2020 Annual Report
DANA
AT A
GLANCE
Established in 1904. Employing
38,000 people across 141 major
facilities in 33 countries. Shipping
to 14,000 customers in 141
countries. Leveraging a global network
of technology centers across
9 countries.
Vision
To be the global technology
leader in efficient power
conveyance and energy-
management solutions that
enable our customers to achieve
their sustainability objectives.
Mission
Our talented people power a
customer-centric organization
that is continuously improving
the performance and efficiency
of vehicles and machines around
the globe. We will consistently
deliver superior products and
services to our customers and
will generate exceptional value for
our shareholders.
This mission is embodied in
our company theme:
Values
Honesty and Integrity
Good Corporate Citizenship
Open Communication
Continuous Improvement
2
Sales
$7.1 billion
Adjusted EBITDA1
$593 million
Diluted Adjusted EPS 2
$0.39
Adjusted Free Cash Flow1
$60 million
Future Sales Backlog
$700 million
All figures as of year-end December 31, 2020.
1 See pages 30-31 of Dana’s 2020 Form 10-K, included herein, for
explanation and reconciliation of non-GAAP financial measures.
2 Diluted adjusted EPS is a non-GAAP financial measure, which
we have defined 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 Dana.com/investors for explanation and
calculation of diluted adjusted EPS.
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3
3
SALES SNAPSHOT
46%
20%
12%
Region
North America
Europe
Asia-Pacific
51%
31%
13%
5%
13%
51%
South America 5%
31%
Customer
Ford
20%
Stellantis (FCA+PSA)*
12%
PACCAR
Deere
Volkswagen
Toyota
4%
3%
3%
3%
General Motors
3%
Renault/Nissan
2%
Tata
CNH Industrial
2%
2%
All Other Customers
46%
* Includes sales to system integrators
for driveline products that support
Stellantis vehicles.
Segment
Light Vehicle
Off-Highway
43%
28%
Commercial Vehicle 16%
Power Technologies 13%
Market
Light Vehicle
Off-Highway
54%
28%
13%
16%
43%
28%
18%
54%
Commercial Vehicle 18%
28%
4
All figures as of year-end December 31, 2020.
James K. Kamsickas
Chairman and Chief
Executive Officer
DEAR FELLOW
SHAREHOLDERS,
This past year has been one dominated by disruption and
uncertainty. Yet, despite the challenges faced by our world
and the mobility industry, I am immensely proud of the Dana
team and all that we accomplished. This year continued
to reveal the depth of our team’s character, which brought
us together to overcome hardship, while we strategically
advanced our mission to support our customers across all
markets and serve our communities around the globe.
Not only did we manage through the operational challenges
of the pandemic with more than 100 facilities temporarily
idled, but our teams also applied their expertise to support
frontline workers, including manufacturing personal
protective equipment and critical components for ventilators.
We are grateful for the Dana women and men who, today,
are working in our manufacturing facilities so that we can do
our part to ensure the world’s critical mobility industry can
continue to operate during the pandemic.
It is the collective spirit of the Dana
family that has me entering 2021 with
confidence in our company’s future.
I truly believe the future is Dana.
My sentiment isn’t just optimistic; it’s realistic. In 2020, our team
demonstrated a strong resilience by expanding our electric-vehicle
components and systems offerings, securing future sales of $700
million – half of which will come from hybrid and electric vehicle
programs, while continuing to generate cash and further strengthening
our balance sheet.
5
5
LETTER TO SHAREHOLDERS
We also elevated our leadership position
in the e-Mobility space, developing new
electrified propulsion systems across
all end markets and expanding our
global capabilities and capacity for our
electrification portfolio, including motors,
inverters, controls, and beyond.
As the mobility industry shifts to place greater emphasis on electrified vehicle
programs, Dana has strategically invested to build on our more than a century
of leadership in powertrain solutions. Our acquisition of Rational Motion
GmbH and investment in Pi Innovo LLC further extended our ability to provide
complete software, controls, integration, and engineering services to support
our customers. These solutions position Dana to assist our customers during
their transition to electrification and ultimately enhance the flexibility, robustness,
efficiency, and safety of electric-vehicle systems.
Our commercial-vehicle customers have leveraged these e-Propulsion
competencies with new electric programs featuring fully integrated solutions from
Dana, including the DAF LF Electric truck for the European market and Kenworth
and Peterbilt programs in North America, which will be on the road this year.
In the off-highway segment, there are a diverse number of applications and duty
cycles that benefit from Dana’s portfolio of solutions, not only in e-Propulsion,
but also in e-Motion systems. Dana has been a long-time leader in supplying
hydraulic-driven scissor-lift drivetrains, but now we are leveraging Dana’s
renowned mechanical capabilities, combined with our electrified solutions, to
expand into the growing electric-driven scissor-lift market. As an example, we
have already secured a multi-year program with JLG Industries for North America
and Europe, which begins early this year.
Dana’s thermal-management capabilities will also be getting a boost in 2021
upon completion of the acquisition of the liquid-cooling automotive thermal-
management business of Modine Manufacturing Company. The acquisition will
add approximately $300 million in annual revenue, further diversify our geographic
footprint for thermal products, strengthen our technology platform, and increase
the scale of our Power Technologies business by 30 percent. The transaction will
bring Dana complementary solutions
and strengthen our relationships with
existing customers while giving us
entrance into new original-equipment
manufacturers, such as Lucid Motors
and Byton.
Over the past year, Dana has realized
great successes from our light-vehicle
business, especially in the SUV and
light-truck segments. High-torque,
maximum payloads, and extreme
durability are key drivers for this
market, as is evidenced by our content
being featured on some of the year’s
highest-profile vehicles, including the
Ford Bronco® and Bronco Sport,
Jeep® Wrangler and Gladiator, Land
Rover Defender, and Ram TRX. As
automakers explore the best solutions
for electrifying in the future, there will
be a strong need for Dana’s high-
performance driveline technologies that
will not only meet the needs of exacting
truck owners, but also address the
desire for off-road adventure.
As a company, we firmly believe
our aggressive commitment to
sustainability and social responsibility
are positive forces driving our business
and are important for our future. I
am proud to report that Dana has
committed to reducing our total annual
greenhouse gas emissions by at least
50 percent before the end of 2035, and
we remain focused on finding better
ways to serve our people, develop our
products, and protect our planet.
6 6
LETTER TO SHAREHOLDERS
As we look ahead, we believe continuing to
execute our Powering into e-Drive enterprise
strategy will position us for future success and
further differentiate Dana among the mobility
supply base as an energy-source agnostic
supplier capable of supporting our customers
across their diverse powertrain options.
A year ago, I was reporting on the most profitable year in our company’s
history, and I believe that momentum didn’t just carry us through 2020, but it
continues to build as we move forward – and it’s all thanks to our people, our
customers, and our investors.
Together with the Board of Directors and the global Dana team, I thank
you for your support. I do not doubt that as we move into 2021, Dana will
continue to adapt and innovate so that we can launch ourselves into a very
bright future. After all, we are People Finding A Better Way.
My personal best,
James K. Kamsickas
Chairman and Chief Executive Officer
DANA IS THE ONLY SUPPLIER CAPABLE OF DELIVERING ALL ELEMENTS OF A COMPLETE,
FULLY INTEGRATED ELECTRIFIED SYSTEM ACROSS ALL MOBILITY MARKETS.
7 7
ELECTRIFIED
Vehicle electrification isn’t just a far-off
ambition for the mobility industry. It’s right
here, right now. And, Dana is delivering
electrification now.
Whether a vehicle developer is looking for individual components,
modules, or complete, fully integrated electrified systems, we have
the in-house capabilities to meet any electrification need. In fact, we
are actively providing solutions for a number of innovative programs
across all mobility markets.
8
THE FUTURE IS ELECTRIFIED
New electric motors enable material-handling equipment
Dana launched a new electric motor targeted for Class I electric lift trucks,
sideloaders, and mobile elevated work platforms. Delivering up to 95 percent
efficiency, these 48- to 120/144-volt synchronous reluctance internal permanent
magnet motors prolong battery life and extend duty cycles by delivering higher
power density than the AC motors typically used in these applications.
Currently in production, these new low-voltage, high-efficiency motors offer
continuous power from 20 kW to 60 kW, and peak power from 30 kW to
70 kW. They can be combined with Dana’s inverter, controller, software, and
drive products to deliver comprehensive system solutions for many types of
SRI 200 SERIES MOTOR
material-handling equipment.
Spicer Electrified™ axle
in production for medium-
duty trucks
The new Spicer Electrified™
eS9000r e-Axle for Class 4 and 5
medium-duty fleet applications is
currently in production. Dana was
the first to market in North America
with this e-Axle classification and
is ready to support widespread
deployment of this streamlined
e-Propulsion system.
Designed for medium-duty truck
frame rails to simplify truck body
and bus applications, the eS9000r
positioning. This e-Axle also
is based on proven and widely
specified Spicer® rear drive axle
incorporates Dana’s patent-pending
electronically controlled parking
platforms, and is engineered as a
pawl system.
fully integrated e-Axle, including
a gearbox and motor. The e-Axle
is easily incorporated into most
existing chassis, reducing driveline
complexity while allowing batteries
to be located between the
eS9000r e-AXLE
9
THE FUTURE IS ELECTRIFIED
Dana strengthens system integration capabilities
with strategic acquisitions
With a focus on enhancing the company’s in-house system
integration expertise, Dana acquired Rational Motion GmbH and
Pi Innovo LLC, both leaders in software, controls, integration, and
engineering services for electric vehicles.
Rational Motion brings to Dana more than 10 years of experience
in electric vehicle system integration, with specialized expertise
in embedded software, electric powertrain testing, hardware and
software in the loop, and battery simulation.
Dana collaborates with DAF
Trucks to develop fully electric
distribution truck
DAF Trucks selected Dana to
supply a complete e-Powertrain for
its new DAF LF Electric, a battery
electric medium-duty truck for urban
and regional product distribution.
Production will begin this year.
The e-Powertrain system, which
generates, stores, and manages
the energy for the vehicle, includes
all electrodynamic components,
embedded software and controls,
an e-Power system, e-Propulsion
system, and complete vehicle
integration.
Dana’s long-standing leadership in
truck driveline capabilities, coupled
with the company’s full e-Powertrain
capabilities, provides customers,
The acquisition of Pi Innovo, completed March 1, 2021, enables
like DAF Trucks, with highly efficient
Dana to increase its in-house electrodynamics capabilities and
solutions to support their reduced
electrification product portfolio by adding a strong library of turn-
emission and total cost of ownership
key electric vehicle application software, vehicle level controllers,
objectives.
and auxiliary controllers.
10
GROWTH
Despite the many challenges that 2020 threw
our way, we didn’t stop moving forward.
Always working to be a step ahead, we continued to strategically build
upon our foundation of success and position our company for growth
in the years to come.
11
THE FUTURE IS GROWTH
Dana to acquire portion of
light-vehicle thermal business
from Modine Manufacturing
Company
In 2020, Dana signed a definitive
agreement to purchase the
liquid-cooling automotive thermal-
management business of Modine
Manufacturing Company. The
transaction is expected to be
completed in the first half of 2021
and will increase the scale of Dana’s
Power Technologies business unit
by approximately 30 percent.
This acquisition will bring
complementary solutions to the
company’s current product portfolio
by extending its offerings in chillers,
water-charged air coolers, exhaust-
gas recirculation, and electric-
vehicle thermal technologies. It will
also further diversify our geographic
footprint for thermal products across
the United States, Europe, and Asia;
enhance our technology platform;
and strengthen relationships with
new and existing light-vehicle
manufacturers.
The transaction is expected to add
approximately $300 million in annual
revenue based on 2019 results.
Dana secures programs for new Ford Bronco® and Land Rover
Defender, expands presence in SUV market
Two of the most highly anticipated new light-vehicle launches — the Land
Rover Defender and the Ford Bronco — feature Dana’s latest Spicer®
AdvanTEK® axles. The innovative axles are designed to deliver improved
performance and greater power density in a compact package. The 2021
Bronco also features Spicer® driveshafts.
Both of these iconic SUVs are engineered to withstand extreme conditions,
and Dana matches this rugged character with high-performance front and
rear axles that feature high-strength materials and gearing for maximum
durability. In addition to the axles’ ability to tackle challenging terrain, Dana’s
axles provide improved efficiency and best-in-class performance for noise,
vibration, and harshness performance.
SPICER ADVANTEK ULTRATM
WITH SPICER SMARTCONNECTTM
SPICER® DRIVESHAFTS WITH CV33
JOINTS
DANA 35TM ADVANTEK®
DANA 44TM ADVANTEK®
12
THE FUTURE IS GROWTH
Dana recognized for superior
support to construction
industry in China
Dana earned several supplier
Tractors featuring Dana
technologies sweep all
categories in “Tractor of the
Year 2021” awards
awards from Chinese original-
Dana’s advanced drive technologies
equipment manufacturers based on
are used on all four of the winners
its close collaboration in engineering
of the “Tractor of the Year 2021”
and testing, high-quality production,
awards competition.
Dana recognized by PACCAR as
top-performing supplier
Dana was recognized by PACCAR as
a Supplier Performance Management
Achiever in North America, marking the
second consecutive year as a recipient
of the distinguished award. Suppliers
are evaluated on cross-functional key
performance indicators in the areas
successful integration with customer
supply chains, and responsive
aftermarket service.
These recognitions include:
• AGCO China recognized Dana
as an “Above and Beyond
Champion”
•
LGMG named Dana a “Best
Strategic Partner”
• SANY’s crane division
presented Dana with its
“Excellent Supplier Award
2020,” and the company’s
intelligent manufacturing
The Massey Ferguson 8 S.265
of product development, operations
high-horsepower tractor, which
support, and business alignment with
earned the “Tractor of the Year”
award, features a Spicer® modular
steer axle, as well as Dana’s
high-precision gears and shifting
solutions. The Valtra G 135 Versu
multi-purpose tractor, the winner of
the “Best Utility” category, utilizes
a Spicer steer axle, along with
gears and shifting solutions from
Dana. The “Best of Specialized”
award recipient, the Fendt 211 V
Vario narrow-track tractor, features
PACCAR’s objectives.
Dana supplies PACCAR with a range
of electrified technologies, drive and
steer axles, steering shafts, driveshaft
assemblies, and engine gaskets.
Dana twice recognized
by General Motors as
Supplier of the Year
a Spicer steer axle, and the Claas
Dana was named a GM
Axion 960 CEMOS tractor, which
Supplier of the Year by
technology group named Dana
received the “Sustainable Tractor of
General Motors for both
a “Production Guarantee Star”
the Year” designation, is equipped
its driveline technologies and
• Sunward named Dana a “2020
Silver Supplier”
•
Zoomlion recognized Dana with
the “Excellent Supplier” award
with a Spicer suspended steer axle,
powertrain cooling solutions during
driveshaft, and gears.
Altogether, Dana technologies
are featured on 10 of this year’s
a virtual ceremony honoring the
recipients of the company’s 28th
annual Supplier of the Year awards.
This is the third consecutive year
18 finalists in the distinguished
Dana has received the award.
international showcase, which is
held annually.
The Supplier of the Year award
winners were chosen by a
global team of GM purchasing,
engineering, quality, manufacturing,
and logistics executives.
Winners were selected based on
performance criteria in product
purchasing, global purchasing and
manufacturing services, customer
care and aftersales, and logistics.
13
INNOVATIVE
We’ve proven time and again that we don’t just
reinvent parts to support the future of mobility,
we are continually reinventing ourselves, too.
We’ve taken strategic steps to augment our core capabilities to support
all of our customers’ drivetrain and propulsion needs, regardless of the
power source.
14
THE FUTURE IS INNOVATIVE
Dana launches production of new technologies
for construction equipment
Dana launched a new series of eight Spicer Torque-HubTM drives, expanding
the company’s offering of drive and motion technologies for crawler cranes
and other large tracked vehicles. The new drives offer flexible packaging
and gear ratios to meet manufacturer preferences for tracked and wheeled
applications.
In addition, to support the growing construction market in China, Dana
began manufacturing track drives in Yangcheng, China, for a wide range of
construction equipment. This added capability will decrease the supply times
to original-equipment manufacturers and help them accelerate the production
of equipment for domestic and regional distribution.
SPICER TORQUE-HUBTM
Dana enhances Spicer® SPL®
series driveshafts
percent for the SPL 140 model.
The SPL 170 and SPL 250 heavy-
These increases are achieved
duty series incorporate another
and confirmed through rigorous
evolution of an improved, patented
To improve overall efficiency and
increase performance, Dana
enhanced its Spicer® SPL® Series
driveshafts. The improvements
underscore Dana’s ongoing
commitment to its traditional
driveline technologies, providing
solutions for evolving customer
application requirements.
For the medium-duty SPL series,
Dana increased the maximum
torque rating up to 15 percent for
the SPL 170 model and up to 7
testing, improvements in analytical
seal design, providing extended
techniques, improved processes
durability. The new composite
and materials, and extensive
sealing package provides even
benchmarking of competitive
greater resistance against
products. The enhanced medium-
environmental influence, further
duty SPL product targets multiple
increasing performance life.
applications, allowing for rightsizing
and the use of an optimum
driveshaft, improving efficiency
and cost.
SPICER® SPL® SERIES DRIVESHAFTS
15
THE FUTURE IS INNOVATIVE
INSPIRE project features Dana’s metallic bipolar
plate, receives FCH Award for fuel cell technology
Dana’s metallic bipolar plates for fuel-cell stacks are
increasing the viability of fuel-cell-powered vehicles and
supporting a more eco-friendly charging infrastructure
— ultimately fulfilling the company’s vision of helping
customers achieve their sustainability objectives throughout
the entire power supply chain.
These innovative bipolar plates were recognized by the
Fuel Cells and Hydrogen Joint Undertaking (FCH JU) with
an FCH Award in the Best Success Story category as
part of the INSPIRE project. The FCH Award recognizes
outstanding projects and developments in the field of fuel
cells that reduce production costs, improve manufacturing
speed, develop new materials, increase performance, and
demonstrate the reliability of hydrogen energy.
The INSPIRE project develops innovative stack components
for fuel cells with high power densities. One of the project
goals was to develop a cost-effective and competitive
bipolar plate. The results of the INSPIRE
project demonstrate Dana’s ability to
deliver a market-ready metallic bipolar
plate, which is crucial for the growth
of the fuel-cell market. The highly
durable bipolar plate is designed
to meet the extreme demands for
sealing, coating, and absolute
precision of the extra-fine
embossing structures.
NEW POWER PROGRESS
Dana recognized with Drivetrain
Component of the Year Award
for Spicer® TE50 powershift
transmission
Dana was awarded the Drivetrain
Component of the Year Award for its
Spicer® TE50 powershift transmission at
the 2020 Diesel Progress Summit and
Awards, which recognizes commercially
available drivetrain components used in
a conventional powertrain application,
including transmissions, powertrain
components, axles, hydraulics, and wheels.
Designed for large-load haul dumpers,
trucks used in underground mining, and
wheel loaders, the new transmission
increases productivity, improves reliability,
and reduces operating costs for heavy-duty,
high-power applications. Its electronically
modulated hydrodynamic design provides
precise vehicle handling, improved fuel
efficiency, smoother shifting, and optimized
braking. Offered with four- or eight-speed
gearboxes to optimize shifting ratios, the
transmission is available with automatic
lockup, which improves fuel efficiency by
enabling direct drive even at low speeds.
METALLIC BIPOLAR PLATE
16
RESPONSIBLE
With a strong focus on sustainability and social
responsibility, we are committed to supporting
our employees and the communities in which
we operate to help ensure a brighter future.
Not only are our electrified products helping to support emissions-free
mobility, but we have also taken strategic steps to tangibly minimize our
company’s environmental footprint, increase diversity and inclusion within
our workforce, and improve the health and safety of our employees.
17
THE FUTURE IS RESPONSIBLE
Dana to reduce total annual greenhouse gas emissions
Dana has committed to reducing its total annual greenhouse gas
emissions by at least 50 percent before the end of 2035. This
will result in a reduction of more than 300,000 metric tons of
greenhouse gas emissions annually. To achieve this goal, Dana
will focus on improving energy efficiency, increasing the use of
renewable energy, eliminating waste, and conserving water across
all facilities worldwide.
Dana recognized by
Forbes magazine as a
World’s Best Employer
In addition to being named a World’s Best Employer by Forbes
magazine, Dana was also recognized as a top employer in Europe,
and received honors in a number of other countries, including
Brazil, Canada, India, Mexico, and the United States.
Dana Incorporated Board of Directors establishes
Technology and Sustainability Committee
A new Technology and Sustainability Committee, established
by the Dana Board of Directors, is responsible for assisting the
Board with oversight relating to innovation, new technologies,
and sustainability and social responsibility. By leveraging the vast
experience and insight of the company’s Board of Directors related
to environmental, social, and governance, Dana will be better able
to serve its people, develop products, and protect the planet.
Key areas of focus for the committee include the strategy,
implementation, and effectiveness of Dana’s research and
development initiatives; emerging trends in science, technology,
and related regulations; the company’s strategic approach to
technical talent management; and sustainability and social
responsibility activities.
Dana named one of
“America’s Most Responsible
Companies 2021” by
Newsweek magazine
Newsweek magazine ranked Dana
111th out of 400 companies on
its “America’s Most Responsible
Companies 2021” list, up 134
spots from the inaugural listing of
300 companies last year. Dana
ranked 5th in the Automotive and
Components category.
The list was compiled after a
detailed analysis by Newsweek
and its partner Statista of the
companies’ corporate social
responsibility efforts, including
environmental, social, and corporate
governance.
Dana’s scoring in the environmental
category increased by 36 points,
contributing significantly to the
company’s ranking. From solar
energy fields to optimizing resource
usage, Dana’s global team is
focused on reducing the company’s
environmental impact across its 141
major facilities.
18
THE FUTURE IS RESPONSIBLE
A GROUP OF MORE THAN 30 DANA TEAM MEMBERS SUPPORTED
VENTILATOR COMPONENT MANUFACTURING IN PARIS, TENNESSEE
Dana partners with hospitals to develop protective equipment
amid COVID-19
In response to global shortages of personal protective equipment, Dana
Dana achieves CIPS
Procurement Excellence
Standard
used its engineering expertise to develop — in partnership with hospitals
Dana is the first company in the
around the world — equipment needed for patient care and personal
United States and the first automotive
protection for healthcare workers.
Dana engineers designed and distributed 3D-printed face shields to
prevent fluids and other airborne materials from coming into contact with
healthcare professionals’ faces. While there were many 3D-printed designs
already available for use, Dana worked with healthcare professionals to
design a lightweight, rigid, and flexible solution.
At Dana’s Paris, Tennessee facility, a group of more than 30 team members
collaborated to support the manufacturing of critical ventilator components.
In addition, Dana developed and delivered patient enclosures, designed
to provide a barrier between the patient and healthcare workers during an
intubation procedure. During this procedure, the risk of bodily fluids and
airborne pathogens reaching a healthcare worker is extremely high. The
plexiglass enclosure allows for full visibility of and access to the patient and
is able to be sanitized and used multiple times.
3D-PRINTED
FACE SHIELDS
PATIENT
ENCLOSURE
supplier globally to achieve the
Chartered Institute of Procurement
& Supply (CIPS) Procurement
Excellence Program’s Standard
award for its purchasing policies,
processes, and procedures.
The recognition of the Standard
award is the result of an in-depth
assessment of Dana’s procurement
practices and supply-chain
operations by an independent
third-party against internationally
respected standards. The
assessment focuses on five key
areas, including leadership and
organization, strategy and policy,
people, processes and systems,
and performance management.
19
L
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D
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R
S
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P
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BOARD OF
DIRECTORS
Rachel A. Gonzalez 1*, 3
Executive Vice President, General
Counsel, and Secretary of
Starbucks Corporation
Director since 2017
James K. Kamsickas
Chairman and Chief Executive
Officer of Dana Incorporated
Director since 2015
Michael J. Mack 1, 2
Retired Group President of John
Deere Financial Services, Global
Human Resources, and Public Affairs
at Deere & Co.
Director since 2018
R. Bruce McDonald 1, 2*
Retired Chairman and Chief
Executive Officer of Adient plc
Director since 2014
Virginia A. Kamsky 2, 3*
Chairman and Chief Executive
Officer of Kamsky Associates, Inc.
Diarmuid B. O’Connell 1, 4*
Former Vice President of Tesla, Inc.
Director since 2011
Director since 2018
Bridget E. Karlin 3, 4
Global Chief Technology Officer
and Vice President of IBM Global
Technology Services
Keith E. Wandell 3, †
Retired President, Chief Executive
Officer, and Chairman of Harley-
Davidson, Inc.
Director since 2020
Director since 2008
The 2020 Women on
Boards advocates
for corporate boards
of directors to be
at least 20 percent
gender diverse by
2020. Dana has
exceeded this target.
Raymond E. Mabus, Jr. 2, 4
Founding Principal and Chief
Executive Officer of The Mabus Group
Director since 2017
20
20
1 Member, Compensation Committee
2 Member, Audit Committee
3 Member, Nominating and Corporate Governance Committee
4 Member, Technology and Sustainability Committee
* Committee Chair
† Lead Independent Director
For full biographies, please refer to Dana.com/investors or the proxy.
CORPORATE OFFICERS
James K. Kamsickas
Chairman and
Chief Executive Officer
James D. Kellett
Vice President and
Chief Accounting Officer
Aziz S. Aghili
Executive Vice President and
President, Off-Highway Drive and Motion Systems
Timothy R. Kraus
Senior Vice President,
Tax and Treasury
Shelley R. K. Bridarolli
Senior Vice President,
Human Resources
Chris J. Clark
Senior Vice President,
Global Operations
Jonathan M. Collins
Executive Vice President and
Chief Financial Officer
Christophe J. Dominiak
Senior Vice President and
Chief Technology Officer
Matthew H. Fahnestock
Senior Vice President and
Chief Information Officer
Byron S. Foster
Senior Vice President and Chief Commercial,
Marketing, and Communications Officer
Ryan W. Laskey
Senior Vice President,
Commercial Vehicle Drive and Motion Systems
Douglas H. Liedberg
Senior Vice President, General Counsel, and Secretary
Chief Compliance and Sustainability Officer
M. Craig Price
Senior Vice President,
Purchasing and Supplier Development
Robert D. Pyle
Executive Vice President and
President, Light Vehicle Drive Systems
Antonio Valencia
President, Power Technologies and
Global Electrification
21
World Headquarters
Dana Incorporated
3939 Technology Drive
Maumee, OH 43537-7000, USA
Telephone: 419-887-3000
Fax: 419-887-5200
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:
Annual Meeting Information
The 2021 Annual Meeting of
Shareholders will be held virtually on
April 21, 2021.
Independent Registered
Public Accounting Firm
PricewaterhouseCoopers LLP
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Form 10-K and Other Reports
Dana’s Annual Report on Form
10-K and its Proxy Statement may
be accessed online at Dana.com/
investors.
Stock Listing
The New York Stock Exchange
is the principal market for Dana
common stock.
Ticker Symbol: DAN
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Through this 24-hour phone service,
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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, 2020
OR
☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Transition Period From to
Commission File Number: 1-1063
Dana Incorporated
(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
Trading Symbol
DAN
Name of 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 every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller
reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller
reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.:
Large accelerated filer ☑
Non-accelerated filer ☐
Accelerated filer
Smaller reporting company
Emerging growth company
☐
☐
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b))
by the registered public accounting firm that prepared or issued its audit report. ☑
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, 2020 was $1,750,128,369.
There were 144,670,587 shares of the registrant's common stock outstanding at January 29, 2021.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive Proxy Statement to be delivered to stockholders in connection with the Annual Meeting of Shareholders
to be held on April 21, 2021 are incorporated by reference into Part III.
DANA INCORPORATED
FORM 10-K
YEAR ENDED DECEMBER 31, 2020
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
Signatures
Pages
1
7
12
13
13
14
15
16
37
39
90
90
90
90
90
91
91
91
92
94
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
Item 16
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 Incorporated and its consolidated subsidiaries
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 Incorporated (Dana) is headquartered in Maumee, Ohio and was incorporated in Delaware in 2007. We are a world
leader in providing power-conveyance and energy-management solutions for vehicles and machinery. The company's portfolio
improves the efficiency, performance, and sustainability of light vehicles, commercial vehicles, and off-highway equipment. From
axles, driveshafts, and transmissions to electrodynamic, thermal, sealing and digital solutions, the company enables the propulsion
of conventional, hybrid, and electric-powered vehicles by supplying nearly every major vehicle and engine manufacturer in the
world. We also serve the stationary industrial market. As of December 31, 2020, we employed approximately 38,200 people,
operated in 33 countries and had 141 major facilities around the world.
