 versus 2013)
2014
2013
Dollars
% of
Net Sales
Dollars
% of
Net Sales
Net sales
Cost of sales
Gross margin
Selling, general and administrative expenses
Amortization of intangibles
Restructuring charges, net
Loss on disposal group held for sale
Pension settlement charges
Loss on extinguishment of debt
Other income, net
Income from continuing operations before
interest expense and income taxes
Interest expense
Income from continuing operations before
income taxes
Income tax expense (benefit)
Equity in earnings of affiliates
Income from continuing operations
Loss from discontinued operations
Net income
Less: Noncontrolling interests net income
Net income attributable to the parent company
$
$
6,617
5,672
945
411
42
21
(80)
(42)
(19)
48
378
118
260
(70)
13
343
(15)
328
9
319
$
85.7%
14.3%
6.2%
6,769
5,849
920
410
74
24
86.4%
13.6%
6.1%
55
467
99
368
119
12
261
(1)
260
16
244
$
Increase/
(Decrease)
(152)
$
(177)
25
1
(32)
(3)
(80)
(42)
(19)
(7)
(89)
19
(108)
(189)
1
82
(14)
68
(7)
75
$
Sales — The following table shows changes in our sales by geographic region.
North America
Europe
South America
Asia Pacific
Total
2014
2013
$
$
3,126
1,978
771
742
6,617
$
$
2,958
1,994
983
834
6,769
$
$
$
Increase/
(Decrease)
168
(16)
(212)
(92)
(152) $
Amount of Change Due To
Currency
Effects
Organic
Change
(15) $
3
(170)
(31)
(213) $
183
(19)
(42)
(61)
61
Sales for 2014 declined $152 or 2% from 2013, with the primary driver being weaker international currencies. After
adjusting to exclude currency effects, sales increased $61. Sales benefited by $65 from cost recovery pricing, while overall
market volume and mix reduced sales by $4. Stronger sales volume in North America and Europe was more than offset by
weaker demand in our global Off-Highway business and the South America medium/heavy truck market.
The 2014 sales increase of 6% in North America was driven primarily by stronger production levels in the light vehicle and
medium/heavy vehicle markets. Light vehicle engine builds and full frame light truck production were both up about 6% and
combined medium/heavy truck production was higher by about 17%. Partially offsetting these stronger volumes was lower
demand in the off-highway markets.
Our sales in Europe in 2014 were generally flat with 2013, with currency movements having a nominal impact. Our Off-
Highway segment has a significant European presence. The weaker demand in the markets served by this segment contributed
to reduced sales of around $60. Largely offsetting the weaker off-highway demand were stronger production levels in the light
vehicle market where light engine build was up 3% and light truck production was higher by about 7%. Our sales in Europe in
2014 also benefited from new Light Vehicle programs coming on line during the year.
South America sales in 2014 were significantly reduced by currency effects from a weaker Brazilian real and Argentine
peso along with devaluation of the Venezuelan bolivar. Adjusted for currency effects, 2014 sales in South America were down
25
$42 or about 4%. Production levels were down in our light and commercial vehicle end markets – light truck production off
12%, light vehicle engine build down about 16% and medium/heavy truck production lower by 23%. Partially offsetting the
effects of lower demand levels was cost recovery pricing for material and other cost inflation.
Asia Pacific sales were 11% lower than in 2013. Adverse currency effects resulted principally from a weakening of the
Indian rupee, Thai baht, Australian dollar and Japanese yen. The organic sales reduction of 7% is primarily due to
comparatively weaker economic environments in India and Thailand, along with reduced demand on a scheduled light vehicle
program roll-off in Australia.
Cost of sales and gross margin — Cost of sales for 2014 was 3% lower than in 2013, with cost of sales as a percent of sales of
85.7% lower than the 86.4% realized in 2013. The reduction in cost is consistent with the decline in sales, due principally to
weaker international currencies and slightly lower overall net sales volume. Cost of sales in 2014 was increased by higher
material commodity costs of about $35, higher warranty expense of $14 and inflationary increases on other costs, principally in
our South America and South Africa markets. More than offsetting these increases were the effects of continued supplier
rationalization and engineering design actions, which contributed to material cost reductions of approximately $66, and reduced
depreciation and amortization expense of $20.
Gross margin in 2014 of $945, which excludes pension settlement charges, increased $25 from 2013, representing 14.3%
of sales – 70 basis points higher than the prior year's gross margin percentage of 13.6%. The gross margin improvement was
attributable to the reduced cost of sales as a percent of sales discussed in the preceding paragraph.
Selling, general and administrative expenses (SG&A) — SG&A expenses in 2014 were $411 (6.2% of sales) as compared to
$410 (6.1% of sales) in 2013. Salary and benefits expense in 2014 was approximately $7 less than in 2013, nearly offsetting an
increase of $8 in selling expense and other discretionary spending.
Restructuring charges, net — Restructuring charges of $21 in 2014 primarily represented the impact of headcount reduction
initiatives in our Commercial Vehicle and Light Vehicle businesses in South America and Europe, including the closure of our
Commercial Vehicle foundry in Argentina and other severance and exit costs associated with previously announced initiatives.
Restructuring charges of $24 in 2013 include the impact of headcount reduction initiatives, primarily in our Light Vehicle and
Commercial Vehicle businesses in Argentina and Australia as well as in our Off-Highway business in Europe. Restructuring
charges in 2013 also include severance and exit costs associated with previously announced initiatives, offset in part by a $10
reversal of previously accrued obligations. New customer programs and other developments in our Light Vehicle and Power
Technologies businesses in North America and a decision by our Off-Highway business in Europe to in-source the
manufacturing of certain parts were the primary factors leading to the reversal of previously accrued severance obligations.
Loss on disposal group held for sale — During the fourth quarter of 2014, we entered into an agreement to sell our operations
in Venezuela. We completed the sale in January 2015. The divested business was determined to be held for sale at December
31, 2014, resulting in the recognition of a loss of $80 to reduce the assets and liabilities of this business to their fair value less
cost to sell. Reference is made to Divestitures in this Item 7 and to Note 2 of the consolidated financial statements in Item 8 for
additional disclosures regarding this transaction.
Pension settlement charges — We completed two actions in the fourth quarter of 2014 that reduced our pension plan
obligations. Lump sum payments to deferred vested salaried participants in our U.S. pension plans under a voluntary program
resulted in a settlement charge of $36, while completion of a wind-up of certain Canadian pension plans resulted in a charge of
$6. See Note 10 of the consolidated financial statements in Item 8 for additional discussion of these two actions.
Loss on extinguishment of debt — In connection with a refinancing of long-term debt obligations in the fourth quarter of 2014,
we recognized expense for the call premium incurred and the write-off of the unamortized financing costs associated with the
extinguished obligations. See Note 12 of the consolidated financial statements in Item 8 for additional disclosure surrounding
this debt refinancing.
26
Other income, net — The following table shows the major components of other income, net.
Interest income
Government grants and incentives
Foreign exchange gain (loss)
Strategic transaction expenses
Insurance and other recoveries
Gain on sale of marketable securities
Write-off of deferred financing costs
Recognition of unrealized gain on payment-in-kind note receivable
Other
Other income, net
2014
2013
$
$
$
15
4
11
(3)
2
2
17
48
$
25
3
(5)
(4)
13
9
(4)
5
13
55
The change in interest income in 2014 includes a reduction of $11 attributable to a payment-in-kind note receivable being
partially prepaid in 2013 and subsequently sold in January 2014. Additionally, interest income in 2013 included $3 from a
favorable legal ruling related to recovery of gross receipts taxes paid in Brazil in earlier periods. Net foreign exchange gain in
2014 resulted in large part from favorable currency movement on an intercompany loan that was fully paid in the first half of
2014. As described in Note 1 of the consolidated financial statements in Item 8, devaluation of the Venezuelan bolivar was
recognized through use of the SICAD rate for translating the bolivar-denominated activities of our operations in Venezuela.
Devaluation charges of $20 in 2014 were more than offset by gains of $22 from subsequent settlement of dollar-denominated
obligations at the more favorable official exchange rate and sales of U.S. dollars at the SICAD 2 exchange rate. The net foreign
exchange loss for 2013 included a charge of $6 resulting from the devaluation of the Venezuelan bolivar and subsequent
recoveries of $5 on transactions existing at the date of devaluation that were subsequently settled at the former exchange rate.
See Note 17 of the consolidated financial statements in Item 8 for additional information. During 2013, we received $4 on the
sale of our interest in claims pending in the liquidation proceedings of an insurer to a third party, $7 of other asbestos-related
recoveries and a $2 insurance recovery related to business interruptions resulting from flooding in Thailand. During 2013, we
wrote off deferred financing costs of $2 associated with our prior revolving credit facility and $2 upon the termination of our
European accounts receivable backed credit facility. The January 2014 sale and 2013 prepayment of the payment-in-kind note
receivable resulted in recognition of $2 and $5 of an unrealized gain that arose following the valuation of the note receivable
below its callable value at emergence from bankruptcy.
Interest expense — Interest expense was $118 and $99 in 2014 and 2013. The impact of higher average debt levels was
partially offset by a lower average effective interest rate. As discussed in Note 12 to the consolidated financial statements in
Item 8, we completed the sale of $425 and $750 in senior unsecured notes in December 2014 and July 2013, respectively, and
redeemed $345 in senior unsecured notes in December 2014. Average effective interest rates, inclusive of amortization of debt
issuance costs, approximated 6.9% and 7.8% in 2014 and 2013.
Income tax expense (benefit) — Income taxes of our continuing operations was a benefit of $70 in 2014. The primary driver
was a benefit of $179 recorded for the release of a portion of our U.S. deferred tax asset valuation allowance. As discussed
more fully in Note 16 to our consolidated financial statements in Item 8, the release resulted from income forecasted to be
realized in 2015 in connection with certain tax planning actions expected to be completed in 2015. The $80 charge associated
with the divestiture of our operations in Venezuela provided a partial offset as the expected tax benefit was negated by an
adjustment to the valuation allowance. Excluding these valuation allowance adjustments, the effective tax rate of continuing
operations in 2014 was 33% as the benefit of income in certain jurisdictions outside the U.S. being taxed at lower statutory
rates more than offset withholding taxes incurred in connection with the repatriation of income to the U.S. In 2013, tax expense
of $119 resulted in an effective tax rate of 32%. Adjusted for valuation allowance effects, primarily in the U.S., the effective
income tax rate in 2013 was 34%. Lower statutory rates outside the U.S. were the primary contributor to the adjusted 2013 rate
being less than the U.S. statutory rate.
In the U.S. and certain other countries, our recent history of operating losses does not allow us to satisfy the “more likely than
not” criterion for recognition of deferred tax assets. Therefore, there is generally no income tax recognized on the pre-tax income
or losses in these jurisdictions as valuation allowance adjustments offset the associated tax effects. See Note 16 to our consolidated
financial statements in Item 8 for additional information.
Equity in earnings of affiliates — Equity investments provided net earnings of $13 in 2014 and $12 in 2013. Our equity in
earnings of Bendix Spicer Foundation Brake, LLC increased $2 in 2014 to $10 while our equity in earnings of Dongfeng Dana
Axle Co., Ltd. (DDAC) decreased $2 in 2014 to $5.
27
Loss from discontinued operations — Loss from discontinued operations relates to our former Structural Products business.
The loss in 2014 reflects the charges resulting from final settlement of the claims presented by the buyer of this business and
the settlement of an outstanding legal matter relating to this business along with associated costs incurred during the year to
achieve the settlements. See Note 2 to our consolidated financial statements in Item 8.
Segment Results of Operations (2014 versus 2013)
Light Vehicle
2013
Volume and mix
Performance
Venezuelan bolivar devaluation
Currency effects
2014
Sales
2,549
35
60
(148)
2,496
$
$
Segment
EBITDA
242
$
8
38
(11)
(27)
250
$
Segment
EBITDA
Margin
9.5%
10.0%
Adverse currency effects in our Light Vehicle segment were attributable in large part to devaluation of the Venezuelan
bolivar and a weaker Argentine peso, South African rand and Thai baht. Exclusive of currency effects, Light Vehicle sales for
2014 were 4% higher than in 2013. Volume and mix increased largely from stronger 2014 full frame light truck production in
North America of 6% and increased light truck production in Europe of 7%, along with contributions from new program roll-
outs. Partially offsetting these volume increases were lower demand levels in Thailand, India, Australia and Venezuela.
Performance sales impact is primarily increased pricing to recover material, devaluation and inflationary costs in Argentina and
Venezuela.
Light Vehicle segment EBITDA of $250 was $8 higher than in 2013, with EBITDA margin of 10.0% in 2014 increased
from a margin of 9.5% in the prior year. As more fully discussed in Note 1 of the consolidated financial statements in Item 8, in
the first quarter of 2014, we recorded a charge of $17 for devaluation of the bolivar as a result of using the SICAD exchange
rate rather than the official exchange rate for translating the financial results of our Venezuelan operations. Further devaluation
of the SICAD rate in 2014 resulted in additional charges of $3. Partially offsetting these devaluation effects were gains of $8 on
approved CENCOEX settlements of U.S. dollar obligations at the official exchange rate of 6.3 bolivars per dollar. The 2013
results of this segment included a first-quarter charge of $6 for devaluation of the bolivar official exchange rate of 4.3 bolivars
per U.S. dollar to 6.3. Subsequent settlement in 2013 of U.S. dollar obligations at an official rate of 4.3 provided gains of $5.
The net impacts of these devaluation-related items were net charges of $12 in 2014 and $1 in 2013. Adversely impacting
currency effects is about $34 for translating full year 2014 bolivar-denominated activities at the devalued SICAD rate. Partially
offsetting this translation impact were gains of $14 from 2014 sales of U.S. dollars in the SICAD 2 market at an average of 49.9
bolivars per dollar.
Increased performance-related segment EBITDA in 2014 is attributable in large part to pricing, primarily to recover
inflationary cost increases of about $45 in Argentina and Venezuela. Segment EBITDA also benefited from additional year-
over-year material cost savings of $24 and lower warranty expense of $6. Partially offsetting these factors were increased
material commodity costs of $14 and engineering and development cost of $10, with the remaining difference resulting
primarily from cost reduction actions.
28
Commercial Vehicle
2013
Volume and mix
Performance
Currency effects
2014
Sales
1,860
20
7
(49)
1,838
$
$
Segment
EBITDA
194
$
3
(22)
(3)
172
$
Segment
EBITDA
Margin
10.4%
9.4%
Reduced sales resulting from currency effects in our Commercial Vehicle segment were due primarily to a weaker
Brazilian real. After adjusting for the effects of currency, sales in our Commercial Vehicle segment in 2014 were up about 2%
from the previous year. Increases in Class 8 and medium truck production in North America of 21% and 12% were the primary
drivers of the volume-related sales increase. This was largely offset, however, by the effects of a reduction of about 23% in
medium/heavy truck production in South America where we have a significant commercial vehicle market presence.
Commercial Vehicle segment EBITDA in 2014 of $172 was $22 lower than in 2013, with EBITDA margin of 9.4% for
2014 being down from the 10.4% realized in 2013. Segment EBITDA in 2014 was adversely impacted by about $11 of
increased cost from supply chain inefficiencies associated with the transition to new suppliers and increased warranty expense
of $8. Material commodity cost increases affecting this business approximated $17, with material cost savings of $10 and net
pricing improvement of $7 providing improved EBITDA.
Off-Highway
2013
Volume and mix
Performance
Currency effects
2014
$
Sales
1,330
(101)
2
$
1,231
Segment
EBITDA
163
$
(10)
17
(1)
169
$
Segment
EBITDA
Margin
12.3%
13.7%
Sales in our Off-Highway segment were down about 7% from 2013. The reduction was due principally to lower demand
levels, with global agriculture and construction/mining segment vehicle production in 2014 being down about 8%.
Off-Highway segment EBITDA of $169 was $6 higher than in 2013, resulting in an EBITDA margin of 13.7% in 2014
compared to 12.3% in 2013. Performance improvement was driven by material cost savings of about $22 and pricing
improvement of $2 which more than offset a $4 increase in warranty cost and $3 of other cost increases.
Power Technologies
2013
Volume and mix
Performance
Currency effects
2014
Sales
1,030
42
(4)
(16)
1,052
$
$
Segment
EBITDA
150
$
11
(3)
(4)
154
$
Segment
EBITDA
Margin
14.6%
14.6%
Power Technologies primarily serves the light vehicle market, but also sells product to the medium/heavy truck and off-
highway markets. Sales in 2014, net of currency effects, were up 4%. Sales volumes benefited from stronger global light
vehicle engine production of 3% and increased medium/heavy truck production levels in North America.
The Power Technologies 2014 segment EBITDA of $154 increased by $4 from 2013. Performance-related impacts on
segment EBITDA in 2014 included an increase in warranty cost of $7, lower pricing of $4 and increased material commodity
costs of $2. Partially offsetting these factors were material cost savings of $9 and benefits from other cost reduction actions.
29
Non-GAAP Financial Measures
Adjusted EBITDA
We have defined adjusted EBITDA as earnings from continuing and discontinued operations before interest, taxes,
depreciation, amortization, equity grant expense, restructuring expense and other adjustments not related to our core operations
(gain/loss on debt extinguishment, pension settlements or divestitures, impairment, etc.). Adjusted 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. Adjusted EBITDA should not be considered a substitute for income before income taxes, net income or
other results reported in accordance with GAAP. Adjusted EBITDA may not be comparable to similarly titled measures
reported by other companies.
The following table provides a reconciliation of segment EBITDA and adjusted EBITDA to net income.
Segment EBITDA
Light Vehicle
Commercial Vehicle
Off-Highway
Power Technologies
Total Segment EBITDA
Corporate expense and other items, net
Structures EBITDA
Adjusted EBITDA
Depreciation and amortization
Restructuring
Interest expense, net
Structures EBITDA
Other*
Income from continuing operations before income taxes
Income tax expense (benefit)
Equity in earnings (losses) of affiliates
Income from continuing operations
Income (loss) from discontinued operations
Net income
2015
2014
2013
$
$
262
100
147
149
658
(6)
652
(174)
(15)
(100)
(71)
292
82
(34)
176
4
180
$
$
250
172
169
154
745
1
746
(213)
(21)
(103)
(149)
260
(70)
13
343
(15)
328
$
$
242
194
163
150
749
(2)
(2)
745
(262)
(24)
(74)
2
(19)
368
119
12
261
(1)
260
*
Other includes stock compensation expense, strategic transaction expenses, impairment of long-lived assets, gain on derecognition of noncontrolling
interest, loss on disposal group held for sale, distressed supplier costs, amounts attributable to previously divested/closed operations, pension settlement
charges, loss on extinguishment of debt, write-off of deferred financing costs, recognition of unrealized gain on payment-in-kind note receivable, and
other items. See Note 18 to our consolidated financial statements in Item 8 for additional details.
Free Cash Flow
We have defined free cash flow as cash provided by operating activities less purchases of property, plant and equipment.
We believe this measure is useful to investors in evaluating the operational cash flow of the company inclusive of the spending
required to maintain the operations. Free cash flow is neither intended to represent nor be an alternative to the measure of net
cash provided by operating activities reported under GAAP. Free cash flow may not be comparable to similarly titled measures
reported by other companies.
The following table reconciles free cash flow to net cash flows provided by operating activities.
Net cash provided by operating activities
Purchases of property, plant and equipment
Free cash flow
2015
2014
2013
$
$
406
(260)
146
$
$
510
(234)
276
$
$
577
(209)
368
30
Liquidity
Our global liquidity at December 31, 2015 was as follows:
Cash and cash equivalents
Less: Deposits supporting obligations
Available cash
Additional cash availability from revolving facility
Marketable securities
Total global liquidity
$
$
791
(8)
783
260
162
1,205
Cash deposits are maintained to provide credit enhancement for certain agreements and are reported as part of cash and
cash equivalents. For most of these deposits, the cash may be withdrawn if a comparable security is provided in the form of
letters of credit. Accordingly, these deposits are not considered to be restricted.
Marketable securities are included as a component of global liquidity as these investments can be readily liquidated at our
discretion.
Cash and marketable securities of $143 held by a wholly-owned subsidiary at December 31, 2015 can be transferred out of
this subsidiary only if approved by its independent board member. Accordingly, accessing this component of global liquidity is
uncertain.
The components of our December 31, 2015 consolidated cash balance were as follows:
Cash and cash equivalents
Cash and cash equivalents held as deposits
Cash and cash equivalents held at less than wholly-owned subsidiaries
Consolidated cash balance
U.S.
Non-U.S.
Total
$
$
260
2
3
265
$
$
427
6
93
526
$
$
687
8
96
791
A portion of the non-U.S. cash and cash equivalents is utilized for working capital and other operating purposes. Several
countries have local regulatory requirements that significantly restrict the ability of our operations to repatriate this cash.
Beyond these restrictions, there are practical limitations on repatriation of cash from certain subsidiaries because of the
resulting tax withholdings and subsidiary by-law restrictions which could limit our ability to access cash and other assets.
The principal sources of liquidity available for our future cash requirements are expected to be (i) cash flows from
operations, (ii) cash and cash equivalents on hand and (iii) borrowings from our revolving facility. We believe that our overall
liquidity and operating cash flow will be sufficient to meet our anticipated cash requirements for capital expenditures, working
capital, debt obligations, common stock repurchases and other commitments during the next twelve months. While uncertainty
surrounding the current economic environment could adversely impact our business, based on our current financial position, we
believe it is unlikely that any such effects would preclude us from maintaining sufficient liquidity.
At December 31, 2015, we had no borrowings under the revolving facility but we had utilized $37 for letters of credit.
Based on our borrowing base collateral, we had availability as of that date under the revolving facility of $260 after deducting
the outstanding letters of credit.
In December 2014, we completed the sale of $425 in senior unsecured notes. Net proceeds of the offering after transaction
costs totaled $418. Net proceeds of $359 were used to redeem $345 of our senior notes due February 15, 2019 (February 2019
Notes) pursuant to a tender offer at a weighted average price of 104.116%. In January 2015, net proceeds of $41 were used to
redeem $40 of our February 2019 Notes at a price of 103.000%. In March 2015, net proceeds of $16 were used to redeem the
remaining $15 of our February 2019 Notes at a price of 103.250%.
At December 31, 2015, we were in compliance with the covenants of our financing agreements. Under the revolving
facility and our senior notes, we are required to comply with certain incurrence-based covenants customary for facilities of
these types. The incurrence-based covenants in the revolving facility permit us to, among other things, (i) issue foreign
subsidiary indebtedness, (ii) incur general secured indebtedness and (iii) incur additional unsecured debt so long as the pro
forma minimum fixed charge coverage ratio is at least 1.0:1.0. We may also make dividend payments in respect of our common
31
stock as well as certain investments and acquisitions so long as there is (i) at least $100 of pro forma excess borrowing
availability or (ii) at least $75 of pro forma excess borrowing availability and the pro forma minimum fixed charge coverage
ratio is at least 1.0:1.0. The indentures governing our senior notes include similar incurrence-based covenants that may subject
us to additional specified limitations.
Our Board of Directors approved an expansion of our existing common stock share repurchase program from $1,400 to
$1,700 on January 11, 2016. During 2015, we paid $311 to acquire 16,412,485 shares of common stock in the open market.
From time to time, depending upon market, pricing and other conditions, as well as our cash balances and liquidity, we
may seek to acquire our senior notes or other indebtedness or our common stock through open market purchases, privately
negotiated transactions, tender offers, exchange offers or otherwise, upon such terms and at such prices as we may determine
(or as may be provided for in the indentures governing the notes), for cash, securities or other consideration. There can be no
assurance that we will pursue any such transactions in the future, as the pursuit of any alternative will depend upon numerous
factors such as market conditions, our financial performance and the limitations applicable to such transactions under our
financing and governance documents.
Cash Flow
Cash provided by (used for) changes in working capital
Other cash provided by operations
Net cash provided by operating activities
Net cash used in investing activities
Net cash used in financing activities
Net increase (decrease) in cash and cash equivalents
2015
2014
2013
$
$
(41) $
447
406
(258)
(403)
(255) $
(39) $
549
510
(246)
(254)
10
$
104
473
577
(222)
(150)
205
The table above summarizes our consolidated statement of cash flows. During 2013, we received a $61 payment on a
payment-in-kind note receivable. The payment included $33 of principal and $28 of interest, $26 of which related to prior
years. In January 2014, we sold the payment-in-kind note receivable to a third party for $75. The proceeds included $35 of
principal and $40 of interest related to prior years. The principal portion of the payment has been classified as cash provided by
investing activities and the interest portion has been classified as cash provided by operating activities.