The terms “Dana,” “we,” “our” and “us” 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 Drive Systems (Light Vehicle), Commercial
Vehicle Drive and Motion Systems (Commercial Vehicle), Off-Highway Drive and Motion Systems (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, 2020, 2019 and 2018 are as follows:
Light Vehicle
Commercial Vehicle
Off-Highway
Power Technologies
Total
2020
2019
Dollars
$
% of Total Dollars
42.8 % $
16.6 %
27.7 %
12.9 %
$
% of Total Dollars
41.9 % $
18.7 %
27.4 %
12.0 %
$
3,609
1,611
2,360
1,040
8,620
3,038
1,181
1,970
917
7,106
3,575
1,612
1,844
1,112
8,143
$
2018
% of Total
43.9 %
19.8 %
22.6 %
13.7 %
Refer to Segment Results of Operations in Item 7 and Note 21 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 as of December 31, 2020:
Segment
Markets
Products
Light Vehicle
Light vehicle market:
Axles
Light trucks (full frame)
Driveshafts
Sport utility vehicles
Transmissions
Crossover utility vehicles
e-Axles
Largest
Customers
Ford Motor Company
Fiat Chrysler Automobiles*
Toyota Motor Company
Renault-Nissan-Mitsubishi
Vans
Passenger cars
Electrodynamic and
Alliance
drivetrain components
General Motors Company
Commercial Vehicle
Medium/heavy vehicle market:
Axles
Medium duty trucks
Heavy duty trucks
Buses
Specialty vehicles
Driveshafts
e-Axles
e-Transmissions
Electrodynamic and
Tata Motors / Jaguar Land
Rover
PACCAR Inc
Traton Group
AB Volvo
Navistar International Corp.
Daimler AG
drivetrain components
Ford Motor Company
Electric vehicle integration
services
Software as a service
Off-Highway
Off-Highway market:
Axles
Construction
Earth moving
Agricultural
Mining
Forestry
Driveshafts
Transmissions
Planetary hub drives
e-Axles
e-Drives
Material handling
Industrial stationary
Electrodynamic, hydraulic
and drivetrain components
Deere & Company
CNH Industrial N.V.
AGCO Corporation
Oshkosh Corporation
Manitou Group
Sany Group
Power Technologies
Light vehicle market
Gaskets
Medium/heavy vehicle market
Cover modules
Off-Highway market
Heat shields
Ford Motor Company
General Motors Company
Volkswagen AG
Engine sealing systems
(including Traton Group)
Cooling
Cummins Inc.
Heat transfer products
Fiat Chrysler Automobiles
Caterpillar Inc.
* Via a directed supply relationship
2
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
Denmark
Finland
France
Germany
Hungary
Ireland
Italy
Lithuania
Argentina
Brazil
Colombia
Ecuador
Netherlands
Norway
Russia
South Africa
Spain
Sweden
Switzerland
Turkey
United Kingdom
Australia
China
India
Japan
New Zealand
Singapore
South Korea
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 $3,702, or 52%, of our 2020 consolidated sales of $7,106. A summary
of sales and long-lived assets by geographic region can be found in Note 21 to our consolidated financial statements in Item 8.
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) and Fiat Chrysler Automobiles (FCA) were the only individual customers
accounting for 10% or more of our consolidated sales in 2020. As a percentage of total sales from operations, our sales to Ford
were approximately 20% in 2020, 20% in 2019 and 20% in 2018, and our sales to FCA (via a directed supply relationship), our
second largest customer, were approximately 12% in 2020, 11% in 2019 and 11% in 2018. PACCAR Inc, Deere & Company and
Volkswagen AG (including Traton Group) were our third, fourth and fifth largest customers in 2020. Our 10 largest customers
collectively accounted for approximately 54% of our sales in 2020.
Loss of all or a substantial portion of our sales to Ford, FCA 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, bearings, and batteries and related rare earth materials. 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 changeovers 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.
3
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 focus on product innovation, we differentiate ourselves through efficiency and performance,
reliability, materials and processes, sustainability and product extension.
The following table summarizes our principal competitors by operating segment as of December 31, 2020:
Segment
Light Vehicle
Commercial Vehicle
Off-Highway
Power Technologies
Intellectual Property
Principal Competitors
American Axle & Manufacturing Holdings, Inc.
BorgWarner Inc.
Hofer Powertrain GmbH
IFA ROTARION Holding GmbH
Allison Transmission
American Axle & Manufacturing Holdings, Inc.
Borg Warner Inc.
Klein Products Inc.
Bonfiglioli
Bosch Rexroth AG
Carraro Group
Comer Industries
Denso Corporation
ElringKlinger AG
Freudenberg NOK Group
Hanon Systems
Schaeffler Group
Wanxiang Group Corporation
ZF Friedrichshafen AG
Vertically integration OEM operations
Meritor, Inc.
Tirsan Kardan
ZF Friedrichshafen AG
Vertically integrated OEM operations
Danfoss
Kessler & Co.
ZF Friedrichshafen AG
Vertically integrated OEM operations
MAHLE GmbH
Tenneco Inc.
Valeo Group
YinLun Co., LTD
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®, Long® and TM4® 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.
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, 2020, we had seven stand-alone technical and engineering centers and nineteen additional sites at which we
conduct research and development activities. Our research and development costs were $146 in 2020, $112 in 2019 and
$103 in 2018. Total engineering expenses including research and development were $246 in 2020, $271 in 2019 and $252 in 2018.
4
During 2020, we reduced our total engineering spend in response to the global COVID-19 pandemic, taking advantage of various
government programs and subsidies in the countries in which we operate. We also made the strategic decision to focus our
engineering spend more heavily on research and development activities, continuing to progress key electrification initiatives
despite the global pandemic.
Our research and development is targeted to create unique value for our customers. Our technologies are enabling the
electrification of vehicles and accessories to improve efficiency and reduce the impact of carbon emissions. Our advanced
drivelines are more efficient than ever before and include mechatronic systems to enhance performance. The power technologies
group is developing new ways to keep batteries and power electronics at optimum temperatures to improve their efficiency and
operation. We have developed innovative fuel cell products to help keep vehicles running in near continuous operation.
Human Capital
Our talented people power a customer-centric organization that is continuously improving the performance and efficiency of
vehicles and machines around the globe. The following table summarizes our employees by operating segment and geographical
region as of December 31, 2020:
Segment
Light Vehicle
Commercial Vehicle
Off-Highway
Power Technologies
Technical and administrative
Total
Employees
Region
13,800 North America
6,200 Europe
11,100 South America
5,400 Asia Pacific
1,700 Total
38,200
Employees
14,800
10,000
3,800
9,600
38,200
Safety – The health and safety of employees remain our highest priority and we believe our company has an essential
responsibility to safeguard life, health, property, and the environment for the well-being of all involved. Through effective
feedback and positive recognition, we actively promote and pursue safety in all that we do. This is achieved through a consistent
commitment to excellence in, health, safety, security management, and risk elimination. Dana’s health, safety and security
programs ensure that all employees receive training, guidance, and assistance in safety awareness and risk prevention. An
implemented, verified, audited, and communicated occupational health and safety management system reflects Dana’s internal and
external commitment to all our stakeholders in identifying and reducing the health and safety risk of our employees around the
world. Dana has developed robust safety systems, including detailed work instructions and processes for standard and non-
standard work, as well as regular layer process audits to ensure that we carefully consider safety in each of our work functions.
COVID-19 Response – The company’s response to the global COVID-19 pandemic was comprehensive, swift, and decisive with
an emphasis on health and safety. Our top priorities were to protect our employees, communities, customers, and our future. For
our employees, we implemented protocols throughout our global footprint to ensure their health and safety including, but not
limited to: temporarily closing a significant number of our facilities; restricting access to all facilities; increasing cleaning and
disinfecting protocols of those facilities that continued to operate; use of personal protection equipment; adhering to social
distancing guidelines; instituting remote work; and restricting travel. In our communities, we provided support to initiatives across
the globe, including light manufacturing and assembly for personal protection equipment and ventilator-related components. As
our customers focused on managing through the challenges of the pandemic, we carefully managed our supply chain and
inventory, while preparing our facilities for a safe restart.
Inclusion and Diversity – Our vision is to maintain an inclusive and diverse, global organization that develops, fosters, and attracts
great people whose perspectives are heard, valued, and supported. We embrace our team members, suppliers, and customers. Their
unique backgrounds, experiences, thoughts, views, and talents shape the ever-changing world. We are continuously building upon
our diverse strengths to further grow a strong, inclusive work environment. Dana remains focused on embracing inclusion and
diversity while enhancing the cultural competence of the global workforce. To achieve this, we have emphasized three core areas:
retention and employee development, resources for employees, and recruiting of new team members.
Retention and Employee Development – Dana believes the development of its people is critical to the company’s success. The
company empowers individuals to lead their development by articulating their professional, personal, and career growth
aspirations to their manager. Development of all Dana people is strongly encouraged and should be considered each year as a part
of their goals. Dana as an organization has the responsibility to set the tone, culture, and organizational expectations. The company
also provides regular training opportunities for our associates across the globe to ensure they have the skills and information to
keep pace with technological change. This development is supported and measured with robust performance management and
development plans that encourages employees to continuously improve upon their past performance and build on critical skills the
company requires to remain competitive. The company has a mentorship program for diverse employees to help guide and coach
employees to positions of leadership and ensure the company is developing a diverse talent pool.
5
Resources – Dana has established an expanding network of Business Resource Groups (BRGs) to enhance Dana’s ability to
develop, retain, and attract employees of varied backgrounds. By embracing inclusion and diversity, we create an environment that
inspires the best from everyone and maximizes the value of our most important asset – Dana people. These BRGs are executive
leadership-supported, employee-led initiatives with the mission to inspire growth and innovation and foster diversity for all
employees. Our BRGs currently include:
● Dana Women’s Network (DAWN) – The company’s DAWN group is focused on providing professional networking
and career development for women at Dana. They also promote activities that engage Dana’s senior leaders to better
understand how the company can support women at work.
● African American Resource Group (AARG) – Dana’s AARG group is committed to supporting the career development
of African American talent through thought-leadership workshops and community events. The group provides insight
to Dana into the best practices for sourcing and retaining top talent.
● LGBT+A – The LGBT+A group focuses on maintaining an inclusive working environment that enables the company
to leverage a diverse leadership pipeline. It has assisted in providing educational resources and community activities to
engage the Dana team on best ways to support our LGBT+A colleagues.
● Live Green – Dana’s Live Green resource group helps to advance Dana’s mission to be sustainably responsible in our
business practices. The group helps to inform and drive grassroots employee initiatives on reducing our impact on the
environment.
● New to Dana (NTD) – The NTD group is open to all new Dana employees to help acclimate them to the Dana business
culture and understand the company’s rich history. It provides resources, support, and professional development
opportunities to new employees as they transition into their job responsibilities at Dana.
● Dana Alumni – With more than a century of rich history, Dana leverages its vast network of Alumni, including retires
and former long-time employees to help them remain informed about the company’s latest initiatives and to gather
ideas on how to best continue to engage our workforce.
● Military and Veterans – The military and veterans group supports active-duty and veteran military personnel by
understanding their unique needs and finding the best ways to support them. This group’s understanding of the needs of
those who have served also allows the company to consider the best way to engage candidates and recruit them to
Dana.
Recruiting – As a company, we are always collaborating with internationally recognized organizations to reach out to diverse
talent and implement best practices for recruiting individuals who work within our core business functions.
Health and Wellness – Dana understands the importance of advocating for the health and well-being of our employees. Health
initiatives can have a long-lasting, sustainable impact on employee well-being, but healthy habits do not develop overnight. The
company is continuously evaluating new opportunities for programs that help address factors that influence health-related
behaviors, which can have a long-lasting impact on an employee’s well-being. Dana understands the needs of individuals are
unique and continues to offer initiatives spanning the spectrum of health and wellness to help provide a supportive work
environment where employees strive for balance in their lives.
We encourage you to review the “Empowering People” section of our annual Sustainability and Social Responsibility Report
(located on our website) for more detailed information regarding our Human Capital programs and initiatives. Nothing on our
website, including our annual Sustainability and Social Responsibility Report or sections thereof, shall be deemed incorporated by
reference into this Annual Report.
Environmental Compliance
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 2020.
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. Copies of any materials we file with the SEC can also be
obtained free of charge through the SEC’s website at http://www.sec.gov. 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 Incorporated, 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.
6
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
A downturn in the global economy could have a substantial adverse effect on our business.
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.
Certain political developments occurring the past several years have provided increased economic uncertainty. The United
Kingdom’s (UK) 2016 decision to exit the European Union (EU) has not had significant economic ramifications on our operations
to date. The UK and the EU have announced the UK-EU Trade and Cooperation Agreement (TCA) which covers the future UK –
EU relationship. The TCA is being provisionally applied beginning January 1, 2021 pending approval in the Council of the EU
and European Parliament. The longer term economic, legal, political, and social implications of the TCA are unclear at this
stage. Political climate changes in the U.S., including tax reform legislation, regulatory requirements and potential trade policy
actions, are likely to impact economic conditions in the U.S. and various countries, the cost of importing into the U.S. and the
competitive landscape of our customers, suppliers and competitors.
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.
Our results of operations could be adversely affected by climate change, natural catastrophes or public health crises, in the
locations in which we, our customers or our suppliers operate.
A natural disaster could disrupt our operations, or our customers’ or suppliers’ operations and could adversely affect our
results of operations and financial condition. Although we have continuity plans designed to mitigate the impact of natural
disasters on our operations, those plans may be insufficient, and any catastrophe may disrupt our ability to manufacture and deliver
products to our customers, resulting in an adverse impact on our business and results of operations. Also, climate change poses
both regulatory and physical risks that could harm our results of operations or affect the way we conduct our businesses. For
example, new or modified regulations could require us to spend substantial funds to enhance our environmental compliance
efforts. In addition, our global operations expose us to risks associated with public health crises, such as pandemics and epidemics,
which could harm our business and cause our operating results to suffer.
The novel coronavirus disease (COVID-19) pandemic has had an adverse effect on our business, results of operations, cash
flows and financial condition. The COVID-19 pandemic has negatively impacted the global economy, disrupted our operations as
well as those of our customers, suppliers and the global supply chains in which we participate, and created significant volatility
and disruption of financial markets. The extent of the impact of the COVID-19 pandemic on our business and financial
performance, including our ability to execute our near-term and long-term operational, strategic and capital structure initiatives,
will depend on future developments, including the duration and severity of the pandemic, which are uncertain and cannot be
predicted.
As a result of the COVID-19 pandemic, and in response to government mandates or recommendations, rapid dissipation of
customer demand, as well as decisions we have made to protect the health and safety of our employees and communities, we
temporarily closed a significant number of our facilities globally during 2020. We may face facility closure requirements and other
operational restrictions with respect to some or all of our locations for prolonged periods of time due to, among other factors,
evolving and increasingly stringent governmental restrictions including public health directives, quarantine policies or social
distancing measures. We operate as part of the complex integrated global supply chains of our largest customers. As the COVID-
19 pandemic dissipates at varying times and rates in different regions around the world, there could be a prolonged negative
impact on these global supply chains. Our ability to continue operations at specific facilities will be impacted by the
interdependencies of the various participants of these global supply chains, which are largely beyond our direct control. A
prolonged shut down of these global supply chains will have a material adverse effect on our business, results of operations, cash
flows and financial condition.
Consumer spending may also be negatively impacted by general macroeconomic conditions and consumer confidence,
including the impacts of any recession, resulting from the COVID-19 pandemic. This may negatively impact the markets we serve
and may cause our customers to purchase fewer products from us. Any significant reduction in demand caused by decreased
consumer confidence and spending following the pandemic, would result in a loss of sales and profits and other material adverse
effects.
7
Rising interest rates could have a substantial adverse effect on our business
Rising interest rates could have a dampening effect on overall economic activity, the financial condition of our customers and
the financial condition of the end customers who ultimately create demand for the products we supply, all of which could
negatively affect demand for our products. An increase in interest rates could make it difficult for us to obtain financing at
attractive rates, impacting our ability to execute on our growth strategies or future acquisitions.
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 54% of our overall
sales in 2020. 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 33 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. We operate in Argentina, where trade-related initiatives and other government restrictions limit our ability to optimize
operating effectiveness. At December 31, 2020, our net asset exposure related to Argentina was approximately $21, including
$5 of net fixed assets.
We may be adversely impacted by changes in trade policies and proposed or imposed tariffs, including but not limited to, the
imposition of new tariffs by the U.S. government on imports to the U.S. and/or the imposition of retaliatory tariffs by foreign
countries.
Section 232 of the Trade Expansion Act of 1962, as amended (the Trade Act), gives the executive branch of the U.S.
government broad authority to restrict imports in the interest of national security by imposing tariffs. Tariffs imposed on imported
steel and aluminum could raise the costs associated with manufacturing our products. We work with our customers to recover a
portion of any increased costs, and with our suppliers to defray costs, associated with tariffs. While we have been successful in the
past recovering a significant portion of costs increases, there is no assurance that cost increases resulting from trade policies and
tariffs will not adversely impact our profitability. Our sales may also be adversely impacted if tariffs are assessed directly on the
products we produce or on our customers’ products containing content sourced from us.
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 52% of our sales in 2020 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 could have an adverse effect on 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 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.
8
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 (EPA). 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.
The proposed phase out of the London Interbank Offer Rate (LIBOR) could have an adverse effect on our business
Our revolving credit facility (the "Revolving Facility") and term loan B facility (the "Term B Facility") utilize Libor to set the
interest rate on any outstanding borrowings. In July 2017, the head of the United Kingdom Financial Conduct Authority
announced the desire to phase out the use of Libor by the end of 2021. On November 30, 2020 the ICE Benchmark Administration
Limited (IBA) announced that it will consult on its intention to cease publication of the one week and two-month USD Libor
settings at the end of 2021 and the remaining USD Libor settings at the end of June 2023. The potential effect on our cost of
borrowing utilizing a replacement rate cannot yet be determined. In addition, any further changes or reforms to the determination
of Libor or its successor rate may result in a sudden or prolonged increase or decrease on our borrowing rate, which could have an
adverse impact on extension of credit held by us and could have a material adverse effect on our business, financial condition 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 retain and attract 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 depend on our subsidiaries for cash to satisfy the obligations of the 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, which can
be impacted by a variety of factors, including changes in trade laws and tariffs, will not adversely impact our profitability in the
future.
9
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
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.
Our profitability and results of operations may be adversely affected by program launch difficulties.
The launch of new business is a complex process, the success of which depends on a wide range of factors, including the
production readiness of our manufacturing facilities and manufacturing processes and those of our suppliers, as well as factors
related to tooling, equipment, employees, initial product quality and other factors. Our failure to successfully launch material new
or takeover business could have an adverse effect on our profitability and results of operations.
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 have a material adverse impact on our business and our competitive position.
We could encounter unexpected difficulties integrating acquisitions and joint ventures.
We acquired businesses in recent years, and we expect to complete additional acquisitions and 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 with ours, 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.
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, 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.
10
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. (See Notes 16 and 17 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 certain of 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, 2020. 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 12 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 and liabilities, 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.
Our ability to utilize our net operating loss carryforwards may be limited.
Net operating loss carryforwards (NOLs) approximating $190 were available at December 31, 2020 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). The NOLs are treated as losses incurred before the change of control in
January 2008 and are limited to annual utilization of $84. There can be no assurance that trading in our shares will not affect
another change in control under the Code, which could 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.
An inability to provide products with the technology required to satisfy customer requirements would adversely impact our ability
to successfully compete in our markets.
The vehicular markets in which we operate are undergoing significant technological change, with increasing focus on
electrified and autonomous vehicles. These and other technological advances could render certain of our products obsolete.
11
Maintaining our competitive position is dependent on our ability to develop commercially viable products and services that
support the future technologies embraced by our customers.
Failure to appropriately anticipate and react to the cyclical and volatile nature of production rates and customer demands in our
business can adversely impact our results of operations.
Our financial performance is directly related to production levels of our customers. In several of our markets, customer
production levels are prone to significant cyclicality, influenced by general economic conditions, changing consumer preferences,
regulatory changes, and other factors. Oftentimes the rapidity of the downcycles and upcycles can be severe. Successfully
executing operationally during periods of extreme downward and upward demand pressures can be challenging. Our inability to
recognize and react appropriately to the production cycles inherent in our markets can adversely impact our operating results.
Our continued success is dependent on being able to retain and attract requisite talent.
Sustaining and growing our business requires that we continue to retain, develop and attract people with the requisite skills.
With the vehicles of the future expected to undergo significant technological change, having qualified people savvy in the right
technologies will be a key factor in our ability to develop the products necessary to successfully compete in the future. As a global
organization, we are also dependent on our ability to attract and maintain a diverse work force that is fully engaged supporting our
company’s objectives and initiatives.
Failure to maintain effective internal controls could adversely impact our business, financial condition and results of operations.
Regulatory provisions governing the financial reporting of U.S. public companies require that we maintain effective
disclosure controls and internal controls over financial reporting across our operations in 33 countries. Effective internal controls
are designed to provide reasonable assurance of compliance, and, as such, they can be susceptible to human error, circumvention
or override, and fraud. Failure to maintain adequate, effective internal controls could result in potential financial misstatements or
other forms of noncompliance that have an adverse impact on our results of operations, financial condition or organizational
reputation.
Developments in the financial markets or downgrades to Dana's credit rating could restrict our access to capital and increase
financing costs.
At December 31, 2020, Dana had consolidated debt obligations of $2,481, with cash and marketable securities of $580 and
unused revolving credit capacity of $979. Our ability to grow the business and satisfy debt service obligations is dependent, in
part, on our ability to gain access to capital at competitive costs. External factors beyond our control can adversely affect capital
markets – either tightening availability of capital or increasing the cost of available capital. Failure on our part to maintain
adequate financial performance and appropriate credit metrics can also affect our ability to access capital at competitive prices.
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.
12
Item 2. Properties
Type of Facility
Light Vehicle
Manufacturing/Distribution
Service/Assembly
Technical and Engineering Centers
Commercial Vehicle
Manufacturing/Distribution
Service/Assembly
Administrative Offices
Technical and Engineering Centers
Off-Highway
Manufacturing/Distribution
Service/Assembly
Administrative Offices
Technical and Engineering Centers
Power Technologies
Manufacturing/Distribution
Administrative Offices
Technical and Engineering Centers
Corporate and other
Administrative Offices
Technical and Engineering Centers - Multiple
Segments
North
America
Europe
South
America
Asia
Pacific
Total
14
1
6
1
1
3
3
9
1
1
3
4
4
5
3
1
20
13
3
1
4
1
1
1
9
1
1
7
1
7
4
1
2
2
2
31
2
1
21
1
1
2
30
21
4
1
15
1
1
7
2
43
52
9
37
141
As of December 31, 2020, we operated in 33 countries and had 141 major facilities housing manufacturing and distribution
operations, service and assembly operations, technical and engineering centers and administrative offices. In addition to the seven
stand-alone technical and engineering centers in the table above, we have nineteen technical and engineering centers housed within
manufacturing sites. We lease 68 of these facilities and own the remainder. We believe that all of our property and equipment is
properly maintained.
Our world headquarters is 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, tax,
treasury, risk management, legal, human resources, procurement and supply chain management, communications and information
technology.
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 Note 16 to our consolidated financial statements in Item 8.
13
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."
Holders of common stock — Based on reports by our transfer agent, there were approximately 2,629 registered holders of our
common stock on January 29, 2021.
Reference is made to the Equity Compensation Plan Information section of Item 12 for certain information regarding our
equity compensation plans.
Stockholder return — The following graph shows the cumulative total shareholder return for our common stock since December
31, 2015. 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, 2015. Each of the returns
shown assumes that all dividends paid were reinvested.
Performance chart
Index
Dana Incorporated
S&P 500
Dow Jones US Auto Parts Index
12/31/2015 12/31/2016 12/31/2017 12/31/2018 12/31/2019 12/31/2020
156.84
$
203.04
142.12
137.94 $
111.96
105.41
104.97 $
130.42
94.91
100.00 $
100.00
100.00
139.76 $
171.49
120.95
230.83 $
136.40
136.81
Issuer's purchases of equity securities — On February 16, 2021, our Board of Directors approved an extension of our existing
common stock share repurchase program through December 31, 2023. Approximately $150 remained available under the program
for future share repurchases as of December 31, 2020. We repurchase shares utilizing available excess cash either in the open
market or through privately negotiated transactions. Stock repurchases are subject to prevailing market conditions and other
considerations. No shares of our common stock were repurchased under the program during the fourth quarter of 2020.
Annual meeting — We will hold an annual meeting of shareholders on April 21, 2021.
14
Item 6. Selected Financial Data
Operating Results
Net sales
Earnings (loss) before income taxes
Net income (loss)
2020(1)
Year Ended December 31,
2018(3)
2019(2)
2017(4)
$
7,106 $
(13 )
(51 )
8,620 $
171
233
8,143 $
494
440
7,209 $
380
116
Net income (loss) attributable to the parent company $
Redeemable noncontrolling interests adjustment to
redemption value
Net income (loss) available to common stockholders $
(31 ) $
226 $
427 $
111 $
—
(31 ) $
—
226 $
—
427 $
6
105 $
Net income (loss) per share available to common
stockholders
Basic
Diluted
Depreciation and amortization
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, less debt issuance costs
Common stock and additional paid-in capital
Treasury stock
Total parent company stockholders' equity
Book value per share
$
(0.21 ) $
(0.21 ) $
365 $
386
326
580 $
7,376
2,420
2,454
2,410
(156 )
1,758
12.17 $
1.57 $
1.56 $
339 $
637
426
527 $
7,220
2,336
2,370
2,388
(150 )
1,873
13.01 $
2.94 $
2.91 $
270 $
568
325
531 $
5,918
1,755
1,783
2,370
(119 )
1,345
9.27 $
0.72 $
0.71 $
233 $
554
393
643 $
5,644
1,759
1,799
2,356
(87 )
1,013
6.98 $
2016(5)
5,826
215
653
640
—
640
4.38
4.36
182
384
322
737
4,860
1,595
1,664
2,329
(83 )
1,157
7.92
Common Share Information
Dividends declared per common share
Weighted-average common shares outstanding
Basic
Diluted
$
0.10 $
0.40 $
0.40 $
0.24 $
0.24
144.5
144.5
144.0
145.1
145.0
146.5
145.1
146.9
146.0
146.8
(1) Operating results in 2020 were significantly impacted by the global COVID-19 pandemic. Net income in 2020 included a $51 pre-tax goodwill impairment
charge, a $33 pre-tax gain on notes receivable conversion and subsequent adjustment of shares to fair value and a $8 charge attributable to net discrete tax items.
(2) Net income in 2019 included pension settlement charges of $259 attributable to the termination of certain U.S. and Canadian defined benefit pension plans and
a $135 benefit attributable to net discrete tax items. The increase in total assets in 2019 is primarily attributable to the acquisition of the Oerlikon Drive Systems
(ODS) segment of the Oerlikon Group. The increase in total debt, less debt issuance costs is primarily attributable to taking out additional debt to finance the
acquisition of ODS.
(3) Net income in 2018 included a $20 charge attributable to the impairment of intangible assets used in research and development activities and a
$67 benefit attributable to net discrete tax items.
(4) Net income in 2017 included a $27 charge attributable to the divestiture of our Brazil suspension components business and a $159 charge attributable to net
discrete tax items, including a charge of $186 associated with a reduction of net deferred tax assets to reflect expected realization at the lower U.S corporate tax
rate of 21% rather than the previous rate of 35%.
(5) Net income in 2016 includes a $77 loss attributable to the divestiture of Dana Companies, LLC and a $476 benefit attributable to net discrete tax items, including
a benefit of $501 associated with the release of valuation allowances against U.S. deferred taxes.
15
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 products to virtually every major vehicle manufacturer in the world. We also
serve the stationary industrial market. Our technologies include drive systems (axles, driveshafts, transmissions, and wheel and
track drives); motion systems (winches, slew drives, and hub drives); electrodynamic technologies (motors, inverters, software and
control systems, battery-management systems, and fuel cell plates); sealing solutions (gaskets, seals, cam covers, and oil pan
modules); thermal-management technologies (transmission and engine oil cooling, battery and electronics cooling, charge air
cooling, and thermal-acoustical protective shielding); and digital solutions (active and passive system controls and descriptive and
predictive analytics). We serve our global light vehicle, medium/heavy vehicle and off-highway markets through four business
units – Light Vehicle Drive Systems (Light Vehicle), Commercial Vehicle Drive and Motion Systems (Commercial Vehicle), Off-
Highway Drive and Motion Systems (Off-Highway) and Power Technologies, which is the center of excellence for sealing and
thermal-management technologies that span all customers in our on-highway and off-highway markets. We have a diverse
customer base and geographic footprint which minimizes our exposure to individual market and segment declines. In 2020, 51% of
our sales came from North American operations and 49% from operations throughout the rest of the world. Our sales by operating
segment were Light Vehicle – 43%, Commercial Vehicle – 16%, Off-Highway – 28% and Power Technologies – 13%.