Operating activities — Exclusive of working capital, other cash provided by operations was $447 during 2015 compared to
$549 during 2014 and $473 during 2013. The decrease during 2015 was primarily attributable to lower operating earnings and
lower year-over-year cash received on our payment-in-kind note receivable attributable to interest of $40, partially offset by
lower year-over-year cash income taxes of $26, cash paid for interest of $26 and restructuring payments of $10. The increase
during 2014 was primarily attributable to lower year-over-year pension contributions of $41 and higher year-over-year cash
received on our payment-in-kind note receivable attributed to interest of $14. Lower cash taxes and restructuring payments in
2014 contributed an additional $20 and $14 to improved operating cash flows.
Working capital used cash of $41 and $39 in 2015 and 2014. Cash of $32 was used to finance increased receivables in
2014. Cash of $28 and $56 was used to fund higher inventory levels in 2015 and 2014. Decreases in accounts payable and
other net liabilities used cash of $13 in 2015 while increases in accounts payable and other net liabilities provided cash of $49
in 2014.
Working capital used cash of $39 in 2014 versus generating cash of $104 in 2013. Cash of $32 was used to finance
increased receivables in 2014 versus cash of $12 generated from declining receivables in 2013. Cash of $56 was used to fund
higher inventories in 2014 versus cash of $50 generated from lower inventory levels. Increases in accounts payable and other
net liabilities provided cash of $49 and $42 in 2014 and 2013. Increased working capital levels at the end of 2014 were due in
part to December sales in 2014 being higher than in 2013. Additionally, supplier transitions in process at the end of 2014 in our
Commercial Vehicle business contributed to increased inventory levels.
Investing activities — Expenditures for property plant and equipment were $260, $234 and $209 in 2015, 2014 and 2013.
During 2015, purchases of marketable securities were funded by proceeds from sales and maturities of marketable securities.
As discussed above, we received proceeds in 2014 from the sale of a payment-in-kind note receivable which included $35 of
principal. During 2014, net purchases of marketable securities were primarily funded by cash receipts related to the sale of our
payment-in-kind notes receivable. Also during 2014, we received $9 that was released from escrow related to the 2010 sale of
our former Structural Products business. During 2013, we paid $8 related to our strategic alliance with Fallbrook. As discussed
32
above, we received a payment in 2013 on a payment-in-kind note receivable which included $33 of principal. During 2013, net
purchases of marketable securities were primarily funded by cash receipts related to our payment-in-kind notes receivable.
Financing activities — During 2015, we redeemed $55 of our February 2019 Notes at a $2 premium. During 2014, we
completed the sale of $425 in senior unsecured notes and paid financing costs of $7 related to the notes. Also during 2014, we
redeemed $345 of our February 2019 Notes at a $15 premium. During 2013, we completed the sale of $750 in senior unsecured
notes and paid financing costs of $14 related to the notes and $3 to amend our revolving facility. During 2013, we used cash of
$474 to redeem our Series A preferred stock and $7 to purchase the noncontrolling interests in our United Kingdom
subsidiaries. We used cash of $311, $260 and $337 to repurchase common shares under our share repurchase program in 2015,
2014 and 2013. We used $8 and $28 for dividend payments to preferred stockholders in 2014 and 2013 and used $37, $32 and
$30 for dividend payments to common stockholders in 2015, 2014 and 2013. Distributions to noncontrolling interest totaled $9,
$9 and $11 in 2015, 2014 and 2013.
Contractual Obligations
We are obligated to make future cash payments in fixed amounts under various agreements. The following table
summarizes our significant contractual obligations as of December 31, 2015.
Payments Due by Period
$
$
2016
Total
Contractual Cash Obligations
Long-term debt(1)
Interest payments(2)
Leases(3)
Unconditional purchase obligations(4)
Pension contribution(5)
Retiree health care benefits(6)
Uncertain income tax positions(7)
Total contractual cash obligations
______________________________________________________
Notes:
(1) Principal payments on long-term debt and capital lease obligations in place at December 31, 2015.
1,583
633
159
93
14
86
17
91
34
90
14
4
2,568
250
$
$
2017 - 2018
38
$
180
56
1
$
2019 - 2020 After 2020
1,525
$
184
41
1
3
178
28
1
9
10
63
$
284
$
220
$
1,814
(2)
Interest payments are based on long-term debt and capital leases in place at December 31, 2015 and the interest rates applicable to such obligations.
(3) Operating leases related to real estate, vehicles and other assets.
(4) Unconditional purchase obligations are comprised principally of commitments for procurement of fixed assets and the purchase of raw materials.
(5) This amount represents estimated 2016 minimum required contributions to our global defined benefit pension plans. We have not estimated pension
contributions beyond 2016 due to the significant impact that return on plan assets and changes in discount rates might have on such amounts.
(6) This amount represents estimated payments under our non-U.S. retiree health care programs. Obligations under the non-U.S. retiree health care programs
are not fixed commitments and will vary depending on various factors, including the level of participant utilization and inflation. Our estimates of the
payments to be made in the future consider recent payment trends and certain of our actuarial assumptions.
(7) We are not able to reasonably estimate the timing of payments related to uncertain tax positions because the timing of settlement is uncertain. The above
table does not reflect unrecognized tax benefits at December 31, 2015 of $87. See Note 16 to our consolidated financial statements in Item 8 for
additional discussion.
At December 31, 2015, we maintained cash balances of $8 on deposit with financial institutions primarily to support
property insurance policy deductibles, certain employee retirement obligations and specific government approved
environmental remediation efforts.
Contingencies
For a summary of litigation and other contingencies, see Note 14 to our consolidated financial statements in Item 8. We
believe that any liabilities beyond the amounts already accrued that may result from these contingencies will not have a
material adverse effect on our liquidity, financial condition or results of operations.
33
Critical Accounting Estimates
The preparation of our consolidated financial statements in accordance with GAAP requires us to use estimates and make
judgments and assumptions about future events that affect the reported amounts of assets, liabilities, revenue, expenses and the
related disclosures. Considerable judgment is often involved in making these determinations. Critical estimates are those that
require the most difficult, subjective or complex judgments in the preparation of the financial statements and the accompanying
notes. We evaluate these estimates and judgments on a regular basis. We believe our assumptions and estimates are reasonable
and appropriate. However, the use of different assumptions could result in significantly different results and actual results could
differ from those estimates. The following discussion of accounting estimates is intended to supplement the Summary of
Significant Accounting Policies presented as Note 1 to our consolidated financial statements in Item 8.
Income taxes — Accounting for income taxes is complex, in part because we conduct business globally and therefore file
income tax returns in numerous tax jurisdictions. Significant judgment is required in determining the income tax provision,
uncertain tax positions, deferred tax assets and liabilities and the valuation allowances recorded against our net deferred tax
assets. A valuation allowance is provided when, in our judgment based upon available information, it is more likely than not
that a portion of such deferred tax assets will not be realized. To make this assessment, we consider the historical and projected
future taxable income or loss in different tax jurisdictions and we review our tax planning strategies. We have recorded
valuation allowances against deferred tax assets in the U.S. and other foreign jurisdictions where realization has been
determined to be uncertain. Since future financial results may differ from previous estimates, periodic adjustments to our
valuation allowances may be necessary.
At December 31, 2015, we continue to carry a valuation allowance against the deferred tax assets in the U.S. because, on a
more likely than not basis, we have concluded that the U.S. deferred tax assets are not expected to be realized. When evaluating
the continued need for this valuation allowance we consider all components of comprehensive income, and we weight the
positive and negative evidence, putting greater reliance on objectively verifiable historical evidence than on projections of
future profitability that are dependent on actions that have not taken place as of the assessment date. We also consider the
changes to historical profitability of actions that have occurred through the year of assessment and objectively verifiable effects
of material forecasted events that have a sustained effect on future profitability, as well as the effect on historical profits of
nonrecurring events. These effects included items such as the lost future interest income resulting from the prepayment on and
subsequent sale of the payment-in-kind callable note receivable and the additional interest expense resulting from the $750
senior unsecured notes payable issued in July 2013. We also consider the changes to historical and prospective income from tax
planning strategies expected to be implemented. A sustained period of profitability, after considering the effect of implemented
actions, planned actions and nonrecurring events, along with positive expectations for future profitability are necessary for a
determination that a valuation allowance should be released.
In 2015, we generated taxable income associated with a tax planning action originally contemplated in 2014. At that time,
the gain and related income associated with these actions were estimated to generate tax of $179. Upon completion of the tax
planning action in 2015, it was determined that the final income generated by the transaction was higher than anticipated as a
consequence of proposed Internal Revenue Service regulations issued during 2015 providing guidance on the tax treatment
afforded a component of the tax planning action we undertook as well as revised income estimates, which resulted in an
additional $66 release of valuation allowance. In conjunction with the tax planning action, a prepaid tax asset of $190 was
recorded. The prepaid tax asset represents the usage of tax attributes recognized in 2014 and 2015 through the release of the
valuation allowance on our deferred tax assets and will be amortized into tax expense over the life of the assets transferred in
the transaction. During 2015, $2 of the prepaid tax asset was recognized in tax expense as a result of this amortization. In
addition, we recognized tax expense of $23 related to the sale of the affiliate's stock. While our U.S. operations have
experienced improved profitability in recent years, our analysis of the income of the U.S. operations, as adjusted for changes to
historical income for developments through 2015, demonstrates historical losses as of December 31, 2015. Therefore, we have
not achieved a level of sustained profitability that would, in our judgment, support a release of the valuation allowance at
December 31, 2015. While there may be opportunity for our U.S. operations to generate profits in the future, our near-term
level of profitability is uncertain. The potential long-term profitability cannot be given as much weight in our analysis given the
objectively verifiable lack of sustained pro forma historical profitability and uncertainty associated with the future U.S.
operations.
In the ordinary course of business, there are many transactions and calculations where the ultimate tax determination is less
than certain. We are regularly under audit by the various applicable tax authorities. Although the outcome of tax audits is always
uncertain, we believe that we have appropriate support for the positions taken on our tax returns and that our annual tax provisions
include amounts sufficient to pay assessments, if any, which may be proposed by the taxing authorities. Nonetheless, the amounts
34
ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ materially from the amounts accrued
for each year. See additional discussion of our deferred tax assets and liabilities in Note 16 to our consolidated financial statements
in Item 8.
Retiree benefits — Accounting for pensions and other postretirement benefits (OPEB) involves estimating the cost of benefits
to be provided well into the future and attributing that cost to the time period each employee works. These plan expenses and
obligations are dependent on assumptions developed by us in consultation with our outside advisers such as actuaries and other
consultants and are generally calculated independently of funding requirements. The assumptions used, including inflation,
discount rates, investment returns, life expectancies, turnover rates, retirement rates, future compensation levels and health care
cost trend rates, have a significant impact on plan expenses and obligations. These assumptions are regularly reviewed and
modified when appropriate based on historical experience, current trends and the future outlook. Changes in one or more of the
underlying assumptions could result in a material impact to our consolidated financial statements in any given period. If actual
experience differs from expectations, our financial position and results of operations in future periods could be affected.
Mortality rates are based in part on the company's plan experience and actuarial estimates.The inflation assumption is
based on an evaluation of external market indicators, while retirement and turnover rates are based primarily on actual plan
experience. Health care cost trend rates are developed based on our actual historical claims experience, the near-term outlook
and an assessment of likely long-term trends. For our largest plans, discount rates are based upon the construction of a
theoretical bond portfolio, adjusted according to the timing of expected cash flows for the future obligations. A yield curve is
developed based on a subset of these high-quality fixed-income investments (those with yields between the 40th and 90th
percentiles). The projected cash flows are matched to this yield curve and a present value developed which is then calibrated to
develop a single equivalent discount rate. Pension benefits are funded through deposits with trustees that satisfy, at a minimum,
the applicable funding regulations. For our largest defined benefit pension plans, expected investment rates of return are based
on input from the plans’ investment advisers and actuary regarding our expected investment portfolio mix, historical rates of
return on those assets, projected future asset class returns, the impact of active management and long-term market conditions
and inflation expectations. We believe that the long-term asset allocation on average will approximate the targeted allocation
and we regularly review the actual asset allocation to periodically re-balance the investments to the targeted allocation when
appropriate. OPEB benefits are funded as they become due.
Actuarial gains or losses may result from changes in assumptions or when actual experience is different from that which
was expected. Under the applicable standards, those gains and losses are not required to be immediately recognized in our
results of operations as income or expense, but instead may be deferred as part of accumulated other comprehensive income
(AOCI) and amortized into our results of operations over future periods.
U.S. retirement plans
Our U.S. defined benefit pension plans comprise about 85% of our consolidated defined benefit pension obligations at
December 31, 2015. These plans are frozen and no service-related costs are being incurred. Changes in our net obligations are
principally attributable to changing discount rates and the performance of plan assets. Pension obligations are valued using
discount rates established annually in consultation with our outside actuarial advisers using a theoretical bond portfolio,
adjusted according to the timing of expected cash flows for our future obligations. Declining discount rates increase the present
value of future pension obligations – a 25 basis point decrease in the discount rate would increase our U.S. pension liability by
about $43. As indicated above, when establishing the expected long-term rate of return on our U.S. pension plan assets, we
consider historical performance and forward looking return estimates reflective of our portfolio mix and investment strategy.
Based on the most recent analysis of projected portfolio returns, we concluded that the use of 6.5% as the expected return on
our U.S. pension plan assets for 2016 is appropriate. See Note 10 to the consolidated financial statements in Item 8 for
information about the investing and allocation objectives related to our U.S. pension plan assets.
During the fourth quarter of 2015, the Society of Actuaries (SOA) issued new mortality improvement scales (MP-2015).
When it issued MP-2014 a year earlier, the SOA had projected improvement from the beginning of 2008 after analyzing
historical data through 2007. In connection with selecting our assumptions in 2014, we had compared actual experience for
years after 2007 to the improvement projected in MP-2014, along with other information, before concluding that a 0.75% long-
term improvement rate (LTIR) for periods beginning with 2014 was appropriate and that the LTIR would be attained by 2020,
sooner than the period assumed in MP-2014. The mortality improvement assumptions adopted in 2014 were not modified in
2015 as they are generally consistent with MP-2015.
Effective January 1, 2016, we changed the method used to estimate the service (where applicable) and interest components
of the annual cost of our pension and other postretirement benefit plans. Prior to 2016, we estimated interest and service
expense using the discount rate underlying the calculation of the related projected benefit obligation at the end of the preceding
35
year, which was a weighted-average rate derived from the corresponding yield curve. The new method, referred to as a full
yield curve approach, estimates interest and service expense using the specific spot rates, from the yield curve, that relate to
projected cash flows. This method, which we believe is more precise, will reduce interest expense for our pension plans in the
U.S. by approximately $14 in 2016. The determination of the projected benefit obligation at year end is unchanged, accordingly
the actuarial gain or loss will be affected by the amount of the change in interest and service expense.
At December 31, 2015, we have $513 of unrecognized losses relating to our U.S. pension plans. Actuarial gains and losses,
which are primarily the result of changes in the discount rate and other assumptions and differences between actual and
expected asset returns, are deferred in AOCI and amortized to expense following the corridor approach. We use the average
remaining service period of active participants unless almost all of the plan’s participants are inactive, in which case we use the
average remaining life expectancy of inactive participants.
Actuarial gains and losses can also impact required cash contributions. Based on the current funded status of our U.S.
plans, there are no minimum contribution requirements for 2016.
See Note 10 to our consolidated financial statements in Item 8 for additional discussion of our pension and OPEB
obligations.
Goodwill and other indefinite-lived intangible assets — Our goodwill and other indefinite-lived intangible assets are tested for
impairment as of October 31 of each year for all of our reporting units, and more frequently if events occur or circumstances
change that would warrant such a review. We make significant assumptions and estimates about the extent and timing of future
cash flows, growth rates and discount rates. The cash flows are estimated over a significant future period of time, which makes
those estimates and assumptions subject to a high degree of uncertainty. We also utilize market valuation models which require
us to make certain assumptions and estimates regarding the applicability of those models to our assets and businesses. We use
our internal forecasts, which we update quarterly, to make our cash flow projections. These forecasts are based on our
knowledge of our customers’ production forecasts, our assessment of market growth rates, net new business, material and labor
cost estimates, cost recovery agreements with customers and our estimate of savings expected from our restructuring activities.
The most likely factors that would significantly impact our forecasts are changes in customer production levels and loss of
significant portions of our business. We believe that the assumptions and estimates used in the assessment of the goodwill in
our Off-Highway reporting unit and our other indefinite-lived intangible assets as of October 31, 2015 were reasonable. There
is a significant excess of fair value over the carrying value of these assets at December 31, 2015.
Long-lived assets with definite lives — We perform impairment assessments on our property, plant and equipment and our
definite-lived intangible assets whenever events and circumstances indicate that the carrying amounts of the assets may not be
recoverable. When indications are present, we compare the estimated future undiscounted net cash flows of the operations to
which the assets relate to the carrying amounts of such assets. We utilize the cash flow projections discussed above for
property, plant and equipment and amortizable intangibles. We group the assets and liabilities at the lowest level for which
identifiable cash flows are largely independent of the cash flows of other assets and liabilities and evaluate the asset group
against the undiscounted future cash flows using the life of the primary assets. If the carrying amounts of the long-lived assets
are not recoverable from future cash flows and exceed their fair value, an impairment loss is recognized to reduce the carrying
amounts of the long-lived assets to their fair value. Fair value is determined based on discounted cash flows, third party
appraisals or other methods that provide appropriate estimates of value. Determining whether a triggering event has occurred,
performing the impairment analysis and estimating the fair value of the assets require numerous assumptions and a
considerable amount of management judgment. During 2015, we recorded a $36 charge, fully impairing the long-lived assets
related to a significant South American supplier to our Commercial Vehicle operating segment. See Note 2 to our consolidated
financial statements in Item 8 for additional information.
Investments in affiliates — As of December 31, 2015 and 2014 , we had aggregate investments in affiliates of $153 and $204.
We monitor our investments in affiliates for indicators of other-than-temporary declines in value on an ongoing basis in
accordance with GAAP. If we determine that an other-than temporary decline in value has occurred, we recognize an
impairment loss, which is measured as the difference between the recorded carrying value and the fair value of the investment.
Fair value is generally determined using the discounted cash flows (an income approach) or guideline public company (a
market approach) methods. A deterioration in industry conditions and decline in the operating results of our non-consolidated
affiliates could result in the impairment of our investments. During 2015, we recorded a $39 impairment charge related to our
investment in DDAC. See Note 19 to our consolidated financial statements in Item 8 for additional information.
Warranty — Costs related to product warranty obligations are estimated and accrued at the time of sale with a charge against
cost of sales. Warranty accruals are evaluated and adjusted as appropriate based on occurrences giving rise to potential warranty
36
exposure and associated experience. Warranty accruals and adjustments require significant judgment, including a determination
of our involvement in the matter giving rise to the potential warranty issue or claim, our contractual requirements, estimates of
units requiring repair and estimates of repair costs. If actual experience differs from expectations, our financial position and
results of operations in future periods could be affected.
Contingency reserves — We have numerous other loss exposures, such as asbestos claims and litigation. Establishing loss
reserves for these matters requires the use of estimates and judgment in regards to risk exposure and ultimate liability. In the
case of legal contingencies, estimates are made of the likely outcome of legal proceedings and potential exposure where
reasonably determinable based on the information presently known to us. New information and developments in these matters
could materially affect our recorded liabilities. Estimates of potential liability associated with asbestos claims are influenced by
a number of factors, including legislative and legal developments to reduce submission of claims without merit, our success in
litigating and resolving claims, developments with incidence of disease manifested as a consequence of asbestos, developments
with and availability of bankruptcy trusts and other asbestos claim defendants, and the costs incurred by us to successfully
defend and resolve asbestos claims. Additionally, we use a fifteen-year time horizon to estimate our probable asbestos liability.
37
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
We are exposed to fluctuations in foreign currency exchange rates, commodity prices for products we use in our
manufacturing and interest rates. To reduce our exposure to these risks, we maintain risk management controls to monitor these
risks and take appropriate actions to attempt to mitigate such forms of market risks.
Foreign currency exchange rate risk — The majority of our foreign currency exposures are associated with intercompany and
third party sales and purchase transactions and with cross-currency intercompany loans. We use forward contracts to manage
our foreign currency exchange rate risk associated with a portion of our forecasted foreign currency-denominated sales and
purchase transactions and with certain foreign currency-denominated assets and liabilities. We also use currency swaps to
manage foreign currency exchange rate risk associated with certain intercompany loans. Foreign currency exposures are
reviewed quarterly, at a minimum, and natural offsets are considered prior to entering into derivative instruments.
Changes in the fair value of derivative instruments treated as cash flow hedges are reported in OCI. Deferred gains and
losses are reclassified to earnings in the same period in which the underlying transactions affect earnings. Changes in the fair
value of derivative instruments not treated as cash flow hedges are recognized in earnings in the period in which those changes
occur. Changes in the fair value of derivative instruments associated with product-related transactions are recorded in cost of
sales, while those associated with non-product transactions are recorded in other income, net. See Note 13 to our consolidated
financial statements in Item 8.
The following table summarizes the sensitivity of the fair value of our derivative instruments, including forward contracts
and currency swaps, at December 31, 2015 to a 10% change in foreign exchange rates (versus the currencies presented).
Foreign currency rate sensitivity:
Forward contracts and currency swaps
Long U.S. dollars
Short U.S. dollars
Long euros (short other than U.S. dollar)
Short euros (long other than U.S. dollar)
Other, net
10%
Increase
in Rates
Gain (Loss)
10%
Decrease
in Rates
Gain (Loss)
$
$
$
$
$
(18) $
10
$
(5) $
$
9
(1) $
18
(10)
5
(9)
1
At December 31, 2015, approximately one-half of our foreign currency derivative instruments are associated with recorded
intercompany loans while the other half is primarily associated with our forecasted foreign currency-denominated sales and
purchase transactions. Except where not necessary due to the existence of natural hedges, our foreign currency-denominated
loans are nearly fully hedged, eliminating virtually all currency exposure on those loans.
We are also subject to currency translation risk with respect to our net investments in foreign subsidiaries and, as deemed
appropriate, we hedge such risk. As of December 31, 2015, no net investment hedge contracts remain outstanding.
Commodity price risk — We do not utilize derivative contracts to manage commodity price risk. Our overall strategy is to pass
through commodity risk to our customers in our pricing agreements. A substantial portion of our customer agreements include
contractual provisions for the pass-through of commodity price movements. In instances where the risk is not covered
contractually, we have generally been able to adjust customer pricing to recover commodity cost increases.
Interest rate risk — Our long-term debt portfolio consists mostly of fixed-rate instruments. On occasion we enter into interest
rate swaps to convert fixed-rate debt to floating-rate debt. As of December 31, 2015, we do not hold any derivative contracts
that hedge our interest rate risk.
38
Item 8. Financial Statements and Supplementary Data
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Dana Holding Corporation
In our opinion, the consolidated financial statements listed in the index appearing under Item 15(a)(1) present fairly, in all
material respects, the financial position of Dana Holding Corporation and its subsidiaries at December 31, 2015 and 2014, and
the results of their operations and their cash flows for each of the three years in the period ended December 31, 2015 in
conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company
maintained, in all material respects, effective internal control over financial reporting as of December 31, 2015 based on criteria
established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO). The Company's management is responsible for these financial statements, for maintaining
effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial
reporting, included in Management's Report on Internal Control over Financial Reporting under Item 9A. Our responsibility is
to express opinions on these financial statements and on the Company's internal control over financial reporting based on our
integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about
whether the financial statements are free of material misstatement and whether effective internal control over financial
reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal
control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the
risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based
on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the
circumstances. We believe that our audits provide a reasonable basis for our opinions.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ PricewaterhouseCoopers LLP
Toledo, Ohio
February 18, 2016
39
Dana Holding Corporation
Consolidated Statement of Operations
(In millions except per share amounts)
Net sales
Costs and expenses
Cost of sales
Selling, general and administrative expenses
Amortization of intangibles
Restructuring charges, net
Impairment of long-lived assets
Loss on disposal group held for sale
Pension settlement charges
Loss on extinguishment of debt
Other income, net
Income from continuing operations before interest expense and income taxes
Interest expense
Income from continuing operations before income taxes
Income tax expense (benefit)
Equity in earnings (losses) of affiliates
Income from continuing operations
Income (loss) from discontinued operations
Net income
Less: Noncontrolling interests net income
Net income attributable to the parent company
Preferred stock dividend requirements
Preferred stock redemption premium
Net income (loss) available to common stockholders
Net income (loss) per share available to parent company common
stockholders:
Basic:
Income (loss) from continuing operations
Income (loss) from discontinued operations
Net income (loss)
Diluted:
Income (loss) from continuing operations
Income (loss) from discontinued operations
Net income (loss)
Weighted-average common shares outstanding
Basic
Diluted
2015
2014
2013
$
6,060
$
6,617
$
6,769
5,211
391
14
15
(36)
(2)
14
405
113
292
82
(34)
176
4
180
21
159
5,672
411
42
21
(80)
(42)
(19)
48
378
118
260
(70)
13
343
(15)
328
9
319
7
$
$
$
$
$
$
$
159
$
312
$
0.98
0.02
1.00
0.97
0.02
0.99
$
$
$
$
$
$
2.07
$
(0.10) $
$
1.97
$
1.93
(0.09) $
$
1.84
5,849
410
74
24
55
467
99
368
119
12
261
(1)
260
16
244
25
232
(13)
(0.08)
(0.01)
(0.09)
(0.08)
(0.01)
(0.09)
159.0
160.0
158.0
173.5
146.4
146.4
Dividends declared per common share
$
0.23
$
0.20
$
0.20
The accompanying notes are an integral part of the consolidated financial statements.