Operational and Strategic Initiatives
Our enterprise strategy builds on our strong technology foundation and leverages our resources across the organization while
driving a customer centric focus, expanding our global markets, and delivering innovative solutions as we evolve into the era of
vehicle electrification.
Central to our strategy is leveraging our core operations. This foundational element enables us to infuse strong operational
disciplines throughout the strategy, making it practical, actionable, and effective. It enables us to capitalize on being a major drive
systems supplier across all three end-mobility markets. We are achieving improved profitability by actively seeking synergies
across our engineering, purchasing, and manufacturing base. We have strengthened the portfolio by acquiring critical assets; and
we are utilizing our physical and intellectual capital to amplify innovation across the enterprise. Leveraging these core elements
can further expand the cost efficiencies of our common technologies and deliver a sustainable competitive advantage for Dana.
Driving customer centricity continues to be at the heart of who we are. Putting our customers at the center of our value system
is firmly embedded in our culture and is driving growth by focusing customer relationships and providing value to our customers.
These relationships are strengthened as we are physically where we need to be in order to provide unparalleled service and we are
prioritizing our customers’ needs as we engineer solutions that differentiate their products, while making it easier to do business
with Dana by digitizing their experience. Our customer centric focus has uniquely positioned us to win more than our fair share of
new business and capitalize on future customer outsourcing initiatives.
We continue to enhance and expand our global footprint, optimizing it to capture growth across all of our end markets.
Expanding global markets means utilizing our global capabilities and presence to further penetrate growth markets, focusing on
Asia due to its position as the largest mobility market in the world with the highest market growth rate and its lead in the adoption
of new energy vehicles. We are investing across various avenues to increase our presence in Asia Pacific by forging new
partnerships, expanding inorganically, and growing organically. We continue to operate in this region through wholly owned and
joint ventures with local market partners. We have recently made acquisitions that have augmented our footprint in the region,
specifically in India and China. All the while, we have been making meaningful organic investments to grow with existing and
new customers, primarily in Thailand, India, and China. These added capabilities have enabled us to target the domestic Asia
Pacific markets and utilize the capacity for export to other global markets.
Delivering innovative solutions enables us to capitalize on market growth trends as we evolve our core technology
capabilities. We are also focused on enhancing our physical products with digital content to provide smart systems and we see an
opportunity to become a digital systems provider by delivering software as a service to our traditional end customers. This focus
on delivering solutions based on our core technology is leading to new business wins and increasing our content per vehicle. We
have made significant investments - both organically and inorganically - allowing us to move to the next phase, which is to Lead
electric propulsion.
Over the past year we have achieved our goal to accelerate hybridization and electrification through both core Dana
technologies and targeted strategic acquisitions and are positioned today to lead the market. The nine recent investments
in electrodynamic expertise and technologies combined with Dana’s longstanding mechatronics capabilities has allowed us to
develop and deliver fully integrated e-Propulsion systems that are power-dense and achieve optimal efficiency through the
integration of the components that we offer due to our mechatronics capabilities. With recent electric vehicle program awards, we
are well on our way to achieving our growth objectives in this emerging market.
16
The development and implementation of our enterprise strategy is positioning Dana to grow profitably due to increased
customer focus as we leverage our core capabilities, expand into new markets, develop and commercialize new technologies
including for hybrid and electric vehicles.
Capital Structure Initiatives
In addition to investing in our business, we plan to continue prioritizing the allocation of capital to reduce debt and maintain a
strong financial position. We continue to drive toward investment grade metrics as part of a balanced approach to our capital
allocation priorities and our goal of further strengthening our balance sheet.
Shareholder return 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 has enabled us to
simplify our capital structure while providing returns to our shareholders in the form of cash dividends and a reduction in the
number of shares outstanding. Our Board of Directors authorized a $200 share repurchase program effective in 2018 which expires
at the end of 2023. Through December 31, 2020, we have used $50 of cash to repurchase common shares under the program.
Through the first quarter of 2020, we had declared and paid quarterly common stock dividends for thirty-three
consecutive quarters. In response to the global COVID-19 pandemic, we temporarily suspended the declaration and payment of
dividends to common shareholders and the repurchase of common stock under our existing common stock share repurchase
program.
Financing actions — Over the past few years we have taken advantage of the lower interest rate environment to complete
refinancing transactions that resulted in lower effective interest rates while extending maturities. During 2019 we expanded our
credit and guaranty agreement, entering into $675 of additional floating rate term loans to fund the ODS acquisition (see
Acquisitions section below) and increased our revolving credit facility to $1,000 and extended its maturity to August 2024. We
completed a $300 2027 note offering and used the proceeds to repay $300 of higher cost 2023 notes. During 2019, we terminated
one of our U.S. defined benefit pension plans, settling approximately $165 of previously unfunded pension obligations and
eliminating future funding risk associated with interest rate and other market developments. In response to the global COVID-19
pandemic, during June 2020, we completed a $400 2028 note offering and a $100 add on to our 2027 notes. With the impact of the
global COVID-19 pandemic on our operations dissipating, we paid down $474 of our floating rate term loans (the "Term A
Facility") in the third and fourth quarters of 2020. See Note 14 to our consolidated financial statements in Item 8 for additional
information.
Other Initiatives
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. Powered by recognized
brands such as Dana®, Spicer®, Spicer Electrified™, Victor Reinz®, Glaser®, GWB®, Thompson®, Tru-Cool®, SVL®, and
Transejes™, Dana delivers a broad range of aftermarket solutions – including genuine, all makes, and value lines – servicing
passenger, commercial and off-highway vehicles across the globe.
Selective acquisitions — Although transformational opportunities like the GKN plc driveline business transaction that we pursued
in 2018 will be considered when strategically and economically attractive, our acquisition focus is principally directed at “bolt-on”
or adjacent acquisition opportunities that have a strategic fit with our existing core businesses, particularly opportunities that
support our enterprise strategy and enhance the value proposition of our product offerings. Any potential acquisition will be
evaluated in the same manner we currently consider customer program opportunities and other uses of capital – with a disciplined
financial approach designed to ensure profitable growth and increased shareholder value.
Acquisitions
Ashwoods Innovations Limited — On February 5, 2020, we acquired Curtis Instruments, Inc.'s (Curtis) 35.4% ownership interest
in Ashwoods Innovations Limited (Ashwoods). Ashwoods designs and manufactures permanent magnet electric motors for the
automotive, material handling and off-highway vehicle markets. The acquisition of Curtis' interest in Ashwoods, along with our
existing ownership interest in Ashwoods, provided us with a 97.8% ownership interest and a controlling financial interest in
Ashwoods. We recognized a $3 gain to other income (expense), net on the required remeasurement of our previously held equity
method investment in Ashwoods to fair value. The total purchase consideration of $22 is comprised of $8 of cash paid to Curtis at
closing, the $10 fair value of our previously held equity method investment in Ashwoods and $4 related to the effective settlement
of a pre-existing loan payable due from Ashwoods. During March 2020, we acquired the remaining noncontrolling interests in
Ashwoods held by employee shareholders. The results of operations of Ashwoods are reported within our Off-Highway operating
segment. The Ashwoods acquisition had an insignificant impact on our consolidated results of operations during 2020. See Hydro-
Québec relationship discussion below for details of the subsequent change in our ownership interest in Ashwoods.
17
Nordresa — On August 26, 2019, we acquired a 100% ownership interest in Nordresa Motors, Inc. (Nordresa) for consideration of
$12, using cash on hand. Nordresa is a prominent integration and application engineering expert for the development and
commercialization of electric powertrains for commercial vehicles. The investment further enhances Dana's electrification
capabilities by combining its complete portfolio of motors, inverters, chargers, gearboxes, and thermal-management products with
Nordresa's proprietary battery-management system, electric powertrain controls and integration expertise to deliver complete
electric powertrain systems. The results of operations of Nordresa are reported within our Commercial Vehicle operating segment.
Nordresa had an insignificant impact on our consolidated results of operations during 2019.
Prestolite E-Propulsion Systems (Beijing) Limited — On June 6, 2019, we acquired Prestolite Electric Beijing Limited's (PEBL)
50% ownership interest in Prestolite E-Propulsion Systems (Beijing) Limited (PEPS). PEPS manufactures and distributes electric
mobility solutions, including electric motors, inverters, and generators for commercial vehicles and heavy machinery. PEPS has a
state-of-the-art facility in China, enabling us to expand motor and inverter manufacturing capabilities in the world's largest
electric-mobility market. The acquisition of PEBL's interest in PEPS, along with our existing ownership interest in PEPS through
our TM4 subsidiary, provides us with a 100% ownership interest and a controlling financial interest in PEPS. We recognized a $2
gain to other income (expense), net on the required remeasurement of our previously held equity method investment in PEPS to
fair value. We paid $50 at closing using cash on hand. Reference is made to Note 2 of our consolidated financial statements in
Item 8 for the allocation of purchase consideration to assets acquired and liabilities assumed. The results of operations of PEPS are
reported within our Commercial Vehicle operating segment. The PEPS acquisition contributed $8 of sales and de minimis adjusted
EBITDA in 2019. See Hydro-Québec relationship discussion below for details of the subsequent change in our ownership interest
in PEPS.
Oerlikon Drive Systems — On February 28, 2019, we acquired a 100% ownership interest in the Oerlikon Drive Systems (ODS)
segment of the Oerlikon Group. ODS is a global manufacturer of high-precision gears, planetary hub drives for wheeled and
tracked vehicles, and products, controls, and software that support vehicle electrification across the mobility industry. We paid
$626 at closing, which was primarily funded through debt proceeds. Reference is made to Note 2 of our consolidated financial
statements in Item 8 for the allocation of purchase consideration to assets acquired and liabilities assumed. The results of
operations of ODS are reported primarily within our Off-Highway and Commercial Vehicle operating segments. The ODS
acquisition added $630 of sales and $87 of adjusted EBITDA during 2019.
SME — On January 11, 2019, we acquired a 100% ownership interest in S.M.E. S.p.A. (SME). SME designs, engineers, and
manufactures low-voltage AC induction and synchronous reluctance motors, inverters, and controls for a wide range of off-
highway electric vehicle applications, including material handling, agriculture, construction, and automated-guided vehicles. The
addition of SME's low-voltage motors and inverters, which are primarily designed to meet the evolution of electrification in off-
highway equipment, significantly expands Dana's electrified product portfolio. We paid $88 at closing, consisting of $62 in cash
on hand and a note payable of $26 which allows for net settlement of potential contingencies as defined in the purchase agreement.
The note is payable in five years and bears annual interest of 5%. Reference is made to Note 2 of our consolidated financial
statements in Item 8 for the allocation of purchase consideration to assets acquired and liabilities assumed. The SME acquisition
added $21 of sales and de minimis adjusted EBITDA during 2019. See Hydro-Québec relationship discussion below for details of
the subsequent change in our ownership interest in SME.
TM4 — On June 22, 2018, we acquired a 55% ownership interest in TM4 Inc. (TM4) from Hydro-Québec. TM4 designs
and manufactures motors, power inverters and control systems for electric vehicles, offering a complementary portfolio to
Dana's electric gearboxes and thermal-management technologies for batteries, motors and inverters. The transaction establishes
Dana as the only supplier with full e-Drive design, engineering and manufacturing capabilities – offering electro
mechanical propulsion solutions to each of our end markets. TM4's technology and advanced manufacturing facility in
Boucherville, Quebec will add to our global technical centers, and their 50% interest in PEPS provides an opportunity to enhance
our position in the fastest growing market for electric vehicles. See PEPS acquisition discussion above for details of the
subsequent change in our ownership interest in PEPS. Dana is consolidating TM4 as the governing documents provide Dana with
a controlling financial interest. We paid $125 at closing, using cash on hand. Reference is made to Note 2 of
our consolidated financial statements in Item 8 for the allocation of purchase consideration to assets acquired and liabilities
assumed. The results of operations of the TM4 business are reported in our Commercial Vehicle operating segment. The TM4
acquisition contributed $11 of sales and de minimis adjusted EBITDA in 2018.
Hydro-Québec Relationship
On June 22, 2018, we acquired a 55% ownership interest in TM4 from Hydro-Québec. On July 29, 2019, we broadened our
relationship with Hydro-Québec, with Hydro-Québec acquiring an indirect 45% redeemable noncontrolling interest in SME and
increasing its existing indirect 22.5% noncontrolling interest in PEPS to 45%. We received $65 at closing, consisting of $53 of
cash and a note receivable of $12. The note is payable in five years and bears annual interest of 5%. Dana will continue to
consolidate SME and PEPS as the governing documents continue to provide Dana with a controlling financial interest in these
subsidiaries. See Acquisitions section above for a discussion of Dana's acquisitions of PEPS and SME. On April 14, 2020, Hydro-
Québec acquired an indirect 45% redeemable noncontrolling interest in Ashwoods. We received $9 in cash at closing, inclusive of
$2 in proceeds on a loan from Hydro-Québec. Dana will continue to consolidate Ashwoods as the governing documents continue
18
to provide Dana with a controlling financial interest in this subsidiary. See the Acquisitions section above for a discussion of
Dana's acquisition of Ashwoods.
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
We serve our customers in three core global end markets: light vehicle, primarily full frame trucks and SUVs; commercial
vehicle, including medium-and heavy-duty trucks and busses; and off-highway, including construction, mining, and agriculture
equipment.
In 2020, all of our end-markets were impacted to varying degrees by the global COVID-19 pandemic, which initially resulted
in lower demand driven by production shutdowns related to virus mitigation efforts in the regions we serve. Each of our end-
markets has unique cyclical dynamics and market drivers. These cycles are impacted by periods of investment where end-user
vehicle fleets are refreshed or expanded in reaction to demand usage patterns, regulatory changes, or when the age of vehicles in
service reach their useful life. Key market drivers include regional economic growth rates; industrial output; commodity
production and pricing; and residential and nonresidential construction rates. Our multi-market coverage and broad customer base
help provide stability across the cycles while mitigating secular variability.
Light vehicle markets — Our driveline business is weighted more heavily to the truck and SUV segments of the light-vehicle
market versus the passenger-car segment. Our vehicle content is greater on rear-wheel drive, four-wheel drive, and all-wheel drive
vehicles, as well as hybrid and electric vehicles. Global light-truck volumes have seen steady growth over the last three years, with
the largest gains being in North America. The impact of COVID-19 saw the global market contract by 13% from 2019 levels. The
outlook for the full year of 2021 reflects full-frame light-truck production to be up by a similar percentage, with all regions
exhibiting a strong rebound and returning to 2019 levels as production constraints have eased, inventory returns to more normal
levels, and constrained customer demand is fulfilled.
Commercial vehicle markets — Our primary business is driveline systems for medium and heavy-duty trucks and busses,
including the emerging market for hybrid and electric vehicles. Key regional markets are North America, South America
(primarily Brazil) and Asia Pacific. The Class-8 truck market in North America has experienced steady growth from 2017 through
2019, peaking at 345,000 trucks produced in 2019. Production of Class-8 trucks in 2020 was 38% below the record production in
2019 due to normal cycle dynamics and the impact of COVID-19. The outlook for 2021 is for stronger demand with production up
35% over the prior year driven by improving economic outlook and cyclical growth.
Medium-duty truck production in North America has grown steadily over the last several years before experiencing a 20%
year- over-year decline from 2019 to 2020, primarily due to COVID-19. The outlook for 2021 is for a 6% increase in production
over the prior year. Outside of North America, production of medium-and heavy-duty trucks in South America had been slowly
improving prior to the COVID-19 pandemic as economic conditions had started to stabilize. Pandemic and economic conditions
drove a 22% decline in production in 2020. The 2021 outlook for South America is for a 30% increase in production as the region
recovers from the impact of the pandemic and the age of existing vehicles drives a replacement cycle for new trucks. In contrast to
the rest of the world, Asia Pacific, driven by China, did not experience lower truck production in 2020, but is expected to slow
output by 12% in 2021 as production matches lower demand, primarily driven by India where the recovery from the pandemic has
been slower than in China.
Off-highway markets — Our off-highway business has a large presence outside of North America, with 64% of its 2020 sales
coming from products manufactured in Europe; however, a large portion of these products are utilized in vehicle production
outside the region. The construction equipment segment of the off-highway market is closely related to global economic growth
and infrastructure investment. This segment has experienced a 5% market contraction, which began in late 2018 and further
accelerated due to COVID-19, with 2020 production ending down an additional 10%. The 2021 outlook has production demand in
the global construction market rebounding by 5% over the prior year. End-user investment in the mining equipment segment is
driven by prices for commodity products produced by underground mining. The global mining equipment market has been mostly
stable over the past several years as industry participants have maintained vehicle inventory levels to match commodity output,
and this trend is expected to continue in 2021. The agriculture equipment market is the third of our key off-highway
segments. Like the underground mining segment, investment in agriculture equipment is primarily driven by prices for farm
commodities. From 2018 to 2019, global demand for agriculture equipment fell by 3% due to a slump in commodity prices. As
prices have remained low, production in 2020 fell an additional 7%. The outlook for 2021 is for end-market demand to improve by
19
5% compared to the prior year, as farm subsidies in response to the global pandemic have bolstered the commodity market and is
expected to drive the replacement of aging equipment.
Foreign currency — With 52% of our 2020 sales coming from outside the U.S., international currency movements can have a
significant effect on our sales and results of operations. The euro zone countries and China accounted for 51% and 10% of our
2020 non-U.S. sales, respectively, while Brazil and India each accounted for 7%. Although sales in South Africa are less than 5%
of our non-U.S. sales, the rand has been volatile and significantly impacted sales from time to time. International currencies
weakened against the U.S. dollar in 2020, decreasing 2020 sales by $53. A weaker Brazilian real, South African rand and Indian
rupee more than offset a stronger euro.
Argentina has experienced significant inflationary pressures the past few years, contributing to significant devaluation of its
currency among other economic challenges. Our Argentine operation supports our Light Vehicle operating segment. Our sales in
Argentina for 2020 of approximately $78 are 1% of our consolidated sales and our net asset exposure related to Argentina was
approximately $21, including $5 of net fixed assets, at December 31, 2020. During the second quarter of 2018, we determined that
Argentina's economy met the GAAP definition of a highly inflationary economy. In assessing Argentina's economy as highly
inflationary we considered its three-year cumulative inflation rate along with other factors. As a result, effective July 1, 2018, the
U.S. dollar is the functional currency for our Argentine operations, rather than the Argentine peso. Beginning July 1, 2018, peso-
denominated monetary assets and liabilities are remeasured into U.S. dollars using current Argentine peso exchange rates with
resulting translation gains or losses included in results of operations. Nonmonetary assets and liabilities are remeasured into U.S.
dollar using historic Argentine peso exchange rates. Reference is made to Note 1 of our consolidated financial statements in Item 8
for additional information.
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, brass and rare earth materials. 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, batteries and component parts that include commodities. Most of our major customer
agreements provide for the sharing of significant commodity price changes with those customers based on the movement in
various published commodity indexes. 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 increased year-over-year earnings in 2020 by approximately $37, as compared to year-over-
year earnings reductions of $30 from higher commodity prices in 2019. Material recovery and other pricing actions decreased
year-over-year earnings by $80 and $10 in 2020 and 2019, respectively.
Sales, Earnings and Cash Flow Outlook
Sales
Adjusted EBITDA
Net cash provided by operating activities
Discretionary pension contributions
Purchases of property, plant and equipment
Adjusted Free Cash Flow
2021
Outlook*
$8,050 - $8,550
$860 - $960
~7.5% of sales
$—
~4.5% of sales
~3.0% of sales
$
$
$
$
$
$
2020
2019
2018
7,106 $
593 $
386 $
— $
326 $
60 $
8,620 $
1,019 $
637 $
61 $
426 $
272 $
8,143
957
568
—
325
243
* Our 2021 outlook does not include our pending acquisition of a portion of the thermal-management business of Modine Manufacturing Company, as the timing
of closing the transaction is uncertain.
Adjusted EBITDA and adjusted 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. We have not provided a reconciliation of our adjusted EBITDA
outlook to the most comparable GAAP measure of net income. Providing net income guidance is potentially misleading and not
practical given the difficulty of projecting event driven transactional and other non-core operating items that are included in net
income, including restructuring actions, asset impairments and certain income tax adjustments. The accompanying reconciliations
of these non-GAAP measures with the most comparable GAAP measures for the historical periods presented are indicative of the
reconciliations that will be prepared upon completion of the periods covered by the non-GAAP guidance.
Our 2021 sales outlook is $8,050 to $8,550, reflecting improving post-pandemic global market demand and $500 of net new
business backlog. Based on our current sales and exchange rate outlook for 2021, we expect overall stability in international
currencies with a modest benefit to sales. At sales levels in our current outlook for 2021, a 5% movement on the euro would
impact our annual sales by approximately $125. A 5% change on the Chinese renminbi, Indian rupee, Brazilian real and Thai
baht rates would impact our annual sales in each of those countries by approximately $10 to $20. At our current sales outlook for
2021, we expect full year 2021 adjusted EBITDA to approximate $860 to $960. Adjusted EBITDA Margin is expected to be
20
11.0%, a 270 basis-point improvement over 2020, reflecting higher margin net new business and the benefit of operational
inefficiencies associated with the global COVID-19 pandemic not repeating in 2021, being partially offset by increased investment
to support our electrification strategy. In addition, we anticipate higher commodity costs to be largely offset by material recovery
and other pricing actions. We expect to generate adjusted free cash flow of approximately $250, or 3.0% of sales for 2021. The
benefit of higher year-over-year adjusted EBITDA will be partially offset by an elevated level of capital spending supporting new
customer programs, as spending on certain projects was deferred during 2020 in response the global COVID-19 pandemic.
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. Our success on this
front is measured, in part, by our sales backlog – net new business received that will be launching in the future and adding to our
base annual sales. This backlog excludes replacement business and represents incremental sales associated with new programs for
which we have received formal customer awards. At December 31, 2020, our sales backlog of net new business for the
2021 through 2022 period was $700. We expect to realize $500 of our sales backlog in 2021, with incremental sales backlog of
$200 being realized in 2022. Our sales backlog is evenly balanced between electric-vehicle and traditional ICE-vehicle content.
Summary Consolidated Results of Operations (2020 versus 2019)
Consolidated Results of Operations
2020
2019
% of
Net Sales
% of
Net Sales
Dollars
$
91.3 %
8.7 %
5.9 %
Dollars
$
7,106
6,485
621
421
13
34
(51 )
Net sales
Cost of sales
Gross margin
Selling, general and administrative expenses
Amortization of intangibles
Restructuring charges, net
Impairment of goodwill
Pension settlement charges
Other income (expense), net
Earnings before interest and income taxes
Loss on extinguishment of debt
Interest income
Interest expense
Earnings (loss) before income taxes
Income tax expense (benefit)
Equity in earnings of affiliates
Net income (loss)
Less: Noncontrolling interests net income
Less: Redeemable noncontrolling interests net loss
Net income (loss) attributable to the parent company $
22
124
(8 )
9
138
(13 )
58
20
(51 )
10
(30 )
(31 )
$
Increase/
(Decrease)
(1,514 )
$
(1,004 )
86.9 %
(510 )
13.1 %
(87 )
5.9 %
1
5
(45 )
259
47
(168 )
1
(1 )
16
(184 )
90
(10 )
(284 )
(3 )
(24 )
(257 )
$
8,620
7,489
1,131
508
12
29
(6 )
(259 )
(25 )
292
(9 )
10
122
171
(32 )
30
233
13
(6 )
226
Sales — The following table shows changes in our sales by geographic region.
North America
Europe
South America
Asia Pacific
Total
Amount of Change Due To
2020
2019
Increase/
(Decrease)
Currency
Effects
Acquisitions Organic
(Divestitures) Change
$
$
3,602 $
2,209
358
937
7,106 $
4,473 $
2,606
509
1,032
8,620 $
(871 ) $
(397 )
(151 )
(95 )
(1,514 ) $
(1 ) $
32
(73 )
(11 )
(53 ) $
30 $
66
29
125 $
(900 )
(495 )
(78 )
(113 )
(1,586 )
Sales in 2020 were $1,514 lower than in 2019. Weaker international currencies decreased sales by $53, principally due to a
weaker Brazilian real, South African rand and Indian rupee, partially offset by a stronger euro. The acquisitions of ODS in last
year's first quarter, PEPS in last year's second quarter and Ashwoods in this year's first quarter, generated a year-over-year increase
in sales of $125. The organic sales decrease of $1,586, or 18%, resulted from weaker light and medium/heavy truck markets and
lower global off-highway demand in January and February 2020 and the rapid dissipation in production volumes across all of our
end markets beginning in March 2020 as a result of the global COVID-19 pandemic. The impact of the global COVID-19
21
pandemic on our operations as well as those of our customers, suppliers and the global supply chains in which we participate, was
most notable during April 2020, with a measured ramp up in production beginning in May followed by a rapid increase in
customer demand through the third quarter. Sales in the fourth quarter of 2020 were $121 higher than the same period of 2019,
primarily due to strong customer demand in, and the conversion of sales backlog by, our Light Vehicle operating segment. The
conversion of sales backlog contributed $348 on a full-year basis, while pricing actions, including material commodity price and
inflationary cost adjustments, reduced sales by $80.
The North America organic sales decrease of 20% was driven principally by weaker light and medium/heavy duty truck
production volumes resulting from the global COVID-19 pandemic, partially offset by the conversion of sales backlog. Full frame
light truck production was down 20% during 2020 while production of Class 8 and Classes 5-7 trucks were down 38% and 20%,
respectively.
Excluding currency and acquisition effects, sales in Europe were down 19% compared with 2019. With our significant Off-
Highway presence in the region, weakening construction/mining and agricultural markets due to the global COVID-19 pandemic
were a major factor. Organic sales in this operating segment were down 22% compared with 2019.
Excluding currency effects, sales in South America decreased 15% compared to 2019 primarily due to the global COVID-19
pandemic. Medium/heavy truck production was down 22% and light truck production was down 17% compared to 2019.
Excluding currency and acquisition effects, sales in Asia Pacific decreased about 11% as China's economy showed signs of
weakening even before the onset of the COVID-19 pandemic. Light truck and light vehicle engine production were down 9% and
13%, respectively, while medium/heavy truck production was up 12% compared to 2019.
Cost of sales and gross margin — Cost of sales for 2020 decreased $1,004, or 13% when compared to 2019. Cost of sales as a
percent of sales in 2020 was 440 basis points higher than in the previous year. Cost of sales attributed to acquisitions was
approximately $137. Excluding the effects of acquisitions, cost of sales as a percent of sales was 90.9%, 400 basis points higher
than in the previous year. The increase in cost of sales as a percent of sales is attributable to the rapid dissipation of customer
demand across all of our end markets primarily during the second quarter of 2020, as a result of the global COVID-19 pandemic,
followed by a dramatic increase in demand during the third quarter of 2020. During the second quarter of 2020 actions to flex
down our cost structure lagged the rapid dissipation of customer demand across all of our end markets, our inability to effectively
reduce labor costs in certain countries due to government requirements, as well as our inability to reduce fixed costs including
depreciation and rent expense. During the third quarter of 2020 we experienced operational inefficiencies and premium costs
associated with taking a number of our plants from being idled just a few months prior to running at full capacity. Partially
offsetting the impact of the global COVID-19 pandemic were lower commodity prices which lowered material costs by $37 and
continued material cost savings of approximately $75.
Gross margin of $621 for 2020 decreased $510 from 2019. Gross margin as a percent of sales was 8.7% in 2020, 440 basis
points lower than in 2019. The decline in margin as a percent of sales was driven principally by the cost of sales factors referenced
above.
Selling, general and administrative expenses (SG&A) — SG&A expenses in 2020 were $421 (5.9% of sales) as compared to
$508 (5.9% of sales) in 2019. SG&A attributed to acquisitions was $9. The year-over-year decrease of $96 exclusive of
acquisitions was primarily due to lower year-over-year incentive compensation as well as lower salaried employee wages, benefits,
travel expenses, marketing expenses and professional fees resulting from the execution of cost reduction initiatives in response to
the global COVID-19 pandemic.