40
Dana Holding Corporation
Consolidated Statement of Comprehensive Income
(In millions)
Net income
Less: Noncontrolling interests net income
Net income attributable to the parent company
2015
2014
2013
$
$
180
21
159
$
328
9
319
Other comprehensive income (loss) attributable to the parent company, net of
tax:
Currency translation adjustments
Hedging gains and losses
Investment and other gains and losses
Defined benefit plans
Other comprehensive income (loss) attributable to the parent company
Other comprehensive income (loss) attributable to noncontrolling interests, net
of tax:
Currency translation adjustments
Hedging gains and losses
Defined benefit plans
Other comprehensive loss attributable to noncontrolling interests
(181)
5
(3)
2
(177)
(5)
1
(4)
Total comprehensive income (loss) attributable to the parent company
Total comprehensive income attributable to noncontrolling interests
Total comprehensive income (loss)
$
(18)
17
(1) $
(185)
(9)
2
(78)
(270)
(4)
(4)
49
5
54
$
The accompanying notes are an integral part of the consolidated financial statements.
260
16
244
(40)
(4)
(9)
122
69
(5)
1
(4)
313
12
325
41
Dana Holding Corporation
Consolidated Balance Sheet
(In millions except share and per share amounts)
2015
2014
Assets
Current assets
Cash and cash equivalents
Marketable securities
Accounts receivable
Trade, less allowance for doubtful accounts of $5 in 2015 and $6 in 2014
Other
Inventories
Other current assets
Current assets of disposal group held for sale
Total current assets
Goodwill
Intangibles
Other noncurrent assets
Investments in affiliates
Property, plant and equipment, net
Total assets
Liabilities and equity
Current liabilities
Notes payable, including current portion of long-term debt
Accounts payable
Accrued payroll and employee benefits
Taxes on income
Other accrued liabilities
Current liabilities of disposal group held for sale
Total current liabilities
Long-term debt, less debt issuance costs of $21 in 2015 and $25 in 2014
Pension and postretirement obligations
Other noncurrent liabilities
Noncurrent liabilities of disposal group held for sale
Total liabilities
Commitments and contingencies (Note 14)
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, 150,068,040 and
166,070,057 shares outstanding
Additional paid-in capital
Accumulated deficit
Treasury stock, at cost (23,963 and 1,588,990 shares)
Accumulated other comprehensive loss
Total parent company stockholders' equity
Noncontrolling equity
Total equity
Total liabilities and equity
$
$
$
$
791
162
673
115
625
108
2,474
80
102
353
150
1,167
4,326
22
712
145
19
193
1,091
1,553
521
330
3,495
—
2
2,311
(410)
(1)
(1,174)
728
103
831
4,326
$
$
$
$
1,121
169
755
117
654
111
27
2,954
90
169
312
204
1,176
4,905
65
791
158
32
194
21
1,261
1,588
580
279
17
3,725
—
2
2,640
(532)
(33)
(997)
1,080
100
1,180
4,905
The accompanying notes are an integral part of the consolidated financial statements.
42
Dana Holding Corporation
Consolidated Statement of Cash Flows
(In millions)
2015
2014
2013
Operating activities
Net income
Depreciation
Amortization of intangibles
Amortization of deferred financing charges
Call premium on senior notes
Write off of deferred financing costs
Earnings of affiliates, net of dividends received
Stock compensation expense
Deferred income taxes
Pension expense (contributions), net
Impairment of long-lived assets
Impairment of equity affiliate
Loss on disposal group held for sale
Interest payment received on payment-in-kind note receivable
Change in working capital
Change in other noncurrent assets and liabilities
Other, net
Net cash provided by operating activities
Investing activities
Purchases of property, plant and equipment
Principal payment received on payment-in-kind note receivable
Purchases of marketable securities
Proceeds from sales of marketable securities
Proceeds from maturities of marketable securities
Proceeds from sale of businesses
Other
Net cash used in investing activities
Financing activities
Net change in short-term debt
Proceeds from letters of credit
Repayment of letters of credit
Proceeds from long-term debt
Repayment of long-term debt
Call premium on senior notes
Deferred financing payments
Preferred stock redemption
Dividends paid to preferred stockholders
Dividends paid to common stockholders
Distributions to noncontrolling interests
Repurchases of common stock
Other
Net cash used in financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents - beginning of period
Effect of exchange rate changes on cash balances
Less: cash of disposal group held for sale
Cash and cash equivalents - end of period
$
$
180
158
16
5
2
1
12
14
(10)
(18)
36
39
(41)
(7)
19
406
(260)
(43)
17
30
(2)
(258)
(5)
(4)
18
(60)
(2)
(37)
(9)
(311)
7
(403)
(255)
1,121
(75)
$
791
$
328
164
49
5
15
4
4
16
(199)
30
78
40
(39)
(16)
31
510
(234)
35
(84)
7
21
9
(246)
(8)
12
(8)
448
(372)
(15)
(7)
(8)
(32)
(9)
(260)
5
(254)
10
1,256
(118)
(27)
1,121
$
260
175
87
5
4
(2)
16
(10)
(60)
26
104
(3)
(25)
577
(209)
33
(84)
28
8
1
1
(222)
(14)
817
(57)
(17)
(474)
(28)
(30)
(11)
(337)
1
(150)
205
1,059
(8)
$
1,256
The accompanying notes are an integral part of the consolidated financial statements.
43
Dana Holding Corporation
Consolidated Statement of Stockholders’ Equity
(In millions)
Parent Company Stockholders'
Preferred
Stock
Common
Stock
Additional
Paid-In
Capital
Accumulated
Deficit
Treasury
Stock
Accumulated
Other
Compre-
hensive
Loss
Parent
Company
Stockholders'
Equity
Non-
controlling
Interests
Total
Equity
Balance, December 31, 2012 $
753
$
2
$
2,668
$
(769) $
(25) $
(793) $
1,836
$
112
$
1,948
Net income
Other comprehensive income
(loss)
Preferred stock dividends
($4.00 per share)
Common stock dividends
($0.20 per share)
Distributions to
noncontrolling interests
Preferred stock redemption
Share conversion
Common stock share
repurchases
Purchase of noncontrolling
interests
Repurchase of equity awards
Stock compensation
Stock withheld for employees
taxes
(242)
(139)
140
6
(2)
28
Balance, December 31, 2013
372
2
2,840
Net income
Other comprehensive loss
Preferred stock dividends
($3.00 per share)
Common stock dividends
($0.20 per share)
Distributions to
noncontrolling interests
Share conversion
Common stock share
repurchases
Retire treasury shares
Stock compensation
Stock withheld for employees
taxes
(372)
74
(294)
20
Balance, December 31, 2014
—
2
2,640
Net income
Other comprehensive loss
Common stock dividends
($0.23 per share)
Distributions to
noncontrolling interests
Derecognition of
noncontrolling interest
Common stock share
repurchases
Retire treasury shares
Stock compensation
Stock withheld for employees
taxes
(346)
17
244
(25)
(30)
(232)
(812)
319
(7)
(32)
(532)
159
(37)
(337)
(4)
(366)
301
(260)
294
(2)
(33)
(311)
346
(3)
69
(3)
(727)
(270)
(997)
(177)
244
69
(25)
(30)
—
(474)
1
(337)
3
(2)
28
(4)
1,309
319
(270)
(7)
(32)
—
3
(260)
—
20
(2)
1,080
159
(177)
(37)
—
—
(311)
—
17
(3)
16
(4)
(11)
(9)
260
65
(25)
(30)
(11)
(474)
1
(337)
(6)
(2)
28
(4)
104
1,413
9
(4)
(9)
100
21
(4)
(9)
(5)
328
(274)
(7)
(32)
(9)
3
(260)
—
20
(2)
1,180
180
(181)
(37)
(9)
(5)
(311)
—
17
(3)
Balance, December 31, 2015 $
— $
2
$
2,311
$
(410) $
(1) $
(1,174) $
728
$
103
$
831
The accompanying notes are an integral part of the consolidated financial statements.
44
Dana Holding Corporation
Index to Notes to the Consolidated
Financial Statements
Organization and Summary of Significant Accounting Policies
Divestitures, Discontinued Operations and Impairment of Long-Lived Assets
Goodwill and Other Intangible Assets
Restructuring of Operations
Inventories
Supplemental Balance Sheet and Cash Flow Information
Stockholders' Equity
Earnings per Share
Stock Compensation
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Pension and Postretirement Benefit Plans
11. Marketable Securities
12.
Financing Agreements
13.
Fair Value Measurements and Derivatives
14.
Commitments and Contingencies
15. Warranty Obligations
16.
Income Taxes
17. Other Income, Net
18.
Segments, Geographical Area and Major Customer Information
19.
Equity Affiliates
45
Page
46
52
54
55
56
57
58
61
61
63
71
71
73
76
78
78
82
83
85
Notes to Consolidated Financial Statements
(In millions, except share and per share amounts)
Note 1. Organization and Summary of Significant Accounting Policies
General
Dana Holding Corporation (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
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 include the accounts of all subsidiaries where we hold a
controlling financial interest. The ownership interests in subsidiaries held by third parties are presented in the consolidated
balance sheet within equity, but separate from the parent’s equity, as noncontrolling interests. All significant intercompany
balances and transactions have been eliminated in consolidation. Investments in 20 to 50%-owned affiliates, which are not
required to be consolidated, are generally accounted for under the equity method. Equity in earnings of these investments is
presented separately in the consolidated statement of operations, net of tax. Investments in less-than-20%-owned companies are
generally included in the financial statements at the cost of our investment. Dividends, royalties and fees from these cost basis
affiliates are recorded in income when received.
In the first quarter of 2015, we identified an error attributable to the calculation of noncontrolling interests net income of a
subsidiary. The error resulted in an understatement of noncontrolling equity and noncontrolling interests net income and a
corresponding overstatement of parent company stockholders' equity and net income attributable to the parent company in prior
periods. Based on our assessments of qualitative and quantitative factors, the error and related impacts were not considered
material to the financial statements of the prior periods to which they relate. The error was corrected in March 2015 by
increasing noncontrolling interests net income by $9. The correction was not considered material to our 2015 net income
attributable to the parent company.
In the third quarter of 2014, we identified an error that had resulted in a $10 overstatement of the values assigned to our
defined benefit pension obligation and goodwill when we applied fresh start accounting in 2008. These overstatements affected
pension expense, other comprehensive income and impairment of goodwill in subsequent periods. Based on our assessments of
qualitative and quantitative factors, the error and the related impacts were not considered material to the financial statements
for the quarter ended September 30, 2014 or the prior periods to which they relate. The error was corrected in September 2014
by decreasing pension and postretirement obligations by $17, decreasing accumulated other comprehensive loss by $3 to
eliminate the related impacts on unrecognized pension expense and currency translation adjustments, decreasing goodwill by
$3, decreasing cost of sales by $5 to reverse the cumulative impact on pension expense and crediting other income, net for $6
to effectively reverse a portion of the goodwill impairment recognized in 2008.
Held for sale — We classify long-lived assets or disposal groups as held for sale in the period: management commits to a plan
to sell; the long-lived asset or disposal group is available for immediate sale in its present condition subject only to terms that
are usual and customary for sales of such long-lived assets or disposal groups; an active program to locate a buyer and other
actions required to complete the plan to sell have been initiated; the sale is probable within one year; the asset or disposal group
is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and it is unlikely that
significant changes to the plan will be made or that the plan will be withdrawn. Long-lived assets and disposal groups classified
as held for sale are measured at the lower of their carrying amount or fair value less costs to sell. See Note 2 for additional
information regarding the disposal group held for sale at the end of 2014 and divested in January 2015.
Discontinued operations — Prior to January 1, 2015, we would classify a business component that had been disposed of or
classified as held for sale as discontinued operations if the cash flows of the component were eliminated from our ongoing
operations and we no longer had any significant continuing involvement in or with the component. The results of operations of
our discontinued operations, including any gains or losses on disposition, were aggregated and presented on one line in the
income statement. See Recently adopted accounting pronouncements in this note for a description of the current practice and
Note 2 for additional information regarding our discontinued operations.
46
Estimates — Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in
the United States (GAAP), which require the use of estimates, judgments and assumptions that affect the amounts reported in
the consolidated financial statements and accompanying disclosures. We believe our assumptions and estimates are reasonable
and appropriate. However, due to the inherent uncertainties in making estimates, actual results could differ from those
estimates.
Fair value measurements — A three-tier fair value hierarchy is used to prioritize the inputs to valuation techniques used to
measure fair value. The three levels of inputs are as follows: Level 1 inputs (highest priority) include unadjusted quoted prices
in active markets for identical instruments. Level 2 inputs include quoted prices for similar instruments that are observable
either directly or indirectly. Level 3 inputs (lowest priority) include unobservable inputs in which there is little or no market
data, which require management to develop its own assumptions. Classification within the hierarchy is determined based on the
lowest level input that is significant to the fair value measurement.
The inputs we use in our valuation techniques include 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. When available, we use quoted market prices to determine the fair value
(market approach). In the absence of active markets for the identical assets or liabilities, such measurements involve developing
assumptions based on market observable data and, in the absence of such data, we consider the amount and timing of estimated
future cash flows and assumed discount rates reflecting varying degrees of credit risk that is consistent with what market
participants would use in a hypothetical transaction that occurs at the measurement date (income approach). Fair values may
not represent actual values of the financial instruments that could be realized as of the balance sheet date or that will be realized
in the future.
Cash and cash equivalents — Cash and cash equivalents includes cash on hand, demand deposits and short-term cash
investments that are highly liquid in nature and have maturities of three months or less when purchased.
Marketable securities — Our investments in marketable securities reported in the accompanying balance sheet are classified as
available for sale and carried at fair value. Unrealized gains and losses are recorded in accumulated other comprehensive
income (loss) (AOCI) until realized. Realized gains and losses are recorded using the specific identification method.
Inventories — Inventories are valued at the lower of cost or market. Cost is determined using the average or first-in, first-out
(FIFO) cost method.
Property, plant and equipment — As a result of our adoption of fresh start accounting on February 1, 2008, property, plant and
equipment was stated at fair value with useful lives ranging from two to thirty years. Useful lives of newly acquired assets are
generally twenty to thirty years for buildings and building improvements, five to ten years for machinery and equipment, three
to five years for tooling and office equipment and three to ten years for furniture and fixtures. Depreciation is recognized over
the estimated useful lives using primarily the straight-line method for financial reporting purposes and accelerated depreciation
methods for federal income tax purposes. If assets are impaired, their value is reduced via an increase in accumulated
depreciation.
Pre-production costs related to long-term supply arrangements — The costs of tooling used to make products sold under long-
term supply arrangements are capitalized as part of property, plant and equipment and amortized over their useful lives if we
own the tooling or if we fund the purchase but our customer owns the tooling and grants us the irrevocable right to use the
tooling over the contract period. If we have a contractual right to bill our customers, costs incurred in connection with the
design and development of tooling are carried as a component of other accounts receivable until invoiced. Design and
development costs related to customer products are deferred if we have an agreement to collect such costs from the customer;
otherwise, they are expensed when incurred. At December 31, 2015, the machinery and equipment component of property,
plant and equipment includes $3 of our tooling related to long-term supply arrangements, while trade and other accounts
receivable includes $27 of costs related to tooling that we have a contractual right to collect from our customers.
Goodwill — We test goodwill for impairment annually as of October 31 and more frequently if events occur or circumstances
change that would warrant an interim review. Goodwill impairment testing is performed at the reporting unit level, which is our
operating segment. We estimate the fair value of the reporting unit in the first step using various valuation methodologies,
including projected future cash flows and multiples of current earnings. If the estimated fair value of the reporting unit exceeds
its carrying value, the goodwill is considered not impaired. If the carrying value of the reporting unit exceeds its estimated fair
value, then the second step of the test would be required to determine the implied fair value of the goodwill and any resulting
impairment. Our goodwill is assigned to our Off-Highway segment. The estimated fair value of our Off-Highway reporting unit
47
was significantly greater than its carrying value at October 31, 2015. No impairment of goodwill occurred during the three
years ended December 31, 2015.
Intangible assets — Intangible assets include the value of core technology, trademarks and trade names, customer relationships
and intangible assets used in research and development activities. Core technology and customer relationships have definite
lives while intangible assets used in research and development activities and substantially all of our trademarks and trade
names have indefinite lives. Definite-lived intangible assets are amortized over their useful life using the straight-line method
of amortization and are periodically reviewed for impairment indicators. Amortization of core technology is charged to cost of
sales. Amortization of trademarks and trade names and customer relationships is charged to amortization of intangibles.
Intangible assets used in research and development activities have an indefinite life until completion of the associated research
and development efforts. Upon completion of development, the assets are amortized over their useful life; if the project is
abandoned, the assets are written off immediately. Indefinite-lived intangible assets are tested for impairment annually and
more frequently if impairment indicators exist. See Notes 2 and 3 for more information about intangible assets.
Investments in affiliates — Investments in affiliates include investments accounted for under the equity and cost methods. We
monitor our investments in affiliates for indicators of other-than-temporary declines in value on an ongoing basis in accordance
with GAAP. Indicators include, but are not limited to, current economic and market conditions, operating performance of the
affiliate, including current earnings trends and undiscounted cash flows, and other affiliate-specific information. If we
determine that an other-than-temporary decline in value has occurred, we recognize an impairment loss, which is measured as
the excess of the investment's recorded carrying value over its fair value. The fair value determination, particularly for
investments in privately-held companies, requires significant judgment to determine appropriate estimates and assumptions.
Changes in these estimates and assumptions could affect the calculation of the fair value of the investments and determination
of whether any identified impairment is other than temporary. See Note 19 for further information about our investment in
affiliates.
Tangible asset impairments — We review the carrying value of amortizable long-lived assets for impairment whenever events
or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be
held and used is measured by a comparison of the carrying amount of the assets to the undiscounted future net cash flows
expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is
measured by the amount by which the carrying amount of the assets exceeds their fair value. Assets to be disposed of are
reported at the lower of their carrying amount or fair value less costs to sell and are no longer depreciated.
Other long-lived assets and liabilities — We discount our workers’ compensation and asbestos liabilities and the related
amounts recoverable from insurers by applying blended risk-free rates that are appropriate for the duration of the projected cash
flows. The use of risk-free rates is considered appropriate given that other risks affecting the volume and timing of payments
have been considered in developing the probability-weighted projected cash flows. The blended risk-free rates are revised
annually to consider incremental cash flow projections.
Financial instruments — The carrying values of cash and cash equivalents, trade receivables and short-term borrowings
approximate fair value. Notes receivable are carried at fair value, which considers the contractual call or selling price, if
applicable. Borrowings under our credit facilities are carried at historical cost and adjusted for principal payments and foreign
currency fluctuations.
Derivatives — Foreign currency forward contracts and currency swaps are carried at fair value. We enter into these contracts to
manage our exposure to the impact of currency fluctuations on certain foreign currency-denominated assets and liabilities and
on a portion of our forecasted purchase and sale transactions. On occasion, we also enter into net investment hedges to protect
the translated U.S. dollar value of our investment in certain foreign subsidiaries.
Changes in the fair value of currency-related contracts treated as cash flow hedges are deferred and included as a
component of other comprehensive income (loss) (OCI) to the extent the contracts remain effective and the associated
forecasted transactions remain probable. 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. Deferred gains and losses are reclassified to other income, net in the same periods in which the underlying
transactions affect earnings.
Changes in the fair value of contracts not treated as cash flow hedges or as net investment hedges are recognized in other
income, net in the period in which those changes occur. Changes in the fair value of contracts treated as net investment hedges
are recorded in the cumulative translation adjustment (CTA) component of OCI. Amounts recorded in CTA are deferred until
such time as the investment in the associated subsidiary is substantially liquidated.
48
We may also use interest rate swaps to manage exposure to fluctuations in interest rates and to adjust the mix of our fixed-
rate and variable-rate debt. With our current portfolio of fixed-rate debt, we occasionally execute a fixed-to-floating interest
rate swap which serves to convert our fixed-rate debt to variable-rate debt. As a fair value hedge of the underlying debt,
changes in the fair values of the swap and the underlying debt are recorded in interest expense. We do not use derivatives for
trading or speculative purposes and we do not hedge all of our exposures.
Environmental compliance and remediation — Environmental expenditures that relate to current operations are expensed or
capitalized as appropriate. Expenditures that relate to existing conditions caused by past operations that do not contribute to our
current or future revenue generation are expensed. Liabilities are recorded when environmental assessments and/or remedial
efforts are probable and the costs can be reasonably estimated. We consider the most probable method of remediation, current
laws and regulations and existing technology in determining our environmental liabilities.
Pension and other postretirement defined benefits — Net pension and postretirement benefits expenses and the related
liabilities are determined on an actuarial basis. These plan expenses and obligations are dependent on management’s
assumptions developed in consultation with our actuaries. We review these actuarial assumptions at least annually and make
modifications when appropriate. With the input of independent actuaries and other relevant sources, we believe that the
assumptions used are reasonable; however, changes in these assumptions, or experience different from that assumed, could
impact our financial position, results of operations or cash flows.
Postemployment benefits — Costs to provide postemployment benefits to employees are accounted for on an accrual basis.
Obligations that do not accumulate or vest are recorded when payment is probable and the amount can be reasonably estimated.
For those obligations that accumulate or vest and the amount can be reasonably estimated, expense and the related liability are
recorded as service is rendered.
Equity-based compensation — We measure compensation cost arising from the grant of share-based awards to employees at
fair value. We recognize such costs in income over the period during which the requisite service is provided, usually the vesting
period. The grant date fair value is estimated using valuation techniques that require the input of management estimates and
assumptions. We believe that the assumptions used are reasonable; however, due to inherent uncertainties in making estimates,
if other assumptions had been used, it could have impacted our financial position and results of operations.
Revenue recognition — Sales are recognized when products are shipped and risk of loss has transferred to the customer. We
accrue for warranty costs, sales returns and other allowances based on experience and other relevant factors when sales are
recognized. Adjustments are made as new information becomes available. Shipping and handling fees billed to customers are
included in sales, while costs of shipping and handling are included in cost of sales. Taxes collected from customers are
excluded from revenues and credited directly to obligations to the appropriate governmental agencies.
Foreign currency translation — The financial statements of subsidiaries and equity affiliates outside the U.S. located in non-
highly inflationary economies are measured using the currency of the primary economic environment in which they operate as
the functional currency, which typically is the local currency. Transaction gains and losses resulting from translating assets and
liabilities of these entities into the functional currency are included in other income, net or in equity in earnings of affiliates.
When translating into U.S. dollars, income and expense items are translated at average monthly rates of exchange, while assets
and liabilities are translated at the rates of exchange at the balance sheet date. Translation adjustments resulting from translating
the functional currency into U.S. dollars are deferred and included as a component of AOCI in stockholders’ equity. For
operations whose functional currency is the U.S. dollar, nonmonetary assets are translated into U.S. dollars at historical
exchange rates and monetary assets are translated at current exchange rates.
Because the economy in Venezuela was considered highly inflationary under GAAP, we remeasured the financial
statements of our subsidiaries in Venezuela through the January 2015 date of divestiture as if their functional currency was the
U.S. dollar.
Prior to 2014, the Venezuelan government through its Commission for the Administration of Foreign Exchange (CADIVI)
maintained a fixed official exchange rate. In March 2013, the Venezuelan government announced the creation of the
Complementary System of Foreign Currency Administration (SICAD), a supplementary currency auction system regulated by
the Central Bank of Venezuela for purchases of U.S. dollars by certain eligible importers. During 2013, our subsidiaries in
Venezuela were not eligible to utilize SICAD and therefore we continued to use the official exchange rate to remeasure the
financial statements of our subsidiaries in Venezuela.