Amortization of intangibles — Amortization expense was $13 in 2020 and $12 in 2019. The increase in amortization expense is
primarily due to higher levels of intangible assets as the result of acquisition activity.
Restructuring charges, net — Restructuring charges of $34 in 2020 were comprised of severance and benefit costs primarily
related to headcount reductions across our operations in response to the global COVID-19 pandemic and exit costs related to
previously announced actions. Restructuring charges of $29 in 2019 were comprised of severance and benefit costs primarily
related to integration of recent acquisitions, headcount reductions across our operations and exit costs related to previously
announced actions. See Note 4 of our consolidated financial statements in Item 8 for additional information.
Impairment of goodwill — During the first quarter of 2020, we recorded a $51 goodwill impairment charge. During the fourth
quarter of 2019, we wrote off the goodwill recognized as part of a 2016 acquisition. See Note 3 of our consolidated financial
statements in Item 8 for additional information.
Pension settlement charges — During 2019, we recorded a $256 settlement charge related to the termination of one of our U.S.
defined benefit pension plans and a $3 settlement charge related to the termination of one of our Canadian defined benefit pension
plans. See Note 12 of our consolidated financial statements in Item 8 for additional information.
22
Other income (expense), net — The following table shows the major components of other income (expense), net.
Non-service cost components of pension and OPEB costs
Government grants and incentives
Foreign exchange loss
Strategic transaction expenses
Gain on investment in Hyliion
Non-income tax legal judgment
Gain on liquidation of foreign subsidiary
Other, net
Other income (expense), net
2020
2019
$
$
(10 ) $
14
8
(20 )
33
(3 )
22 $
(23 )
15
(11 )
(41 )
6
12
17
(25 )
Strategic transaction expenses in 2020 were primarily attributable to the acquisition of ODS and Nordresa and certain other
strategic initiatives. Strategic transaction expenses in 2019 were primarily attributable to the acquisition of ODS. We held $16 of
convertible notes receivable from our investment in Hyliion Inc. On October 1, 2020, Hyliion Inc. completed its merger with
Tortoise Acquisition Corp. The business combination resulted in the combined company being renamed Hyliion Holdings Corp.
(Hyliion), with its common stock being listed on the New York Stock Exchange under the ticker symbol HYLN. Effective with the
completed merger, our notes receivable were converted into 2,988,229 common shares of HYLN. Our investment in Hyliion will
be included in noncurrent marketable securities and carried at fair value with changes in fair value included in net income in future
periods. During the first quarter of 2019, we won a legal judgment regarding the methodology used to calculate PIS/COFINS tax
on imports into Brazil. During the fourth quarter of 2019, we liquidated a foreign subsidiary. The resulting non-cash gain is
attributable to the recognition of accumulated currency translation adjustments. See Note 19 of our consolidated financial
statements in Item 8 for additional information.
Loss on extinguishment of debt — On June 19, 2020, in connection with the issuance of our June 2028 Notes, we terminated our
$500 bridge facility and wrote off $5 of deferred fees associated with the bridge facility. On December 31, 2020, we fully paid
down our Term A Facility. We wrote off $3 of previously deferred financing costs associated with the Term A Facility. During the
fourth quarter of 2019, we redeemed $300 of our September 2023 Notes. We incurred redemption premiums of $7 in connection
with these repayments and wrote off $2 of previously deferred financing costs associated with the extinguished debt. See Note
14 of our consolidated financial statements in Item 8 for additional information.
Interest income and interest expense — Interest income was $9 in 2020 and $10 in 2019. Interest expense increased from $122 in
2019 to $138 in 2020 due to higher average debt levels in 2020. The increase in average debt levels is primarily attributable to
outstanding borrowings under the Revolving Facility during the first half of 2020 and the issuances of $400 of our June 2028
Notes and an additional $100 of our November 2027 Notes in June 2020. Average effective interest rates, inclusive of
amortization of debt issuance costs, approximated 5.0% in both 2020 and 2019.
Income tax expense (benefit) — Income taxes were an expense of $58 in 2020 and benefit of $32 in 2019. During 2020, we
recognized tax expense of $60 for additional valuation allowances in foreign jurisdictions due to reduced income projections. We
also recognized a benefit of $26 for the release of valuation allowance in a subsidiary in Australia, based on recent history of
profitability and increased income projections. In conjunction with the completion of the intercompany sale of certain assets to a
non-U.S. affiliate, net tax expense of $12 was recorded, including the corresponding foreign derived intangible income benefit. For
the year, we also recognized tax benefits of $37 related to tax actions that adjusted federal tax credits. A pre-tax goodwill
impairment charge of $51 with an associated income tax benefit of $1 was recorded. During 2019, we recognized a benefit of $22
for the release of valuation allowance in a subsidiary in Brazil based on recent history of profitability and increased income
projections. A pre-tax pension settlement charge of $259 was recorded, resulting in income tax expense of $11 and a valuation
allowance release of $18. For the year, we also recognized benefits for the release of valuation allowance in the US of $34 based
on increased income projections and $30 based on the development of a tax planning strategy related to federal tax credits.
Partially offsetting this benefit in the US was $6 of expense related to a US state law change. During the second quarter of 2019,
we also recorded tax benefits of $48 related to tax actions that adjusted federal tax credits. See Note 18 to our consolidated
financial statements in Item 8 for additional information.
In countries where our history of operating losses does not allow us to satisfy the “more likely than not” criterion for
recognition of deferred tax assets, we have generally recognized no income tax on the pre-tax income or losses as valuation
allowance adjustments offset the associated tax effects. In the fourth quarter of 2020, we recognized a benefit of $26 for the
release of valuation allowance in a subsidiary in Australia. During the third quarter of 2019, we recognized a benefit of $22 for
the release of a valuation allowance in a subsidiary in Brazil.
Equity in earnings of affiliates — Net earnings from equity investments was $20 in 2020 and $30 in 2019. Equity in earnings from
Dongfeng Dana Axle Co., Ltd. (DDAC) was $15 in 2020 and $18 in 2019. After experiencing significant impacts resulting from
23
the global COVID-19 pandemic during the first quarter of 2020, DDAC experienced higher demand levels during the balance of
2020 primarily driven by increased demand for certain medium/heavy vehicles by the Chinese government. Equity in earnings
from Bendix Spicer Foundation Brake, LLC (BSFB) was $4 in 2020 and $12 in 2019. The year-over-year decrease in BSFB's
earnings is primarily attributable to the global COVID-19 pandemic and the October 1, 2020 sale of our 20% ownership interest in
BSFB to Bendix Commercial Vehicle Systems LLC. See Note 22 of our consolidated financial statements in Item 8 for additional
information.
Segment Results of Operations (2020 versus 2019)
Light Vehicle
2019
Volume and mix
Performance
Currency effects
2020
Sales
Segment
EBITDA
$
$
3,609 $
(495 )
(61 )
(15 )
3,038 $
438
(140 )
(59 )
239
Segment
EBITDA
Margin
12.1 %
7.9 %
Light Vehicle sales in 2020, exclusive of currency effects, were 15% lower than 2019. Full year 2020 full frame light truck
production declined in North America, Europe, South America, and Asia Pacific by 20%, 20%, 17%, and 9%, respectively,
compared to 2019. Full frame light truck production rapidly dissipated across all regions beginning in March 2020 as a result of
the global COVID-19 pandemic. The impact of the global COVID-19 pandemic on our Light Vehicle operations was most notable
during April 2020, with a measured ramp up in production beginning in May followed by a rapid increase in customer demand
through the third quarter. Light Vehicle sales in the fourth quarter of 2020, exclusive of currency effects, were $135 higher than
the fourth quarter of 2019 primary due to the conversion of sales backlog and continued strengthening of customer demand. Net
customer pricing and cost recovery actions further decreased year-over-year sales by $49.
Light Vehicle segment EBITDA decreased by $199 in 2020. Lower sales volumes provided a year-over-year headwind of
$140 (28.3% decremental margin) as actions to flex down our cost structure during the second quarter of 2020 lagged the rapid
dissipation of customer demand resulting from the global COVID-19 pandemic. Performance during the third and fourth quarters
was negatively impacted by taking a number of our Light Vehicle plants from being idled just a few months prior to running at full
capacity. The year-over-year performance-related earnings decline was driven by operational inefficiencies of $86, lower net
pricing and material cost recovery of $49 and incremental safety costs of $2 directly related to the global COVID-19 pandemic,
including facility sanitization and personal protective equipment. Partially offsetting these performance-related earnings decreases
were material cost savings of $32, commodity cost decreases of $26, lower salaried employee wages of $10, certain benefits of the
CARES Act of $5, lower incentive compensation of $3 and lower warranty expense of $2.
Commercial Vehicle
2019
Volume and mix
Acquisition / Divestiture
Performance
Currency effects
2020
Sales
Segment
EBITDA
Segment
EBITDA
Margin
$
$
1,611 $
(378 )
8
(11 )
(49 )
1,181 $
138
(98 )
(7 )
6
(3 )
36
8.6 %
3.0 %
Commercial Vehicle sales in 2020, exclusive of currency effects and the impact of acquisitions, were 24% lower than 2019.
Declining market conditions coming out of 2019 deteriorated further with the rapid dissipation in customer demand resulting from
the global COVID-19 pandemic. Full year North America Class 8 production was down 38% and Classes 5-7 production was
down 20% from 2019. Year-over-year medium/heavy truck production in Europe and South America were down 30% and
22%, respectively. Asia Pacific was impacted by the global COVID-19 pandemic earlier than the other regions, with its most
significant year-over-year production decline occurring during the first quarter of 2020. Asia Pacific medium/heavy truck
production was up 12% compared to 2019. Net customer pricing and cost recovery actions further decreased year-over-year sales
by $12.
Commercial Vehicle segment EBITDA decreased by $102 in 2020. Lower sales volumes provided a year-over-year headwind
of $98 (25.9% decremental margin) as actions to flex down our cost structure during the second and third quarters of 2020 lagged
the rapid dissipation of customer demand resulting from the global COVID-19 pandemic. The year-over-year performance-related
earnings improvement was driven by material cost savings of $14, lower salaried employee wages of $6, commodity cost
decreases of $3, lower incentive compensation of $2, certain benefits of the CARES Act of $2 and lower warranty expense of $1.
Partially offsetting these performance-related earnings increases were lower net customer pricing and cost recovery actions of $12,
24
operational inefficiencies of $7 and incremental safety costs of $3 directly related to the global COVID-19 pandemic, including
facility sanitization and personal protective equipment.
Off-Highway
2019
Volume and mix
Acquisition
Performance
Currency effects
2020
Segment
EBITDA
Margin
14.0 %
Sales
Segment
EBITDA
$
$
2,360 $
(498 )
117
(15 )
6
1,970 $
330
(115 )
22
(3 )
234
11.9 %
Off-Highway sales in 2020, exclusive of currency effects and the impact of the ODS and Ashwoods acquisitions, were 22%
lower than 2019. Already declining global construction/mining and agricultural equipment markets coming out of 2019
deteriorated further with the rapid dissipation of customer demand resulting from the global COVID-19 pandemic. Net customer
pricing and cost reduction actions further decreased year-over-year sales by $15.
Off-Highway segment EBITDA decreased by $96 in 2020. Lower sales volumes provided a year-over-year headwind of
$115 (23.1% decremental margin) as actions to flex down our cost structure lagged the rapid dissipation of customer demand
resulting from the global COVID-19 pandemic. The year-over-year performance-related earnings decline was driven by operating
inefficiencies of $23, lower net pricing and material recovery of $15, incremental safety costs of $4 directly related to the global
COVID-19 pandemic, including facility sanitization and personal protective equipment and higher incentive compensation of $1.
Partially offsetting these performance-related earnings decreases were material cost savings of $22, commodity cost decreases of
$8, lower salaried employee wages of $8, certain benefits of the CARES Act of $1 and lower warranty expense of $1.
Power Technologies
2019
Volume and mix
Performance
Currency effects
2020
Sales
Segment
EBITDA
$
$
1,040 $
(124 )
(4 )
5
917 $
Segment
EBITDA
Margin
11.3 %
117
(39 )
16
94
10.3 %
Power Technologies primarily serves the light vehicle market but also sells product to the medium/heavy truck and off-
highway markets. Net of currency effects, sales for 2020 were 12% lower than 2020, primarily due to lower market demand
resulting from the global COVID-19 pandemic. Full year 2020 light vehicle engine production declined in North America, Europe
and Asia Pacific by 18%, 22% and 13%, respectively, compared to 2019. Net customer pricing and cost reduction actions further
decreased year-over-year sales by $4.
Power Technologies segment EBITDA decreased by $23 in 2020. Lower sales volumes provided a year-over-year headwind
of $39 (31.5% decremental margin) as actions to flex down our cost structure lagged the rapid dissipation of customer demand
resulting from the global COVID-19 pandemic. The year-over-year performance-related earnings increase was driven by
operational efficiencies of $9, lower salaried employee wages of $9, material cost savings of $7 and certain benefits of the CARES
Act of $1. Partially offsetting these performance-related earnings increases were lower net pricing and material recovery of $4,
higher warranty expense of $3, incremental safety costs of $2 directly related to the global COVID-19 pandemic, including facility
sanitization and personal protective equipment and higher incentive compensation of $1.
25
Summary Consolidated Results of Operations (2019 versus 2018)
2019
2018
Net sales
Cost of sales
Gross margin
Selling, general and administrative expenses
Amortization of intangibles
Restructuring charges, net
Impairment of goodwill and indefinite-lived
intangible asset
Gain on disposal group held for sale
Pension settlement charges
Other income (expense), net
Earnings before interest and income taxes
Loss on extinguishment of debt
Interest income
Interest expense
Earnings before income taxes
Income tax expense (benefit)
Equity in earnings of affiliates
Net income
Less: Noncontrolling interests net income
Less: Redeemable noncontrolling interests net loss
$
Net income attributable to the parent company
% of
Net Sales
% of
Net Sales
Dollars
$
8,620
7,489
1,131
508
12
29
Dollars
$
86.9 %
13.1 %
5.9 %
8,143
6,986
1,157
499
8
25
Increase/
(Decrease)
477
$
503
85.8 %
(26 )
14.2 %
9
6.1 %
4
4
(6 )
(259 )
(25 )
292
(9 )
10
122
171
(32 )
30
233
13
(6 )
226
(20 )
3
(29 )
579
11
96
494
78
24
440
13
$
427
$
14
(3 )
(259 )
4
(287 )
(9 )
(1 )
26
(323 )
(110 )
6
(207 )
—
(6 )
(201 )
Sales — The following table shows changes in our sales by geographic region.
North America
Europe
South America
Asia Pacific
Total
Amount of Change Due To
2019
2018
Increase/
(Decrease)
Currency
Effects
Acquisitions Organic
(Divestitures) Change
$
$
4,473 $
2,606
509
1,032
8,620 $
4,106 $
2,484
546
1,007
8,143 $
367 $
122
(37 )
25
477 $
(3 ) $
(129 )
(31 )
(14 )
(177 ) $
196 $
322
(13 )
149
654 $
174
(71 )
7
(110 )
—
Sales in 2019 were $477 higher than in 2018. Weaker international currencies decreased sales by $177, principally due to a
weaker euro, Brazilian real, South African rand, Chinese renminbi and Indian rupee. The acquisitions of ODS and SME in the first
quarter of 2019, PEPS in the second quarter of 2019, Nordresa in the third quarter of 2019 and TM4 in the second quarter of 2018,
net of the divestiture of the Brazil suspension components business in the third quarter of 2018, generated a year- over-year
increase in sales of $654. The organic sales increase in North America driven by stronger medium/heavy truck production and the
conversion of sale backlog was offset by weaker global construction/mining and agricultural equipment markets and a softening in
the Chinese economy. Pricing actions, including material commodity price and inflationary cost recovery, reduced sales by $10.
The North America organic sales increase of 4% was driven principally by stronger medium/heavy truck production volumes
and the conversion of sales backlog. Production of Class 8 trucks was up 6% and production of Classes 5-7 was up 2% while full
frame light truck production was flat compared to 2018. In addition, realization of light truck sales backlog helped to offset the
year-over-year sales volume-related decline attributable to one of our largest light vehicle customer programs for which production
continued on the outgoing model, concurrent with production of the new model vehicle, during the first quarter of 2018.
A weaker euro and South African rand were the primary driver of the decreased sales in Europe due to currency effects.
Excluding currency and acquisition effects, sales in Europe decreased 3% compared to 2018. Strong market demand in the first
half of 2019 in our Off-Highway segment was more than offset by weak demand in the second half of 2019.
A weaker Brazilian real reduced South America sales in 2019. The region overall experienced relatively stable markets, with
medium/heavy truck production being flat and light truck production down 3% compared to 2018.
26
A weaker Chinese renminbi and Indian rupee were the primary drivers of the decreased sales in Asia Pacific due to currency
effects. Excluding currency and acquisition effects, sales decreased about 11% as China's economy showed signs of weakening.
Light truck, light vehicle engine and medium/heavy truck production were down 4%, 7% and 4% respectively, from 2018.
Cost of sales and gross margin — Cost of sales for 2019 increased $503, or 7% when compared to 2018. Similar to the factors
affecting sales, the increase was primarily due to the inclusion of acquired businesses. Cost of sales as a percent of sales in
2019 was 110 basis points higher than in the previous year. Cost of sales attributed to net acquisitions, which included $13 of
incremental cost assigned to inventory as part of business combination accounting, was approximately $620. Excluding the effects
of acquisitions and divestitures, cost of sales as a percent of sales was 86.2%, 40 basis points higher than in 2018. The increased
cost of sales as a percent of sales was largely attributable to higher commodity prices which increased material costs by about $30,
an increase in engineering and development cost of $4, higher depreciation expense of $15 and operational inefficiencies and other
cost increases. Partially offsetting these higher costs were continued material cost savings of $86, a net benefit of $17 from the
monetization of a non-income tax claim, lower start-up and launch costs and lower premium freight.
Gross margin of $1,131 for 2019 decreased $26 from 2018. Gross margin as a percent of sales was 13.1% in 2019, 110 basis
points lower than in 2018. The decline in margin as a percent of sales was driven principally by the cost of sales factors referenced
above.
Selling, general and administrative expenses (SG&A) — SG&A expenses in 2019 were $508 (5.9% of sales) as compared to $499
(6.1% of sales) in 2018. SG&A attributed to net acquisitions was $33. Excluding the increase associated with net acquisitions,
SG&A expenses were 10 basis points lower than the same period of 2018. The year-over-year decrease of $24 exclusive of net
acquisitions was primarily due to lower salaries and benefits expenses resulting from the voluntary retirement program and other
headcount reduction actions taken in the fourth quarter of 2018.
Amortization of intangibles — The $4 increase in amortization expense in 2019 was attributable to intangible assets obtained
through the TM4, ODS, SME, and PEPS acquisitions, partially offset by certain intangible assets becoming fully amortized. See
Note 2 and Note 3 of our consolidated financial statements in Item 8 for additional information.
Restructuring charges, net — Restructuring charges of $29 in 2019 were comprised of severance and benefit costs related to
integration of recent acquisitions, headcount reductions across our operations and exit costs related to previously announced
actions. Restructuring charges of $25 in 2018 were primarily comprised of severance and benefit costs related to a voluntary
retirement program in North America, headcount reduction actions in our operations and corporate functions in Brazil and
administrative cost reduction initiatives primarily in Europe and North America. In response to continued market recovery in our
Off-Highway business in Europe, management re-evaluated the economic conditions of our global Off-Highway business and
determined that $7 of the previously approved restructuring actions are no longer economically prudent. See Note 4 of
our consolidated financial statements in Item 8 for additional information.
Impairment of goodwill and indefinite-lived intangible asset — During the fourth quarter of 2019, we wrote off the goodwill
recognized as part of a 2016 acquisition. During the second quarter of 2018, we wrote off the in-process research and development
intangible asset recognized as part of a 2012 acquisition. See Note 3 of our consolidated financial statements in Item 8 for
additional information.
Gain on disposal group held for sale — Upon completion of the divestiture of our Brazil suspension components business in the
second quarter of 2018, we reversed $3 of the previously recognized $27 pre-tax loss.
Pension settlement charges — During 2019, we recorded a $256 settlement charge related to the termination of one of our U.S.
defined benefit pension plans and a $3 settlement charge related to the termination of one of our Canadian defined benefit pension
plans. See Note 12 of our consolidated financial statements in Item 8 for additional information.
Other income (expense), net — The following table shows the major components of other income (expense), net.
Non-service cost components of pension and OPEB costs
Government grants and incentives
Foreign exchange loss
Strategic transaction expenses, net of transaction breakup fee income
Non-income tax legal judgment
Gain on liquidation of foreign subsidiary
Other, net
Other income (expense), net
2019
2018
$
$
(23 ) $
15
(11 )
(41 )
6
12
17
(25 ) $
(15 )
12
(12 )
(18 )
4
(29 )
27
Strategic transaction expenses in 2019 were primarily attributable to our acquisition of ODS. Strategic transaction expenses in
2018 were primarily attributable to our bid to acquire the driveline business of GKN plc., our acquisition of an ownership interest
in TM4, our pending acquisition of ODS and integration costs associated with our acquisitions of BFP and BPT, and were partially
offset by a $40 transaction breakup fee associated with the GKN plc. transaction. During the first quarter of 2019, we won a legal
judgment regarding the methodology used to calculate PIS/COFINS tax on imports into Brazil. During the fourth quarter of 2019,
we liquidated a foreign subsidiary. The resulting non-cash gain is attributable to the recognition of accumulated currency
translation adjustments. See Note 19 of our consolidated financial statements in Item 8 for additional information.
Loss on extinguishment of debt — We redeemed $300 of our September 2023 Notes during the fourth quarter of 2019. We incurred
redemption premiums of $7 in connection with these repayments and wrote off $2 of previously deferred financing costs
associated with the extinguished debt. See Note 14 of our consolidated financial statements in Item 8 for additional information.
Interest income and interest expense — Interest income was $10 in 2019 and $11 in 2018. Interest expense increased from $96 in
2018 to $122 in 2019 primarily due to increased debt levels used to fund recent acquisition activities. Average effective interest
rates, inclusive of amortization of debt issuance costs, approximated 5.0% and 5.2% in 2019 and 2018.
Income tax expense — Income taxes were a benefit of $32 in 2019 and an expense of $78 in 2018. During 2019, we recognized a
benefit of $22 for the release of valuation allowance in a subsidiary in Brazil based on recent history of profitability and increased
income projections. A pre-tax pension settlement charge of $259 was recorded, resulting in income tax expense of $11 and a
valuation allowance release of $18. For the year, we also recognized benefits for the release of valuation allowance in the US of
$34 based on increased income projections and $30 based on the development of a tax planning strategy related to federal tax
credits. Partially offsetting this benefit in the US was $6 of expense related to a US state law change. During the second quarter of
2019, we also recorded tax benefits of $48 related to tax actions that adjusted federal tax credits. During 2018, we recognized a
benefit of $44 related to U.S. state law changes and the development and implementation of a tax planning strategy which adjusted
federal tax credits, along with federal and state net operating losses and the associated valuation allowances. We also recognized
benefits of $11 relating to the reversal of a provision for an uncertain tax position, $5 relating to the release of valuation
allowances in the US based on improved income projections and $7 due to permanent reinvestment assertions. Partially offsetting
these benefits was $5 of expense to settle outstanding tax matters in a foreign jurisdiction. See Note 18 of our consolidated
financial statements in Item 8 for additional information.
Excluding the effects of the items referenced in the preceding paragraph, our effective tax rates were 24% in 2019 and 28% in
2018. These rates vary from the applicable U.S. federal statutory rate of 21% primarily due to establishment, release and
adjustment of valuation allowances in several countries, nondeductible expenses, deemed income, local tax incentives in several
countries outside the U.S., different statutory tax rates outside the U.S. and withholding taxes related to repatriations of
international earnings.
In countries where our history of operating losses does not allow us to satisfy the "more likely than not" criterion for
recognition of deferred tax assets, we have generally recognized no income tax on the pre-tax income or losses as valuation
allowance adjustments offset the associated tax effects. During the third quarter of 2019, we recognized a benefit of $22 for the
release of a valuation allowance in a subsidiary in Brazil.
Equity in earnings of affiliates — Net earnings from equity investments was $30 in 2019 compared with $24 in 2018. Equity in
earnings from BSFB was $12 in 2019 and $7 in 2018. Equity in earnings from DDAC was $18 in 2019 and $15 in 2018. See Note
22 of our consolidated financial statements in Item 8 for additional information.
Segment Results of Operations (2019 versus 2018)
Light Vehicle
2018
Volume and mix
Acquisition
Performance
Currency effects
2019
Sales
Segment
EBITDA
$
$
3,575 $
64
1
(10 )
(21 )
3,609 $
398
18
(1 )
26
(3 )
438
Segment
EBITDA
Margin
11.1 %
12.1 %
Light Vehicle sales in 2019, exclusive of acquisition and currency effects, were 2% higher than 2018. Conversion of sales
backlog was partially offset by lower full frame truck production in Asia Pacific and the year-over-year sales volume-related
decline attributable to one of our largest customer programs for which production continued on the outgoing model, concurrent
with production of the new model vehicle, during last year's first quarter. Full frame truck production in North America and
Europe was flat compared to 2018. Net customer pricing and cost recovery actions resulted in a year-over-year decrease of $13.
28
Light Vehicle segment EBITDA increased by $40 in 2019. Higher sales volumes provided a year-over-year benefit of $18.
The year-over-year performance related earnings improvement was driven by material cost savings of $37 and lower new program
start-up and launch-related costs of $16. Lower net pricing and material cost recovery actions of $13, increased engineering spend
of $9, higher warranty costs of $2 and operational inefficiencies and other cost increases of $3 reduced performance in 2019.
Commercial Vehicle
2018
Volume and mix
Acquisition / Divestiture
Performance
Currency effects
2019
Sales
Segment
EBITDA
Segment
EBITDA
Margin
$
$
1,612 $
10
17
16
(44 )
1,611 $
146
3
(2 )
(3 )
(6 )
138
9.1 %
8.6 %
Excluding currency effects and the net impact of acquisitions and divestitures, Commercial Vehicle sales increased 2%
compared to last year. The volume-related increase was primarily attributable to higher production levels in North America during
the first half of 2019 where Class 8 production was up 22% and Classes 5-7 production was up 7% compared to the first half of
2018. During the second half of 2019, North American production volumes declined, with Class 8 production down 9% and
Classes 5-7 down 3% compared to the second half of 2018. Similarly, the impact of higher 2019 first-half production volumes in
Europe and Asia Pacific have been largely offset by declining production volumes in both regions during the second half of 2019.
With the improving economy in Brazil, our sales volume in 2019 benefited from year-over-year higher production levels in that
country of around 7%. Net customer pricing and cost recovery actions increased year-over-year sales by $7.
Commercial Vehicle segment EBITDA was $8 lower than 2018. Higher sales volumes increased year-over-year earnings by
$3. The year-over-year performance related earnings decline was driven by higher commodity costs of $21, increased engineering
spend of $2 and operational inefficiencies and other cost increases of $8. Material cost savings of $19, higher net pricing and
material cost recovery actions of $7 and net foreign currency transaction gains of $2 provided a partial offset.
Off-Highway
2018
Volume and mix
Acquisition
Performance
Currency effects
2019
Sales
Segment
EBITDA
$
$
1,844 $
(42 )
636
3
(81 )
2,360 $
285
(19 )
88
(15 )
(9 )
330
Segment
EBITDA
Margin
15.5 %
14.0 %
Excluding currency effects, primarily due to a weaker euro, and the impact of the ODS and SME acquisitions, Off-Highway
segment sales decreased 2% compared to last year. The construction/mining and agricultural equipment markets were relatively
stable during the first half of 2019 but deteriorated rapidly during the second half of 2019. Customer pricing and material cost
recovery actions increased year-over-year sales by $5.
Off-Highway segment EBITDA increased by $45 in 2019. Marginally higher market demand through the first half of
2019 was more than offset by rapid market deterioration in the second half of 2019. The $15 performance-related deterioration in
2019 earnings was impacted by higher commodity costs of $6 and operational inefficiencies and other cost increases of $36,
partially offset by material cost savings of $22 and customer pricing and material cost recovery actions of $5.