49
In the first quarter of 2014, the Venezuelan government transferred the administration of the official exchange rate to the
National Center of Foreign Commerce (CENCOEX) and indicated that the official exchange rate would be increasingly
reserved only for the settlement of U.S. dollar-denominated obligations related to purchases of “essential goods and services.”
In addition, the Venezuelan government expanded the entities and transactions that would be eligible to use SICAD.
Transactions eligible for SICAD included foreign investments and payments of royalties. Also during the first quarter of 2014,
the Venezuelan government announced the creation of SICAD 2, a market-based exchange mechanism regulated by the Central
Bank of Venezuela. SICAD 2 could be used by all companies incorporated or domiciled in Venezuela who want to obtain U.S.
dollars for any purpose.
With the expansion of SICAD and the formation of SICAD 2 there was uncertainty surrounding transactions that
CENCOEX would allow to be transacted at the official exchange rate. In consultation with legal counsel we determined that the
SICAD rate, which we believed would apply to dividend remittances, was the appropriate rate to remeasure the bolivar-
denominated net monetary assets of our subsidiaries in Venezuela. Effective March 31, 2014, we ceased using the official
exchange rate and began using the SICAD rate to remeasure the financial statements of our subsidiaries in Venezuela. See Note
17 for additional information. In January 2015, we completed the divestiture of our operations in Venezuela. See Note 2 for
additional information.
Income taxes — In the ordinary course of business there is inherent uncertainty in quantifying our income tax positions. We
assess our income tax positions and record tax assets or liabilities for all years subject to examination based upon
management’s evaluation of the facts and circumstances and information available at the reporting dates. For those tax
positions where it is more likely than not that a tax benefit will be sustained, we have recorded the largest amount of tax benefit
with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of
all relevant information. For those income tax positions where it is not more likely than not that a tax benefit will be sustained,
no tax benefit has been recognized in the financial statements. Where applicable, the related interest cost has also been
recognized as a component of the income tax provision.
Research and development — Research and development costs include expenditures for research activities relating to product
development and improvement. Salaries, fringes and occupancy costs, including building, utility and overhead costs, comprise
the vast majority of these expenses and are expensed as incurred. Research and development expenses were $75, $72 and $64
in 2015, 2014 and 2013.
Recently adopted accounting pronouncements
In August 2015, the Financial Accounting Standards Board (FASB) issued guidance that resolves the issue of whether the
scope exception in existing derivatives and hedging guidance is applicable to certain electricity contracts, permitting
application of the exception. The guidance confirmed that a forward contract to purchase or sell electricity that is transmitted
through a grid operated by an independent system operator will meet the physical delivery criterion under the normal purchases
and normal sales scope exception. This guidance is effective immediately, permitting entities to designate prospective
qualifying contracts as normal purchases or normal sales. Adoption of the guidance did not impact our consolidated financial
statements.
In April 2015, the FASB issued guidance which changes the presentation of debt issuance costs. Debt issuance costs
related to term debt will be presented on the balance sheet as a direct deduction from the related debt liability rather than
recorded as a separate asset. The amendment does not affect the recognition and measurement of debt issuance costs. There is
no effect on the statement of operations as debt issuance costs will continue to be amortized to interest expense. Subsequently,
the SEC staff announced that it will not object when debt issuance costs related to a revolving debt arrangement are presented
as an asset regardless of whether or not there is an outstanding balance on the revolving debt arrangement. The guidance
becomes effective January 1, 2016 and requires retrospective application to all prior periods presented. We adopted the
guidance effective December 31, 2015. We have presented $21 and $25 of debt issuance costs as a direct deduction from long-
term debt as of December 31, 2015 and 2014. We continue to present debt issuance costs associated with revolving debt
arrangements in other noncurrent assets.
In April 2014, the FASB issued guidance that revises the definition of a discontinued operation. The revised definition
limits discontinued operations reporting to disposals of components of an entity that represent strategic shifts that have (or will
have) a major effect on operations and financial results. The guidance also requires new disclosures of both discontinued
operations and certain other disposals that do not meet the definition of a discontinued operation. The guidance applies to
covered transactions that occur after December 31, 2014. The significance of this guidance for us is dependent on any
qualifying future dispositions or disposals.
50
Recently issued accounting pronouncements
In November 2015, the FASB issued guidance that simplifies the balance sheet classification of deferred taxes. Current
GAAP requires an entity to separate deferred income tax liabilities and assets into current and noncurrent amounts in a
classified statement of financial position. This amendment simplifies the presentation to require that all deferred tax liabilities
and assets be classified as noncurrent on the balance sheet. The guidance does not change the existing requirement that only
permits offsetting within a jurisdiction. The change to noncurrent classification will have an impact on working capital. This
guidance becomes effective January 1, 2017 and allows for prospective or retrospective application, with appropriate
disclosures. Early adoption is permitted. We are currently evaluating the impact this guidance will have on our consolidated
financial statements.
In September 2015, the FASB issued an amendment that eliminates the requirement to restate prior period financial
statements for measurement period adjustments in accounting for business combinations. Entities should recognize adjustments
to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment
amounts are determined. This guidance becomes effective January 1, 2016 and requires prospective application. The guidance
will apply to any qualifying future business combinations.
In July 2015, the FASB issued an amendment that changes the measurement principle for inventory from the lower of cost
or market to lower of cost and net realizable value. This amendment only addresses the measurement of inventory if its value
declines or is impaired. The guidance on determining the cost of inventory is not being amended. This guidance becomes
effective January 1, 2017 and requires prospective application. Early adoption is permitted. Adoption of this guidance will have
no impact on our consolidated financial statements.
In May 2015, the FASB issued guidance that modifies disclosures related to investments for which fair value is measured
using the net asset value (or its equivalent) per share practical expedient by eliminating the requirement to categorize such
assets under the fair value hierarchy. The new guidance also eliminates the requirement to include in certain disclosures those
investments that are merely eligible to be measured using the practical expedient, limiting the disclosures to those investments
actually valued under that approach. This guidance becomes effective January 1, 2016 and requires retrospective application.
The adoption of this guidance will have no impact on our consolidated financial statements but could impact pension asset
disclosures.
In April 2015, the FASB issued an amendment to provide explicit guidance about a customer's accounting for fees paid in a
cloud computing arrangement. If a cloud computing arrangement includes a software license, then the customer should account
for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud
computing arrangement does not include a software license, then the customer should account for the arrangement as a service
contract. The guidance is effective January 1, 2016 and can be adopted either prospectively to all arrangements entered into or
materially modified after the effective date or retrospectively. We will be adopting the amendment prospectively and do not
expect the guidance to have an impact on our consolidated financial statements.
In April 2015, the FASB issued guidance to provide for a practical expedient that permits an entity to measure defined
benefit plan assets and obligations as of the month end that is closest to the entity's fiscal year end or the month end that is
closest to the date of a significant event caused by the entity that occurred in an interim period. Significant events, such as a
plan amendment, settlement or curtailment, call for a remeasurement in accordance with existing requirements. An entity is
required to disclose the accounting policy election and the date used to measure defined benefit plan assets and obligations. The
guidance is effective January 1, 2016. The guidance will not impact our consolidated financial statements.
In February 2015, the FASB released updated consolidation guidance that entities must use to evaluate specific ownership
and contractual arrangements that lead to a consolidation conclusion. The updates could change consolidation outcomes
affecting presentation and disclosures. This guidance, which is effective January 1, 2016, is not expected to impact our
consolidated financial statements.
In June 2014, the FASB issued guidance to provide clarity on whether to treat a performance target that could be achieved
after the requisite service period as a performance condition that affects vesting or as a nonvesting condition that affects the
grant-date fair value of a share-based payment award. Generally, an award with a performance target also requires an employee
to render service until the performance target is achieved. In some cases, however, the terms of an award may provide that the
performance target could be achieved after an employee completes the requisite service period. The amendment requires that a
performance target that affects vesting and extends beyond the end of the service period be treated as a performance condition
and not as a factor in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in
which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable
51
to the period(s) for which the requisite service has already been rendered. The guidance, which is effective January 1, 2016, is
not expected to impact our consolidated financial statements.
In May 2014, the FASB issued guidance that requires companies to recognize revenue in a manner that depicts the transfer
of promised goods or services to customers in amounts that reflect the consideration a company expects to be entitled to in
exchange for those goods or services. The new guidance will also require new disclosures about the nature, amount, timing and
uncertainty of revenue and cash flows arising from contracts with customers. In July 2015, the FASB adopted a one-year
deferral of this guidance. As a result, this guidance will be effective January 1, 2018 with the option to adopt the standard as of
the original January 1, 2017 effective date. The guidance allows for either a full retrospective or a modified retrospective
transition method. We are currently evaluating the impact this guidance will have on our consolidated financial statements
including changes to internal processes and controls.
Note 2. Divestitures, Discontinued Operations and Impairment of Long-Lived Assets
Divestiture of operations in Venezuela — In December 2014, we entered into an agreement to divest our Light Vehicle
operations in Venezuela (the disposal group) to an unaffiliated company for no consideration. Upon classification of the
disposal group as held for sale in December 2014, we recognized an $80 loss to adjust the carrying value of the net assets of
our operations in Venezuela to fair value less cost to sell. The assets and liabilities of our operations in Venezuela were
presented as held for sale on our balance sheet as of December 31, 2014. The carrying amounts of the major classes of assets
and liabilities of our operations in Venezuela were as follows:
Cash and cash equivalents
Current assets classified as held for sale
Accounts payable
Accrued payroll and employee benefits
Other accrued liabilities
Current liabilities classified as held for sale
Pension obligations
Other noncurrent liabilities
Noncurrent liabilities classified as held for sale
Accumulated other comprehensive loss classified as held for sale
December 31,
2014
$
$
$
$
$
$
$
27
27
16
4
1
21
11
6
17
(11)
Upon completion of the divestiture of the disposal group in January 2015, we recognized a gain of $5 on the derecognition
of the noncontrolling interest in a former Venezuelan subsidiary in other income, net. We also credited other comprehensive
loss attributable to the parent for $10 and other comprehensive loss attributable to noncontrolling interests for $1 to eliminate
the unrecognized pension expense recorded in accumulated other comprehensive loss.
Discontinued operations of Structural Products business — The sale of substantially all of the assets of our Structural Products
business to Metalsa S.A. de C.V. (Metalsa) in 2010 excluded the facility in Longview, Texas and its employees and
manufacturing assets related to a significant customer contract. The customer contract was satisfied and operations concluded
in August 2012. As a result of the cessation of all operations, activities related to the former Structural Products business have
been presented as discontinued operations in the accompanying financial statements.
The Longview facility was sold in March 2013 and a previously closed plant in Canada was sold in January 2014. The
proceeds from both transactions approximated the carrying values of the facilities. We reached a final agreement on the
remaining issues with the buyer in May 2014, resulting in the receipt of $9 from the escrow agent and a charge of $1 to other
income (expense) within discontinued operations in 2014.
52
The results of the discontinued operations were as follows:
Sales
Restructuring charges, net
Other income (expense)
Pre-tax income (loss)
Income tax expense (benefit)
Income (loss) from discontinued operations
2015
2014
2013
— $
— $
5
5
1
4
$
(19)
(19)
(4)
(15) $
—
1
(1)
(1)
$
$
In 2012, Ford Motor Company (Ford) filed a complaint alleging quality issues relating to products supplied by the former
Structural Products business at Dana Canada Corporation. The Dana Canada facility was closed in 2008. In December 2014,
while admitting no liability related to the complaint, we reached a settlement agreement with Ford. The cost of the settlement
with Ford and the associated legal fees incurred in connection with this matter were charged to other income (expense) within
discontinued operations in the fourth quarter of 2014. The loss reported for 2014 also includes the charge that resulted from the
final settlement of the claims presented by Metalsa along with the related legal fees. The income reported for 2015 includes
insurance recoveries related to previously outstanding claims.
Impairment of long-lived assets — On February 1, 2011, we entered into an agreement with SIFCO S.A. (SIFCO), a leading
producer of steer axles and forged components in South America. In return for payment of $150 to SIFCO, we acquired the
distribution rights to SIFCO's commercial vehicle steer axle systems as well as an exclusive long-term supply agreement for
key driveline components. During 2014, our Commercial Vehicle operating segment had $225 of sales attributable to SIFCO
supplied axles and parts.
This agreement was accounted for as a business combination for financial reporting purposes. The aggregate fair value of
the net assets acquired was allocated primarily to the exclusivity provisions of the supply agreement as a contract-based
intangible asset and recorded within our Commercial Vehicle operating segment. Fair value was also allocated to fixed assets
and an embedded lease obligation. The intangible asset was being amortized and the fixed assets were being depreciated on a
straight-line basis over ten years. The embedded lease obligations were being amortized using the effective interest method
over the ten-year useful lives of the related fixed assets.
On April 22, 2014, SIFCO and affiliated companies filed for judicial reorganization before Bankruptcy Court in São Paulo,
Brazil and an ancillary Chapter 15 proceeding before the Bankruptcy Court of the Southern District of New York. The Brazilian
bankruptcy case has subsequently been moved to the 5th Lower Civil Court in the Judicial District of Jundiai, the location of
SIFCO's principal operations. Until the third quarter of 2015, SIFCO complied with the terms of the supply agreement. In
August 2015, SIFCO discontinued production of our orders and failed to comply with provisions of the supply agreement. We
obtained a judicial injunction requiring that SIFCO release any finished product in their possession that was produced pursuant
to the supply agreement, resume production and parts supply pursuant to the terms of the supply agreement and cease
communications with our customers regarding direct sale of parts. SIFCO contested the injunction we obtained, without
success, and refused to comply with the injunction. Through a judicial seizure order we were successful in obtaining the release
of the finished product.
Based on SIFCO's refusal to comply with the terms of the supply agreement and the court injunctions as noted above, we
believed that the carrying amount of the contract-based intangible asset was not recoverable and therefore tested the associated
asset group for impairment as of September 30, 2015 under ASC 360-10. Based upon management's conclusion that there were
no future economic benefits and related cash flows associated with the long-lived assets of this asset group, which is comprised
predominantly of the intangible asset, management concluded that the fair value of the asset group was de minimis and
accordingly recorded a full impairment charge of $36 in the third quarter of 2015.
On October 27, 2015, we entered into an interim agreement with SIFCO under which they have continued to supply us
product while pursuing various mutually satisfactory longer-term alternatives. During 2015, in addition to the above mentioned
impairment charge, we incurred approximately $8 of increased costs in connection with maintaining product supply from
SIFCO. While agreeing on suitable short-term arrangements with SIFCO, we have preserved the ability to pursue the legal
rights and remedies available to us to enforce compliance with the original supply agreement. Our ability to maintain continued
53
uninterrupted product supply to satisfy our customer commitments is uncertain, dependent on continued mutually satisfactory
interim arrangements with SIFCO and the outcome of their reorganization proceedings.
Note 3. Goodwill and Other Intangible Assets
Goodwill — Our goodwill is assigned to our Off-Highway segment. Based on our October 31, 2015 impairment assessment,
the fair value of this segment is significantly higher than its carrying value, including goodwill. We do not believe that our
goodwill is at risk of being impaired. The change in the carrying amount of goodwill in 2015 is due to currency fluctuations.
Non-amortizable intangible assets — Our non-amortizable intangible assets include trademarks, trade names and intangible
assets used in research and development activities. Trademarks and trade names consist of the Dana® and Spicer® trademarks
and trade names utilized in our Commercial Vehicle and Off-Highway segments. We value trademarks and trade names using a
relief from royalty method which is based on revenue streams. No impairment was recorded during the three years ended
December 31, 2015 in connection with the required annual assessment. Intangible assets used in research and development
activities relate to our strategic alliance formed with Fallbrook Technologies Inc. in September 2012. We use the multi-period
excess earnings method, an income approach, to value the intangible assets used in research and development activities. No
impairment has been recorded during the three years ended in December 31, 2015 in connection with the required annual
assessment.
Amortizable intangible assets — Our amortizable intangible assets include core technology, customer relationships and a
portion of our trademarks and trade names. Core technology includes the proprietary know-how and expertise that is inherent in
our products and manufacturing processes. Customer relationships include the established relationships with our customers and
the related ability of these customers to continue to generate future recurring revenue and income.
These assets are tested for impairment whenever events or changes in circumstances indicate that their carrying amounts
may not be recoverable. We group the assets and liabilities at the lowest level for which identifiable cash flows are largely
independent of the cash flows of other assets and liabilities and evaluate the asset group against the undiscounted future cash
flows. We use our internal forecasts, which we update quarterly, to develop our cash flow projections. These forecasts are based
on our knowledge of our customers’ production forecasts, our assessment of market growth rates, net new business, material
and labor cost estimates, cost recovery agreements with customers and our estimate of savings expected from our restructuring
activities. The most likely factors that would significantly impact our forecasts are changes in customer production levels and
loss of significant portions of our business. Our valuation is applied over the life of the primary assets within the asset groups.
If the undiscounted cash flows do not indicate that the carrying amount of the asset group is recoverable, an impairment charge
is recorded if the carrying amount of the asset group exceeds its fair value based on discounted cash flow analyses or
appraisals.
During the third quarter of 2015, we impaired the customer relationships intangible asset associated with our exclusive
long-term supply agreement with SIFCO. See Note 2 for additional information.
Components of other intangible assets —
December 31, 2015
December 31, 2014
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
Trademarks and trade
names
Customer relationships
Non-amortizable intangible
assets
Trademarks and trade
names
Used in research and
development activities
7
$
86
$
(83) $
(2)
(370)
16
7
3
383
65
20
3
1
13
65
20
$
90
$
(85) $
(1)
(416)
3
493
65
20
$
557
$
(455) $
102
$
671
$
(502) $
5
2
77
65
20
169
54
The net carrying amounts of intangible assets, other than goodwill, attributable to each of our operating segments at
December 31, 2015 were as follows: Light Vehicle Driveline (Light Vehicle) – $11, Commercial Vehicle – $36, Off-Highway –
$48 and Power Technologies – $7.
Amortization expense related to amortizable intangible assets —
Charged to cost of sales
Charged to amortization of intangibles
Total amortization
2015
2014
2013
$
$
2
14
16
$
$
7
42
49
$
$
13
74
87
The following table provides the estimated aggregate pre-tax amortization expense related to intangible assets for each of
the next five years based on December 31, 2015 exchange rates. Actual amounts may differ from these estimates due to such
factors as currency translation, customer turnover, impairments, additional intangible asset acquisitions and other events.
Amortization expense
$
8
$
5
$
2
$
1
$
1
2016
2017
2018
2019
2020
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. In recent years, however, in response to lower
demand and other market conditions in certain businesses, our focus has primarily been headcount reduction initiatives to
reduce operating costs. Restructuring expense includes costs associated with current and previously announced actions and is
comprised of contractual and noncontractual separation costs and exit costs, including costs associated with lease continuation
obligations and certain operating costs of facilities that we are in the process of closing.
During 2015, we implemented certain headcount reduction programs, primarily in our Commercial Vehicle business in
Brazil in response to lower demand in that region. Including costs associated with these actions and with other previously
announced initiatives, total restructuring expense in 2015 was $15 and included $12 of severance and related benefits costs and
$3 of exit costs.
During 2014, we implemented various cost reduction programs, including the closure of our Commercial Vehicle foundry
in Argentina and other headcount reduction programs in our Light Vehicle and Commercial Vehicle businesses in South
America and Europe. Total restructuring expense in 2014 associated with these actions and with other previously announced
initiatives was $21 and included $15 of severance and related benefits costs and $6 of exit costs.
During 2013, we implemented certain headcount reduction programs, primarily in our Light Vehicle and Commercial
Vehicle businesses in Argentina and Australia and in our Off-Highway business in Europe. New customer programs and other
developments in our North American Light Vehicle business and a decision by our European Off-Highway business to in-
source the manufacturing of certain parts resulted in the reversal of previously accrued severance obligations. Excluding $1 of
exit costs associated with discontinued operations, restructuring expense in 2013 was $24, net of the aforementioned reversals,
and was attributable to the cost of newly implemented and previously announced initiatives. Restructuring expense included
$14 of severance and related benefits costs and $10 of exit costs.
55
Accrued restructuring costs and activity, including noncurrent portion —
Balance at December 31, 2012
Charges to restructuring
Adjustments of accruals
Discontinued operations charges
Cash payments
Balance at December 31, 2013
Charges to restructuring
Adjustments of accruals
Cash payments
Currency impact
Balance at December 31, 2014
Charges to restructuring
Cash payments
Currency impact
Balance at December 31, 2015
$
$
Employee
Termination
Benefits
Exit
Costs
$
27
23
(9)
Total
$
13
11
(1)
1
(13)
11
6
(8)
9
3
(4)
40
34
(10)
1
(40)
25
23
(2)
(26)
1
21
15
(16)
(3)
17
$
8
$
(27)
14
17
(2)
(18)
1
12
12
(12)
(3)
9
At December 31, 2015, the accrued employee termination benefits relate to the reduction of approximately 100 employees
to be completed over the next year. The exit costs relate primarily to lease continuation obligations.
Cost to complete — The following table provides project-to-date and estimated future expenses for completion of our pending
restructuring initiatives for our business segments.
Light Vehicle
Commercial Vehicle
Total
Expense Recognized
Prior to
2015
2015
Total
to Date
Future
Cost to
Complete
$
$
9
23
32
$
$
2
13
15
$
$
11
36
47
$
$
2
12
14
The future cost to complete includes estimated separation costs, primarily those associated with one-time benefit programs,
and exit costs, including lease continuation costs, equipment transfers and other costs which are required to be recognized as
closures are finalized or as incurred during the closure.
Note 5. Inventories
Inventory components at December 31 —
Raw materials
Work in process and finished goods
Inventory reserves
Total
2015
2014
$
$
303
368
(46)
625
$
$
304
398
(48)
654
56
Note 6. Supplemental Balance Sheet and Cash Flow Information
Supplemental balance sheet information at December 31 —
Other current assets:
Deferred tax assets
Prepaid expenses
Other
Total
Other noncurrent assets:
Deferred tax assets
Prepaid income taxes
Amounts recoverable from insurers
Prepaid expenses
Deferred financing costs
Pension assets, net of related obligations
Other
Total
Property, plant and equipment, net:
Land and improvements to land
Buildings and building fixtures
Machinery and equipment
Total cost
Less: accumulated depreciation
Net
Other accrued liabilities (current):
Non-income taxes payable
Accrued interest
Warranty reserves
Asbestos claims obligations
Deferred income
Work place injury costs
Restructuring costs
Payable under forward contracts
Environmental
Other expense accruals
Total
Other noncurrent liabilities:
Income tax liability
Asbestos claims obligations
Deferred income tax liability
Work place injury costs
Warranty reserves
Restructuring costs
Other noncurrent liabilities
Total
57
2015
2014
43
57
8
108
78
178
44
5
4
2
42
353
185
405
1,760
2,350
(1,183)
1,167
30
24
31
12
8
5
10
15
5
53
193
78
66
83
30
25
7
41
330
$
$
$
$
$
$
$
$
$
$
50
45
16
111
217
44
11
5
3
32
312
207
420
1,700
2,327
(1,151)
1,176
30
25
24
13
9
8
9
20
3
53
194
75
68
33
31
23
12
37
279
$
$
$
$
$
$
$
$
$
$
Supplemental cash flow information —
Change in working capital:
Change in accounts receivable
Change in inventories
Change in accounts payable
Change in accrued payroll and employee benefits
Change in accrued income taxes
Change in other current assets and liabilities
Net
Cash paid during the period for:
Interest
Income taxes
Non-cash investing and financing activities:
Purchases of property, plant and equipment included in accounts payable
Stock compensation plans
Conversion of preferred stock into common stock
Conversion of preferred dividends into common stock
Dividends on preferred stock accrued not paid
Per share preferred dividends not paid
Note 7. Stockholders' Equity
Preferred Stock
2015
2014
2013
$
$
$
$
$
$
$
$
$
$
— $
(28)
(22)
3
(1)
7
(41) $
96
90
$
$
$
55
15
$
— $
— $
— $
— $
(32) $
(56)
66
13
(2)
(28)
(39) $
122
116
$
$
$
48
$
13
$
372
3
$
— $
— $
12
50
60
7
(11)
(14)
104
72
136
43
13
139
1
4
1.00
We are authorized to issue 50,000,000 of Dana preferred stock, par value $0.01 per share. There were no preferred shares
outstanding at December 31, 2015 or 2014.
Series A Preferred stock issuance and redemption — We had issued 2.5 million shares of our 4.0% Series A Preferred on
January 31, 2008 to Centerbridge Partners, L.P. and certain of its affiliates (Centerbridge). Dividends accrued daily until
redemption. In August 2013, we paid $474 to redeem our Series A preferred shares, including $3 of redemption costs. The
amount paid exceeded the $242 carrying value of our Series A preferred stock. The $232 redemption premium was charged
directly to accumulated deficit on our balance sheet. The redemption premium is treated like a dividend on preferred stock and
deducted from net income attributable to the parent company in arriving at net income (loss) available to common stockholders.
Series B Preferred stock issuance and conversion — We had issued 5.4 million shares of our 4.0% Series B Preferred on
January 31, 2008 to certain investors. Dividends accrued daily until conversion into common stock. During 2014 and 2013,
holders of 2,296,802 and 1,417,425 Series B preferred shares elected to convert those preferred shares into common stock and
received 19,517,593 and 11,985,254 common shares. The common stock issued included shares to satisfy the accrued
dividends owed to the converting Series B preferred stockholders. Based on the market price of Dana common stock on the
date of conversion, the fair value of the conversions totaled $409 and $249. As of July 2, 2014, the per share closing price of
our common stock exceeded $22.24 for 20 consecutive trading days. As a result, we exercised our right to cause the conversion
of all of the remaining outstanding Series B preferred shares at the conversion price of $11.93 upon fulfillment of the required
90-day notice period ending September 30, 2014. We caused the conversion of 1,506,972 Series B shares with holders
receiving 12,631,780 common shares valued at $250 based on the market price of Dana common stock on the date of
conversion.
Common Stock
We are authorized to issue 450,000,000 shares of Dana common stock, par value $0.01 per share. At December 31, 2015,
there were 150,092,003 shares of our common stock issued and 150,068,040 shares outstanding, net of 23,963 in treasury
shares. Treasury shares include those shares withheld at cost to satisfy tax obligations from stock awards issued under our stock
compensation plan in addition to share repurchases noted below.
58
Our Board of Directors declared a quarterly cash dividend of six cents per share of common stock in the second, third and
fourth quarters of 2015 and five cents per share of common stock in first quarter of 2015. Aggregate 2015 declared and paid
dividends total $37. 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.
Treasury stock — During 2014 we reissued 14,879,935 shares of treasury stock in conjunction with the conversion of
1,772,693 Series B preferred shares into common stock. The reissuance of the treasury shares resulted in a $127 charge to
additional paid-in capital as the carrying value of the treasury shares reissued exceeded the carrying value of the Series B
preferred shares converted. We use the weighted-average pool price of our treasury shares at the date of reissuance to determine
the carrying value of treasury shares reissued. In December 2014, we retired 14,600,000 shares of treasury stock. The $294
excess of the cost of the treasury stock over the common stock par value, based on the weighted-average pool price of our
treasury shares at the date of retirement, was charged to additional paid-in capital. In December 2015, we retired 18,100,000
shares of treasury stock. The $346 excess of the cost of the treasury stock over the common stock par value, based on the
weighted-average pool price of our treasury shares at the date of retirement, was charged to additional paid-in capital.
Share repurchase program — Our Board of Directors approved a share repurchase program of $1,400, expiring on December
31, 2015. Under the program, we spent $311 to repurchase 16,412,485 shares of our common stock during 2015 through open
market transactions.
59
Changes in each component of AOCI of the parent —
Foreign
Currency
Translation
$
(198) $
(40)
(40)
(4)
(242)
(185)
(185)
(427)
(179)
(2)
4
(8)
(4)
1
—
(12)
2
1
(9)
(9)
(14)
20
Balance, December 31, 2012
Other comprehensive income (loss):
Currency translation adjustments
Holding gains (losses)
Reclassification of amount to net income (a)
Venezuela bolivar devaluation
Net actuarial gains
Reclassification adjustment for net actuarial
losses included in net periodic benefit cost (b)
Tax expense
Other comprehensive income (loss)
Adjustment for purchase of noncontrolling
interests
Balance, December 31, 2013
Other comprehensive income (loss):
Currency translation adjustments
Holding gains (losses)
Reclassification of amount to net income (a)
Venezuelan bolivar devaluation
Net actuarial losses
Reclassification adjustment for net actuarial
losses included in net periodic benefit cost (b)
Other
Tax benefit
Other comprehensive income (loss)
Balance, December 31, 2014
Other comprehensive income (loss):
Currency translation adjustments
Holding loss on net investment hedge
Holding gains (losses)
Reclassification of amount to net income (a)
Net actuarial losses
Reclassification adjustment for net actuarial
losses included in net periodic benefit cost (b)
Elimination of net prior service cost and
actuarial losses of disposal group
Tax expense
Other comprehensive income (loss)
Parent Company Stockholders
Defined
Benefit
Plans
Accumulated
Other
Comprehensive
Income
(Loss)
$
(610) $
(793)
Hedging
Investments
12
$
3
(1)
(8)
(9)
2
101
24
(5)
122
3
(488)
3
(1)
2
5
(3)
4
(156)
60
3
11
(78)
(566)
(28)
25
10
(5)
2
(564) $
(40)
3
(16)
2
101
24
(5)
69
(3)
(727)
(185)
(9)
1
4
(156)
60
3
12
(270)
(997)
(179)
(2)
(17)
20
(28)
25
10
(6)
(177)
(1,174)
Balance, December 31, 2015
___________________________________________________
Notes:
(a) Foreign currency contract and investment reclassifications are included in other income, net.
(b) See Note 10 for additional details.
$
(181)
(608) $
(1)
5
(4) $
(3)
2
$
During the first quarter of 2013, Dana purchased the noncontrolling interests in three of its subsidiaries for $7. Dana
maintained its controlling financial interest in each of the subsidiaries and accounted for the purchases as equity transactions.
The difference between the fair value of the consideration paid and the carrying value of the noncontrolling interests was
recognized as additional paid-in capital of the parent company. At the time of the purchases the subsidiaries had accumulated
60
other comprehensive income. Accumulated other comprehensive income of the parent company has been adjusted to reflect
the ownership interest change with a corresponding offset to additional paid-in capital of the parent company.
Note 8. Earnings per Share
Reconciliation of the numerators and denominators of the earnings per share calculations —
Income from continuing operations
Less: Noncontrolling interests
Less: Preferred stock dividend requirements
Less: Preferred stock redemption premium
Income (loss) from continuing operations available to common stockholders -
Numerator basic
Preferred stock dividend requirements
Numerator diluted
Net income (loss) available to common stockholders - Numerator basic
Preferred stock dividend requirements
Numerator diluted
Weighted-average number of shares outstanding - Denominator basic
Employee compensation-related shares, including stock options
Conversion of preferred stock
Denominator diluted
$
$
$
$
2015
2014
2013
$
176
21
$
$
$
155
155
159
159
159.0
1.0
160.0
$
$
$
$
343
9
7
327
7
334
312
7
319
158.0
1.2
14.3
173.5
261
16
25
232
(12)
(12)
(13)
(13)
146.4
146.4
The share count for diluted earnings per share is computed on the basis of the weighted-average number of common shares
outstanding plus the effects of dilutive common stock equivalents (CSEs) outstanding during the period. We excluded 0.4
million and 0.3 million CSEs from the calculations of diluted earnings per share for the years 2015 and 2013 as the effect of
including them would have been anti-dilutive. In addition, we excluded CSEs that satisfied the definition of potentially dilutive
shares of 1.5 million for 2013 since there was no net income available to common stockholders for this period.
We excluded 12.2 million shares related to the assumed conversion of our Series A preferred stock for 2013 and 39.9
million shares related to the assumed conversion of our Series B preferred stock for 2013, along with the adjustment for the
related dividend requirements, as the conversions would have been anti-dilutive for the period.
Note 9. Stock Compensation
2012 Omnibus Incentive Plan
Our 2012 Omnibus Incentive Plan (the Plan), as approved by our stockholders, authorizes the grant of stock options, stock
appreciation rights (SARs), RSUs and performance share units (PSUs) through April 2022. Cash-settled awards do not count
against the maximum aggregate number. At December 31, 2015, there were 4.0 million shares available for future grants.
Shares of common stock to be issued under the Plan are made available from authorized and unissued Dana common stock.
61
Award activity — (shares in millions)
Options
SARs
RSUs
PSUs
Weighted-
Average
Exercise
Price
$
14.46
Shares
1.9
Weighted-
Average
Exercise
Price
$
15.18
Shares
0.4
(0.1)
13.83
(0.1)
12.53
1.8
14.50
0.3
15.46
Weighted-
Average
Grant-Date
Fair
Value
$
18.18
21.68
17.21
20.46
20.09
Weighted-
Average
Grant-Date
Fair
Value
$
24.36
22.97
24.48
24.57
22.92
Shares
0.3
0.4
(0.1)
(0.2)
0.4
Shares
1.5
0.7
(0.7)
(0.2)
1.3
Outstanding at
December 31, 2014
Granted
Exercised or vested
Forfeited or expired
December 31, 2015
Weighted-average grant-date fair value per share granted
Stock options
SARs
Intrinsic value of awards exercised or vested
Stock options / SARs
RSUs / PSUs
2015
2014
2013
N/A
N/A
$
$
1
16
N/A $
N/A
$
7
8
7.46
7.45
14
5
Compensation expense is generally measured based on the fair value at the date of grant and is recognized on a straight-
line basis over the vesting period. For options and SARs, we use an option-pricing model to estimate fair value. For RSUs and
PSUs, the fair value is based on the closing market price of our common stock at the date of grant. Awards that are settled in
cash are subject to liability accounting. Accordingly, the fair value of such awards is remeasured at the end of each reporting
period until settled or expired. We had accrued $3 and $6 for cash-settled awards at December 31, 2015 and 2014.
We recognized total stock compensation expense of $14, $16 and $16 during 2015, 2014 and 2013. The total fair value of
awards vested during 2015, 2014 and 2013 was $21, $13 and $10. We received $2, $7 and $15 of cash from the exercise of
stock options and we paid $2, $2 and $4 of cash to settle SARs, RSUs and PSUs during 2015, 2014 and 2013. We issued 0.4
million in RSUs in 2015 based on vesting. At December 31, 2015, the total unrecognized compensation cost related to the
nonvested awards granted and expected to vest was $19. This cost is expected to be recognized over a weighted-average period
of 2.0 years.
Stock options and stock appreciation rights — The exercise price of each option or SAR equals the closing market price of our
common stock on the date of grant. Options and SARs generally vest over three years and their maximum term is ten years.
Shares issued upon the exercise of options are recorded as common stock and additional paid-in capital at the option price.
SARs are settled in cash for the difference between the market price on the date of exercise and the exercise price.
We estimated fair values for options and SARs at the date of grant using the following key assumptions as part of the
Black-Scholes option pricing model. The expected term was estimated using the simplified method because the limited period
of time our common stock had been publicly traded provided insufficient historical exercise data. The risk-free rate was based
on U.S. Treasury security yields at the time of grant. The dividend yield was calculated by dividing the expected annual
dividend by the average stock price of our common stock over the prior year. The expected volatility was estimated using a
combination of the historical volatility of similar entities and the implied volatility of our exchange-traded options.
Expected term (in years)
Risk-free interest rate
Dividend yield
Expected volatility
Options
2013
SARs
2013
6.0
1.07%
1.41%
55.8%
6.0
1.07%
1.41%
55.8%
Restricted stock units and performance shares units — Each RSU or PSU granted represents the right to receive one share of
Dana common stock or, at the election of Dana (for units awarded to board members) or for employees located outside the U.S.
(for employee awarded units), cash equal to the market value per share. All RSUs contain dividend equivalent rights. RSUs
62
granted to non-employee directors vest on the first anniversary date of the grant and those granted to employees generally cliff
vest fully after three years. PSUs granted to employees vest if specified performance goals are achieved during the respective
performance period, generally three years.
The number of PSUs that ultimately vest is contingent on achieving specified return on invested capital targets and
specified total shareholder return targets relative to peer companies. For the portion of the PSU award based on the return on
invested capital performance metric, we estimated the fair value 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 award is not dividend
protected. The estimated grant date value is accrued over the performance period and adjusted as appropriate based on
performance relative to the target. For the portion of the PSU award based on shareholder returns, we estimated the fair value 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 performance period. The risk-free interest rate was based on U.S. Treasury constant maturity rates at
the grant date. The dividend yield was calculated by dividing the expected annual dividend by the average stock price over the
prior year. The expected volatility was based on historical volatility using daily stock price observations.
Expected term (in years)
Risk-free interest rate
Dividend yield
Expected volatility
PSUs
2015
2014
3.0
0.89%
0.98%
33.9%
3.0
0.64%
1.02%
43.6%
Outstanding awards expected to vest and exercisable or convertible at December 31, 2015 — (shares in millions)
Equity Awards Outstanding
Expected to Vest
Equity Awards Outstanding
That are Exercisable or Convertible
Weighted-Average
Weighted-Average
Aggregate
Intrinsic
Value
Exercise
Price
Shares
Options / SARs
RSUs / PSUs
$
2.1
1.8
$
2
24
14.66
—
Remaining
Contractual
Life in
Years
5.9
1.3
Aggregate
Intrinsic
Value
Exercise
Price
Shares
$
1.9
0.3
$
2
4
14.49
—
Remaining
Contractual
Life in
Years
5.8
0.9
Annual cash incentive awards — Our 2012 Omnibus Incentive Plan provides for cash incentive awards. We make awards
annually to certain eligible employees designated by Dana, including certain executive officers. Awards under the plan are
based on achieving certain financial target performance goals. The performance goals of the plan are established annually by
the Board of Directors.
Under the 2015, 2014 and 2013 programs, participants were eligible to receive annual cash awards based on achieving
earnings and cash flow performance goals, with our 2013 program also including a component based on reduction of inventory
days. Our long-term incentive programs include a performance-based cash award that consists of three individual annual
awards with the related annual performance objectives established at the beginning of each year. Amounts earned under the
three individual annual awards of the 2015, 2014 and 2013 long-term incentive programs cliff vest at the end of the respective
three year periods covered by the long-term incentive programs. Our 2015, 2014 and 2013 long-term incentive programs
included a cash-settled component which provided for payment if we achieved a certain return on invested capital. We accrued
$35, $44 and $47 of expense in 2015, 2014 and 2013 for the expected cash payments under these programs.
Note 10. Pension and Postretirement Benefit Plans
We sponsor various 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.
We also sponsor various defined contribution plans that cover the majority of our employees. Under the terms of the
qualified defined contribution retirement plans, employee and employer contributions may be directed into a number of diverse
investments. None of these qualified defined contribution plans allow direct investment in our stock.
63
$
U.S.
80
(111)
16
36
(5)
16
93
(52)
(2)
39
Components of net periodic benefit cost (credit) and other amounts recognized in OCI —
Interest cost
Expected return on plan assets
Service cost
Amortization of net actuarial loss
Settlement loss
Other
2015
$
U.S.
66
(108)
18
Non-U.S.
8
$
(2)
5
7
Net periodic benefit cost (credit)
(24)
18
Pension Benefits
2014
Non-U.S.
11
$
(1)
6
3
6
(1)
24
2013
$
U.S.
74
(117)
20
Non-U.S.
11
$
(1)
6
4
(23)
20
Recognized in OCI:
Amount due to net actuarial (gains)
losses
Reclassification adjustment for net
actuarial losses in net periodic
benefit cost
Venezuelan bolivar devaluation
Other
Total recognized in OCI
Net recognized in benefit cost
(credit) and OCI
Interest cost
Service cost
Amortization of net actuarial gain
Net periodic benefit cost
Recognized in OCI:
40
(18)
22
(6)
(7)
(11)
(24)
53
(9)
(4)
(1)
39
(88)
(20)
(108)
$
(2) $
(6) $
55
$
63
$
(131) $
(1)
(4)
(2)
(7)
13
5
1
6
(12)
(12)
(6)
OPEB - Non-U.S.
2014
2015
2013
$
$
$
3
1
4
$
$
(6)
(6)
(2) $
5
1
(1)
5
10
1
11
16
$
$
$
Amount due to net actuarial (gains) losses
Reclassification adjustment for net actuarial gain in net periodic benefit cost
Total recognized in OCI
Net recognized in benefit cost and OCI
Our U.S. defined benefit pension plans are frozen and no additional service cost is being accrued. The estimated net
actuarial loss for the defined benefit pension plans that will be amortized from AOCI into benefit cost in 2016 is $21 for our
U.S. plans and $5 for our non-U.S. plans. We use the corridor approach for purposes of systematically amortizing deferred
gains or losses as a component of net periodic benefit cost into the income statement in future reporting periods. The
amortization period used is generally the average remaining service period of active participants in the plan unless almost all of
the plan’s participants are inactive, in which case we use the average remaining life expectancy of the inactive participants. No
portion of the estimated net actuarial gain related to OPEB plans will be amortized from AOCI into benefit cost in 2016.
As discussed in Note 2, upon the divestiture of our operations in Venezuela, we eliminated unrecognized pension expense
of $11, of which $1 was attributable to noncontrolling interests.
64
Funded status — The following tables provide reconciliations of the changes in benefit obligations, plan assets and funded
status.
Pension Benefits
2015
2014
OPEB - Non-U.S.
U.S.
Non-U.S.
U.S.
Non-U.S.
2015
2014
Reconciliation of benefit
obligation:
Obligation at beginning of
period
Interest cost
Service cost
Actuarial (gain) loss
Benefit payments
New plans
Settlements
Other
Translation adjustments
Obligation at end of period
$
$
1,823
66
(70)
(127)
325
8
5
(5)
(11)
4
(2)
$
$
1,805
80
212
(124)
(133)
(17)
$
1,692
$
(36)
288
$
1,823
$
313
11
6
54
(16)
16
(7)
(11)
(41)
325
$
$
$
110
3
1
(6)
(5)
(17)
86
$
112
5
1
10
(6)
(12)
110
The amounts included on the Other line of the preceding table represent the error correction discussed in Note 1 and the
reclassification of the amount related to our operations in Venezuela to noncurrent liabilities of disposal group held for sale as
discussed in Note 2.
Pension Benefits
2015
2014
OPEB - Non-U.S.
U.S.
Non-U.S.
U.S.
Non-U.S.
2015
2014
Reconciliation of fair value of
plan assets:
Fair value at beginning of
period
Actual return on plan assets
Employer contributions
Benefit payments
Settlements
New plans
Asset reversion
Translation adjustments
Fair value at end of period
Funded status at end of period
$
$
$
$
1,622
(2)
(127)
$
$
1,649
230
(124)
(133)
44
3
12
(11)
(2)
3
1,493
$
(9)
40
$
1,622
$
42
2
16
(16)
(7)
18
(6)
(5)
44
$
— $
5
(5)
—
6
(6)
$
— $
—
(199) $
(248) $
(201) $
(281) $
(86) $
(110)
Amounts recognized in the balance sheet —
Pension Benefits
2015
2014
OPEB - Non-U.S.
U.S.
Non-U.S.
U.S.
Non-U.S.
2015
2014
Amounts recognized in the
consolidated balance sheet:
Noncurrent assets
Current liabilities
Noncurrent liabilities
Net amount recognized
$
$
— $
(199)
(199) $
$
2
(10)
(240)
(248) $
— $
(201)
(201) $
$
3
(10)
(274)
(281) $
— $
(4)
(82)
(86) $
—
(5)
(105)
(110)
65
Amounts recognized in AOCI —
Pension Benefits
2015
2014
OPEB - Non-U.S.
U.S.
Non-U.S.
U.S.
Non-U.S.
2015
2014
Amounts recognized in AOCI:
Net actuarial loss (gain)
Prior service cost
AOCI before tax
Deferred taxes
Net
$
$
513
$
83
$
491
$
513
513
$
83
(21)
62
491
$
491
$
103
3
106
(25)
81
$
$
(15) $
(15)
4
(11) $
(9)
(9)
3
(6)
We initiated a program in September 2014 under which certain former U.S. employees with vested pension benefits were
offered lump sum payments to settle their pension obligations. The same participants were also offered the option to begin
receiving monthly benefits soon after the program ended – earlier than previously allowed under the related plans. This
voluntary program ended in early November with 71% of the participants in the program accepting accelerated payments. The
lump sum payments were made in December. Together with routine settlements occurring in the U.S. throughout 2014, these
actions resulted in the distribution of plan assets of $133 to effect settlement of the related obligations. We charged earnings for
$36 to write off a pro rata portion of the cumulative actuarial loss related to the settled obligations. Because of differences in
valuation methods, the reduction in pension obligations exceeded the assets distributed by $38, which was credited to other
comprehensive income as a component of the actuarial loss for 2014.
During the fourth quarter of 2014, a defined benefit pension plan in Canada distributed the remainder of its assets in
accordance with the related agreement. We incurred a charge of $6 to write off the remaining unrecognized pension expense
related to this plan.
The other elements of the 2014 actuarial loss resulted from changes in assumptions and investment returns. Reducing our
discount rate at the end of 2014 caused an increase in the U.S. pension benefit obligation and an actuarial loss of $165. During
the fourth quarter of 2014, the Society of Actuaries (SOA) issued new mortality tables (RP-2014) and mortality improvement
scales (MP-2014). After studying our recent experience and evaluating the new tables, we adopted the RP-2014 Blue Collar
table for hourly participants and the No Collar table for salaried participants in our U.S. plans. With respect to the improvement
scales, the SOA had projected improvement from the beginning of 2008 after analyzing historical data through 2007. We
compared actual experience for years after 2007 to the improvement projected in MP-2014 and, in concert with our actuarial
advisers, considered other relevant data before concluding that a 0.75% long-term improvement rate (LTIR) for periods
beginning with 2014 was appropriate and that the LTIR would be attained by 2020, sooner than the period assumed in
MP-2014. Adopting the new mortality assumptions in 2014 caused an increase in our pension obligations and an actuarial loss
of $83. The actual return on U.S. plan assets provided a partial offset to these losses as it exceeded the assumed return by $119.
Aggregate funding levels — The following table presents information regarding the aggregate funding levels of our defined
benefit pension plans at December 31:
Plans with fair value of plan assets in excess of obligations:
Accumulated benefit obligation
Projected benefit obligation
Fair value of plan assets
Plans with obligations in excess of fair value of plan assets:
Accumulated benefit obligation
Projected benefit obligation
Fair value of plan assets
2015
2014
U.S.
Non-U.S.
U.S.
Non-U.S.
$
— $
1,692
1,692
1,493
10
10
12
254
278
28
$
— $
1,823
1,823
1,622
14
14
16
283
311
28
66
Fair value of pension plan assets —
$
$
$
Asset Category
Equity securities:
U.S. all cap (a)
U.S. large cap
U.S. small cap
EAFE composite
Emerging markets
Fixed income securities:
U.S. core bonds (b)
Corporate bonds
U.S. Treasury strips
Non-U.S. government
securities
Emerging market debt
Alternative investments:
Hedge fund of funds (c)
Insurance contracts (d)
Real estate
Other (e)
Cash and cash equivalents
Total
Equity securities:
U.S. all cap (a)
U.S. large cap
U.S. small cap
EAFE composite
Emerging markets
Fixed income securities:
U.S. core bonds (b)
Corporate bonds
U.S. Treasury strips
Non-U.S. government
securities
Emerging market debt
Alternative investments:
Hedge fund of funds (c)
Insurance contracts (d)
Real estate
Other (e)
Cash and cash equivalents
Total
$
Total
64
72
20
132
60
136
471
264
21
64
75
12
41
16
85
1,533
76
76
22
139
78
132
500
263
25
69
87
10
50
(3)
142
1,666
Fair Value Measurements at December 31, 2015
Non-U.S.
U.S.
Significant
Significant
Other
Other
Observable
Observable
Inputs
Inputs
(Level 2)
(Level 2)
Significant
Unobserv-
able
Inputs
(Level 3)
Quoted
Prices in
Active
Markets
(Level 1)
Significant
Unobserv-
able
Inputs
(Level 3)
$
— $
— $
— $
— $
—
1
Quoted
Prices in
Active
Markets
(Level 1)
$
64
72
20
132
59
136
471
264
64
11
84
1,030
$
347
$
75
41
$
116
$
1
$
21
5
1
27
12
$
12
Fair Value Measurements at December 31, 2014
$
— $
— $
— $
— $
—
$
76
76
22
139
75
3
132
500
263
69
(3)
136
1,097
87
50
$
137
$
3
$
25
6
31
$
10
10
$
388
$
________________________________
Notes:
(a) This category comprises a combination of small-, mid- and large-cap equity stocks that are allocated at the investment manager's discretion. Investments
include common and preferred securities as well as equity funds that invest in these instruments.
67
(b) This category represents a combination of investment grade corporate bonds, sovereign bonds, Yankee bonds, asset-backed securities and U.S.
government bonds. Investments include fixed income funds that invest in these instruments.