Power Technologies
2018
Volume and mix
Performance
Currency effects
2019
Sales
Segment
EBITDA
Segment
EBITDA
Margin
$
$
1,112 $
(36 )
(5 )
(31 )
1,040 $
149
(13 )
(15 )
(4 )
117
13.4 %
11.3 %
29
Power Technologies primarily serves the light vehicle market but also sells product to the medium/heavy truck and off-
highway markets. Net of currency effects, sales for 2019 were 4% lower than 2018, primarily due to program roll offs and lower
market demand. Light vehicle engine production declined across all regions during 2019. Net customer pricing and material cost
recovery actions decreased year-over-year sales by $9.
Power Technologies segment EBITDA decreased $32 compared to 2019. The $15 performance deterioration resulted from
higher commodity costs of $2, operational inefficiencies and other cost increases of $4 and lower net pricing and material cost
recovery actions of $9.
Non-GAAP Financial Measures
Adjusted EBITDA
We have defined adjusted EBITDA as net income (loss) before interest, income taxes, depreciation, amortization, equity grant
expense, restructuring expense, non-service cost components of pension and other postretirement benefits (OPEB) costs and other
adjustments not related to our core operations (gain/loss on debt extinguishment, pension settlements, divestitures, impairment,
etc.). Adjusted EBITDA is a measure of our ability to maintain and continue to invest in our operations and provide shareholder
returns. We use adjusted EBITDA in assessing the effectiveness of our business strategies, evaluating and pricing potential
acquisitions and as a factor in making incentive compensation decisions. In addition to its use by management, we also believe
adjusted EBITDA is a measure widely used by securities analysts, investors and others to evaluate financial performance of our
company relative to other Tier 1 automotive suppliers. Adjusted EBITDA should not be considered a substitute for earnings 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 net income (loss) to adjusted EBITDA
2020
2019
2018
Net income (loss)
Equity in earnings of affiliates
Income tax expense (benefit)
Earnings (loss) before income taxes
Depreciation and amortization
Restructuring charges, net
Interest expense, net
Impairment of goodwill and indefinite-lived intangible assets
Gain on investment in Hyliion
Loss on extinguishment of debt
Pension settlement charge
Acquisition related inventory adjustments
(Gain) on disposal group held for sale
Other*
Adjusted EBITDA
$
(51 ) $
20
58
(13 )
365
34
129
51
(33 )
8
233 $
30
(32 )
171
339
29
112
6
9
259
13
$
52
593 $
81
1,019 $
440
24
78
494
270
25
85
20
(3 )
66
957
*
Other includes stock compensation expense, non-service cost components of pension and OPEB costs, strategic transaction expenses, net of transaction breakup
fees and other items. See Note 21 of our consolidated financial statements in Item 8 for additional details.
Free Cash Flow and Adjusted Free Cash Flow
We have defined free cash flow as cash provided by operating activities less purchases of property, plant and equipment. We
have defined adjusted free cash flow as cash provided by operating activities excluding discretionary pension contributions less
purchases of property, plant and equipment. We believe these measures are useful to investors in evaluating the operational cash
flow of the company inclusive of the spending required to maintain the operations. Free cash flow and adjusted free cash flow are
not intended to represent nor be an alternative to the measure of net cash provided by operating activities reported in accordance
with GAAP. Free cash flow and adjusted free cash flow may not be comparable to similarly titled measures reported by other
companies.
30
The following table reconciles net cash flows provided by operating activities to adjusted free cash flow.
Net cash provided by operating activities
Purchases of property, plant and equipment
Free cash flow
Discretionary pension contribution
Adjusted free cash flow
Liquidity
2020
2019
2018
$
$
386 $
(326 )
60
—
60 $
637 $
(426 )
211
61
272 $
568
(325 )
243
—
243
The following table provides a reconciliation of cash and cash equivalents to liquidity, a non-GAAP measure, at December
31, 2020:
Cash and cash equivalents
Less: Deposits supporting obligations
Available cash
Additional cash availability from Revolving Facility
Marketable securities
Total liquidity
$
$
559
(3 )
556
979
21
1,556
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
liquidity as these investments can be readily liquidated at our discretion. We had availability of $979 at December 31, 2020 under
the Revolving Facility after deducting $21 of outstanding letters of credit.
The components of our December 31, 2020 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
35 $
3
38 $
425 $
3
93
521 $
460
3
96
559
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 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.
In response to the COVID-19 pandemic we have taken controlled and measured actions to preserve liquidity including but not
limited to flexing our cost structure, reducing capital spending and investments in research and development activities where and
when appropriate, taking advantage of various government programs and subsidies including certain provisions of the
CARES Act, temporarily suspending the declaration and payment of dividends to common shareholders and temporarily
suspending the repurchase of common stock under our existing common stock share repurchase program. During June 2020, we
completed the sale of $400 in senior unsecured notes due June 15, 2028 (June 2028 Notes) as well as a $100 add on to our senior
unsecured notes due November 15, 2027 (November 2027 Notes).
On April 16, 2020, we amended certain provisions of our credit and guaranty agreement including gradually increasing the
first lien net leverage ratio from a maximum of 2.00 to 1.00 to a maximum of 4.00 to 1.00 for the quarter ending December 31,
2020 and then, starting with the quarter ending December 31, 2021, decrease the ratio quarterly until it returns to its prior level of
2.00 to 1.00 for and after the quarter ending September 30, 2022, unless Dana, in its sole discretion, elects to return the first lien
net leverage ratio to its prior level of 2.00 to 1.00 earlier than such date. We also amended certain restrictive covenants to provide
additional limitations on incurring additional liens, taking on additional debt, paying dividends, entering into certain transactions
with affiliates, making certain investments and disposing of certain assets until December 31, 2021, unless Dana, in its sole
discretion, elects to return the first lien net leverage ratio to its prior level prior to December 31, 2021.
While varied, the markets in which participate generally saw marked improvement during the third and fourth quarters of
2020, returning to near pre-pandemic levels. Based on our strengthening operating results and improved adjusted free cash flow
generation, we fully paid down our Term A Facility in the third and fourth quarters of 2020 and elected to return the maximum
first lien net leverage ratio to its prior level of 2.00 to 1.00 in December 2020.
31
At December 31, 2020, we were in compliance with the covenants of our financing agreements. Under the Term B Facility,
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 Term B Facility and the Revolving Facility permit us to, among
other things, (i) issue foreign subsidiary indebtedness, (ii) incur general secured indebtedness subject to a pro forma first lien net
leverage ratio not to exceed 1.50:1.00 in the case of first lien debt and a pro forma secured net leverage ratio of 2.50:1.00 in the
case of other secured debt and (iii) incur additional unsecured debt subject to a pro forma total net leverage ratio not to exceed
3.50:1.00, tested at the time of incurrence. We may also make dividend payments in respect of our common stock as well as
certain investments and acquisitions subject to a pro forma total net leverage ratio of 2.75:1.00. In addition, the Revolving Facility
is subject to a financial covenant requiring us to maintain a first lien net leverage ratio not to exceed 2.00:1.00. The indentures
governing the senior notes include other incurrence-based covenants that may subject us to additional specified limitations.
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.
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 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.
Cash Flow
Cash 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 provided by (used in) financing activities
Net increase (decrease) in cash, cash equivalents and restricted cash
$
$
47 $
339
386
(327 )
(12 )
47 $
(17 ) $
654
637
(1,123 )
479
(7 ) $
(113 )
681
568
(462 )
(180 )
(74 )
2020
2019
2018
The table above summarizes our consolidated statement of cash flows.
Operating activities — Exclusive of working capital, other cash provided by operations was $339 during 2020 compared to $654
during 2019 and $681 during 2018. The decrease in 2020 is primarily attributable to lower operating earnings, as a result of the
global COVID-19 pandemic, and higher year-over-year cash paid for interest of $12 due to increased debt levels, partially offset
by lower year-over-year pension contributions of $40, cash paid for income taxes of $27, cash paid for restructuring of $21 and
cash paid for strategic transaction expenses of $21. The decrease in 2019 is principally due to the $61 of discretionary pension
contributions, higher year-over-year cash paid for interest of $27, cash paid for strategic transaction expenses of $30 and cash paid
for restructuring of $19, partially offset by higher operating earnings and lower year-over-year cash paid for income taxes of $20.
Working capital provided cash of $47 in 2020 and used cash of $17 in 2019 and $113 in 2018. Higher levels of receivables
used cash of $66 in 2020 while lower levels of receivables generated cash of $135 in 2019. The cash used for receivables in 2020
is reflective of higher year-over-year fourth quarter sales resulting from stronger market demand. The cash generated from
receivables in 2019 is reflective of lower year-over-year fourth quarter sales resulting from lower market demand. Lower
inventories generated cash of $69 in 2020 and $35 in 2019 while higher inventory levels consumed cash of $110 in 2018. During
the fourth quarter of 2020 we continued to closely monitor inventory levels across our facilities, as the recovery from the global
COVID-19 pandemic has varied by end market. Inventory levels began to decline at the end of 2019 in response to lower market
demand. Increases in accounts payable and other net liabilities provided cash of $44 in 2020 while decreases in accounts payable
and other net liabilities used cash of $187 in 2019. Increases in accounts payable and other liabilities provided cash of $110 in
2018. Cash generated by accounts payable and other net liabilities in 2020 is primarily attributable to negotiating temporary
extensions of payment terms with certain suppliers and service providers in response to the global COVID-19 pandemic. Cash
used by accounts payable and other net liabilities in 2019 is primarily attributable to lower levels of purchasing during the fourth
quarter of 2019 resulting from lower market demand, lower year-over-year accruals for professional service fees and strategic
transaction expenses and the payment of higher incentive compensation accrued in 2018.
32
Investing activities — Expenditures for property plant and equipment were $326, $426 and $325 in 2020, 2019 and 2018. Capital
spending increased in 2019 in support of new business sales backlog and for needed improvements at several ODS facilities.
During 2020, capital spending was delayed where and when appropriate in response to the global COVID-19 pandemic. During
2020, we paid $8 to acquire Curtis' 35.4% ownership interest in Ashwoods. The acquisition of Curtis' interest in Ashwoods, along
with our existing ownership interest in Ashwoods, provided us with a controlling financial interest in Ashwoods. During 2019, we
paid $545, net of cash and restricted cash acquired, to purchase ODS, we paid $61 to acquire SME, we paid $48, net of cash
acquired, to purchase PEPS and we paid $10 to acquire Nordresa. During 2019, we paid $21 to settle the undesignated Swiss franc
notional deal contingent forward related to the ODS acquisition. In 2018, we paid $125 to acquire a 55% ownership interest in
TM4 and, pursuant to our purchase and sale agreement for the Brevini Fluid Power S.p.A. (BFP) and Brevini Power Transmission
S.p.A. (BPT) acquisitions in 2017, we made a net payment of $20 to complete a required purchase of real estate and settle
purchase price adjustment amounts owed by the seller. During 2020, we sold our 20% ownership interest in Bendix Spicer
Foundation Brake, LLC for $50, consisting of $21 in cash, a note receivable of $25 and deferred proceeds of $4. During 2018, we
completed the sale of our Brazil suspension components business resulting in a net cash outflow of $6, as the cash transferred to
the buyer in the transaction exceeded the proceeds received from the buyer. During all three years, purchases of marketable
securities were largely funded by proceeds from sales and maturities of marketable securities.
Financing activities — During 2020, we completed the issuance of $400 of our June 2028 Notes and the issuance of an additional
$100 of our November 2027 Notes, paying financing costs of $8. During 2020, we entered into a $500 bridge facility, paying
financing costs of $5. We subsequently terminated the bridge facility. During 2020 we fully paid down the Term A Facility,
making principle payments of $474. During 2019, we entered into an amended credit and guaranty agreement comprised of a $500
Term A Facility, a $450 Term B Facility and a $1,000 Revolving Facility. The Term A Facility was an expansion of our existing
$275 term facility. We drew the $225 available under the Term A Facility and the $450 available under the Term B Facility. The
proceeds from the Term Facilities were used to acquire ODS and pay for related integration activities. We paid financing costs of
$16 to amend the credit and guaranty agreement. During 2019, we made combined principle payments of $117 on the Term
Facilities. Also during 2019, we completed the issuances of $300 of our November 2027 Notes, paying financing cost of $4. We
used the proceeds of the November 2027 Notes issuance to redeem all $300 of our September 2023 Notes, paying a redemption
premium of $7. During 2019, we broadened our relationship with Hydro-Québec, with Hydro-Québec acquiring an indirect 45%
redeemable noncontrolling interest in SME and increasing its existing indirect 22.5% noncontrolling interest in PEPS to an indirect
45% redeemable noncontrolling interest. We received $53 of cash at closing. During 2020, Hydro-Québec paid us $7 to acquire an
indirect 45% redeemable noncontrolling interest in Ashwoods. During 2018, we paid $43 to acquire Intrafind S.p.A.'s (formerly
Brevini Group S.p.A.) remaining 20% ownership interests in BFP and BPT. Also during 2018, Yulon Motor Co., Ltd. (Yulon)
paid $22 to acquire a direct ownership interest in two of our consolidated operating subsidiaries. Yulon's ownership interest in the
two consolidated operating subsidiaries did not change as a result of the transactions, as it previously owned the same percentages
indirectly through a series of consolidated holding companies. The $22, less withholding taxes, was returned to Yulon in the form
of a dividend in 2018. During 2020 we sold a portion of our ownership interest in ROC-Spicer, Ltd. (ROC-Spicer) to China Motor
Corporation, reducing our ownership interest in ROC-Spicer to 50%. In conjunction with the decrease in our ownership interest,
the ROC-Spicer shareholders agreement was amended, eliminating our controlling financial interest in ROC-Spicer. Upon our loss
of control, we deconsolidated ROC-Spicer, including $14 of cash and cash equivalents. We used cash of $25 to repurchase
common shares under our share repurchase program in both 2019 and 2018. We used $15, $58 and $58 for dividend payments to
common stockholders in 2020, 2019 and 2018. During the second quarter of 2020, we temporarily suspended the declaration and
payment of dividends to common stockholders and temporarily suspended the repurchase of common stock under our existing
common stock repurchase program in response to the global COVID-19 pandemic. Distributions to noncontrolling interests totaled
$11, $19 and $42 in 2020, 2019 and 2018. Distributions to noncontrolling interest in 2018 includes the dividend to Yulon
discussed above.
Off-Balance Sheet Arrangements
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 the new owner, Metalsa S.A. de C.V. (Metalsa). Under the terms of the sale agreement, we 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.
33
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, 2020.
Payments Due by Period
$
2021
Total
2022 - 2023 2024 - 2025 After 2025
1,524
107
61
49
1
Contractual Cash Obligations
Long-term debt(1)
Interest payments(2)
Operating leases(3)
Financing leases(4)
Unconditional purchase obligations(5)
Pension contribution(6)
Retiree health care benefits(7)
Uncertain income tax positions(8)
Total contractual cash obligations
______________________________________________________
Notes:
(1) Principal payments on long-term debt.
(2)
(3) Operating lease obligations, including interest, related to real estate, manufacturing and material handling equipment, vehicles and other assets.
(4) Finance lease obligations, including interest, related to real estate and manufacturing and material handling equipment.
(5) Unconditional purchase obligations are comprised of commitments for the procurement of fixed assets, the purchase of raw materials and the fulfillment of other
2,390 $
686
226
86
164
16
50
—
3,618 $
Interest payments are based on long-term debt in place at December 31, 2020 and the interest rates applicable to such obligations.
— $
125
50
9
153
16
5
9 $
249
70
17
8
857 $
205
45
11
2
1,130 $
358 $
363 $
1,767
10
10
25
$
contractual obligations.
(6) This amount represents estimated 2021 minimum required contributions to our global defined benefit pension plans. We have not estimated pension contributions
beyond 2021 due to the significant impact that return on plan assets and changes in discount rates might have on such amounts.
(7) This amount represents estimated payments under our retiree health care programs. Obligations under the 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.
(8) 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, 2020 of $104. See Note 18 of our consolidated financial statements in Item 8 for additional discussion.
At December 31, 2020, we maintained cash balances of $3 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 16 of our consolidated financial statements in Item 8. Based on
information available to us at the present time, we do not believe that any liabilities beyond the amounts already accrued that may
result from these contingencies will have a material adverse effect on our liquidity, financial condition or results of operations.
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 of 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 by tax jurisdiction. We consider all components of comprehensive income and 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 taken place as of the assessment date. We also consider changes to historical profitability of actions that
occurred through the date of assessment and objectively verifiable effects of material forecasted events that would have a sustained
effect on future profitability, as well as the effect on historical profits of nonrecurring events. We also incorporate the changes to
historical and prospective income from tax planning strategies expected to be implemented.
34
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, upon final determination by the taxing authorities. Nonetheless, the amounts
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 18 of our consolidated financial
statements in Item 8.
Retiree benefits — Accounting for pension benefits 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 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 yield curve which
is developed based on a subset of 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 and the
majority of our non-U.S. pension 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 are deferred as part of AOCI and amortized into our results of operations over future
periods.
U.S. retirement plans — Our U.S. defined benefit pension plans comprise 65% of our consolidated defined benefit pension
obligations at December 31, 2020. 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. In October 2017, upon
authorization by the Dana Board of Directors, we commenced the process of terminating one of our U.S. defined benefit pension
plans. During the second quarter of 2019, payments were made from plan assets to those plan participants that elected to take the
lump-sum payout option. In June 2019, we entered into (a) a definitive commitment agreement by and among Dana, Athene
Annuity and Life Company (Athene) and State Street Global Advisors, as independent fiduciary to the plan, and (b) a definitive
commitment agreement by and among Dana, Companion Life Insurance Company (Companion) and State Street Global Advisors,
as independent fiduciary to the plan. Pursuant to the definitive commitment agreements, the plan purchased group annuity
contracts that irrevocably transferred to the insurance companies the remaining future pension benefit obligations of the plan. Plan
participant’s benefits are unchanged as a result of the termination. We contributed $59 to the plan prior to the purchase of the
group annuity contracts. The purchase of group annuity contracts was then funded directly by the assets of the plan in June 2019.
By irrevocably transferring the obligations to Athene and Companion, we reduced our unfunded pension obligation by
approximately $165 and recognized a pre-tax pension settlement charge of $256 in 2019.
Rising discount rates decrease the present value of future pension obligations – a 25 basis point increase in the discount rate
would decrease our U.S. pension liability by about $20. 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 a 3.5% expected return in 2021 is appropriate for our U.S. pension plans. See Note 12 to our consolidated financial statements
in Item 8 for information about the investing and allocation objectives related to our U.S. pension plan assets.
We elected to use the Society of Actuaries (SOA) MP-2020 Mortality Improvement Scale. This update from the plan-specific
mortality tables used in prior years did not have a material effect on our pension obligations.
35
We use a full yield curve approach to estimate the service (where applicable) and interest components of the annual cost of
our pension and other postretirement benefit plans. This method estimates interest and service expense using the specific spot
rates, from the yield curve, that relate to projected cash flows. We believe this method is a more precise measurement of interest
and service costs by improving the correlation between the projected cash flows and the corresponding interest rates. The
determination of the projected benefit obligation at year end is unchanged.
At December 31, 2020, we have $142 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.
Based on the current funded status of our U.S. plans, we do not expect to make any contributions during 2021.
See Note 12 of our consolidated financial statements in Item 8 for additional discussion of our pension and OPEB obligations.
Acquisitions — From time to time, we make strategic acquisitions that have a material impact on our consolidated results of
operations or financial position. We allocate the purchase price of acquired businesses to the identifiable tangible and intangible
assets acquired, liabilities assumed and any redeemable noncontrolling interests or noncontrolling interests based upon their
estimated fair values as of the acquisition date. We determine the estimated fair values using information available to us and
engage independent third-party valuation specialists when necessary. Estimating fair values can be complex and subject to
significant business judgment. We believe the assumptions and estimates we have made in the past have been reasonable and
appropriate, they are based, in part, on historical experience and information obtained from management of the acquired
companies and are inherently uncertain. Critical estimates in valuing certain of the intangible assets we have acquired include, but
are not limited to, future expected cash flows from product sales, customer contracts and acquired technologies, and discount rates.
The discount rates used to discount expected future cash flows to present value are typically derived from a weighted-average cost
of capital analysis and adjusted to reflect inherent risks. Unanticipated events and circumstances may occur that could affect either
the accuracy or validity of such assumptions, estimates or actual results. Generally, we have, if necessary, up to one year from
the acquisition date to finalize our estimates of acquisition date fair values.
Goodwill and other indefinite-lived intangible assets — Our goodwill and other indefinite-lived intangible assets are tested for
impairment annually as of October 31 for all of our reporting units, and more frequently if events or circumstances warrant such a
review. We make significant assumptions and estimates about the extent and timing of future cash flows, including revenue
growth rates, projected gross margins, discount rates, terminal growth rates, and exit earnings multiples. 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. Our utilization of market valuation models requires 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 and
other indefinite-lived intangible assets as of October 31, 2020 were reasonable.
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.
Investments in affiliates — We had aggregate investments in affiliates of $152 at December 31, 2020 and $182 at December 31,
2019. 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.
36
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
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 product liability and warranty claims and matters
involving litigation. Establishing loss reserves for these matters requires the use of estimates and judgment regarding risk of
exposure and ultimate liability. Product liability and warranty claims are generally estimated based on historical experience and
the estimated costs associated with specific events giving rise to potential field campaigns or recalls. 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 other developments in these matters could
materially affect our recorded liabilities.
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 — Our foreign currency exposures are primarily associated with intercompany and third
party sales and purchase transactions, cross-currency intercompany loans and external debt. 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, including
fixed-to-fixed cross-currency interest rate swaps, to manage foreign currency exchange rate risk associated with our intercompany
loans and external debt. 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 other comprehensive income
(loss) (OCI). Deferred gains and losses are reclassified to earnings in the same period in which the underlying transactions affect
earnings. Specifically, with respect to the cross-currency interest rate swap, to the extent we recognize an exchange gain or loss on
the underlying external debt, we reclassify an offsetting portion from OCI to earnings in the same period.
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 (expense), net.
See Note 15 of 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, 2020 to a 10% change in foreign exchange rates.
Foreign currency rate sensitivity:
Currency swaps
Forward contracts
10% Increase
in Rates
10% Decrease
in Rates
Gain (Loss)
Gain (Loss)
$
$
(142 ) $
(22 ) $
142
27
At December 31, 2020, of the $1,504 total notional amount of foreign currency derivatives, approximately 74% represents the
aggregate of three fixed-to-fixed cross-currency interest rate swaps associated with recorded foreign currency-denominated
external debt and certain foreign currency-denominated intercompany loans while the remaining 26% primarily represents forward
contracts associated with our forecasted foreign currency-denominated sales and purchase transactions.
To manage our global liquidity objectives, we periodically execute intercompany loans, some of which are foreign currency-
denominated. With respect to such intercompany loans, the total notional amount outstanding at December 31, 2020 is
approximately $800. Depending on the specific objective of each intercompany loan arrangement, certain intercompany loans may
be hedged while others remain unhedged for strategic reasons. The decision to hedge the loan, to designate the loan itself as a
hedge or not to hedge the loan is dependent on management's underlying strategy. Of the approximately $800 of foreign currency-
denominated intercompany loans outstanding at December 31, 2020, $340, or 43%, has been hedged by one of our fixed-to-fixed
cross-currency swaps whereby we have protected the income statement from exchange rate risk. Of the remaining 57% of such
37
outstanding intercompany loans, $35 million has been hedged by foreign currency forwards and the remaining balances have not
been hedged. A significant portion of the remaining 57% is deemed to be permanent in nature. The remeasurement of foreign
currency-denominated intercompany loans that have been characterized as permanent in nature is recognized as an adjustment to
the cumulative translation adjustment component of OCI.
To align our cash requirements with availability by currency, we also periodically issue external debt that is denominated in a
currency other than the functional currency of the issuing entity. As of December 31, 2020, we had $775 of external U.S. dollar
debt, issued by a euro-functional entity, all of which has been hedged by our fixed-to-fixed cross-currency interest rate swaps.
Such swaps are treated as cash flow hedges whereby the changes in fair value are recorded in OCI to the extent the hedges remain
effective.
At December 31, 2019, the total notional amount of our currency derivative portfolio was $1,598 and included fixed-to-fixed
cross-currency interest rate swaps associated with $775 of external debt. The remaining $823 represents currency swaps and
forward contracts associated with certain foreign currency-denominated intercompany loans and forecasted sales and purchase
transactions.
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 described in Note 15 of our consolidated financial statements in Item 8,
we entered into a fixed-to-floating interest rate swap during 2015 but terminated that swap prior to the end of 2015. At December
31, 2020, we do not hold any fixed-to-floating interest rate swaps. Our three fixed-to-fixed cross-currency interest rate swaps
remain outstanding at December 31, 2020 and act as hedges of the currency risk of certain external and intercompany debt
instruments. To partially mitigate our exposure to interest rate fluctuations on our variable rate term loan debt we have entered into
interest rate collars with a notional value of $425 that will mature in December 2021. The interest rate collars were used to lock in
a maximum rate if interest rates rise, but allow us to otherwise pay lower market rates, subject to a floor. See Note 15 of our
consolidated financial statements in Item 8 for additional information.
The table below indicates interest rate sensitivity on interest expense of our floating rate debt, inclusive of the interest rate
collar, based on amounts outstanding as of December 31, 2020.
Change in rate:
25 bps decrease
25 bps increase
Impact on
Annual Interest
Expense
$
$
(1 )
1
38
Item 8. Financial Statements and Supplementary Data
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Dana Incorporated
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheet of Dana Incorporated and its subsidiaries (the “Company”) as of
December 31, 2020 and 2019, and the related consolidated statements of operations, of comprehensive income, of stockholders’
equity and of cash flows for each of the three years in the period ended December 31, 2020, including the related notes and
schedule of valuation and qualifying accounts and reserves for each of the three years in the period ended December 31, 2020
appearing under Item 8 (collectively referred to as the “consolidated financial statements”). We also have audited the Company's
internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position
of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years
in the period ended December 31, 2020 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, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Change in Accounting Principle
As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for leases
in 2019.
Basis for Opinions
The Company's management is responsible for these consolidated 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 appearing under Item 9A. Our responsibility is to express
opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based
on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States)
(PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and
the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement,
whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material
respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of
the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as
well as evaluating the overall presentation of the consolidated financial statements. 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.
Definition and Limitations of Internal Control over Financial Reporting
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.
39
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.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial
statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or
disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or
complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated
financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate
opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Interim and Annual Goodwill Impairment Assessments – Off-Highway and Commercial Vehicle Reporting Units
As described in Notes 1 and 3 to the consolidated financial statements, the Company’s consolidated goodwill balance was
$479 million as of December 31, 2020, and the goodwill associated with the Off-Highway and Commercial Vehicle reporting units
was $302 million and $177 million, respectively. Management tests goodwill for impairment annually as of October 31 and more
frequently if events occur or circumstances change that would warrant an interim review. Management estimates the fair value of
these reporting units using discounted cash flow projections. In determining fair value using discounted cash flow projections,
management makes significant assumptions and estimates about the extent and timing of future cash flows, including revenue
growth rates, projected segment EBITDA, discount rates, terminal growth rates, and exit earnings multiples. Management
determined certain impairment triggers had occurred in the first quarter of 2020. Accordingly, management performed interim
impairment analyses at each of the reporting units as of March 31, 2020. Based on the results of the interim impairment tests,
management concluded that carrying value exceeded fair value in the Commercial Vehicle reporting unit and recorded a goodwill
impairment charge of $48 million in the first quarter of 2020. Management’s testing for the Off-Highway reporting unit indicated
that fair value exceeded carrying value and, accordingly, no impairment charge was required.
The principal considerations for our determination that performing procedures relating to the interim and annual goodwill
impairment assessments of the Off-Highway and Commercial Vehicle reporting units is a critical audit matter are (i) the significant
judgment by management when determining the fair value estimates of the reporting units; (ii) the high degree of auditor
judgment, subjectivity and effort in performing procedures and evaluating the significant assumptions used in management’s fair
value estimates related to revenue growth rates, projected segment EBITDA, and discount rates; and (iii) the audit effort involved
the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall
opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to
management’s interim and annual goodwill impairment assessments, including controls over the valuation of the Off-Highway and
Commercial Vehicle reporting units. These procedures also included, among others (i) testing management’s process for
determining the fair value estimates of the reporting units; (ii) evaluating the appropriateness of management’s discounted cash
flow projections models; (iii) testing the completeness and accuracy of the underlying data used in the discounted cash flow
projections models; and (iv) evaluating the reasonableness of significant assumptions used by management related to revenue
growth rates, projected segment EBITDA, and discount rates. Evaluating management’s assumptions related to revenue growth
rates and projected segment EBITDA involved evaluating whether the assumptions were reasonable considering (i) the current and
past performance of the reporting units; (ii) consistency with external industry data; and (iii) whether these assumptions were
consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist
in evaluating (i) the appropriateness of the discounted cash flow projections models and (ii) reasonableness of significant
assumptions related to the discount rates.
/s/ PricewaterhouseCoopers LLP
Toledo, Ohio
February 18, 2021
We have served as the Company’s auditor since 1916.
40
Dana Incorporated
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 goodwill and indefinite-lived intangible asset
Gain on disposal group held for sale
Pension settlement charges
Other income (expense), net
Earnings before interest and income taxes
Loss on extinguishment of debt
Interest income
Interest expense
Earnings (loss) before income taxes
Income tax expense (benefit)
Equity in earnings of affiliates
Net income (loss)
Less: Noncontrolling interests net income
Less: Redeemable noncontrolling interests net loss
Net income (loss) attributable to the parent company
Net income (loss) per share available to common stockholders
Basic
Diluted
Weighted-average common shares outstanding
Basic
Diluted
2020
2019
2018
$
7,106 $
8,620 $
8,143
6,485
421
13
34
(51 )
22
124
(8 )
9
138
(13 )
58
20
(51 )
10
(30 )
(31 ) $
7,489
508
12
29
(6 )
(259 )
(25 )
292
(9 )
10
122
171
(32 )
30
233
13
(6 )
226 $
(0.21 ) $
(0.21 ) $
1.57 $
1.56 $
144.5
144.5
144.0
145.1
6,986
499
8
25
(20 )
3
(29 )
579
11
96
494
78
24
440
13
427
2.94
2.91
145.0
146.5
$
$
$
The accompanying notes are an integral part of the consolidated financial statements.
41
Dana Incorporated
Consolidated Statement of Comprehensive Income
(In millions)
Net income (loss)
Other comprehensive income (loss), net of tax:
Currency translation adjustments
Hedging gains and losses
Defined benefit plans
Other comprehensive income (loss)
Total comprehensive income (loss)
Less: Comprehensive income attributable to noncontrolling interests
Less: Comprehensive loss attributable to redeemable noncontrolling
interests
Comprehensive income (loss) attributable to the parent company
$
2020
2019
2018
$
(51 ) $
233 $
(77 )
39
9
(29 )
(80 )
(27 )
36
(71 ) $
8
24
344
376
609
(9 )
1
601 $
440
(63 )
10
23
(30 )
410
(7 )
6
409
The accompanying notes are an integral part of the consolidated financial statements.
42
Dana Incorporated
Consolidated Balance Sheet
(In millions, except share and per share amounts)
2020
2019
Assets
Current assets
Cash and cash equivalents
Marketable securities
Accounts receivable
Trade, less allowance for doubtful accounts of $7 in 2020 and $9 in 2019
Other
Inventories
Other current assets
Total current assets
Goodwill
Intangibles
Deferred tax assets
Other noncurrent assets
Investments in affiliates
Operating lease assets
Property, plant and equipment, net
Total assets
Liabilities and equity
Current liabilities
Short-term debt
Current portion of long-term debt
Accounts payable
Accrued payroll and employee benefits
Taxes on income
Current portion of operating lease liabilities
Other accrued liabilities
Total current liabilities
Long-term debt, less debt issuance costs of $27 in 2020 and $28 in 2019
Noncurrent operating lease liabilities
Pension and postretirement obligations
Other noncurrent liabilities
Total liabilities
Commitments and contingencies (Note 16)
Redeemable noncontrolling interests
Parent company stockholders' equity
Preferred stock, 50,000,000 shares authorized, $0.01 par value, no shares outstanding
Common stock, 450,000,000 shares authorized, $0.01 par value, 144,515,658 and
143,942,539 shares outstanding
Additional paid-in capital
Retained earnings
Treasury stock, at cost (10,442,582 and 10,111,191 shares)
Accumulated other comprehensive loss
Total parent company stockholders' equity
Noncontrolling interests
Total equity
Total liabilities and equity
$
$
$
$
559 $
21
1,201
231
1,149
127
3,288
479
236
611
169
152
190
2,251
7,376 $
26 $
8
1,331
190
35
43
308
1,941
2,420
154
479
368
5,362
180
—
2
2,408
530
(156 )
(1,026 )
1,758
76
1,834
7,376 $
508
19
1,103
202
1,193
137
3,162
493
240
580
120
182
178
2,265
7,220
14
20
1,255
206
46
42
262
1,845
2,336
140
459
305
5,085
167
—
2
2,386
622
(150 )
(987 )
1,873
95
1,968
7,220
The accompanying notes are an integral part of the consolidated financial statements.
43
Dana Incorporated
Consolidated Statement of Cash Flows
(In millions)
2020
2019
2018
Operating activities
Net income (loss)
Depreciation
Amortization
Amortization of deferred financing charges
Call premium on debt
Write-off of deferred financing costs
Earnings of affiliates, net of dividends received
Stock compensation expense
Deferred income taxes
Pension expense, net
Impairment of goodwill and indefinite-lived intangible asset
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
Acquisition of businesses, net of cash acquired
Proceeds from previous acquisition
Purchases of marketable securities
Proceeds from sales of marketable securities
Proceeds from maturities of marketable securities
Proceeds from sale of equity affiliate
Proceeds from sale of subsidiaries, net of cash disposed
Settlements of undesignated derivatives
Other, net
Net cash used in investing activities
Financing activities
Net change in short-term debt
Proceeds from long-term debt
Repayment of long-term debt
Call premium on debt
Deferred financing payments
Dividends paid to common stockholders
Distributions to noncontrolling interests
Sale of interest to noncontrolling shareholder
Contributions from noncontrolling interests
Payments to acquire noncontrolling interests
Deconsolidation of non-wholly owned subsidiary
Payments to acquire redeemable noncontrolling interests
Repurchases of common stock
Other, net
Net cash provided by (used in) financing activities
Net increase (decrease) in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash - beginning of period
Effect of exchange rate changes on cash balances
Cash, cash equivalents and restricted cash - end of period
$
$
(51 ) $
345
20
8
8
7
14
(35 )
3
51
47
(20 )
(11 )
386
(326 )
(6 )
(44 )
5
36
21
(5 )
(8 )
(327 )
9
508
(480 )
(13 )
(15 )
(11 )
9
4
(7 )
(14 )
(2 )
(12 )
47
518
2
567 $
233 $
322
17
6
7
2
(9 )
19
(137 )
211
6
(17 )
(18 )
(5 )
637
(426 )
(668 )
(33 )
6
29
1
(20 )
(12 )
(1,123 )
(3 )
975
(423 )
(7 )
(20 )
(58 )
(19 )
53
4
(25 )
2
479
(7 )
520
5
518 $
440
260
10
4
(4 )
16
(64 )
3
20
(113 )
(12 )
8
568
(325 )
(153 )
9
(37 )
15
37
(6 )
(2 )
(462 )
(21 )
(13 )
(1 )
(58 )
(42 )
25
(43 )
(25 )
(2 )
(180 )
(74 )
610
(16 )
520
The accompanying notes are an integral part of the consolidated financial statements.
44
Dana Incorporated
Consolidated Statement of Stockholders’ Equity
(In millions)
Parent Company Stockholders'
Additional
Accumulated
Other
Parent
Company
Non-
Preferred Common Paid-In Retained Treasury Comprehensive Stockholders' controlling Total
Interests Equity
Stock
101 $ 1,114
$ — $
Capital Earnings Stock
Equity
(1,342 ) $
Stock
2,354 $
1,013 $
(87 ) $
86 $
Loss
2 $
2
427
1
(59 )
(9 )
2
20
—
2
2,368
456
(1 )
226
1
(59 )
17
—
2
2,386
622
(25 )
(7 )
(119 )
(25 )
(6 )
(150 )
(1 )
(31 )
(15 )
(38 )
(7 )
10
12
(2 )
(18 )
(1,362 )
375
(987 )
(40 )
1
—
427
(18 )
(58 )
—
(9 )
2
—
(25 )
20
(7 )
1,345
(1 )
226
375
(58 )
—
—
(25 )
17
(6 )
1,873
(1 )
(31 )
(40 )
(15 )
—
10
—
(38 )
—
440
(24 )
13
(6 )
(58 )
(42 )
(42 )
9 —
2
22
22
(25 )
20
(7 )
97 1,442
13
(4 )
(1 )
239
371
(58 )
(19 )
8
(19 )
8
(25 )
17
(6 )
95 1,968
10
17
(11 )
(23 )
2
(1 )
(21 )
(23 )
(15 )
(11 )
(13 )
2
(38 )
(6 )
12
(6 )
1,758 $
(14 )
(20 )
12
(6 )
76 $ 1,834
Balance, December 31, 2017
Adoption of ASU 2016-01 financial
instruments adjustment, January
1, 2018
Net income
Other comprehensive loss
Common stock dividends ($0.40 per
share)
Distributions to noncontrolling
interests
Purchase of noncontrolling interests
Purchase of redeemable
noncontrolling interests
Contribution from noncontrolling
interest
Common stock share repurchases
Stock compensation
Stock withheld for employees taxes
Balance, December 31, 2018
Adoption of ASU 2016-02 leases,
January 1, 2019
Net income
Other comprehensive income (loss)
Common stock dividends ($0.40 per
share)
Distributions to noncontrolling
interests
Increase from business combination
Common stock share repurchases
Stock compensation
Stock withheld for employees taxes
Balance, December 31, 2019
Adoption of ASU 2016-13 credit
losses, January 1, 2020
Net income (loss)
Other comprehensive income
Common stock dividends ($0.10 per
share)
Distributions to noncontrolling
interests
Purchase of noncontrolling interests
Sale of noncontrolling interests
Redeemable noncontrolling interests
adjustment to redemption value
Deconsolidation of non-wholly
owned subsidiary
Stock compensation
Stock withheld for employees taxes
Balance, December 31, 2020
$ — $
2 $
2,408 $
530 $
(6 )
(156 ) $
(1,026 ) $
The accompanying notes are an integral part of the consolidated financial statements.
45
Dana Incorporated
Index to Notes to the Consolidated
Financial Statements
1. Organization and Summary of Significant Accounting Policies
2. Acquisitions
3. Goodwill and Other Intangible Assets
4. Restructuring of Operations
5.
Inventories
6.
Supplemental Balance Sheet and Cash Flow Information
7.
Leases
8.
Stockholders' Equity
9. Redeemable Noncontrolling Interests
10. Earnings per Share
11. Stock Compensation
12. Pension and Postretirement Benefit Plans
13. Marketable Securities
14. Financing Agreements
15. Fair Value Measurements and Derivatives
16. Commitments and Contingencies
17. Warranty Obligations
18.
Income Taxes
19. Other Income (Expense), Net
20. Revenue from Contracts with Customers
21. Segments, Geographical Area and Major Customer Information
22. Equity Affiliates
46
Page
47
52
56
58
59
60
61
62
64
64
64
66
72
72
75
78
79
79
83
83
84
86
Notes to the Consolidated Financial Statements
(In millions, except share and per share amounts)
Note 1. Organization and Summary of Significant Accounting Policies
General
Dana Incorporated (Dana) is headquartered in Maumee, Ohio, and was incorporated in Delaware in 2007. As a global
provider of high technology driveline (axles, driveshafts and transmissions); sealing and thermal-management products; and
motors, power inverters, and control systems for electric vehicles, our customer base includes virtually every major vehicle
manufacturer in the global light vehicle, medium/heavy vehicle, and off-highway markets.
The terms "Dana," "we," "our" and "us," when used in this report are references to Dana. These references include the
subsidiaries of Dana unless otherwise indicated or the context requires otherwise.
Summary of significant accounting policies
Basis of presentation — Our consolidated financial statements include the accounts of all subsidiaries where we hold a controlling
financial interest. 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.
During the second quarter of 2020, we identified an error in the loss attributable to redeemable noncontrolling interests due to
incorrectly excluding the share of the goodwill impairment charge related to the redeemable noncontrolling interests. Of the $48
million impairment charge recorded for the Commercial Vehicle reporting unit during the quarter ended March 31, 2020, $20
million should have been attributable to the redeemable noncontrolling interests.
We concluded that the error was not material to the financial statements for the quarter ended March 31, 2020 and therefore,
amendment of the previously filed Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 is not required. In
accordance with ASC Topic 250, "Accounting Changes and Error Corrections," we have corrected the error in the prior period by
revising the year-to-date consolidated financial statements appearing herein. The first quarter of 2020 not presented herein will be
revised, as applicable, in future filings. The following historical consolidated financial information includes both the consolidated
financial information “as previously reported” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, as
well as the consolidated financial information “as revised” to reflect the correction of the error. Reference is made to the Quarterly
Results disclosure in Item 8 below. The impact on our consolidated financial statements for the prior periods presented was
insignificant.
47
Three Months Ended March 31, 2020
As Previously
Reported
Adjustment
(unaudited)
As Revised
Consolidated Statement of Operations
Net income
Less: Noncontrolling interests net income
Less: Redeemable noncontrolling interests net loss
Net income attributable to the parent company
Net income per share available to common stockholders
Basic
Diluted
Consolidated Statement of Comprehensive Income
Total comprehensive loss
Less: Comprehensive loss attributable to noncontrolling interests
Less: Comprehensive (income) loss attributable to redeemable
noncontrolling interests
$
$
$
$
$
Comprehensive income (loss) attributable to the parent company
$
38 $
2
(2 )
38 $
— $
(20 )
20 $
0.26 $
0.26 $
0.14 $
0.14 $
(84 ) $
17
(6 )
(73 ) $
— $
20
20 $
38
2
(22 )
58
0.40
0.40
(84 )
17
14
(53 )
Consolidated Balance Sheet
Redeemable noncontrolling interests
Retained earnings
Period Ended March 31, 2020
As Previously
Reported
Adjustment
(unaudited)
As Revised
$
$
175 $
644 $
(20 ) $
20 $
155
664
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.
Discontinued operations — The results of operations of a component or a group of components that either has been disposed of or
is classified as held for sale is reported in discontinued operations if the disposal represents a strategic shift that has (or will have)
a major effect on operations and financial results.
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
our 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
48
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. We recorded unrealized gains and losses in accumulated other comprehensive income
(loss) (AOCI) through the end of 2017 but recorded them in net income beginning in 2018 to comply with new accounting
guidance. Realized gains and losses are recorded using the specific identification method.
Inventories — Inventories are valued at the lower of cost or net realizable value. Cost is determined using the average or first-in,
first-out (FIFO) cost method.
Property, plant and equipment — Property, plant and equipment are recorded at cost. 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. 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. If assets are impaired, their value is reduced via an increase in accumulated
depreciation.
Leases — Our global lease portfolio represents leases of real estate, including manufacturing, assembly and office facilities, while
the remainder represents leases of personal property, including manufacturing, material handling and IT equipment. We have lease
agreements with lease and non-lease components, which are accounted for separately. Leases with an initial term of twelve
months or less are not recorded on the balance sheet, and we recognize lease expense for these leases on a straight-line basis over
the lease term. Generally, we use our incremental borrowing rate in determining the present value of lease payments, unless there
is a rate stated in the lease agreement.
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, 2020, the machinery and equipment component of property, plant and equipment
includes $23 of our tooling related to long-term supply arrangements. Also at December 31, 2020, trade and other accounts
receivable includes $31 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 the
operating segment in the case of our Off-Highway and Commercial Vehicle goodwill. We estimate the fair value of the reporting
units using various valuation methodologies, including discounted cash flow projections and multiples of current earnings. In
determining fair value using discounted cash flow projections, we make significant assumptions and estimates about the extent and
timing of future cash flows, including revenue growth rates, projected segment EBITDA, discount rates, terminal growth rates, and
exit earnings multiples. 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, a goodwill impairment charge is recorded for
the difference. See Note 3 for more information about goodwill.
Intangible assets — Intangible assets include the value of core technology, trademarks and trade names and customer
relationships. Core technology and customer relationships have definite lives while 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. Indefinite-lived
intangible assets are tested for impairment annually and more frequently if impairment indicators exist. See Note 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
49
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 22 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 obligations 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. We also periodically enter into fixed-to-fixed cross-
currency swaps on foreign currency-denominated external or intercompany debt instruments to reduce our exposure to foreign
currency exchange rate risk. Such fixed-to-fixed cross-currency swaps are designated as cash flow hedges. We do not use
derivatives for trading or speculative purposes and we do not hedge all of our exposures.
For derivative instruments designated as cash flow hedges, at the cash flow hedge’s inception and on an ongoing basis, the
company formally assesses whether the cash flow hedging instruments have been highly effective in offsetting changes in the cash
flows of the hedged transactions and whether those cash flow hedging instruments may be expected to remain highly effective in
future periods. 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). For our fixed-to-fixed cross-currency swaps, a review of critical terms is
performed each period to establish that an assumption of effectiveness remains appropriate. Deferred gains and losses are
reclassified to earnings 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 (expense), 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.
We may also use fixed-to-floating or floating-to-fixed interest rate swaps or other similar derivatives to manage exposure to
fluctuations in interest rates and to adjust the mix of our fixed-rate and 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. No such fixed-to-floating or
floating-to-fixed swaps were outstanding at December 31, 2020. See Note 15 for additional information.
Cash flows associated with designated derivatives are classified within the same category as the item being hedged on the
consolidated statement of cash flows. Cash flows associated with undesignated derivatives are included in the investing category
on the consolidated statement of cash flows.
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
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.
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.
50
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.
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. See Note 20 for additional
information.
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 (expense), 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.
Effective July 1, 2018, we accounted for Argentina as a highly inflationary economy, as the three-year cumulative inflation
rate exceeded 100%. As such, beginning July 1, 2018 we began to remeasure the financial statements of our Argentine subsidiaries
as if their functional currency was the U.S. dollar.
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 $146, $112 and $103 in 2020, 2019 and 2018. During 2020, we focused our engineering spend more heavily on research and
development activities in support of electrification and other initiatives.
Recently adopted accounting pronouncements
On January 1, 2019, we adopted Accounting Standards Update (ASU) 2016-02, Leases (Topic 842), using the modified
retrospective approach and an application date of January 1, 2019. Prior period amounts have not been adjusted and continue to be
reflected in accordance with our historical accounting. This transition method resulted in the recognition of a right-of-use asset and
a lease liability for virtually all leases at the application date with a cumulative-effect adjustment to retained earnings.
We elected the package of practical expedients, which among other things, allowed us to carry forward the historical lease
classification. We did not elect the practical expedient that allowed for hindsight to determine the lease term of existing leases. We
51
separated the lease components from the non-lease components of each lease arrangement and, therefore, did not elect the practical
expedient that would enable us to not separate them.
On January 1, 2020, we adopted Accounting Standards Update (ASU) 2016-03, Financial Instruments (Topic 326):
Measurement of Credit Losses on Financial Instruments, using the modified retrospective approach and an application date of
January 1, 2020. This guidance introduces a new approach to estimating credit losses on certain types of financial instruments and
modifies the impairment model for available-for-sale debt securities. The adoption resulted in a noncash cumulative effect
adjustment to retained earnings on our opening consolidated balance sheet as of January 1, 2020.
We also adopted the following standards during 2020, which did not have a material impact on our financial statements or
financial statement disclosures:
2018-15
2018-14
2018-13
Standard
Intangibles – Goodwill and Other – Internal-Use Software, Customer's Accounting for
Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service
Contract
Effective Date
January 1, 2020
Compensation – Retirement Benefits – Defined Benefit Plans – General, Disclosure Framework
– Changes to the Disclosure Requirements for Defined Benefit Plans
Fair Value Measurement, Disclosure Framework – Changes to the Disclosure Requirements for
Fair Value Measurement
January 1, 2020
January 1, 2020
Recently issued accounting pronouncements
In March 2020, the FASB issued ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting.
This guidance is intended to provide temporary optional expedients and exceptions to the US GAAP guidance on contract
modifications and hedge accounting to ease the financial reporting burden related to the expected market transition from the
London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. The amendments in this
ASU are elective and are effective upon issuance for all entities through December 31, 2022. We are currently assessing the
impact of this guidance on our consolidated financial statements.
In December 2019, the FASB issued ASU 2019-12, Income Taxes – Simplifying the Accounting for Income Taxes. This
guidance is intended to simplify various aspects of income tax accounting including the elimination of certain exceptions related to
the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition
of deferred tax liabilities for outside basis differences. The new guidance also simplifies aspects of the accounting for franchise
taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of
goodwill. This guidance becomes effective January 1, 2021 and early adoption is permitted. Adoption of this guidance requires
certain changes to primarily be made prospectively, with some changes to be made retrospectively. We do not expect adoption of
this guidance to have a material impact on our consolidated financial statements.
Note 2. Acquisitions
Ashwoods Innovations Limited — On February 5, 2020, we acquired Curtis Instruments, Inc.'s (Curtis) 35.4% ownership interest
in Ashwoods Innovations Limited (Ashwoods). Ashwoods designs and manufactures permanent magnet electric motors for the
automotive, material handling and off-highway vehicle markets. The acquisition of Curtis' interest in Ashwoods, along with our
existing ownership interest in Ashwoods, provided us with a 97.8% ownership interest and a controlling financial interest in
Ashwoods. We recognized a $3 gain to other income (expense), net on the required remeasurement of our previously held equity
method investment in Ashwoods to fair value. The total purchase consideration of $22 is comprised of $8 of cash paid to Curtis at
closing, the $10 fair value of our previously held equity method investment in Ashwoods and $4 related to the effective settlement
of a pre-existing loan payable due from Ashwoods. During March 2020, we acquired the remaining noncontrolling interests in
Ashwoods held by employee shareholders. See Hydro-Québec relationship discussion below for details of subsequent changes
in our ownership interest in Ashwoods. The results of operations of the business are reported within our Off-Highway operating
segment. The pro forma effects of this acquisition would not materially impact our reported results for any period presented, and
as a result no pro forma financial information is presented.
Nordresa — On August 26, 2019, we acquired a 100% ownership interest in Nordresa Motors, Inc. (Nordresa) for consideration
of $12, using cash on hand. Nordresa is a prominent integration and application engineering expert for the development and
commercialization of electric powertrains for commercial vehicles. The investment further enhances Dana's electrification
capabilities by combining its complete portfolio of motors, inverters, chargers, gearboxes, and thermal-management products with
Nordresa's proprietary battery-management system, electric powertrain controls and integration expertise to deliver complete
electric powertrain systems. The results of operations of the business are reported within our Commercial Vehicle operating
segment. The pro forma effects of this acquisition would not materially impact our reported results for any period presented, and
as a result no pro forma financial information is presented.
52
Hydro-Québec Relationship — On July 29, 2019, we broadened our relationship with Hydro-Québec, with Hydro-Québec
acquiring an indirect 45% redeemable noncontrolling interest in S.M.E. S.p.A. (SME) and increasing its existing
indirect 22.5% noncontrolling interest in Prestolite E-Propulsion Systems (Beijing) Limited (PEPS) to 45%. We received $65 at
closing, consisting of $53 of cash and a note receivable of $12. The note is payable in five years and bears annual interest of 5%.
Dana will continue to consolidate SME and PEPS as the governing documents continue to provide Dana with a controlling
financial interest in these subsidiaries. See Note 9 for additional information. See below for a discussion of Dana's acquisitions of
PEPS, SME and TM4. On April 14, 2020, Hydro-Québec acquired an indirect 45% redeemable noncontrolling interest in
Ashwoods. We received $9 in cash at closing, inclusive of $2 in proceeds on a loan from Hydro-Québec. Dana will continue
to consolidate Ashwoods as the governing documents continue to provide Dana with a controlling financial interest in this
subsidiary.
Prestolite E-Propulsion Systems (Beijing) Limited — On June 6, 2019, we acquired Prestolite Electric Beijing Limited's
(PEBL) 50% ownership interest in PEPS. PEPS manufactures and distributes electric mobility solutions, including electric motors,
inverters, and generators for commercial vehicles and heavy machinery. PEPS has a state-of-the-art facility in China, enabling us
to expand motor and inverter manufacturing capabilities in the world's largest electric-mobility market. The acquisition of PEBL's
interest in PEPS, along with our existing ownership interest in PEPS through our TM4 subsidiary, provides us with
a 100% ownership interest and a controlling financial interest in PEPS. We recognized a $2 gain to other income (expense), net on
the required remeasurement of our previously held equity method investment in PEPS to fair value. See Hydro-Québec
relationship discussion above for details of the subsequent change in our ownership interest in PEPS.
We paid $50 at closing using cash on hand. The purchase consideration and related provisional allocation to the acquisition
date fair values of the assets acquired and liabilities assumed are presented in the following table:
Purchase consideration paid at closing
Fair value of previously held equity method investment
Total purchase consideration
Cash and cash equivalents
Accounts receivable - Trade
Inventories
Goodwill
Intangibles
Property, plant and equipment
Accounts payable
Other accrued liabilities
Other noncurrent liabilities
Total purchase consideration allocation
$
$
$
$
50
45
95
2
17
9
63
10
2
(4 )
(3 )
(1 )
95
Goodwill recognized in this transaction is primarily attributable to synergies expected to arise after the acquisition and the
assembled workforce and is not deductible for tax purposes. We used a combination of the discounted cash flow method, an
income approach, and the guideline public company method, a market approach, to value our previously held equity method
investment in PEPS. The fair value assigned to intangibles includes $10 allocated to customer relationships. We used the multi-
period excess earnings method, an income approach, to value customer relationships. The customer relationships intangible asset
is being amortized on a straight-line basis over seven years.
The results of operations of the business are reported in our Commercial Vehicle operating segment from the date of
acquisition. The pro forma effects of this acquisition would not materially impact our reported results for any period presented,
and as a result no pro forma financial information is presented. PEPS had an insignificant impact on our consolidated results of
operations during 2019.
Oerlikon Drive Systems — On February 28, 2019, we acquired a 100% ownership interest in the Oerlikon Drive Systems (ODS)
segment of the Oerlikon Group. ODS is a global manufacturer of high-precision gears, planetary hub drives for wheeled and
tracked vehicles, and products, controls, and software that support vehicle electrification across the mobility industry. The
acquisition of ODS is expected to deliver significant long-term value by accelerating our commitment to vehicle electrification and
strengthening the technology portfolio for each of our end markets while further expanding and balancing the manufacturing
presence of our off-highway business in key geographical markets.
We paid $626 at closing which was funded primarily through debt proceeds. See Note 14 for additional information. The
purchase consideration and related allocation to the acquisition date fair values of the assets acquired and liabilities assumed are
presented in the following table:
53
Purchase consideration paid at closing
Less purchase consideration to be recovered for indemnified matters
Total purchase consideration
Cash and cash equivalents
Accounts receivable - Trade
Accounts receivable - Other
Inventories
Other current assets
Goodwill
Intangibles
Deferred tax assets
Other noncurrent assets
Investments in affiliates
Operating lease assets
Property, plant and equipment
Current portion of long-term debt
Accounts payable
Accrued payroll and employee benefits
Current portion of operating lease liabilities
Taxes on income
Other accrued liabilities
Long-term debt
Pension and postretirement obligations
Noncurrent operating lease liabilities
Other noncurrent liabilities
Noncontrolling interests
Total purchase consideration allocation
$
$
$
$
626
(11 )
615
76
150
15
190
16
94
58
24
2
7
4
333
(2 )
(151 )
(37 )
(1 )
(5 )
(61 )
(8 )
(49 )
(2 )
(30 )
(8 )
615
Goodwill recognized in this transaction is primarily attributable to synergies expected to arise after the acquisition and the
assembled workforce and is not deductible for tax purposes. The fair values assigned to intangibles includes $11 allocated to
developed technology, $13 allocated to trademarks and trade names and $34 allocated to customer relationships. Various valuation
techniques were used to determine the fair value of the intangible assets, with the primary techniques being forms of the income
approach, specifically, the relief from-royalty and excess earnings valuation methods, which use significant unobservable inputs,
or Level 3 inputs, as defined by the fair value hierarchy. Under these valuation approaches, we are required to make estimates and
assumptions about sales, operating margins, growth rates, customer attrition rates, royalty rates and discount rates based on
anticipated future cash flows and marketplace data. We used a replacement cost method to value fixed assets. The developed
technology, trademarks and trade names and customer relationship intangible assets are being amortized on a straight-line basis
over seven, ten and twelve years, respectively. Property, plant and equipment is being depreciated on a straight-line basis over
useful lives ranging from three to twenty-five years.
The results of operations of the business are primarily reported in our Off-Highway and Commercial Vehicle operating
segments. Transaction related expenses associated with completion of the acquisition totaling $13 in 2019 were charged to other
income (expense), net. During 2019, the business contributed sales of $630.