(c) This category includes fund managers that invest in a well-diversified group of hedge funds where strategies include, but are not limited to, event driven,
relative value, long/short market neutral, multistrategy and global macro. Investments may be made directly or through pooled funds.
(d) This category comprises contracts placed with insurance companies where the underlying assets are invested in fixed interest securities.
(e) Other assets in the U.S. represent interest rate derivatives which had a market value of $11 at December 31, 2015 and $(3) at December 31, 2014.
U.S.
Hedge
Fund of
Funds
2015
Real
Estate
and
Other
$
87
$
50
Non-U.S.
U.S.
Hedge
Fund of
Funds
Insurance
Contracts
10
$
$
83
$
48
2014
Real
Estate
and
Other
Non-U.S.
Insurance
Contracts
11
$
2
4
2
4
5
(3)
(1)
(14)
75
$
(15)
41
$
$
(1)
3
12
$
87
$
50
$
10
Reconciliation of Level 3 Assets
Fair value at beginning of period
Unrealized gains (losses) relating to:
Assets sold during the period
Assets still held at the reporting date
Purchases, sales and settlements
Currency impact
Transfers into (out of) Level 3
Fair value at end of period
Valuation Methods
Equity securities — The fair value of equity securities is determined by either direct or indirect quoted market prices. When the
value of assets held in separate accounts is not published, the value is based on the value of the underlying holdings, which are
primarily direct quoted market prices on regulated financial exchanges.
Fixed income securities — The fair value of fixed income securities is determined by either direct or indirect quoted market
prices. When the value of assets held in separate accounts is not published, the value is based on the value of the underlying
holdings, which are primarily direct quoted market prices on regulated financial exchanges.
Hedge funds — The fair value of hedge funds is accounted for by a custodian. The custodian obtains valuations from
underlying managers based on market quotes for the most liquid assets and alternative methods for assets that do not have
sufficient trading activity to derive prices. We review with the custodian the methods used by the underlying managers to value
the assets. We believe this is an appropriate methodology to obtain the fair value of these assets.
Insurance contracts — The fair value of insurance contracts is determined by reference to the contract provided by the
insurance company. The fair values of the insurance contracts are based on the underlying investments included in the contract.
Real estate — The fair value of investments in real estate is provided by fund managers. The fund managers value the real
estate investments via independent third party appraisals on a periodic basis. Assumptions used to revalue the properties are
updated every quarter. We believe this is an appropriate methodology to obtain the fair value of these assets. For the component
of the real estate portfolio under development, the investments are carried at cost until they are completed and valued by a third
party appraiser.
Cash and cash equivalents — The fair value of cash and cash equivalents is set equal to its cost.
The methods described above may produce a fair value calculation that may not be indicative of net realizable value or
reflective of future fair values. Furthermore, while we believe the valuation methods are appropriate and consistent with other
market participants, the use of different methodologies or assumptions to determine the fair value of certain financial
instruments could result in a different fair value measurement at the reporting date.
Investment policy — Target asset allocations of U.S. pension plans are established through an investment policy, which is
updated periodically and reviewed by an Investment Committee, comprised of certain company officers and directors. The
investment policy allows for a flexible asset allocation mix which is intended to provide appropriate diversification to lessen
market volatility while assuming a reasonable level of economic risk.
68
Our policy recognizes that properly managing the relationship between pension assets and pension liabilities serves to
mitigate the impact of market volatility on our funding levels. The investment policy permits plan assets to be invested in a
number of diverse categories, including a Growth Portfolio, an Immunizing Portfolio and a Liquidity Portfolio. These sub-
portfolios are intended to balance the generation of incremental returns with the management of overall risk.
The Growth Portfolio is invested in a diversified pool of assets in order to generate an incremental return with an
acceptable level of risk. The Immunizing Portfolio is a hedging portfolio that may be comprised of fixed income securities and
overlay positions. This portfolio is designed to offset changes in the value of the pension liability due to changes in interest
rates. The Liquidity Portfolio is a cash portfolio designed to meet short-term liquidity needs and reduce the plans’ overall risk.
As a result of our diversification strategies, there are no significant concentrations of risk within the portfolio of investments.
The allocations among portfolios may be adjusted to meet changing objectives and constraints. We expect that as the
funded status of the plans changes, we will increase or decrease the size of the Growth Portfolio in order to manage the risk of
losses in the plan. At December 31, 2015, the Growth Portfolio (U.S. and non-U.S. equities, core and high-yield fixed income,
hedge fund of funds, real estate, emerging market debt and cash) comprises 45% of total assets, the Immunizing Portfolio (long
duration U.S. Treasury strips, corporate bonds and cash) comprises 53% and the Liquidity Portfolio (cash and short-term
securities) comprises 2%. During 2015, the mid-points of the target ranges were 45.5% for the Growth Portfolio, 53.5% for the
Immunizing Portfolio and 5% for the Liquidity Portfolio.
Significant assumptions — The significant weighted-average assumptions used in the measurement of pension benefit
obligations at December 31 of each year and the net periodic benefit cost for each year are as follows:
Pension benefit obligations:
Discount rate
Net periodic benefit cost:
Discount rate
Rate of compensation increase
Expected return on plan assets
2015
2014
2013
U.S.
Non-U.S.
U.S.
Non-U.S.
U.S.
Non-U.S.
4.13%
2.83%
3.81%
3.75%
4.63%
4.15%
3.81%
N/A
7.00%
3.75%
4.83%
5.87%
4.63%
N/A
7.00%
4.15%
3.77%
3.41%
3.77%
N/A
7.00%
3.93%
3.73%
3.35%
The pension plan discount rate assumptions are evaluated annually in consultation with our outside actuarial advisers.
Long-term interest rates on high quality corporate debt instruments are used to determine the discount rate. For our largest
plans, discount rates are developed using a discounted bond portfolio analysis, with appropriate consideration given to defined
benefit payment terms and duration of the liabilities.
We have historically estimated the interest and service cost components of net periodic benefit cost for pension and other
postretirement benefits using a single weighted-average discount rate derived from the yield curve used to measure the benefit
obligation of the plan at the most recent remeasurement date. At December 31, 2015, we changed the method used to estimate
those interest and service components for pension and other postretirement benefit plans that utilize a yield curve approach.
The new method will use a full yield curve approach to estimate the interest and service components by applying the specific
spot rates along the yield curve used in the most recent remeasurement of the benefit obligation to the relevant projected cash
flows. We believe the new method improves the correlation between the projected cash flows and the corresponding interest
rates and provides a more precise measurement of interest and service costs. This change in accounting estimate will affect the
calculation of the interest and service components of net periodic benefit cost beginning in 2016. Since the remeasurement of
total benefit obligations is not affected, the 2016 reduction in periodic benefit cost will be offset by a change in the actuarial
gain or loss.
The expected rate of return on plan assets was selected on the basis of our long-term view of return and risk assumptions
for major asset classes. We define long-term as forecasts that span at least the next ten years. Our long-term outlook is
influenced by a combination of return expectations by individual asset class, actual historical experience and our diversified
investment strategy. We consult with and consider the opinions of financial professionals in developing appropriate capital
market assumptions. Return projections are also validated using a simulation model that incorporates yield curves, credit
spreads and risk premiums to project long-term prospective returns. The appropriateness of the expected rate of return is
assessed on an annual basis and revised if necessary. We have a high percentage of total assets in fixed income securities since
the benefit accruals are frozen for all of our U.S. pension plans. Based on this assessment, we have selected a 6.50% expected
return on asset assumption for 2016 for our U.S. plans.
69
The significant weighted-average assumptions used in the measurement of OPEB obligations at December 31 of each year
and the net periodic benefit cost for each year are as follows:
OPEB benefit obligations:
Discount rate
Net periodic benefit cost:
Discount rate
Initial health care cost trend rate
Ultimate health care cost trend rate
Year ultimate reached
2015
Non-U.S.
2014
Non-U.S.
2013
Non-U.S.
3.96%
3.84%
5.62%
5.03%
2018
3.84%
4.65%
5.91%
5.02%
2018
4.65%
3.90%
6.11%
5.03%
2018
The discount rate selection process was similar to the process used for the pension plans. Assumed health care cost trend
rates have a significant effect on the health care obligation. To determine the trend rates, consideration is given to the plan
design, recent experience and health care economics.
A one-percentage-point change in assumed health care cost trend rates would have the following effects for 2015:
Effect on total of service and interest cost components
Effect on OPEB obligations
1% Point
Increase
1% Point
Decrease
$
$
1
10
(1)
(9)
Estimated future benefit payments and contributions — Expected benefit payments by our pension and OPEB plans for each of
the next five years and for the following five-year period are as follows:
Year
2016
2017
2018
2019
2020
2021 to 2025
Total
Pension Benefits
U.S.
Non-U.S.
OPEB
Non-U.S.
$
$
129
124
120
117
113
545
1,148
$
$
12
13
13
15
15
82
150
$
$
4
4
5
5
5
25
48
Pension benefits are funded through deposits with trustees that satisfy, at a minimum, the applicable funding regulations.
OPEB benefits are funded as they become due. Projected contributions to be made during 2016 to the defined benefit pension
plans are $14 for our non-U.S. plans. Based on the current funded status of our U.S. plans, there are no minimum contributions
required for 2016.
Multi-employer pension plans — We participate in the Steelworkers Pension Trust (SPT) multi-employer pension plan which
provides pension benefits to substantially all of our U.S. union-represented employees. We also have a small participation in the
IAM National Pension Fund. Benefit levels are set by trustees who manage the plans. Contributions are made in accordance
with our collective bargaining agreements and rates are generally based on hours worked. The collective bargaining agreement
expires May 31, 2017. The trustees of the SPT have provided us with the latest data available for the plan year ended
December 31, 2015. As of that date, the plan is not fully funded. We could be held liable to the plan for our obligations as well
as those of other employers as a result of our participation in the plan. Contribution rates could increase if the plan is required
to adopt a funding improvement plan or a rehabilitation plan, if the performance of plan assets does not meet expectations or as
a result of future collectively bargained wage and benefit agreements. If we choose to stop participating in the plan, we may be
required to pay the plan an amount based on the underfunded status of the plan, referred to as a withdrawal liability.
The Pension Protection Act (PPA) defines a zone status for each plan. Plans in the green zone are at least 80% funded,
plans in the yellow zone are at least 65% funded and plans in the red zone are generally less than 65% funded. The SPT plan
has utilized extended amortization provisions to amortize its losses from 2008. The plan recertified its zone status after using
the extended amortization provisions as allowed by law. The SPT plan has not implemented a funding improvement or
70
rehabilitation plan, nor are such plans pending. Our contributions to the SPT have not exceeded 5% of the total contributions to
the plan.
Pension
Fund
Employer
Identification
Number/
Plan Number
PPA
Zone Status
2015
2014
Funding Plan
Pending/
Implemented
Contributions by Dana
2015
2014
2013
Surcharge
Imposed
SPT
23-6648508 / 499
Green
Green
No
$
10
$
9
$
9
No
Note 11. Marketable Securities
U.S. government securities
Corporate securities
Certificates of deposit
Other
Total marketable securities
2015
Unrealized
Gains
(Losses)
Cost
Fair
Value
Cost
2014
Unrealized
Gains
(Losses)
Fair
Value
$
$
38
42
18
62
160
$
$
— $
2
2
$
38
42
18
64
162
$
$
38
36
23
67
164
$
$
— $
5
5
$
38
36
23
72
169
U.S. government securities include bonds issued by government-sponsored agencies and Treasury notes. Corporate
securities include primarily debt securities. Other consists of investments in mutual and index funds. U.S. government
securities, corporate debt and certificates of deposit maturing in one year or less, after one year through five years and after five
years through ten years total $38, $54 and $6 at December 31, 2015.
Note 12. Financing Agreements
Long-term debt at December 31 —
Senior Notes due February 15, 2019
Senior Notes due February 15, 2021
Senior Notes due September 15, 2021
Senior Notes due September 15, 2023
Senior Notes due December 15, 2024
Other indebtedness
Total
Interest
Rate
6.500%
6.750%
5.375%
6.000%
5.500%
2015
2014
Principal
Unamortized
Debt Issue
Costs
Principal
Unamortized
Debt Issue
Costs
$
$
— $
350
450
300
425
66
1,591
$
— $
(4)
(6)
(5)
(6)
(21) $
55
350
450
300
425
79
1,659
$
$
(1)
(5)
(7)
(5)
(7)
(25)
Interest on the senior notes is payable semi-annually. Other indebtedness includes borrowings from various financial
institutions, capital lease obligations and the unamortized fair value adjustment related to a terminated interest rate swap. See
Note 13 for additional information on the terminated interest rate swap. During the third quarter of 2015, we reversed the $6
embedded capital lease obligation associated with our exclusive long-term supply agreement with SIFCO. See Note 2 for
additional information.
Scheduled principal payments on long-term debt at December 31, 2015 —
Debt maturities
$
17
$
18
$
20
$
3
$
2016
2017
2018
2019
2020
Thereafter
1,525
— $
Total
$
1,583
Senior notes activity — In December 2014, we completed the sale of $425 in senior unsecured notes. Net proceeds of the
offering totaled $418. Financing costs of $7 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 our February 2019 Notes.
71
During December 2014, we redeemed $345 of our February 2019 Notes pursuant to a tender offer at a weighted average
price equal to 104.116% plus accrued and unpaid interest. The $19 loss on extinguishment of debt recorded in December 2014
includes the redemption premium and transaction costs associated with the tender offer and the write-off of $4 of previously
deferred financing costs associated with the February 2019 Notes.
On December 9, 2014, we elected to redeem $40 of our February 2019 Notes effective January 8, 2015 at a price equal to
103.000% plus accrued and unpaid interest. The notes redeemed on January 8, 2015 were included in current portion of long-
term debt as of December 31, 2014. On March 16, 2015, we redeemed the remaining $15 of our February 2019 Notes at a price
equal to 103.250% plus accrued and unpaid interest. The $2 loss on extinguishment of debt includes the redemption premium
and the write-off of previously deferred financing costs associated with the February 2019 Notes.
In July 2013, we completed the sale of $750 in senior unsecured notes. Net proceeds of the offering totaled $734.
Financing costs of $16 were recorded as deferred costs and are being amortized to interest expense over the life of the notes. A
portion of the net proceeds from the offering were used to repurchase all of our outstanding Series A preferred stock and to fund
an accelerated common share repurchase transaction. The remaining net proceeds were be used to fund our previously
authorized share repurchase program and for other general corporate purposes.
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 years set forth below:
Year
2016
2017
2018
2019
2020
2021
2022
2023
Redemption Price
February
2021 Notes
September
2021 Notes
September
2023 Notes
December
2024 Notes
103.375%
102.250%
101.125%
100.000%
100.000%
104.031%
102.688%
101.344%
100.000%
100.000%
103.000%
102.000%
101.000%
100.000%
100.000%
102.750%
101.833%
100.917%
100.000%
100.000%
Prior to February 15, 2016 for the February 2021 Notes, during any 12-month period, we may at our option redeem up to
10% of the aggregate principal amount of the notes at a redemption price equal to 103.000% of the principal amount, plus
accrued and unpaid interest. Prior to this date, we may redeem some or all of the February 2021 at a price equal to the
aggregate principal amount thereof, plus accrued and unpaid interest, 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 risks of this embedded derivative are clearly and closely related to the economic characteristics and risks of
the underlying debt.
Prior to September 15, 2016 for the September 2021 Notes and prior to September 15, 2018 for the September 2023 Notes,
we may redeem some or all of such notes at a price equal to the principal amount thereof, plus accrued and unpaid interest, 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 September 15, 2016, we may redeem up to 35% of the original aggregate principal amount of each of
the September 2021 Notes and September 2023 Notes in an amount not to exceed the amount of proceeds of one or more
equity offerings, at a price equal to 105.375% (for the September 2021 Notes) and 106.000% (for the September 2023 Notes)
of the principal amount of such notes, plus accrued and unpaid interest thereon, provided that at least 50% of the original
aggregate principal amount of the September 2021 Notes (for redemptions of September 2021 Notes) and the September 2023
Notes (for redemptions of September 2023 Notes) remains outstanding after giving effect to any such redemption.
Prior to December 15, 2019, we may redeem some or all of the December 2024 Notes at a price equal to the principal
amount thereof, plus accrued and unpaid interest, 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
72
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 December 15, 2017, we may redeem up to 35% of the original aggregate principal amount of the
December 2024 Notes in an amount not to exceed the amount of proceeds of one or more equity offerings, at a price equal to
105.500% of the principal amount of such notes, plus accrued and unpaid interest thereon, provided that at least 50% of the
original aggregate principal amount of the December 2024 Notes remains outstanding after giving effect to any such
redemption.
Revolving facility — On June 20, 2013, we received commitments from existing lenders for a $500 amended and restated
revolving credit facility (the Amended Revolving Facility) which expires on June 20, 2018. In connection with the Amended
Revolving Facility, we paid $3 in deferred financing costs to be amortized to interest expense over the life of the facility. We
wrote off $2 of previously deferred financing costs associated with our prior revolving credit facility to other income, net.
The Amended Revolving Facility is guaranteed by all of our domestic subsidiaries except for Dana Credit Corporation and
Dana Companies, LLC and their respective subsidiaries (the guarantors) and grants a first priority lien on Dana’s and the
guarantors’ accounts receivable and inventories and, under certain circumstances, to the extent Dana and the guarantors grant a
first-priority lien on certain other assets and property, a second priority lien on such other assets and property.
Advances under the Amended Revolving Facility bear interest at a floating rate based on, at our option, the base rate or
LIBOR (each as described in the revolving credit agreement) plus a margin based on the undrawn amounts available under the
agreement as set forth below:
Remaining Borrowing Availability
Greater than $350
Greater than $150 but less than or equal to $350
$150 or less
Margin
Base
Rate
LIBOR
Rate
0.50%
0.75%
1.00%
1.50%
1.75%
2.00%
Commitment fees are applied based on the average daily unused portion of the available amounts under the Amended
Revolving Facility. If the average daily unused portion of the revolving facility is less than 50%, the applicable fee will be
0.25% per annum. If the average daily unused portion of the revolving facility is equal to or greater than 50%, the applicable
fee will be 0.375% per annum. Up to $300 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 LIBOR
margin based on a quarterly average availability under the revolving facility and a per annum fronting fee of 0.125%, payable
quarterly.
There were no borrowings under the revolving facility at December 31, 2015 but we had utilized $37 for letters of credit.
Based on our borrowing base collateral of $297, we had potential availability at December 31, 2015 under the revolving facility
of $260 after deducting the outstanding letters of credit.
European receivables loan facility — Effective December 31, 2013, we terminated our European accounts receivable backed
credit facility (the European Facility). The European Facility was scheduled to terminate on March 8, 2016 and permitted
borrowings up to €75 ($103 at the December 31, 2013 exchange rate). No borrowings were outstanding under the European
Facility as of the termination date. We wrote off $2 of previously deferred financing costs associated with the European Facility
to other income, net.
Debt covenants — At December 31, 2015, we were in compliance with the covenants of our financing agreements. Under the
Amended Revolving Facility and the senior notes, we are required to comply with certain incurrence-based covenants
customary for facilities of these types.
Note 13. 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.
73
Fair value measurements on a recurring basis — Assets and liabilities that are carried in our balance sheet at fair value are as
follows:
December 31, 2015
Marketable securities
Currency forward contracts - Accounts receivable other
Cash flow hedges
Undesignated
Currency forward contracts - Other accrued liabilities
Cash flow hedges
Undesignated
Currency swaps - Accounts receivable other
Undesignated
Currency swaps - Other accrued liabilities
Undesignated
December 31, 2014
Marketable securities
Currency forward contracts - Accounts receivable other
Cash flow hedges
Undesignated
Currency forward contracts - Other accrued liabilities
Cash flow hedges
Currency swaps - Other accrued liabilities
Undesignated
Changes in Level 3 recurring fair value measurements —
Notes receivable, including current portion
Beginning of period
Accretion of value (interest income)
Payment received and other
Unrealized loss (OCI)
Transfer out (to Level 2)
End of period
Fair Value Measurements Using
Quoted
Prices in
Active
Markets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Total
$
162
$
64
$
98
1
2
5
1
4
9
$
169
$
72
$
1
1
11
9
1
2
5
1
4
9
97
1
1
11
9
2013
129
11
(61)
(4)
(75)
—
$
$
During January 2014, we sold our interest in a payment-in-kind callable note to a third party for $75. Accordingly, we
reclassified the note to current assets and, with observable market value readily available, we reduced the unrealized gain and
transferred the note from Level 3 to Level 2 at December 31, 2013.
Fair value of financial instruments — The financial instruments that are not carried in our balance sheet at fair value are as
follows:
2015
2014
Carrying
Value
Fair
Value
Carrying
Value
Fair
Value
Senior notes
Other indebtedness*
$
Total
* The carrying value at December 31, 2015 includes the unamortized portion of a fair value adjustment related to a terminated interest rate swap.
1,525
66
1,591
1,580
79
1,659
1,552
56
1,608
$
$
$
$
$
$
$
1,643
77
1,720
74
The fair value of our senior notes is estimated based upon a market approach (Level 2) while the fair value of our other
indebtedness is based upon an income approach (Level 2). See Note 12 for additional information about financing
arrangements.
Fair value measurements on a nonrecurring basis — Certain assets are measured at fair value on a nonrecurring basis. These
are long-lived assets that are subject to fair value adjustments only in certain circumstances. These assets include intangible
assets and property, plant and equipment which may be written down to fair value when they are held for sale or as a result of
impairment.
Interest rate derivatives — Our portfolio of derivative financial instruments periodically includes interest rate swaps designed
to mitigate our interest rate risk. Near the end of the third quarter of 2015, we terminated a fixed-to-floating interest rate swap
on our December 2024 Notes. This interest rate swap served to convert the designated fixed-rate debt into variable-rate debt,
using the 3-month U.S. LIBOR as the benchmark interest rate plus a spread of 307 basis points. Of the $425 total notional
amount of the interest rate swap, $340 had been designated as a fair value hedge of the December 2024 Notes.
During the third quarter of 2015, prior to its termination, we realized a $2 interest expense reduction and cash savings from
the interest rate swap. Upon termination, we also received a cash settlement of $4, indicative of the swap's favorable market
value at that date. As a fair value hedge of the December 2024 Notes, the difference between the changes in fair value of the
designated portion of the interest rate swap and the December 2024 Notes was treated as ineffectiveness and was recorded in
the income statement as an adjustment to interest expense. Changes in the fair value associated with the undesignated portion
of the interest rate swap did not represent ineffectiveness but were also recorded as an adjustment to interest expense. The total
amount recorded as ineffectiveness and other such costs was $4 during the third quarter of 2015.
At December 31, 2015, no interest rate swaps remain outstanding. However, at that date, $8 remains on the balance sheet
as the unamortized portion of the fair value adjustment to the carrying amount of the December 2024 Notes. The balance is
being amortized as a reduction of interest expense through the period ending December 2024, the scheduled maturity date of
the December 2024 Notes. The amount amortized during the fourth quarter of 2015 was not material.
Foreign currency derivatives — Our foreign currency derivatives include forward contracts associated with forecasted
transactions, primarily involving the purchases and sales of inventory through the next sixteen months, as well as currency
swaps associated with certain recorded intercompany loans receivable and payable. Periodically, our foreign currency
derivatives also include net investment hedges of certain of our investments in foreign operations.
The total notional amount of outstanding foreign currency forward contracts, involving the exchange of various currencies,
was $212 at December 31, 2015 and $296 at December 31, 2014. The total notional amount of outstanding foreign currency
swaps was $219 at December 31, 2015 and $10 at December 31, 2014.
75
The following currency derivatives were outstanding at December 31, 2015:
Functional Currency
U.S. dollar
Euro
British pound
Swedish krona
Traded Currency
Mexican peso, Euro
U.S. dollar, Canadian dollar,
Hungarian forint, British pound,
Swiss franc, Indian rupee,
Russian ruble
U.S. dollar, Euro
Euro
South African rand
U.S. dollar, Euro
Thai baht
Brazilian real
Indian rupee
Total forward contracts
U.S. dollar, Australian dollar
U.S. dollar, Euro
U.S. dollar, British pound, Euro
Notional Amount (U.S. Dollar Equivalent)
Designated as
Cash Flow
Hedges
Undesignated
Total
Maturity
$
$
47
46
$
2
30
49 Mar-17
Apr-17
76
12
13
118
1
15
25
2
19
94
139
80
219
313
$
13 Mar-17
13 Mar-17
Jun-16
Dec-16
Jun-16
Feb-17
Aug-16
Dec-16
15
25
2
19
212
139
80
219
431
U.S. dollar
Euro
Mexican peso, Euro
Canadian dollar, British pound
Total currency swaps
Total currency derivatives
—
118
$
$
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, net in the period in which the changes occur.
Realized gains and losses from currency-related forward contracts, including those that have been designated as cash flow
hedges and those that have not been designated, are recognized in other income, net.
Net investment hedges — With respect to contracts designated as net investment hedges, we apply the forward method and
report changes in fair value in the CTA component of OCI during the period in which the contracts remain outstanding to the
extent such contracts remain effective.
During the second quarter of 2015, we settled a $98 forward contract that had been executed and designated as a net
investment hedge of the equivalent portion of certain of our European operations during the first quarter of 2015. Although no
net investment hedges remain outstanding at December 31, 2015, a deferred loss of $2 associated with this settled contract has
been recorded in AOCI as of that date and will remain deferred until such time as the investment in the associated subsidiary is
substantially liquidated.
Amounts to be reclassified to earnings — Deferred gains or losses associated with effective cash flow hedges are reported in
AOCI and are reclassified to earnings in the same periods in which the underlying transactions affect earnings. Amounts
expected to be reclassified to earnings assume no change in the current hedge relationships or to December 31, 2015 exchange
rates. Deferred losses of $4 at December 31, 2015 are expected to be reclassified to earnings during the next twelve months,
compared to deferred losses of $10 at December 31, 2014. Amounts reclassified from AOCI to earnings arising from the
discontinuation of cash flow hedge accounting treatment were not material during 2015.
Note 14. Commitments and Contingencies
Asbestos personal injury liabilities — As part of our reorganization in 2008, assets and liabilities associated with personal
injury asbestos claims were retained in Dana Corporation which was then merged into Dana Companies, LLC (DCLLC), a
consolidated wholly-owned limited liability company. The assets of DCLLC include insurance rights relating to coverage
against these liabilities, marketable securities and other assets which are considered sufficient to satisfy its liabilities. DCLLC
had approximately 25,000 active pending asbestos personal injury liability claims at both December 31, 2015 and 2014.
76
DCLLC had accrued $78 for indemnity and defense costs for settled, pending and future claims at December 31, 2015,
compared to $81 at December 31, 2014. A fifteen-year time horizon was used to estimate the value of this liability.
At December 31, 2015, DCLLC had recorded $51 as an asset for probable recovery from insurers for the pending and
projected asbestos personal injury liability claims, compared to $52 recorded at December 31, 2014. The recorded asset
represents our assessment of the capacity of our current insurance agreements to provide for the payment of anticipated defense
and indemnity costs for pending claims and projected future demands. The recognition of these recoveries is based on our
assessment of our right to recover under the respective contracts and on the financial strength of the insurers. DCLLC has
coverage agreements in place with insurers confirming substantially all of the related coverage and payments are being
received on a timely basis. The financial strength of these insurers is reviewed at least annually with the assistance of a third
party. The recorded asset does not represent the limits of our insurance coverage, but rather the amount DCLLC would expect
to recover if the accrued indemnity and defense costs were paid in full.
DCLLC continues to process asbestos personal injury claims in the normal course of business, is separately managed and
has an independent board member. The independent board member is required to approve certain transactions including
dividends or other transfers of $1 or more of value to Dana. Dana Holding Corporation has no obligation to increase its
investment in or otherwise support DCLLC.
In 2013, other income includes proceeds of $4 from the sale of our interest in claims pending in the liquidation
proceedings of an insurer and other asbestos-related recoveries of $7.
Other product liabilities — We had accrued $1 for non-asbestos product liability costs at December 31, 2015 and 2014, with no
recovery expected from third parties at either date. We estimate these liabilities based on assumptions about the value of the
claims and about the likelihood of recoveries against us derived from our historical experience and current information.
Environmental liabilities — Accrued environmental liabilities were $11 at December 31, 2015 and $7 at December 31, 2014.
During the third quarter of 2015, in response to additional information provided by continuing studies at our former foundry
operation in Argentina, we recognized a $6 charge to cost of sales increasing our accrual for this location. We consider the most
probable method of remediation, current laws and regulations and existing technology in estimating our environmental
liabilities. Other accounts receivable included a related recoverable from insurers or other parties of $1 at December 31, 2014.
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.
In November 2013, we received an arbitration notice from Sypris Solutions, Inc. (Sypris), formerly our largest supplier,
alleging damage claims under the 2007 long-term supply agreement that expired on December 31, 2014. In December 2013, we
received Notice of Supplemental Claims by Sypris under the 2007 supply agreement. The arbitration proceedings related to
these supplemental claims concluded in the second quarter of 2015 with Sypris being awarded immaterial damages. Sypris also
alleged that Dana and Sypris entered into a new binding long-term supply agreement in July 2013. Dana filed suit against
Sypris requesting a declaratory judgment that the parties did not enter into a new supply agreement. During the first quarter of
2015, the trial court granted summary judgment in Dana’s favor, rejecting Sypris’ position that a new contract was formed in
July 2013. The Ohio Sixth District Court of Appeals upheld the summary judgment ruling and Sypris has not appealed that
decision. It is uncertain whether Sypris will pursue its remaining claim that Dana failed to negotiate in good faith under the
2007 agreement. Dana maintains that this claim is without merit.
On September 25, 2015, the Brazilian antitrust authority (“CADE”) announced an investigation of an alleged cartel
involving a former Dana business in Brazil and various competitors related to sales of shock absorbers between 2000 and 2014.
We divested this business as a part of the sale of our aftermarket business in 2004. Dana’s policy is to cooperate with
governmental investigations. We cannot predict the duration, scope or ultimate outcome of this matter. Based on the
information currently available to us, we do not believe this matter will result in a material liability to Dana.
77
Lease commitments — Cash obligations under future minimum rental commitments under operating leases and net rental
expense are shown in the table below. Operating lease commitments are primarily related to facilities.
Lease commitments
$
34
$
32
$
24
$
15
$
13
2016
2017
2018
2019
2020
Thereafter
41
$
Total
$
159
Rent expense
Note 15. Warranty Obligations
2015
$49
2014
$51
2013
$58
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 are made as new information becomes available.
Changes in warranty liabilities —
Balance, beginning of period
Amounts accrued for current period sales
Adjustments of prior estimates
Settlements of warranty claims
Currency impact
Balance, end of period
Note 16. Income Taxes
2015
2014
2013
$
$
47
26
22
(36)
(3)
56
$
$
54
19
18
(41)
(3)
47
$
$
66
17
6
(34)
(1)
54
23
106
129
(1)
(9)
(10)
119
Income tax expense (benefit) attributable to continuing operations —
2015
2014
2013
Current
U.S. federal and state
Non-U.S.
Total current
Deferred
U.S. federal and state
Non-U.S.
Total deferred
Total expense (benefit)
$
$
12
80
92
(9)
(1)
(10)
82
$
$
(5) $
134
129
(177)
(22)
(199)
(70) $
We record interest and penalties related to uncertain tax positions as a component of income tax expense or benefit. Net
interest expense for the periods presented herein is not significant.
Income from continuing operations before income taxes —
U.S. operations
Non-U.S. operations
Income from continuing operations before income taxes
2015
2014
2013
$
$
72
220
292
$
$
175
85
260
$
$
151
217
368
Income tax audits — We conduct business globally and, as a result, file income tax returns in multiple jurisdictions that are
subject to examination by taxing authorities throughout the world. With few exceptions, we are no longer subject to U.S.
federal, state and local or foreign income tax examinations for years before 2009. The U.S. federal income tax audits for 2011
and 2012 were settled during the first quarter of 2015, resulting in no incremental cash taxes.
78
We are currently under audit by U.S. and foreign authorities for certain taxation years. When the issues related to these
periods are settled, the total amounts of unrecognized tax benefits for all open tax years may be modified. We accrued tax
reserves of $2 in 2014 and $6 in 2013 for an uncertain tax position in Italy, which was settled in 2015. Audit outcomes and the
timing of the audit settlements are subject to uncertainty and we cannot make an estimate of the impact on our financial
position at this time.
Effective tax rate reconciliation for continuing operations —
U.S. federal income tax rate
Adjustments resulting from:
State and local income taxes, net of federal benefit
Non-U.S. income
Non-U.S. tax incentives
Non-U.S. withholding taxes on undistributed earnings of non-U.S.
operations
Intercompany sale of certain operating assets
Settlement and return adjustments
Miscellaneous items
Valuation allowance adjustments
Effective income tax rate for continuing operations
2015
2014
2013
35%
35 %
35%
1
(10)
(2)
5
9
2
(12)
28%
1
(6)
(4)
4
3
(60)
(27)%
(4)
(4)
5
1
1
(2)
32%
The income tax rate varies from the U.S. federal statutory rate of 35% due to establishment, release and adjustment of
valuation allowances in several countries, nondeductible expenses, 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 to the U.S.
In 2014, income tax expense in the U.S. was reduced by $179 for release of valuation allowances for income forecasted to
be realized in 2015 in connection with a tax planning action that involved a sale of an affiliate’s stock and certain operating
assets by a U.S. subsidiary of the company to a non-U.S. affiliate expected to be completed in 2015. During the fourth quarter
of 2015, the tax planning action was completed. The final income generated by the transaction was higher than anticipated as a
consequence of proposed Internal Revenue Service regulations issued in 2015 providing guidance on the tax treatment afforded
a component of the tax planning action we undertook, as well as revised income estimates, which resulted in an additional $66
release of valuation allowance. In conjunction with the completion of the intercompany sale of certain operating assets to a
non-U.S. affiliate, a prepaid tax asset of $190 was recorded. The prepaid tax asset represents the usage of tax attributes
recognized in 2014 and 2015, through the release of valuation allowance on our deferred tax assets, and will be amortized into
tax expense over the life of the assets transferred in the transaction. During 2015, $2 of the prepaid tax asset was recognized in
tax expense, as a result of this amortization. In addition, we recognized tax expense of $23 related to the sale of the affiliate’s
stock.
No tax benefit was recognized on a charge of $80 in 2014 relating to the divestiture of our Venezuela operations due to the
existence of a valuation allowance, resulting in an increase in the effective tax rate.
In 2013, income tax expense was reduced by $7 for the impact of new tax legislation and tax rate changes outside the U.S.
Additionally, non-U.S. income in each of the three years contributed to an effective tax rate of less than 35% due to lower
statutory tax rates in the countries where we operate outside the U.S.
Foreign income repatriation — We provide for U.S. federal income and non-U.S. withholding taxes on the earnings of our non-
U.S. operations that are not considered to be permanently reinvested. Accordingly, we continue to analyze and adjust the
estimated tax impact of the income and non-U.S. withholding liabilities based on the amount and source of these earnings. We
recognized net expense of $1, $3 and $8 for 2015, 2014 and 2013 related to future income taxes and non-U.S. withholding
taxes on repatriations from operations that are not permanently reinvested. We also paid withholding taxes of $7, $7 and $13
during 2015, 2014 and 2013 related to the actual transfer of funds to the U.S. and between foreign subsidiaries.
The earnings of our non-U.S. subsidiaries will likely be repatriated to the U.S. in the form of repayments of intercompany
borrowings and distributions from earnings. Certain of our international operations had intercompany loan obligations to the
U.S. totaling $1,233 at the end of 2015. Included in this amount are intercompany loans and related interest accruals with an
equivalent value of $32 which are denominated in a foreign currency and considered to be permanently invested.
79
Valuation allowance adjustments — We have generally not recognized tax benefits on losses generated in several entities,
including in the U.S., 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.
At December 31, 2015, we have a valuation allowance against our deferred tax assets in the U.S. When evaluating the
continued need for this valuation allowance we consider all components of comprehensive income, and we weigh the positive
and negative evidence, putting greater reliance on objectively verifiable historical evidence than on projections of future
profitability that are dependent on actions that have not occurred as of the assessment date. We also consider changes to
historical profitability of actions occurring in the year of assessment that have a sustained effect on future profitability, the
effect on historical profits of nonrecurring events, as well as tax planning strategies. These effects included items such as the
lost future interest income resulting from the prepayment on and subsequent sale of the payment-in-kind callable note
receivable, the additional interest expense resulting from the $750 senior unsecured notes payable issued in July 2013 and the
effects of the intercompany transfer of an affiliate's stock and certain operating assets, as discussed above. A sustained period of
profitability, after considering historical changes from implemented actions and nonrecurring events, along with positive
expectations for future profitability are necessary for a determination that a valuation allowance should be released. Our U.S.
operations have experienced improved profitability in recent years, but our analysis of the income of the U.S. operations,
including changes to the historical income for the effects of developments through the current date and planned future actions,
demonstrates historical losses as of December 31, 2015. Therefore, we have not achieved a level of sustained historical
profitability that would, in our judgment, support a release of the valuation allowance at December 31, 2015.
Deferred tax assets and liabilities — Temporary differences and carryforwards give rise to the following deferred tax assets and
liabilities.
Net operating loss carryforwards
Postretirement benefits, including pensions
Research and development costs
Expense accruals
Other tax credits recoverable
Capital loss carryforwards
Inventory reserves
Postemployment and other benefits
Other
Total
Valuation allowance
Deferred tax assets
Unremitted earnings
Intangibles
Depreciation
Other
Deferred tax liabilities
Net deferred tax assets
2015
2014
448
137
89
58
63
50
15
5
865
(662)
203
(68)
(29)
(43)
(27)
(167)
36
$
$
654
148
110
57
60
55
18
4
25
1,131
(728)
403
(31)
(41)
(39)
(58)
(169)
234
$
$
Carryforwards — Our deferred tax assets include benefits expected from the utilization of net operating loss (NOL), capital
loss and credit carryforwards in the future. The following table identifies the net operating loss deferred tax asset components
and the related allowances that existed at December 31, 2015. Due to time limitations on the ability to realize the benefit of the
carryforwards, additional portions of these deferred tax assets may become unrealizable in the future.
80
Net operating losses
U.S. federal
U.S. state
Brazil
France
Australia
South Africa
U.K.
Argentina
Total
Deferred
Tax
Asset
Valuation
Allowance
Carryforward
Period
$
$
256
108
20
12
31
3
7
11
448
$
$
20
Various
Unlimited
Unlimited
Unlimited
Unlimited
Unlimited
5
(256)
(108)
(20)
(31)
(3)
(4)
(11)
(433)
Earliest
Year of
Expiration
2028
2016
2016
In addition to the NOL carryforwards listed in the table above, we have deferred tax assets related to capital loss
carryforwards of $50 which are fully offset with valuation allowances at December 31, 2015. We also have deferred tax assets
of $63 related to other credit carryforwards which are offset with $61 of valuation allowances at December 31, 2015. The
capital losses can be carried forward indefinitely while the other credits are generally available for 10 to 20 years with portions
currently expiring. We also have a deferred tax asset of $32 related to NOLs for excess tax benefits generated upon the
settlement of stock awards that increased a current year net operating loss. We cannot record the benefit of these losses in the
financial statements until the losses are utilized to reduce our income taxes payable at which time we will recognize the tax
benefit in equity.
The use of a portion of our $730 U.S. federal NOL as of December 31, 2015 is subject to limitation due to the change in
ownership of our stock upon emergence from bankruptcy. Generally, the application of the relevant Internal Revenue Code
(IRC) provisions will release the limitation on $84 of pre-change NOLs each year, allowing pre-change losses to offset post-
change taxable income. Through further evaluation and audit adjustment, and after considering U.S. taxable income in 2015,
we estimate that $594 of our U.S. federal NOLs remains subject to limitation as of December 31, 2015. The remainder of our
U.S. federal NOLs represents a combination of post-change NOLs and pre-change NOLs on which the limitation has been
released. However, there can be no assurance that trading in our shares will not effect another change in ownership under the
IRC which would further limit our ability to utilize our available NOLs.
Unrecognized tax benefits — Unrecognized tax benefits are the difference between a tax position taken, or expected to be
taken, in a tax return and the benefit recognized for accounting purposes. Interest income or expense, as well as penalties
relating to income tax audit adjustments and settlements, are recognized as components of income tax expense or benefit.
Interest of $6 was accrued on the uncertain tax positions at both December 31, 2015 and 2014.
Reconciliation of gross unrecognized tax benefits —
Balance, beginning of period
Decrease related to expiration of statute of limitations
Decrease related to prior years tax positions
Increase related to current year tax positions
Decrease related to settlements
Balance, end of period
2015
2014
2013
$
$
109
(6)
(8)
8
(16)
87
$
$
$
101
(3)
25
(14)
109
$
108
(7)
(6)
6
101
We anticipate that the change in our gross unrecognized tax benefits will not be significant in the next twelve months, as a
result of examinations in various jurisdictions. The settlement of these matters will not impact the effective tax rate. Gross
unrecognized tax benefits of $46 would impact the effective tax rate if recognized. If other open matters are settled with the
IRS or other taxing jurisdictions, the total amounts of unrecognized tax benefits for open tax years may be modified.
81
Note 17. Other Income, Net
Interest income
Government grants and incentives
Foreign exchange gain (loss)
Gain on derecognition of noncontrolling interest
Strategic transaction expenses
Insurance and other recoveries
Gain on sale of marketable securities
Write-off of deferred financing costs
Recognition of unrealized gain on payment-in-kind note receivable
Amounts attributable to previously divested/closed operations
Other
Other income, net
2015
2014
2013
$
$
$
13
3
(20)
5
(4)
4
1
1
11
14
$
15
4
11
(3)
2
2
17
48
$
$
25
3
(5)
(4)
13
9
(4)
5
13
55
Interest income decreased from 2013 as a result of selling our payment-in-kind note receivable during the first quarter of
2014. The receipt of a payment on our payment-in-kind note receivable during the second quarter of 2013 resulted in the
recognition of a portion of the related unrealized gain that arose following the valuation of the note receivable below its
callable value at emergence from bankruptcy. The subsequent sale of the payment-in-kind note receivable during the first
quarter of 2014 resulted in the recognition of the remaining unrealized gain. See Note 13 for additional information.
During 2013, we recorded $3 of interest income as a result of a favorable legal ruling related to recovery of gross receipts
tax paid in Brazil in earlier periods.
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. During 2015, foreign exchange losses were primarily driven by the impact the strengthening U.S. dollar had on our
Mexican peso and euro forward contracts. As discussed in Note 1 above, effective March 31, 2014, we ceased using the official
bolivar exchange rate of 6.3 and began using the SICAD rate, which was 10.7 bolivars per U.S. dollar (as published by the
Central Bank of Venezuela) at March 31, 2014, to remeasure the financial statements of our subsidiaries in Venezuela. The
change to the SICAD rate resulted in a charge of $17 during the first quarter of 2014. After remaining relatively unchanged
during the second quarter the SICAD rate declined to 12.0 bolivars per U.S. dollar at September 30, 2014, resulting in a
remeasurement charge of $3 during the third quarter. During 2014, we realized gains of $8 as CENCOEX approved a portion of
our pending claims to settle U.S. dollar obligations at the official exchange rate of 6.3. Also during 2014 we realized net gains
of $14 on sales and purchases of U.S. dollars through SICAD 2 at average rates of 49.9 bolivars per U.S. dollar. The foreign
exchange gains and losses associated with our subsidiaries in Venezuela are included in the segment EBITDA of our Light
Vehicle operating segment. Foreign exchange loss for 2013 includes a first quarter charge of $6 resulting from the February
2013 devaluation of Venezuela's official exchange rate from 4.3 to 6.3 bolivars per U.S. dollar. The charge was largely
recovered over the balance of 2013 as the Venezuelan government allowed certain transactions to be settled at the former
exchange rate.
Upon completion of the divestiture of our operations in Venezuela in January 2015, we recognized a gain on the
derecognition of the noncontrolling interest in a former Venezuelan subsidiary.
Strategic transaction expenses relate primarily to costs incurred in connection with acquisition and divestiture related
activities.
During 2015, we reached a settlement with an insurance carrier for the recovery of previously incurred legal costs. During
2014 we received a payment from the liquidation proceedings of insurers. During 2013, we sold claims pending in the
liquidation proceedings of an insurer to a third party, received payments from the liquidation proceedings of insurers and
recorded an insurance recovery related to business interruptions resulting from flooding in Thailand.
As discussed in Note 12 above, during 2013 we wrote off previously deferred financing costs associated with our prior
revolving credit facility and our terminated European Facility.
82
As part of correcting overstatements of our pension and postretirement obligations and goodwill in September 2014, we
credited other income, net for $6 to effectively reverse a portion of the write-off of goodwill assigned to our former Driveshaft
segment in 2008. See Note 1 for additional information.
Note 18. Segments, Geographical Area and Major Customer Information
We are a global provider of high technology driveline, sealing and thermal-management products for virtually every major
vehicle manufacturer in the on-highway and off-highway markets. Our driveline products – axles, driveshafts and transmissions
– are delivered through our Light Vehicle, Commercial Vehicle and Off-Highway operating segments. Our fourth global
operating segment – Power Technologies – is the center of excellence for the sealing and thermal 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.
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 —
2015
Light Vehicle
Commercial Vehicle
Off-Highway
Power Technologies
Eliminations and other
Total
2014
Light Vehicle
Commercial Vehicle
Off-Highway
Power Technologies
Eliminations and other
Total
2013
Light Vehicle
Commercial Vehicle
Off-Highway
Power Technologies
Eliminations and other
Total
External
Sales
Inter-
Segment
Sales
Segment
EBITDA
Capital
Spend
$
$
$
$
$
$
2,482
1,533
1,040
1,005
$
126
95
37
15
(273)
$
262
100
147
149
6,060
$
— $
658
$
$
2,496
1,838
1,231
1,052
$
139
92
37
19
(287)
$
250
172
169
154
6,617
$
— $
745
$
$
2,549
1,860
1,330
1,030
$
124
119
44
21
(308)
$
242
194
163
150
$
6,769
$
— $
749
$
140
33
18
34
35
260
129
38
23
30
14
234
82
40
33
33
21
209
Depreciation
63
$
32
20
28
15
158
$
$
$
$
$
63
34
21
32
14
164
67
44
18
35
11
175
Net
Assets
1,002
692
309
421
493
2,917
1,002
869
344
442
378
3,035
970
938
379
454
311
3,052
$
$
$
$
$
$
Net assets include certain cash balances, accounts receivable, inventories, other current assets, certain intangibles,
investments in affiliates, other noncurrent assets, net property, plant and equipment, notes payable and short term debt, accounts
payable and current accrued liabilities.
83
Reconciliation of segment EBITDA to consolidated net income —
Segment EBITDA
Corporate expense and other items, net
Depreciation
Amortization of intangibles
Restructuring
Stock compensation expense
Strategic transaction expenses
Other items
Impairment of long-lived assets
Distressed supplier costs
Amounts attributable to previously divested/closed operations
Loss on disposal group held for sale
Pension settlement charges
Loss on extinguishment of debt
Write-off of deferred financing costs
Gain on derecognition of noncontrolling interest
Recognition of unrealized gain on payment-in-kind note receivable
Interest expense
Interest income
Income from continuing operations before income taxes
Income tax expense (benefit)
Equity in earnings (losses) of affiliates
Income from continuing operations
Income (loss) from discontinued operations
Net income
Reconciliation of segment net assets to consolidated total assets —
Segment net assets
Accounts payable and other current liabilities
Other current and long-term assets
Consolidated total assets
$
$
2015
2014
2013
658
(6)
(158)
(16)
(15)
(14)
(4)
(6)
(36)
(8)
(6)
(2)
5
(113)
13
292
82
(34)
176
4
180
$
$
$
$
745
1
(164)
(49)
(21)
(16)
(3)
9
(80)
(42)
(19)
2
(118)
15
260
(70)
13
343
(15)
328
$
$
749
(2)
(175)
(87)
(24)
(16)
(4)
(4)
5
(99)
25
368
119
12
261
(1)
260
2015
2014
2,917
1,091
318
4,326
$
$
3,035
1,261
609
4,905
84
Geographic information — Of our 2015 consolidated net sales, the U.S., Italy, Germany and Brazil account for 46%, 9%, 6%
and 4%, respectively. No other country accounts for more than 5% of our consolidated net sales over the past three years. Sales
are attributed to the location of the product entity recording the sale. Long-lived assets represent property, plant and equipment.
North America
United States
Other North America
Total
Europe
Italy
Germany
Other Europe
Total
South America
Brazil
Other South America
Total
Asia Pacific
Total
2015
Net Sales
2014
2013
2015
Long-Lived Assets
2014
2013
$
$
2,805
405
3,210
570
368
785
1,723
240
137
377
750
6,060
$
$
2,760
366
3,126
703
429
846
1,978
505
266
771
742
6,617
$
$
2,559
399
2,958
734
410
850
1,994
639
344
983
834
6,769
$
$
441
90
531
58
100
153
311
80
19
99
226
1,167
$
$
368
111
479
61
106
151
318
119
22
141
238
1,176
$
$
311
131
442
71
124
161
356
129
56
185
242
1,225
Sales to major customers — Ford is the only individual customer to whom sales have exceeded 10% of our consolidated sales
in the past three years. Sales to Ford for the three most recent years were $1,187 (20% ) in 2015, $1,217 (18%) in 2014 and
$1,226 (18% ) in 2013.