The following unaudited pro forma information has been prepared as if the ODS acquisition and the related debt financing had
occurred on January 1, 2018.
Net sales
Net income
2019
2018
$
$
8,765 $
273 $
9,013
425
The unaudited pro forma results include adjustments primarily related to purchase accounting, interest expense related to the
debt proceeds used in connection with the acquisition of ODS, and non-recurring strategic transaction expenses. The unaudited pro
forma financial information is not indicative of the operational results that would have been obtained had the transactions actually
occurred as of that date, nor is it necessarily indicative of Dana’s future operational results.
SME — On January 11, 2019, we acquired a 100% ownership interest in SME. SME designs, engineers, and manufactures low-
voltage AC induction and synchronous reluctance motors, inverters, and controls for a wide range of off-highway electric vehicle
applications, including material handling, agriculture, construction, and automated-guided vehicles. The addition of SME's low-
voltage motors and inverters, which are primarily designed to meet the evolution of electrification in off-highway equipment,
significantly expands Dana's electrified product portfolio. See Hydro-Québec relationship discussion above for details of the
subsequent change in our ownership interest in SME.
54
We paid $88 at closing, consisting of $62 in cash on hand and a note payable of $26 which allows for net settlement of
potential contingencies as defined in the purchase agreement. The note is payable in five years and bears annual interest
of 5%. The purchase consideration and the related allocation to the acquisition date fair values of the assets acquired and liabilities
assumed are presented in the following table:
Total purchase consideration
Accounts receivable - Trade
Accounts receivable - Other
Inventories
Goodwill
Intangibles
Property, plant and equipment
Short-term debt
Accounts payable
Accrued payroll and employee benefits
Other accrued liabilities
Other noncurrent liabilities
Total purchase consideration allocation
$
$
$
88
4
1
8
68
24
5
(8 )
(6 )
(1 )
(1 )
(6 )
88
Goodwill recognized in this transaction is primarily attributable to synergies expected to arise after the acquisition and the
assembled workforce and is not deductible for tax purposes. The fair values assigned to intangibles include $15 allocated to
developed technology and $9 allocated to customer relationships. We used the relief from royalty method, an income approach, to
value developed technology. We used the multi-period excess earnings method, an income approach, to value customer
relationships. We used a replacement cost method to value fixed assets. The developed technology and customer relationship
intangible assets are being amortized on a straight-line basis over twelve and ten years, respectively, and property, plant and
equipment is being depreciated on a straight-line basis over useful lives ranging from one to twenty years.
The results of operations of the business are reported in our Off-Highway operating segment from the date of acquisition. The
pro forma effects of this acquisition would not materially impact our reported results for any period presented, and as a result no
pro forma financial information is presented. During 2019, the business contributed sales of $21.
TM4 — On June 22, 2018, we acquired a 55% ownership interest in TM4 Inc. (TM4) from Hydro-Québec. TM4 designs and
manufactures motors, power inverters, and control systems for electric vehicles, offering a complementary portfolio to Dana's
electric gearboxes and thermal-management technologies for batteries, motors, and inverters. The transaction establishes Dana as
the only supplier with full e-Drive design, engineering, and manufacturing capabilities – offering electro-mechanical propulsion
solutions to each of its end markets. The transaction further strengthens Dana's position in China, the world's fastest-growing
market for electric vehicles. The terms of the agreement provide Hydro-Québec with the right to put all, and not less than all, of its
shares in TM4 to Dana at fair value any time after June 22, 2021, see Note 9 for additional information. TM4 owns a 50% interest
in PEPS, a joint venture in China with PEBL, which offers electric mobility solutions throughout China and Asia. See discussion
of Dana's subsequent acquisition of PEBL's 50% interest in PEPS above.
55
We paid $125 at closing, using cash on hand. The purchase consideration and the related allocation to the acquisition date fair
values of the assets acquired and liabilities assumed are presented in the following table:
Total purchase consideration
Cash and cash equivalents
Accounts receivable - Trade
Accounts receivable - Other
Inventories
Goodwill
Intangibles
Investment in affiliates
Property, plant and equipment
Accounts payable
Accrued payroll and employee benefits
Other accrued liabilities
Redeemable noncontrolling interest
Total purchase consideration allocation
$
$
$
125
3
3
1
4
148
24
49
5
(2 )
(1 )
(7 )
(102 )
125
Goodwill recognized in this transaction is primarily attributable to synergies expected to arise after the acquisition and the
assembled workforce and is not deductible for tax purposes. The fair values assigned to intangibles include $14 allocated to
developed technology and $10 allocated to trademarks and trade names. We used the relief from royalty method, an income
approach, to value developed technology and the trademarks and trade names. We used a replacement cost method to value fixed
assets. We used a combination of the discounted cash flow, an income approach, and the guideline public company method, a
market approach, to value the equity method investment in PEPS. The developed technology intangible assets are being amortized
on a straight-line basis over ten years, and property, plant and equipment is being depreciated on a straight-line basis over useful
lives ranging from five to six years. The trademarks and trade names are considered indefinite-lived intangible assets.
Dana is consolidating TM4 as the governing documents provide Dana with a controlling financial interest. The results of
operations of the business are reported in our Commercial Vehicle operating segment from the date of acquisition. Transaction
related expenses associated with completion of the acquisition totaling $5 were charged to other income (expense), net in 2018.
The pro forma effects of this acquisition would not materially impact our reported results for any period presented, and as a result
no pro forma financial statements are presented. During 2018, the business contributed sales of $11.
Note 3. Goodwill and Other Intangible Assets
Goodwill — Our goodwill is tested for impairment annually as of October 31 for all of our reporting units, and more frequent if
events or circumstances warrant such a review. We completed numerous acquisitions in 2018 and 2019 that are included in our
Commercial Vehicle and Off-Highway reporting units. These acquisitions were recorded on the balance sheet at their estimated
acquisition date fair values and therefore had no cushion of fair value over their carrying value. As a result of the effect of the
global COVID-19 pandemic on our expected future operating cash flows, a decrease in our share price which reduced our market
capitalization below the book value of net assets and lower cushion in our expected reporting unit fair values as a result of the
recent acquisitions, we determined certain impairment triggers had occurred in the first quarter of 2020. Accordingly, we
performed interim impairment analyses at each of our reporting units as of March 31, 2020.
Based on the results of our interim impairment tests, we concluded that carrying value exceeded fair value in our Commercial
Vehicle and Light Vehicle reporting units and we recorded a goodwill impairment charge of $51 in the first quarter of 2020. Our
testing for the Off-Highway reporting unit indicated that fair value slightly exceeded carrying value and, accordingly, no
impairment charge was required. The reduction in fair values, and the corresponding impairment charges, were primarily driven by
the negative effect of the global COVID-19 pandemic on each reporting unit’s near-term cash flows. The estimated fair value of
our Off-Highway and Commercial Vehicle reporting units were greater than their carrying values at October 31, 2020 by 14% and
4%, respectively. Discount rates of 12% and 14% were used in the valuation of our Off-Highway and Commercial Vehicle
reporting units. These discount rates were based on a market participant developed weighted average cost of capital adjusted to
reflect the risk inherent in future cash flows, perpetual growth rates and projected future economic and market conditions. An
increase of the discount rate to 13.6% and 14.7% would be required to result in fair value being equal to carrying value for the Off-
Highway and Commercial Vehicle reporting units. We expect that the fair value of our reporting units will continue to exceed their
carrying values in future periods.
56
The remaining change in the carrying amount of goodwill in 2020 is primarily due to the acquisition of Ashwoods,
measurement period adjustments for the Nordresa acquisition and currency fluctuation. The change in the carrying amount of
goodwill in 2019 was due to the acquisitions of Nordresa, PEPS, ODS and SME and currency fluctuation. As a result of our
annual goodwill impairment test performed in the fourth quarter of 2019, we concluded that the goodwill resulting from the
acquisition of Magnum Gaskets in 2016 was unrecoverable. Accordingly, a full impairment charge of $6 was recorded for the year
ended December 31, 2019. See Note 2 for additional information on recent acquisitions.
Changes in the carrying amount of goodwill by segment —
Light
Vehicle
Commercial
Vehicle
Off-
Highway
Power
Technologies
Total
Balance, December 31, 2018
$
3 $
Acquisitions
Impairment
Currency impact
Balance, December 31, 2019
Acquisition
Impairment
Currency impact
3
(3 )
Balance, December 31, 2020
$
— $
150 $
74
4
228
(5 )
(48 )
2
177 $
105 $
160
(3 )
262
26
14
302 $
6 $
(6 )
—
— $
264
234
(6 )
1
493
21
(51 )
16
479
Non-amortizable intangible assets — Our non-amortizable intangible assets include a portion of our trademarks and trade names.
Non-amortizable trademarks and trade names consist of the Dana®, Spicer® and TM4® 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 two years ended December 31, 2020 in connection
with the required annual assessment for trademarks and trade names.
During the third quarter of 2012, we entered a strategic alliance with Fallbrook Technologies Inc. (Fallbrook). The transaction
with Fallbrook was accounted for as a business combination and the original purchase price allocation included $20 of intangible
assets used in research and development activities, which had been classified as indefinite-lived. Since the third quarter of 2012,
we had been working with several customers to commercialize the continuously variable planetary (CVP) technology primarily in
combustion engine applications. During the second quarter of 2018 key customers notified us of their intention to redirect their
development efforts to electrification and cease further development efforts of the CVP technology in combustion engine
applications. We determined that it was more likely than not that the fair value of the related intangible assets was less than their
carrying amount. We used the multi-period excess earnings method, an income approach, to fair value the assets used in research
and development activities. Given the lack of adequate identifiable future revenue streams, it was determined that the $20 of
intangible assets used in research and development activities was fully impaired during the second quarter of 2018.
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. Amortizable trademarks and trade
names includes the Graziano™, Fairfield® and Brevini® trademarks and trade names utilized in our Off-Highway segment.
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. There were no impairments recorded
during the two years ended December 31, 2020.
57
Components of other intangible assets —
Weighted
Average
Useful
Life
December 31, 2020
Accumulated
Impairment
and
Net
Carrying
Gross
Carrying
(years) Amount Amortization Amount
December 31, 2019
Accumulated
Impairment
and
Amortization
Net
Carrying
Amount
Gross
Carrying
Amount
8 $
146 $
(103 ) $
43 $
133 $
(94 ) $
39
13
8
31
525
(9 )
(431 )
22
94
30
509
(6 )
(407 )
24
102
$
77
779 $
(543 ) $
77
236 $
75
747 $
(507 ) $
75
240
Amortizable intangible assets
Core technology
Trademarks and trade
names
Customer relationships
Non-amortizable intangible
assets
Trademarks and trade
names
The net carrying amounts of intangible assets, other than goodwill, attributable to each of our operating segments at December
31, 2020 were as follows: Light Vehicle – $22, Commercial Vehicle – $68, Off-Highway – $139 and Power Technologies – $7.
Amortization expense related to amortizable intangible assets —
Charged to cost of sales
Charged to amortization of intangibles
Total amortization
2020
2019
2018
$
$
7 $
13
20 $
5 $
12
17 $
2
8
10
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, 2020 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
$
19 $
19 $
19 $
19 $
19
2021
2022
2023
2024
2025
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, our focus has been primarily headcount
reduction initiatives to reduce operating costs, including actions taken at acquired businesses to rationalize cost structures and
achieve operating synergies. Restructuring expense includes costs associated with current and previously announced actions and is
comprised of contractual and noncontractual separation costs and exit costs, including certain operating costs of facilities that we
are in the process of closing.
Net restructuring charges of $34 and $29 in 2020 and 2019 were comprised of severance and benefit costs related to
integration of recent acquisitions, headcount reductions across our operations and exit costs related to previously announced
actions.
Net restructuring charges of $25 in 2018 were primarily comprised of severance and benefit costs related to a voluntary
retirement program in North America, headcount reduction actions in our operations and corporate functions in Brazil and
administrative cost reduction initiatives primarily in Europe and North America. In response to continued market recovery in our
Off-Highway business in Europe, management re-evaluated the economic conditions of our global Off-Highway business and
determined that $7 of the previously approved restructuring actions were no longer economically prudent.
58
Accrued restructuring costs and activity, including noncurrent portion —
Balance, December 31, 2017
Charges to restructuring
Adjustments of accruals
Cash payments
Currency impact
Balance, December 31, 2018
Charges to restructuring
Adjustments of accruals
Cash payments
Currency impact
Lease cease-use reclassification
Balance, December 31, 2019
Charges to restructuring
Adjustments of accruals
Cash payments
Currency impact
Balance, December 31, 2020
Employee
Termination
Benefits
Exit
Costs
Total
$
$
21 $
28
(7 )
(16 )
(1 )
25
21
(2 )
(31 )
13
30
(2 )
(12 )
1
30 $
5 $
4
(5 )
4
10
(9 )
(4 )
1
6
(7 )
— $
26
32
(7 )
(21 )
(1 )
29
31
(2 )
(40 )
—
(4 )
14
36
(2 )
(19 )
1
30
At December 31, 2020, accrued employee termination benefits include costs to reduce approximately 500 employees to be
completed over the next year.
Cost to complete — The following table provides project-to-date and estimated future restructuring expenses for completion of our
approved restructuring initiatives for our business segments at December 31, 2020.
Commercial Vehicle
Light Vehicle
Expense Recognized
Prior to
2020
2020
Total
to Date
Future
Cost to
Complete
$
$
39 $
— $
2 $
1 $
41 $
1 $
2
1
The future cost to complete includes estimated separation costs, primarily those associated with one-time benefit programs,
and exit costs through 2021, 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
2020
2019
$
$
473 $
752
(76 )
1,149 $
470
787
(64 )
1,193
59
Note 6. Supplemental Balance Sheet and Cash Flow Information
Supplemental balance sheet information at December 31 —
2020
2019
$
$
$
$
$
$
$
$
$
$
95 $
32
127 $
49 $
45
2
5
3
65
169 $
210 $
646
3,613
72
4,541
(2,290 )
2,251 $
56 $
13
43
7
6
30
9
5
139
308 $
51 $
128
38
15
55
81
368 $
109
28
137
—
37
3
6
4
70
120
223
621
3,355
41
4,240
(1,975 )
2,265
65
11
36
6
5
14
5
5
115
262
47
71
40
17
65
65
305
Other current assets:
Prepaid expenses
Other
Total
Other noncurrent assets:
Marketable securities
Customer incentive payments
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
Finance lease right-of-use assets
Total cost
Less: accumulated depreciation
Net
Other accrued liabilities (current):
Non-income taxes payable
Accrued interest
Warranty reserves
Deferred income
Work place injury costs
Restructuring costs
Payable under forward contracts
Environmental
Other expense accruals
Total
Other noncurrent liabilities:
Income tax liability
Interest rate swap market valuation
Deferred income tax liability
Work place injury costs
Warranty reserves
Other noncurrent liabilities
Total
60
Cash, cash equivalents and restricted cash at —
December 31,
2020
December 31,
2019
December 31,
2018
December 31,
2017
Cash and cash equivalents
Restricted cash included in other current assets
Restricted cash included in other noncurrent assets
Total cash, cash equivalents and restricted cash
$
$
559 $
5
3
567 $
508 $
6
4
518 $
510 $
7
3
520 $
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
Noncash investing and financing activities:
$
$
$
Purchases of property, plant and equipment held in accounts payable $
Stock compensation plans
Noncash dividends declared
Note 7. Leases
2020
2019
2018
(66 ) $
69
82
(22 )
(9 )
(7 )
47 $
129 $
98
50 $
12
—
134 $
35
(96 )
(21 )
(19 )
(50 )
(17 ) $
117 $
125
71 $
17
1
603
3
4
610
(113 )
(110 )
97
(28 )
(3 )
44
(113 )
90
145
91
18
1
Our leases generally have remaining lease terms of one year to eleven years, some of which include options to extend the
leases for up to ten years. Our lease agreements do not contain any material residual value guarantees or material restrictive
covenants.
The following table provides a summary of the location and amounts related to finance leases recognized in the consolidated
balance sheet. Short-term lease costs were insignificant as of December 31, 2020 and 2019.
Classification
2020
2019
Finance lease right-of-use assets
Finance lease liabilities
Finance lease liabilities
Components of lease expense —
Operating lease cost
Finance lease cost:
Amortization of right-of-use assets
Interest on lease liabilities
Total finance lease cost
Property, plant and equipment, net
Current portion of long-term debt
Long-term debt
$
$
$
$
72 $
7
53
2020
2019
52 $
5 $
2
7 $
41
5
24
50
3
1
4
61
Supplemental cash flow information related to leases —
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases
Operating cash flows from finance leases
Financing cash flows from finance leases
Right-of-use assets obtained in exchange for lease obligations:
Operating leases
Finance leases
Supplemental balance sheet information related to leases —
Weighted-average remaining lease term (years):
Operating leases
Finance leases
Weighted-average discount rate:
Operating leases
Finance leases
Maturities —
2021
2022
2023
2024
2025
Thereafter
Total lease payments
Less: interest
Present value of lease liabilities
2020
2019
$
$
52 $
2
4
57 $
32
2020
2019
6
14
4.3 %
4.4 %
50
1
3
24
13
6
9
5.5 %
3.2 %
Operating Leases Finance Leases
9
50 $
$
9
41
8
29
6
24
5
21
49
61
86
226
26
30
60
196 $
$
Operating lease payments presented in the table above exclude approximately $18 of minimum lease payments for real estate
leases signed but not yet commenced. These leases are expected to commence in 2021.
Note 8. Stockholders' Equity
Preferred Stock
We are authorized to issue 50,000,000 shares of Dana preferred stock, par value $0.01 per share. There were no preferred
shares outstanding at December 31, 2020 or 2019.
Common Stock
We are authorized to issue 450,000,000 shares of Dana common stock, par value $0.01 per share. At December 31, 2020,
there were 154,958,240 shares of our common stock issued and 144,515,658 shares outstanding, net of 10,442,582 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 shares repurchased through share repurchase programs.
Our Board of Directors declared a cash dividend of ten cents per share of common stock in the first quarter of 2020.
Aggregate 2020 declared dividends totaled $15 and cash dividends paid totaled $15. Dividends accrue on restricted stock units
(RSUs) granted under our stock compensation program and will be paid in cash or additional units when the underlying units vest.
Share repurchase program — On February 16, 2021 our Board of Directors approved an extension of our existing common stock
share repurchase program through December 31, 2023. Approximately $150 remained available under the program for future share
repurchases as of December 31, 2020.
62
Changes in equity —
During the first quarter of 2018, a wholly-owned subsidiary of Dana purchased the ownership interest in Dana Spicer
(Thailand) Limited (a non wholly-owned consolidated subsidiary of Dana) held by ROC-Spicer, Ltd. (a non wholly-owned
consolidated subsidiary of Dana). Dana maintained its controlling financial interest in Dana Spicer (Thailand) Limited and
accordingly accounted for the purchase as an equity transaction. The excess of the fair value of the consideration paid over the
carrying value of the investment attributable to the noncontrolling interest in ROC-Spicer, Ltd. was recognized as additional
noncontrolling interest with a corresponding reduction of the additional paid-in capital of Dana. During the third quarter of 2018,
Yulon Motor Co., Ltd. (Yulon) purchased a direct ownership interest in two of our consolidated operating subsidiaries. Yulon's
ownership interest in the two consolidated operating subsidiaries did not change as a result of the transactions, as it previously
owned the same percentages indirectly through a series of consolidated holding companies. The cash received from Yulon was
recognized as additional noncontrolling interest. The amount received, less withholding taxes, was returned to Yulon in the form
of a dividend in the fourth quarter of 2018.
Changes in each component of AOCI of the parent —
Parent Company Stockholders
Foreign
Currency
Translation Hedging
(670 ) $
$
Defined
Benefit
Plans
Investments
Accumulated
Other
Comprehensive
Loss
(64 ) $
2 $
(610 ) $
(1,342 )
Balance, December 31, 2017
Other comprehensive income (loss):
Currency translation adjustments
Holding loss on net investment hedge
Holding gains and losses
Reclassification of amount to net income (a)
Net actuarial losses
Reclassification adjustment for net actuarial losses
included in net periodic benefit cost (b)
Other
Tax expense
Adoption of ASU 2016-01 financial instruments
adjustment, January 1, 2018
Balance, December 31, 2018
Other comprehensive income (loss):
Currency translation adjustments
Holding gains and losses
Reclassification of amount to net income (a)
Net actuarial gains
Reclassification adjustment for net actuarial losses
included in net periodic benefit cost (b)
Tax expense
Other comprehensive income
Balance, December 31, 2019
Other comprehensive income (loss):
Currency translation adjustments
Holding gains and losses
Reclassification of amount to net income (a)
Net actuarial losses
Reclassification adjustment for net actuarial losses
included in net periodic benefit cost (b)
Other comprehensive income (loss)
Deconsolidation of non-wholly owned subsidiary
(48 )
(3 )
66
(56 )
(721 )
(54 )
8
58
(33 )
(1 )
24
(30 )
(78 )
117
(1 )
7
(714 )
(88 )
—
(2 )
—
—
—
(48 )
(3 )
66
(56 )
(8 )
34
2
(5 )
(18 )
(8 )
34
2
(5 )
23
(587 )
(2 )
(1,362 )
8
58
(33 )
71
286
(15 )
375
(987 )
(88 )
(78 )
117
(11 )
20
(40 )
1
(1,026 )
71
286
(13 )
344
(243 )
(11 )
20
9
1
(233 ) $
(88 )
39
—
Balance, December 31, 2020
$
(802 ) $
9 $
— $
Notes:
(a) Realized gains and losses from currency-related forward contracts associated with forecasted transactions or from other derivative instruments treated as cash flow
hedges are reclassified from AOCI into the same line item in the consolidated statement of operations in which the underlying forecasted transaction or other
hedged item is recorded. See Note 15 for additional details.
(b) See Note 12 for additional details.
63
Other comprehensive income (loss)
(51 )
10
Note 9. Redeemable Noncontrolling Interests
In connection with the acquisition of a controlling interest in TM4 from Hydro-Québec on June 22, 2018, we
recognized $102 for Hydro-Québec's 45% redeemable noncontrolling interest in TM4. On July 29, 2019, we broadened our
relationship with Hydro-Québec, with Hydro-Québec acquiring an indirect 45% redeemable noncontrolling interest in SME and an
additional indirect 22.5% redeemable noncontrolling interest in PEPS which resulted in recognition of additional redeemable
noncontrolling interest of $64. On April 14, 2020, Hydro-Québec acquired an indirect 45% redeemable noncontrolling interest in
Ashwoods which resulted in recognition of additional redeemable noncontrolling interest of $7. The terms of the agreement
provide Hydro-Québec with the right to put all, and not less than all, of its ownership interests in TM4, SME, PEPS and Ashwoods
to Dana at fair value any time after June 22, 2021. See Note 2 for additional information.
Redeemable noncontrolling interests reflected as of the balance sheet date are the greater of the redeemable noncontrolling
interest balances adjusted for comprehensive income items and distributions or the redemption values. Redeemable noncontrolling
interest adjustments of redemption value are recorded in retained earnings. We estimate the fair value of the redemption
value using an income-based approach based on discounted cash flow projections. In determining fair value using discounted cash
flow projections, we make significant assumptions and estimates about the extent and timing of future cash flows, including
revenue growth rates, projected EBITDA, discount rates, terminal growth rates and exit multiples.
Reconciliation of changes in redeemable noncontrolling interests —
Balance, beginning of period
Capital contribution from redeemable noncontrolling interest
Sale of redeemable noncontrolling interest
Adjustment to redemption value
Comprehensive income (loss) adjustments:
Net loss attributable to redeemable noncontrolling interests
Other comprehensive income (loss) attributable to redeemable noncontrolling interests
Balance, end of period
Note 10. Earnings per Share
2020
2019
$
$
167 $
4
7
38
(30 )
(6 )
180 $
100
4
64
(6 )
5
167
Reconciliation of the numerators and denominators of the earnings per share calculations —
Net income (loss) available to common stockholders - Numerator basic
and diluted
$
(31 ) $
226 $
427
2020
2019
2018
Denominator:
Weighted-average common shares outstanding - Basic
Employee compensation-related shares, including stock options
Weighted-average common shares outstanding - Diluted
144.5
—
144.5
144.0
1.1
145.1
145.0
1.5
146.5
The share count for diluted earnings per share is computed on the basis of the weighted-average number of common shares
outstanding plus the effects of dilutive common stock equivalents (CSEs) outstanding during the period. We excluded
1.4 million, 0.1 million and 0.2 million CSEs from the calculations of diluted earnings per share for the years 2020, 2019 and 2018
as the effect of including them would have been anti-dilutive. In addition, we excluded CSEs that satisfied the definition of
potentially dilutive shares of 0.7 million for 2020 since there was no net income available to common stockholders for this period.
Note 11. Stock Compensation
2017 Omnibus Incentive Plan
The 2017 Omnibus Incentive Plan (the Plan) authorizes the grant of stock options, stock appreciation rights (SARs), RSUs
and performance share units (PSUs) through April 2027. Cash-settled awards do not count against the maximum aggregate
number. At December 31, 2020, there were 3.1 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.
64
Award activity — (shares in millions)
Options
SARs
RSUs
PSUs
Shares
Exercise
Price*
Shares
Exercise
Price*
Grant-
Date
Fair
Shares
Value* Shares
Grant-
Date
Fair
Value*
0.6 $
16.13
0.1 $
16.27
0.6
16.27
0.1
16.50
2.0 $
1.3
(0.6 )
(0.2 )
2.5
20.56
15.53
19.58
18.86
18.27
0.7 $
0.5
(0.2 )
(0.2 )
0.8
19.99
14.42
19.15
18.14
15.18
December 31, 2019
Granted
Exercised or vested
Forfeited or expired
December 31, 2020
* Weighted-average per share
Total stock compensation expense
Total grant-date fair value of awards vested
Cash received from exercise of stock options
Cash paid to settle SARs and RSUs
Intrinsic value of stock options and SARs exercised
Intrinsic value of RSUs and PSUs vested
$
2020
2019
2018
14 $
16
2
14
19 $
16
2
1
17
16
16
2
2
3
18
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 $4 and $3 for cash-settled awards at December 31, 2020 and 2019. During 2020 we
issued 0.6 million and 0.3 million shares of common stock based on vesting of RSUs and PSUs. At December 31, 2020, 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 1.8 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 have not granted
stock options or SARs since 2013. All outstanding awards are fully vested and exercisable. At December 31, 2020, the outstanding
awards have an aggregate intrinsic value of $2 and a weighted-average remaining contractual life of 1.3 years.
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 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.
Under the 2020 stock compensation award program, the number of PSUs that ultimately vest is contingent on achieving a
specified free cash flow target and a specified margin target, with an even distribution between the two targets. Our 2019 and 2018
programs had specified return on invested capital targets and specified margin targets, with an even distribution between the two
targets. 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 awards are 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.
Cash incentive awards — Our 2017 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 performance goals. The performance goals of the plan are established annually by the Board of Directors.
Under the 2020 annual incentive program, participants were eligible to receive cash awards based on achieving a cash flow
performance goal. Under the 2019 and 2018 annual incentive programs, participants were eligible to receive cash awards based on
achieving earnings and cash flow performance goals. We accrued $23, $27 and $33 of expense in 2020, 2019 and 2018 for the
expected cash payments under these programs.
65
Note 12. 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.
Components of net periodic benefit cost (credit) and other amounts recognized in OCI —
$
2020
Non-U.S.
U.S.
21 $
(35 )
11
5 $
(3 )
9
9
Interest cost
Expected return on plan assets
Service cost
Amortization of net actuarial loss
Settlement charge
Curtailment
Other
Pension Benefits
2019
U.S.
Non-U.S.
U.S.
2018
Non-U.S.
40 $
(51 )
22
256
8 $
(3 )
8
6
3
(1 )
43 $
(71 )
28
Net periodic benefit cost (credit)
(3 )
20
267
21
—
Recognized in OCI:
Amount due to net actuarial
(gains) losses
Reclassification adjustment for
net actuarial losses in net
periodic benefit cost
Curtailment
Other
Total recognized in OCI
Net recognized in benefit cost
(4 )
10
(107 )
33
11
4
(11 )
(9 )
(278 )
(9 )
(28 )
(15 )
1
(385 )
24
(17 )
(credit) and OCI
$
(18 ) $
21 $
(118 ) $
45 $
(17 ) $
2020
2019
2018
U.S.
Non-U.S.
U.S.
Non-U.S.
Non-U.S.