Note 19. Equity Affiliates
We have a number of investments in entities that engage in the manufacture of vehicular parts – primarily axles,
driveshafts and wheel-end braking systems – supplied to OEMs.
Dividends received from equity affiliates were $16, $16 and $10 in 2015, 2014 and 2013.
Equity method investments exceeding $5 at December 31, 2015 —
Dongfeng Dana Axle Co., Ltd.
Bendix Spicer Foundation Brake, LLC
Axles India Limited
All others as a group
Investments in equity affiliates
Investment in affiliates carried at cost
Investment in affiliates
Ownership
Percentage
50%
20%
48%
Investment
83
$
49
7
9
148
2
150
$
Our equity method investments in Dongfeng Dana Axle Co., Ltd. (DDAC), Bendix Spicer Foundation Brake, LLC and
Axles India Limited are included in the net assets of our Commercial Vehicle operating segment.
The significant decline in China's commercial vehicle market during 2015 resulted in a series of monthly operating losses
by DDAC. These factors when combined with updated long-range plan information received from DDAC in the fourth quarter
of 2015, which incorporated China's projected "new normal" future growth rate, indicated that we may not be able to recover
the carrying value of our investment in DDAC. During the fourth quarter of 2015, we calculated the fair value of our
investment in DDAC to determine if we had an other-than-temporary decline in the carrying value of our investment. We used
both the discounted cash flow (an income approach) and guideline public company (a market approach) methods, weighting
each equally, to fair value our investment in DDAC. The discounted cash flow method used DDAC's updated long-range plan
and focuses on estimating the expected after-tax cash flows attributable to the subject company over its life and converting
85
these after-tax cash flows to present value through discounting. The discount rate of 16.0% which was used in our assessment
accounts for both the time value of money and subject company risk factors. The guideline public company method focuses on
comparing a subject company to reasonably similar (or "guideline") publicly-traded companies. Under this method, valuation
multiples are: (i) derived from the operating data of selected guideline public companies; (ii) evaluated and adjusted based on
the strengths and weaknesses of the subject company relative to the selected guideline companies; and (iii) applied to the
operating data of the subject company to arrive at an indication of fair value. The carrying value of our investment in DDAC
exceeded the calculated fair value by $39. The $39 impairment charge has been included in equity in earnings of affiliates.
The carrying value of our equity method investments at December 31, 2015 was $29 more than our share of the affiliates’
book value, including $19 attributable to goodwill. The difference between the investment carrying value and the amount of
underlying equity in assets, excluding goodwill, is being amortized on a straight-line basis over the underlying assets’ estimated
useful lives of five to forty-five years.
Summarized financial information for DDAC and other equity affiliates on a combined basis —
2015
DDAC
2014
2013
Other Equity Affiliates Combined
2013
2014
2015
Sales
Gross profit
Pre-tax income
Net income
Dana's equity earnings in affiliate
$
$
$
$
$
$
554
45
$
(14) $
(6) $
(45) $
762
82
23
17
5
Current assets
Noncurrent assets
Total assets
Current liabilities
Noncurrent liabilities
Total liabilities
$
$
$
$
$
$
$
$
$
835
82
19
20
7
$
$
$
$
$
582
113
42
40
11
DDAC
2015
2014
406
206
612
385
95
480
$
$
$
$
552
177
729
506
61
567
$
$
$
$
$
$
$
$
$
564
100
33
32
8
$
$
$
$
$
497
79
25
24
5
Other Equity
Affiliates Combined
2014
2015
180
71
251
97
12
109
$
$
$
$
192
73
265
123
13
136
86
Dana Holding Corporation
Quarterly Results (Unaudited)
(In millions, except per share amounts)
2015
Net sales
Gross margin
Net income (loss)
Net income (loss) attributable to the parent company
Net income (loss) per share available to parent company common
stockholders
Basic
Diluted
2014
Net sales
Gross margin
Net income
Net income attributable to the parent company
Net income per share available to parent company common
stockholders
Basic
Diluted
___________________________________________________________
Note: Gross margin is net sales less cost of sales.
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
$
$
$
$
$
$
$
$
$
$
$
$
1,608
228
74
63
0.38
0.38
First
Quarter
1,688
234
37
34
0.21
0.19
$
$
$
$
$
$
$
$
$
$
$
$
1,609
236
63
59
0.36
0.36
Second
Quarter
1,710
248
90
86
0.54
0.49
$
$
$
$
$
$
$
$
$
$
$
$
1,468
213
122
119
0.75
0.75
Third
Quarter
1,637
240
93
90
0.56
0.52
$
$
$
$
$
$
$
$
$
$
$
$
1,375
172
(79)
(82)
(0.54)
(0.54)
Fourth
Quarter
1,582
223
108
109
0.65
0.64
Net income for the third quarter of 2015 includes a $36 loss on impairment of long-lived assets and a deferred tax asset
valuation allowance release of $100. Net income for the fourth quarter of 2015 includes a $39 impairment loss related to our
equity method investment in DDAC, a charge resulting from deferred tax asset valuation allowance adjustments of $49 and tax
expense of $23 on the sale of an affiliate's stock to a non-U.S. affiliate. Net income for the fourth quarter of 2014 includes an
$80 loss on the disposal group held for sale, $42 of pension settlement charges, a $19 loss on extinguishment of debt and a
deferred tax asset valuation allowance release of $179.
87
Dana Holding Corporation
Schedule II
Valuation and Qualifying Accounts and Reserves
(In millions)
Amounts deducted from assets in the balance sheets —
Balance at
beginning
of period
Amounts
charged
(credited)
to income
Allowance
utilized
Adjustments
arising
from change
in currency
exchange
rates
and other
items
Balance at
end of
period
$
$
$
$
$
$
$
$
$
6
7
8
48
48
51
728
982
1,184
$
$
$
$
$
$
$
$
$
1
$
$
1
— $
18
20
16
$
$
$
(49) $
(246) $
(143) $
(1) $
(1) $
(1) $
(16) $
(15) $
(19) $
(1) $
(7) $
(8) $
(1) $
(1) $
— $
(4) $
(5) $
— $
(16) $
(1) $
(51) $
5
6
7
46
48
48
662
728
982
Accounts Receivable - Allowance for Doubtful
Accounts
2015
2014
2013
Inventory Reserves
2015
2014
2013
Deferred Tax Assets - Valuation Allowance
2015
2014
2013
88
Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Disclosure controls and procedures — Our management, with the participation of our Chief Executive Officer and Chief
Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rule
13a-15(e) under the Securities Exchange Act of 1934, as amended, (the Exchange Act)) as of the end of the period covered by
this report. Based on such evaluations, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the
end of such period, our disclosure controls and procedures are effective.
Management's report on internal control over financial reporting — Our management is responsible for establishing and
maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f).
Management, with the participation of the Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness
of our internal control over financial reporting based on the framework in Internal Control-Integrated Framework (2013) issued
by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management has
concluded that, as of December 31, 2015, our internal control over financial reporting was effective.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
PricewaterhouseCoopers LLP, an independent registered public accounting firm, has audited the effectiveness of our
internal control over financial reporting as of December 31, 2015, as stated in its report which is included herein.
Changes in internal control over financial reporting — There has been no change in our internal control over financial
reporting during the quarter ended December 31, 2015 that has materially affected, or is reasonably likely to materially affect,
our internal control over financial reporting.
Item 9B. Other Information
None.
Item 10. Directors, Executive Officers and Corporate Governance
PART III
Dana has adopted Standards of Business Conduct that apply to all of its officers and employees worldwide. Dana also has
adopted Standards of Business Conduct for the Board of Directors. Both documents are available on Dana’s Internet website at
http://www.dana.com/investors.
The remainder of the response to this item will be included under the sections captioned “Corporate Governance,”
“Selection of Chairman and Chief Executive Officer; Succession Planning,” “Information About the Nominees,” “Risk
Oversight,” “Committees and Meetings of Directors,” “Executive Officers” and “Section 16(a) Beneficial Ownership
Reporting Compliance” of Dana’s definitive Proxy Statement relating to the Annual Meeting of Shareholders to be held on
April 28, 2016, which sections are hereby incorporated herein by reference.
Item 11. Executive Compensation
The response to this item will be included under the sections captioned “Compensation Committee Interlocks and Insider
Participation,” “Compensation of Executive Officers,” “Compensation Discussion and Analysis,” “Compensation of
Directors,” “Officer Stock Ownership Guidelines,” “Compensation Committee Report,” “Summary Compensation Table,”
“Grants of Plan-Based Awards at Fiscal Year-End,” “Outstanding Equity Awards at Fiscal Year-End,” “Option Exercises and
Stock Vested During Fiscal Year,” “Pension Benefits,” “Nonqualified Deferred Compensation at Fiscal Year-End,” “Executive
Agreements” and “Potential Payments and Benefits Upon Termination or Change in Control” of Dana’s definitive Proxy
Statement relating to the Annual Meeting of Shareholders to be held on April 28, 2016, which sections are hereby incorporated
herein by reference.
89
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The response to this item will be included under the section captioned “Security Ownership of Certain Beneficial Owners
and Management” of Dana’s definitive Proxy Statement relating to the Annual Meeting of Shareholders to be held on April 28,
2016, which section is hereby incorporated herein by reference.
Equity Compensation Plan Information
The following table contains information at December 31, 2015 about shares of stock which may be issued under our
equity compensation plans, all of which have been approved by our shareholders.
(Shares in millions)
Plan Category
Equity compensation plans
approved by security holders
Equity compensation plans not
approved by security holders
Total
Number of Securities
to be Issued Upon
Exercise of
Outstanding Options,
Warrants and Rights(1)
Weighted Average
Exercise Price of
Number of Securities
to be Issued Upon
Exercise of
Outstanding Options,
Warrants and Rights(2)
Number of Securities
Remaining Available
for
Future Issuance
3.6
$
14.50
3.6
$
14.50
4.0
4.0
________________________________________
Notes:
(1)
In addition to stock options, restricted stock units and performance shares have been awarded under Dana's equity compensation plans and were
outstanding at December 31, 2015.
(2) Calculated without taking into account the 1.8 shares of common stock subject to outstanding restricted stock and performance share units that become
issuable as those units vest since they have no exercise price and no cash consideration or other payment is required for such shares.
Item 13. Certain Relationships and Related Transactions and Director Independence
The response to this item will be included under the sections captioned “Director Independence and Transactions of
Directors with Dana,” “Transactions of Executive Officers with Dana” and “Information about the Nominees” of Dana’s
definitive Proxy Statement relating to the Annual Meeting of Shareholders to be held on April 28, 2016, which sections are
hereby incorporated herein by reference.
Item 14. Principal Accountant Fees and Services
The response to this item will be included under the section captioned "Independent Auditors" of Dana's definitive Proxy
Statement relating to the Annual Meeting of Shareholders to be held on April 28, 2016, which section is hereby incorporated
herein by reference.
90
Item 15. Exhibits and Financial Statement Schedules
PART IV
(a) List of documents filed as a part of this report:
1.
Consolidated Financial Statements:
Report of Independent Registered Public Accounting Firm
Consolidated Statement of Operations
Consolidated Statement of Comprehensive Income
Consolidated Balance Sheet
Consolidated Statement of Cash Flows
Consolidated Statement of Stockholders' Equity
Notes to Consolidated Financial Statements
2.
3.
Quarterly Results (Unaudited)
Financial Statement Schedule:
Valuation and Qualifying Accounts and Reserves (Schedule II)
All other schedules are omitted because they are not applicable or the required information is
shown in the financial statements or notes thereto.
4.
Exhibit Index
10-K
Pages
39
40
41
42
43
44
45
87
88
93
91
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned, hereunto duly authorized.
SIGNATURES
Date: February 18, 2016
DANA HOLDING CORPORATION
By:
/s/ James K. Kamsickas
James K. Kamsickas
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on this 18th day of
February 2016 by the following persons on behalf of the registrant and in the capacities indicated, including a majority of the
directors.
Signature
/s/ James K. Kamsickas
James K. Kamsickas
/s/ Rodney R. Filcek
Rodney R. Filcek
/s/ Virginia A. Kamsky*
Virginia A. Kamsky
/s/ Terrence J. Keating*
Terrence J. Keating
/s/ R. Bruce McDonald*
R. Bruce McDonald
/s/ Joseph C. Muscari*
Joseph C. Muscari
/s/ Mark A. Schulz*
Mark A. Schulz
/s/ Keith E. Wandell*
Keith E. Wandell
*By:
/s/ Marc S. Levin
Marc S. Levin, Attorney-in-Fact
Title
President and Chief Executive Officer
(Principal Executive Officer)
Senior Vice President, Interim Chief Financial Officer
and Chief Accounting Officer
(Principal Financial and Principal Accounting Officer)
Director
Director
Director
Non-Executive Chairman and Director
Director
Director
92
EXHIBIT INDEX
All documents referenced below were filed by Dana Corporation or Dana Holding Corporation (as successor registrant) -
file number 001-01063, unless otherwise indicated.
No.
Description
3.1
3.2
4.1
4.2
4.3
4.4
4.5
10.1**
10.2**
10.3**
10.4**
10.5**
10.6**
10.7**
10.8**
10.9**
10.10**
10.11**
10.12**
10.13**
10.14**
10.15**
Second Restated Certificate of Incorporation of Dana Holding Corporation. Filed as Exhibit 3.2 to Registrant’s
Current Report on Form 8-K dated October 29, 2014, and incorporated herein by reference.
Amended and Restated Bylaws of Dana Holding Corporation. Filed as Exhibit 3.1 to Registrant’s Current Report
on Form 8-K dated January 26, 2016, and incorporated herein by reference.
Specimen Common Stock Certificate. Filed as Exhibit 4.1 to Registrant’s Registration Statement on Form 8-A
dated January 31, 2008, and incorporated herein by reference.
Indenture, dated as of January 28, 2011, among Dana and Wells Fargo Bank, National Association, as trustee. Filed
as Exhibit 4.6 to Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010, and
incorporated herein by reference.
First Supplemental Indenture, among Dana and Wells Fargo Bank, National Association, as trustee. Filed as
Exhibit 4.7 to Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010, and
incorporated herein by reference.
Second Supplemental Indenture, dated August 2, 2013, with respect to the Indenture, dated January 28, 2011,
between Dana Holding Corporation and Wells Fargo Bank, National Association, as trustee. Filed as Exhibit 4.1 to
Registrant's Current Report on Form 8-K dated August 5, 2013, and incorporated herein by reference.
Third Supplemental Indenture, dated December 9, 2014, with respect to the Indenture, dated January 28, 2011,
between Dana Holding Corporation and Wells Fargo Bank, National Association, as trustee. Filed as Exhibit 4.1 to
Registrant's Current Report on Form 8-K dated December 9, 2014, and incorporated herein by reference.
Executive Employment Agreement dated August 11, 2015 by and between James K. Kamsickas and Dana Holding
Corporation. Filed with this Report.
Executive Employment Agreement dated January 12, 2015 by and between Roger Wood and Dana Holding
Corporation. Filed as Exhibit 3.3 to Registrant’s Current Report on Form 8-K dated January 13, 2015, and
incorporated herein by reference.
Form of Proprietary Interest Protection and Non-Solicitation Agreement. Filed as Exhibit 10.3 to Registrant’s
Quarterly Report on Form 10-Q for the quarter ended June 30, 2011, and incorporated herein by reference.
Dana Limited Supplemental Executive Retirement Plan. Filed as Exhibit 10.4 to Registrant’s Annual Report on
Form 10-K for the fiscal year ended December 31, 2012, and incorporated herein by reference.
Supplemental Executive Retirement Plan for Jeffrey S. Bowen dated September 20, 2012. Filed as Exhibit 10.5 to
Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012, and incorporated herein by
reference.
Dana Holding Corporation 2008 Omnibus Incentive Plan. Filed as Exhibit 10.10 to Registrant's Current Report on
Form 8-K dated February 6, 2008, and incorporated herein by reference.
Dana Holding Corporation 2012 Omnibus Incentive Plan. Filed as Exhibit 4.3 to Registrant’s Form S-8
Registration Statement dated May 2, 2012, and incorporated herein by reference.
Form of Indemnification Agreement. Filed as Exhibit 10.4 to Registrant’s Current Report on Form 8-K dated
February 6, 2008, and incorporated herein by reference.
Form of Option Right Agreement for Non-Employee Directors. Filed as Exhibit 10.22 to Registrant’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2007, and incorporated herein by reference.
Form of Restricted Stock Unit Award Agreement for Non-Employee Directors. Filed as Exhibit 10.23 to
Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007, and incorporated herein by
reference.
Form of Option Agreement under the Dana Holding Corporation 2008 Omnibus Incentive Plan. Filed as Exhibit
10.38 to Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008, and incorporated
herein by reference.
Form of Restricted Stock Unit Agreement under the Dana Holding Corporation 2008 Omnibus Incentive Plan.
Filed as Exhibit 10.39 to Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008,
and incorporated herein by reference.
Form of Performance Share Agreement under the Dana Holding Corporation 2008 Omnibus Incentive Plan. Filed
as Exhibit 10.40 to Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008, and
incorporated herein by reference.
Form of Share Appreciation Rights Agreement under the Dana Holding Corporation 2008 Omnibus Incentive Plan.
Filed as Exhibit 10.41 to Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008,
and incorporated herein by reference.
Form of Option Agreement under the Dana Holding Corporation 2012 Omnibus Incentive Plan. Filed as Exhibit
10.15 to Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012, and incorporated
herein by reference.
93
No.
10.16**
10.17**
10.18**
Description
Form of Restricted Stock Unit Agreement under the Dana Holding Corporation 2012 Omnibus Incentive Plan.
Filed as Exhibit 10.16 to Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012,
and incorporated herein by reference.
Form of Performance Share Agreement under the Dana Holding Corporation 2012 Omnibus Incentive Plan. Filed
as Exhibit 10.17 to Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012, and
incorporated herein by reference.
Form of Share Appreciation Rights Agreement under the Dana Holding Corporation 2012 Omnibus Incentive Plan.
Filed as Exhibit 10.18 to Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012,
and incorporated herein by reference.
10.19** Dana Holding Corporation Executive Perquisite Plan. Filed as Exhibit 10.4 to Registrant’s Current Report on Form
8-K dated April 18, 2008, and incorporated herein by reference.
10.20** Dana Holding Corporation Executive Severance Plan. Filed as Exhibit 10.1 to Registrant’s Current Report on Form
10.21
10.22
10.23
12
21
23
24
31.1
31.2
32
101
8-K dated June 24, 2008, and incorporated herein by reference.
Second Amended and Restated Revolving Credit and Guaranty Agreement, dated as of June 20, 2013, among Dana
Holding Corporation, as the borrower; the guarantors party thereto; Citibank, N.A., as administrative agent and
collateral agent; the banks, financial institutions and other institutional lenders party thereto, each as a lender;
Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as lead arrangers and joint
bookrunners; Bank of America, N.A., as syndication agent; and Barclays Bank PLC, Deutsche Bank Securities
Inc., JPMorgan Chase Bank, N.A., UBS Securities LLC and Wells Fargo Bank, N.A., as documentation agents.
Filed as Exhibit 10.1 to Registrant's Current Report on Form 8-K dated June 20, 2013, and incorporated herein by
reference.
Amended and Restated Security Agreement, dated as of June 20, 2013, among Dana Holding Corporation, the
guarantors party thereto and Citibank, N.A., as collateral agent. Filed as Exhibit 10.2 to Registrant's Current Report
on Form 8-K dated June 20, 2013, and incorporated herein by reference.
Underwriting Agreement, dated December 4, 2014, among Dana Holding Corporation and Citigroup Global
Markets Inc. as representative of the several underwriters named therein. Filed as Exhibit 1.1 to Registrant's
Current Report on Form 8-K dated December 9, 2014, and incorporated herein by reference.
Computation of Ratio of Earnings to Fixed Charges. Filed with this Report.
List of Consolidated Subsidiaries of Dana Holding Corporation. Filed with this Report.
Consent of PricewaterhouseCoopers LLP. Filed with this Report.
Power of Attorney. Filed with this Report.
Rule 13a-14(a)/15d-14(a) Certification by Chief Executive Officer. Filed with this Report.
Rule 13a-14(a)/15d-14(a) Certification by Chief Financial Officer. Filed with this Report.
Section 1350 Certification of Periodic Report (pursuant to Section 906 of the Sarbanes-Oxley Act of 2002). Filed
with this Report.
The following materials from Dana Holding Corporation’s Annual Report on Form 10-K for the year ended December
31, 2015, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Statement of Operations,
(ii) the Consolidated Statement of Comprehensive Income, (iii) the Consolidated Balance Sheet, (iv) the Consolidated
Statement of Cash Flows, (v) the Consolidated Statement of Shareholders’ Equity and (vi) Notes to the Consolidated
Financial Statements, filed herewith.
** Management contract or compensatory plan required to be filed as part of an exhibit pursuant to Item 15(b) of
Form 10-K.
94
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, James K. Kamsickas, certify that:
1. I have reviewed this Annual Report on Form 10-K of Dana Holding Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present
in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is
being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by
this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial
reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons
performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and
report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant's internal control over financial reporting.
Date: February 18, 2016
/s/ James K. Kamsickas
James K. Kamsickas
President and Chief Executive Officer
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, Rodney R. Filcek, certify that:
1. I have reviewed this Annual Report on Form 10-K of Dana Holding Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present
in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is
being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by
this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial
reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons
performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and
report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant's internal control over financial reporting.
Date: February 18, 2016
/s/ Rodney R. Filcek
Rodney R. Filcek
Senior Vice President, Interim Chief Financial Officer and Chief Accounting Officer
Exhibit 32
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
In connection with the Annual Report of Dana Holding Corporation (Dana) on Form 10-K for the year ended
December 31, 2015, as filed with the Securities and Exchange Commission on the date hereof (the Report), each of the
undersigned officers of Dana certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002, that to such officer's knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of Dana as of the dates and for the periods expressed in the Report.
Date: February 18, 2016
/s/ James K. Kamsickas
James K. Kamsickas
President and Chief Executive Officer
/s/ Rodney R. Filcek
Rodney R. Filcek
Senior Vice President, Interim Chief Financial Officer and Chief Accounting Officer
(This page intentionally left blank.)
INVESTOR INFORMATION
World Headquarters
Dana Holding Corporation
3939 Technology Drive
Maumee, OH 43537-7000
USA
Telephone: 419-887-3000
Fax: 419-887-5200
Annual Meeting Information
The 2016 Annual Meeting of Shareholders
will be held at the Westin Detroit Metropolitan
Airport in Romulus, Michigan, on April 28, 2016.
Independent Registered Public Accounting Firm
PricewaterhouseCoopers LLP
One SeaGate, Suite 1800
Toledo, OH 43604
USA
Form 10-K and Other Reports
Dana’s Annual Report on Form 10-K and its
Proxy Statement may be accessed online at
www.dana.com/investors, or printed copies
may be obtained without charge by writing:
Investor Relations
Dana Holding Corporation
P.O. Box 1000
Maumee, OH 43537-7000
USA
or by calling Dana’s Investor Relations
Department at 800-537-8823.
Stock Listing
Shareholder Services
Inquiries related to shareholder records, such
as change of name, address, or ownership of
stock, should be directed to the transfer agent
and registrar:
Wells Fargo Shareowner Services
Telephone: 800-468-9716 toll free
or direct: (651) 450-4064
Written Requests:
Shareowner Services
P.O. Box 64874
St. Paul, MN 55164-0874
USA
Certifi ed/Overnight Mail:
Shareowner Services
1110 Centre Pointe Curve, Suite 101
Mendota Heights, MN 55120
USA
Wells Fargo’s stock transfer website:
www.shareowneronline.com
Investor Services
Go to www.dana.com/investors to fi nd the
latest investor relations information about
Dana, including stock quotes, news releases,
and fi nancial data.
Requests for information may be directed to:
Investor Relations
Dana Holding Corporation
P.O. Box 1000
The New York Stock Exchange
Maumee, OH 43537-7000
is the principal market for
USA
Dana common stock.
Ticker Symbol: DAN
E-mail: InvestorRelations@dana.com
Dana’s Investor Line: 800-537-8823.
Through this 24-hour phone service, a caller may
leave his or her name with a message, and the
call will be returned by a Dana representative.
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