OPEB
Interest cost
Service cost
Amortization of net actuarial gain
Net periodic benefit cost
$
— $
—
2 $
1
3
—
— $
3 $
Recognized in OCI:
Amount due to net actuarial (gains) losses
Reclassification adjustment for net actuarial gain
in net periodic benefit cost
1
4
1
Total recognized in OCI
Net recognized in benefit cost (credit) and OCI
$
1
1 $
4
7 $
1
1 $
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 2021 is $9 for our U.S. plans
and $9 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 2021.
66
(1 )
2
2
1
3
5 $
7
(3 )
7
6
2
19
(6 )
(2 )
(4 )
15
3
1
4
(7 )
(7 )
(3 )
In October 2017, upon authorization by the Dana Board of Directors, we commenced the process of terminating one of our
U.S. defined benefit pension plans. During the second quarter of 2019, payments were made from plan assets to those plan
participants that elected to take the lump-sum payout option. In June 2019, we entered into (a) a definitive commitment agreement
by and among Dana, Athene Annuity and Life Company (Athene) and State Street Global Advisors, as independent fiduciary to
the plan, and (b) a definitive commitment agreement by and among Dana, Companion Life Insurance Company (Companion) and
State Street Global Advisors, as independent fiduciary to the plan. Pursuant to the definitive commitment agreements, the plan
purchased group annuity contracts that irrevocably transferred to the insurance companies the remaining future pension benefit
obligations of the plan. Plan participant’s benefits are unchanged as a result of the termination. We contributed $59 to the plan
prior to the purchase of the group annuity contracts. The purchase of group annuity contracts was then funded directly by the
assets of the plan in June 2019. By irrevocably transferring the obligations to Athene and Companion, we reduced our unfunded
pension obligation by approximately $165 and recognized a pre-tax pension settlement charge of $256 in 2019.
Funded status — The following tables provide reconciliations of the changes in benefit obligations, plan assets and funded status.
Pension Benefits
OPEB
2020
2019
2020
2019
U.S.
Non-
U.S.
U.S.
Non-
U.S.
U.S.
Non-
U.S.
U.S.
Non-
U.S.
Reconciliation of benefit obligation:
$
Obligation at beginning of period
Interest cost
Service cost
Actuarial loss
Benefit payments
Acquisitions
Settlements
Curtailment
Deconsolidation of subsidiary
Translation adjustments
Obligation at end of period
412 $ 1,501 $
40
772 $
21
68
(51 )
5
9
10
(13 )
364 $
8
8
41
(14 )
25
(13 )
(1 )
(6 )
412 $
3 $
1
88 $
2
1
4
(4 )
— $
1
(1 )
3
83
3
2
(4 )
4 $
2
93 $
3 $
4
88
13
(90 )
161
(853 )
772 $
(4 )
(8 )
27
438 $
$
810 $
Pension Benefits
OPEB
2020
2019
2020
2019
U.S.
Non-
U.S.
U.S.
Non-
U.S.
U.S.
Non-
U.S.
U.S.
Non-
U.S.
Reconciliation of fair value of plan
assets:
Fair value at beginning of period
Actual return on plan assets
Employer contributions
Benefit payments
Settlements
Acquisitions
Deconsolidation of subsidiary
Translation adjustments
Fair value at end of period
$
724 $
107
1
(51 )
78 $ 1,301 $
171
3
59
14
(90 )
(13 )
(853 )
(4 )
136
71 $ — $ — $
11
17
(14 )
(13 )
7
4
(4 )
— $
—
1
(1 )
4
(4 )
$
781 $
(8 )
(1 )
69 $
724 $
(1 )
78 $ — $ — $
— $
—
Funded status at end of period
$
(29 ) $
(369 ) $
(48 ) $
(334 ) $
(4 ) $
(93 ) $
(3 ) $
(88 )
67
Amounts recognized in the balance sheet —
Pension Benefits
OPEB
2020
2019
2020
2019
U.S.
Non-
U.S.
U.S.
Non-
U.S.
U.S.
Non-
U.S.
U.S.
Non-
U.S.
Amounts recognized in the
consolidated balance sheet:
Noncurrent assets
Current liabilities
Noncurrent liabilities
Net amount recognized
Amounts recognized in AOCI —
$
2 $
1 $ — $
(31 )
(29 ) $
$
(14 )
(356 )
(369 ) $
(48 )
(48 ) $
4 $ — $ — $
(5 )
(88 )
(93 ) $
(13 )
(325 )
(334 ) $
(4 )
(4 ) $
— $
(3 )
(3 ) $
—
(5 )
(83 )
(88 )
Pension Benefits
OPEB
2020
2019
2020
2019
U.S.
Non-
U.S.
U.S.
Non-
U.S.
U.S.
Non-
U.S.
U.S.
Non-
U.S.
Amounts recognized in AOCI:
Net actuarial loss (gain)
AOCI before tax
Deferred taxes
Net
$
$
142 $
142
16
158 $
108 $
108
(30 )
78 $
157 $
157
13
170 $
108 $
108
(28 )
80 $
2 $
2
2 $
(8 ) $
(8 )
3
(5 ) $
1 $
1
1 $
(12 )
(12 )
4
(8 )
The 2020 actuarial gain of $4 on the U.S. plans was largely the result of the actual return on assets exceeding the expected
asset return partially offset by the decrease in discount rate and result of reflecting updated mortality tables.
The 2019 actuarial gain of $107 on the U.S plans was largely the result of the actual return on assets exceeding the expected
asset return.
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
2020
Non-U.S.
U.S.
2019
Non-U.S.
U.S.
$
$
16 $
16
17
794 $
794
764
14 $
14
15
391 $
424
54
15 $
15
16
757 $
757
708
17
17
21
363
395
57
68
Fair value of pension plan assets —
Asset Category
Equity securities:
U.S. all cap (b)
U.S. large cap
EAFE composite
Emerging markets
$
Fixed income securities:
Corporate bonds
U.S. Treasury strips
Non-U.S. government securities
Emerging market debt
Alternative investments:
Insurance contracts (c)
Real estate
Other
Cash and cash equivalents
Total
$
Total
Level 1 Level 2 Level 3 NAV (a) Level 1 Level 2 Level 3
Fair Value Measurements at December 31, 2020
U.S.
Non-U.S.
40 $
36
23
16
572
22
16
12
58
18
2
35
850 $
40 $ — $ — $ — $ — $ — $ —
36
23
16
383
12
18
189
22
1
6
15
2
52
40 $
35
247 $
6 $
488 $ — $
17 $
52
Asset Category
Equity securities:
U.S. all cap (b)
U.S. large cap
EAFE composite
Emerging markets
Fixed income securities:
Corporate bonds
U.S. Treasury strips
Non-U.S. government securities
Emerging market debt
Alternative investments:
Insurance contracts (c)
Real estate
Other
Cash and cash equivalents
Total
$
Total
Level 1 Level 2 Level 3 NAV (a) Level 1 Level 2 Level 3
Fair Value Measurements at December 31, 2019
U.S.
Non-U.S.
$
39 $
28
19
9
492
37
21
11
50
20
11
65
802 $
39 $ — $ — $ — $ — $ — $ —
28
19
9
306
11
20
186
37
4
21
11
46
39 $
65
288 $
4 $
393 $ — $
32 $
46
Notes:
(a) Certain assets are measured at fair value using the net asset value (NAV) per share (or its equivalent) practical expedient and have not been classified in the fair
value hierarchy.
(b) 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.
(c) This category comprises contracts placed with insurance companies where the underlying assets are invested in fixed interest securities.
Reconciliation of Level 3 Assets
Fair value at beginning of period
Actual gains relating to assets still held at the reporting date
Purchases, sales and settlements
Currency impact
Fair value at end of period
2020
Non-U.S.
Insurance
Contracts
2019
U.S.
Insurance
Contracts
2019
Non-U.S.
Insurance
Contracts
2020
U.S.
Insurance
Contracts
$
4 $
2
46 $
4
(2 )
4
52 $
— $
4
4 $
35
7
5
(1 )
46
$
6 $
69
Valuation Methods
Equity securities — The fair value of equity securities held directly by the trust is based on quoted market prices. When the equity
securities are held in commingled funds that are not publicly traded, the fair value of our interest in the fund is its NAV as
determined by quoted market prices for the underlying holdings.
Fixed income securities — The fair value of fixed income securities held directly by the trust is based on a bid evaluation process
with input from independent pricing sources. When the fixed income securities are held in commingled funds that are not publicly
traded, the fair value of our interest in the fund is its NAV as determined by a similar valuation of the underlying holdings.
Insurance contracts — The values shown for insurance contracts are the amounts reported by the insurance company and
approximate the fair values of the underlying investments.
Real estate — The investments in real estate represent ownership interests in commingled funds and partnerships that invest in real
estate. The investment managers determine the NAV of these ownership interests using the fair value of the underlying real estate
which is obtained via independent third-party appraisals prepared on a periodic basis. Assumptions used to value the properties are
updated quarterly. 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 amortized cost.
The methods described above may produce a fair value 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. 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.
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 are adjusted as needed to meet changing objectives and constraints and to manage the risk of
adverse changes in the unfunded positions of our plans. At December 31, 2020, the U.S. plans had targets of 20% for the Growth
Portfolio (U.S. and non-U.S. equities, high-yield fixed income, real estate, emerging market debt and cash), 78% for the
Immunizing Portfolio (long duration U.S. Treasury strips, corporate bonds and cash) and 2% for the Liquidity Portfolio (cash and
short-term securities). The assets held at December 31, 2020 by the U.S. plans were invested 21% in the Growth Portfolio, 76% in
the Immunizing Portfolio and 3% in 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:
2020
Non-U.S.
U.S.
2019
Non-U.S.
2018
Non-U.S.
U.S.
U.S.
2.43 %
1.40 %
3.21 %
1.72 %
4.22 %
2.42 %
Discount rate
Rate of compensation increase
Expected return on plan assets
2.79 %
N/A
5.00 %
2.10 %
3.36 %
4.45 %
3.41 %
N/A
6.00 %
2.50 %
3.28 %
4.61 %
2.56 %
N/A
6.00 %
2.54 %
3.21 %
4.66 %
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,
70
discount rates are developed using a discounted bond portfolio analysis, with appropriate consideration given to defined benefit
payment terms and duration of the liabilities. In the above table, the discount rate used to determine U.S. pension obligations at the
end of 2018 does not consider the terminated plan which had an implied discount rate of 3.46%.
For pension and other postretirement benefit plans that utilize a full yield curve approach to estimate the interest and service
components of net periodic benefit cost, we apply 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 this 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. Since the remeasurement of total benefit obligations is not affected, the resulting reduction in periodic benefit cost is
offset by an increase in the actuarial 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 3.50% expected return on asset assumption for 2021 for our U.S.
plans.
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
2020
Non-U.S.
U.S.
2019
Non-U.S. Non-U.S.
2018
U.S.
2.67 %
2.55 %
3.37 %
3.10 %
3.71 %
3.19 %
N/A
N/A
N/A
3.15 %
4.64 %
5.13 %
2023
4.08 %
N/A
N/A
N/A
3.76 %
4.22 %
4.93 %
2023
3.42 %
4.12 %
5.10 %
2023
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.
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
2021
2022
2023
2024
2025
2026 to 2030
Total
Pension Benefits
OPEB
U.S.
Non-U.S.
U.S.
Non-U.S.
$
$
51 $
51
50
50
49
229
480 $
17 $
16
16
20
17
109
195 $
— $
1
1 $
5
5
5
5
5
24
49
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. There are no projected contributions to be made during 2021 for our U.S. plans and
projected contributions of $16 for our non-U.S plans.
Multi-employer pension plans — We participate in the Steelworkers Pension Trust (SPT) multi-employer pension plan which
provides pension benefits to certain of our U.S. employees represented by the United Steelworkers and United Automobile
Workers unions. Contributions are made in accordance with our collective bargaining agreements and rates are generally based on
hours worked. The collective bargaining agreements expire August 18, 2021. The trustees of the SPT have provided us with the
latest data available for the plan year ended December 31, 2020. 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.
71
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 rehabilitation plan, nor
are such plans pending. Our contributions to the SPT exceeded 5% of the total contributions to the plan.
Pension
Fund
SPT
Employer
Identification
Number/
Plan Number
23-6648508 /
499
Note 13. Marketable Securities
PPA Zone
Status
Funding
Plan
Pending/
2020 2019 Implemented
2020
Contributions by Dana
2019
2018
Surcharge
Imposed
Green Green
No
$
14 $
13 $
12
No
2020
Unrealized
Gains
(Losses)
Fair Value
2019
Unrealized
Gains
(Losses)
Fair Value
Cost
Cost
Certificates of deposit - Current
marketable securities
Corporate securities - Noncurrent
marketable securities
$
$
21 $
— $
21 $
19 $
— $
16 $
33 $
49 $
— $
— $
19
—
Certificates of deposit maturing in one year or less total $21 at December 31, 2020.
We held $16 of convertible notes receivable from our investment in Hyliion Inc. On October 1, 2020, Hyliion completed its
merger with Tortoise Acquisition Corp. The business combination resulted in the combined company being renamed Hyliion
Holdings Corp., with its common stock being listed on the New York Stock Exchange under the ticker symbol HYLN. Effective
with the completed merger, our notes receivable were converted into 2,988,229 common shares of HYLN. Our investment in
Hyliion is included in noncurrent marketable securities and carried at fair value with changes in fair value included in net income
in future periods. The strategic partnership with Hyliion establishes Dana as the preferred supplier for e-propulsion systems to
Hyliion as long as Dana maintains a minimum equity investment in Hyliion.
Note 14. Financing Agreements
Long-term debt at December 31 —
Senior Notes due December 15, 2024
Senior Notes due April 15, 2025
Senior Notes due June 1, 2026
Senior Notes due November 15, 2027
Senior Notes due June 15, 2028
Term A Facility
Term B Facility
Other indebtedness
Debt issuance costs
Less: Current portion of long-term debt
Long-term debt, less debt issuance costs
Interest Rate
5.500%
5.750%
6.500%
5.375%
5.625%
$
*
*
$
2020
2019
425 $
400
375
400
400
349
106
(27 )
2,428
8
2,420 $
425
400
375
300
474
349
61
(28 )
2,356
20
2,336
*
In conjunction with the issuance of the April 2025 Notes we entered into 8-year fixed-to-fixed cross-currency swaps which have the effect of economically
converting the April 2025 Notes to euro-denominated debt at a fixed rate of 3.850%. In conjunction with the issuance of the June 2026 Notes we entered into 10-
year fixed-to-fixed cross-currency swaps which have the effect of economically converting the June 2026 Notes to euro-denominated debt at a fixed rate
of 5.140%. See Note 15 for additional information.
72
Interest on the senior notes is payable semi-annually and interest on the Term B Facility is payable quarterly. Other
indebtedness includes the note payable to SME, borrowings from various financial institutions, finance lease obligations and the
unamortized fair value adjustment related to a terminated interest rate swap. See Note 2 for additional information on the note
payable to SME and Note 15 for additional information on the terminated interest rate swap.
Scheduled principal payments on long-term debt, excluding finance leases at December 31, 2020 —
Maturities
2021
2022
2023
2024
2025
$
— $
4 $
5 $
453 $
404
Senior notes activity — In June 2020, we completed the sale of $400 in senior unsecured notes (June 2028 Notes) at 5.625%. The
June 2028 Notes rank equally with Dana's other unsecured senior notes. Interest on the notes is payable on December 15 and June
15 of each year, beginning on December 15, 2020. The June 2028 Notes will mature on June 15, 2028. Net proceeds of the
offering totaled $395. Financing costs of $5 were recorded as deferred costs and are being amortized to interest expense over the
life of the notes. The proceeds from the offering were used to pay down outstanding borrowings under our Revolving Facility and
for general corporate purposes. Also, we completed the sale of an additional $100 of November 2027 Notes at 5.375%. The
November 2027 Notes rank equally with Dana’s other unsecured senior notes. Interest on the notes is payable on May 15 and
November 15 of each year, beginning on November 15, 2020. The November 2027 Notes will mature on November 15, 2027. Net
proceeds of the offering totaled $99. Financing costs of $1 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 for general corporate purposes.
In November 2019, we completed the sale of $300 in senior unsecured notes (November 2027 Notes) at 5.375%. The
November 2027 Notes rank equally with Dana's other unsecured senior notes. Interest on the notes is payable on May 15 and
November 15 of each year, beginning on May 15, 2020. The November 2027 Notes will mature on November 15, 2027. Net
proceeds of the offering totaled $296. Financing costs of $4 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 September 2023 Notes. On November
22, 2019, we redeemed $162 of our September 2023 Notes pursuant to a tender offer at a weighted average price equal to
102.250% plus accrued and unpaid interest. On November 26, 2019, we called the remaining $138 of our September 2023 Notes at
a price equal to 102.000% plus accrued and unpaid interest. The $9 loss on extinguishment of debt recorded in November 2019
includes the redemption premiums and transaction costs associated with the tender offer and the call and the write-off of $2 of
previously deferred financing costs associated with the September 2023 Notes.
Senior notes redemption provisions — We may redeem some or all of the senior notes at the following redemption prices
(expressed as percentages of principal amount), plus accrued and unpaid interest to the redemption date, if redeemed during the
12-month period commencing on the anniversary date of the senior notes in the year set forth below:
Year
2020
2021
2022
2023
2024
2025
2026
2027
Redemption Price
December
June
2024 Notes 2025 Notes 2026 Notes 2027 Notes 2028 Notes
November
April
June
101.833 %
100.917 %
100.000 %
100.000 %
104.313 %
102.875 %
101.438 %
100.000 %
100.000 %
103.250 %
102.167 %
101.083 %
100.000 %
100.000 %
102.688 %
101.344 %
100.000 %
100.000 %
100.000 %
102.813 %
101.406 %
100.000 %
100.000 %
100.000 %
Prior to June 1, 2021, we may redeem some or all of the June 2026 Notes at a redemption price of 100.000% of the aggregate
principal amount thereof, plus accrued and unpaid interest, if any, to the redemption date plus a “make-whole” 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 November 15, 2022, we may redeem up to 35% of the aggregate principal amount of the November 2027
Notes in an amount not to exceed the amount of proceeds of one or more equity offerings, at a price equal to 105.375% of the
principal amount thereof, plus accrued and unpaid interest, if any, to the redemption date, provided that at least 50% of the original
aggregate principal amount of the November 2027 Notes remains outstanding after the redemption. Prior to November 15, 2022,
we may redeem some or all of the November 2027 Notes at a redemption price of 100.000% of the aggregate principal amount
thereof, plus accrued and unpaid interest, if any, to the redemption date plus a “make-whole” 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
73
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 June 15, 2023, we may redeem up to 35% of the aggregate principal amount of the June 2028 Notes in an
amount not to exceed the amount of proceeds of one or more equity offerings, at a price equal to 105.625% of the principal
amount thereof, plus accrued and unpaid interest, if any, to the redemption date, provided that at least 50% of the original
aggregate principal amount of the June 2028 Notes remains outstanding after the redemption. Prior to June 15, 2023, we may
redeem some or all of the June 2028 Notes at a redemption price of 100.000% of the aggregate principal amount thereof, plus
accrued and unpaid interest, if any, to the redemption date plus a “make-whole” premium. We have not separated the make-whole
premium from the underlying debt instrument to account for it as a derivative instrument as the economic characteristics and the
risks of this embedded derivative are clearly and closely related to the economic characteristics and risks of the underlying debt.
Credit agreement — On February 28, 2019, we entered into an amended credit and guaranty agreement comprised of a $500 term
facility (the Term A Facility), a $450 term facility (the Term B Facility and, together with the Term A Facility, the Term
Facilities) and a $750 revolving credit facility (the Revolving Facility). The Term A Facility and the Revolving Facility were
expansions of our existing facilities. On February 28, 2019, we drew the $225 available under the Term A Facility and the $450
available under the Term B Facility. The proceeds from the Term Facilities were used to acquire the Oerlikon Drive Systems
segment of the Oerlikon Group and pay for related integration activities. We were required to make equal quarterly installments on
the Term A Facility on the last day of each fiscal quarter of $8 beginning March 31, 2019 and 0.25% of the aggregate principal
advances of the Term B Facility quarterly commencing on June 30, 2019. On August 30, 2019, we amended our credit and
guaranty agreement, increasing the Revolving Facility to $1,000 and extending the maturities and reducing the interest rates of
both the Revolving Facility and the Term A Facility. We recorded deferred fees of $13 and $4 related to the amendments to the
Term Facilities and the Revolving Facility, respectively. The deferred fees are being amortized over the life of the applicable
facilities. On August 30, 2019, we borrowed $100 on the Revolving Facility and paid down a similar amount of the Term B
Facility. We are no longer required to make quarterly installments on the Term B Facility. On December 31, 2020, we fully paid
down the Term A Facility. We wrote off $3 of previously deferred financing costs associated with the Term A Facility. We may
prepay some or all of the amounts under the Term B Facility without penalty. Deferred financing costs on our Revolving Facility
are included in other noncurrent assets. The Revolving Facility matures on August 17, 2024 and the Term B Facility matures on
February 28, 2026.
The Term B Facility and the Revolving Facility are guaranteed by all of our wholly-owned domestic subsidiaries subject to
certain exceptions (the guarantors) and are secured by a first-priority lien on substantially all of the assets of Dana and the
guarantors, subject to certain exceptions.
Advances under the Revolving Facility bear interest at a floating rate based on, at our option, the base rate or Eurodollar rate
(each as described in the credit and guaranty agreement) plus a margin as set forth below:
Total Net Leverage Ratio
Less than or equal to 1.00:1.00
Greater than 1.00:1.00 but less than or equal to 2.00:1.00
Greater than 2.00:1.00
Margin
Base Rate
Eurodollar Rate
0.25 %
0.50 %
0.75 %
1.25 %
1.50 %
1.75 %
The Term B Facility bears interest based on, at our option, the Base Rate plus 1.25% or the Eurodollar rate plus 2.25%. We
have elected to pay interest on our advances under the Term B Facility at the Eurodollar Rate. The interest rate on the Term B
Facility was 2.397%, inclusive of the applicable margins, as of December 31, 2020.
Commitment fees are applied based on the average daily unused portion of the available amounts under the Revolving Facility
as set forth below:
Total Net Leverage Ratio
Less than or equal to 1.00:1.00
Greater than 1.00:1.00 but less than or equal to 2.00:1.00
Greater than 2.00:1.00
Commitment
Fee
0.250 %
0.375 %
0.500 %
Up to $275 of the Revolving Facility may be applied to letters of credit, which reduces availability. We pay a fee for issued
and undrawn letters of credit in an amount per annum equal to the applicable margin for Eurodollar rate advances based on a
quarterly average availability under issued and undrawn letters of credit under the Revolving Facility and a per annum fronting fee
of 0.125%, payable quarterly.
74
At December 31, 2020, we had no outstanding borrowings under the Revolving Facility and had utilized $21 for letters of
credit. We had availability at December 31, 2020 under the Revolving Facility of $979 after deducting the letters of credit.
Bridge facility — On April 16, 2020, we entered into a $500 bridge facility (the Bridge Facility). We recorded deferred fees of $5
related to the Bridge Facility. The deferred fees were being amortized over the life of the Bridge Facility. The Bridge Facility was
to mature on April 15, 2021. On June 19, 2020, in connection with the issuance of our June 2028 Notes, we terminated the Bridge
Facility and wrote off the $5 of deferred fees associated with the Bridge Facility.
Debt covenants — At December 31, 2020, we were in compliance with the covenants of our financing agreements. Under the
Term B Facility, Revolving Facility and the senior notes, we are required to comply with certain incurrence-based covenants
customary for facilities of these types and, in the case of the Revolving Facility, a maintenance covenant tested on the last day of
each fiscal quarter requiring us to maintain a first lien net leverage ratio not to exceed 2.00 to 1.00.
Note 15. Fair Value Measurements and Derivatives
In measuring the fair value of our assets and liabilities, we use market data or assumptions that we believe market participants
would use in pricing an asset or liability including assumptions about risk when appropriate. Our valuation techniques include a
combination of observable and unobservable inputs.
Fair value measurements on a recurring basis — Assets and liabilities that are carried in our balance sheet at fair value are as
follows:
Category
Certificates of deposit
Available-for-sale securities
Currency forward contracts
Cash flow hedges
Cash flow hedges
Undesignated
Undesignated
Interest rate collars
Currency swaps
Cash flow hedges
Balance Sheet Location
Marketable securities
Other noncurrent assets
Accounts receivable - Other
Other accrued liabilities
Accounts receivable - Other
Other accrued liabilities
Other accrued liabilities
Other noncurrent liabilities
Fair Value
Level
2
1
2
2
2
2
2
2
Fair Value
December 31,
2020
December 31,
2019
$
21 $
49
15
1
2
1
7
128
19
—
14
2
1
1
3
71
Fair Value Level 1 assets and liabilities reflect quoted prices in active markets. Fair Value Level 2 assets and liabilities reflect
the use of significant other observable inputs.
Fair value of financial instruments — The financial instruments that are not carried in our balance sheet at fair value are as
follows:
2020
2019
Long term debt
Fair Value
Level
2
Carrying
Value
Fair Value
Carrying
Value
$
2,376 $
2,475 $
Fair Value
2,450
2,384 $
Interest rate derivatives — Our portfolio of derivative financial instruments periodically includes interest rate swaps and interest
rate collars designed to mitigate our interest rate risk. As of December 31, 2020, no fixed-to-floating interest rate swaps remain
outstanding. However, a $4 fair value adjustment to the carrying amount of our December 2024 Notes, associated with a fixed-to-
floating interest rate swap that had been executed but was subsequently terminated during 2015, remains deferred at December 31,
2020. This amount 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 as a reduction of interest expense was not material during the
year ended December 31, 2020. We have outstanding interest rate collars with a notional value of $425 that will mature in
December 2021. For interest rate collars, no payments or receipts are exchanged unless interest rates rise or fall in excess of a
predetermined ceiling or floor rate.
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 fifteen months, as well as currency swaps
associated with certain recorded external notes payable and intercompany loans receivable and payable. Periodically, our foreign
currency derivatives also include net investment hedges of certain of our investments in foreign operations.
75
We have executed fixed-to-fixed cross-currency swaps in conjunction with the issuance of certain notes to eliminate the
variability in the functional-currency-equivalent cash flows due to changes in exchange rates associated with the forecasted
principal and interest payments. All of the underlying designated financial instruments, and any subsequent replacement debt, have
been designated as the hedged items in each respective cash flow hedge relationship, as shown in the table below. Designated as
cash flow hedges of the forecasted principal and interest payments of the underlying designated financial instruments, or
subsequent replacement debt, all of the swaps economically convert the underlying designated financial instruments into the
functional currency of each respective holder. The impact of the interest rate differential between the inflow and outflow rates on
all fixed-to-fixed cross-currency swaps is recognized during each period as a component of interest expense.
The following fixed-to-fixed cross-currency swaps were outstanding at December 31, 2020:
Underlying Financial Instrument
Derivative Financial Instrument
Description
April 2025 Notes
June 2026 Notes
Luxembourg Intercompany
Type
Payable
Payable
Face
Amount
Rate
Designated
Notional
Amount
Traded
Amount
Inflow Rate
Outflow
Rate
$ 400
$ 375
5.75%
6.50%
$ 400
$ 375
€ 371
€ 338
5.75%
6.50%
3.85%
5.14%
Notes
Receivable
€ 278
3.70%
€ 278
$ 300
5.38%
3.70%
All of the swaps are expected to be highly effective in offsetting the corresponding currency-based changes in cash outflows
related to the underlying designated financial instruments. Based on our qualitative assessment that the critical terms of all of the
underlying designated financial instruments and all of the associated swaps match and that all other required criteria have been
met, we do not expect to incur any ineffectiveness. As effective cash flow hedges, changes in the fair value of the swaps will be
recorded in OCI during each period. Additionally, to the extent the swaps remain effective, the appropriate portion of AOCI will
be reclassified to earnings each period as an offset to the foreign exchange gain or loss resulting from the remeasurement of the
underlying designated financial instruments. See Note 14 for additional information about the April 2025 Notes and the June 2026
Notes. To the extent the swaps are no longer effective, changes in their fair values will be recorded in earnings.
The total notional amount of outstanding foreign currency forward contracts, involving the exchange of various currencies,
was $386 at December 31, 2020 and $508 at December 31, 2019. The total notional amount of outstanding foreign currency
swaps, including the fixed-to-fixed cross-currency swaps, was $1,118 at December 31, 2020 and $1,090 at December 31, 2019.
The following currency derivatives were outstanding at December 31, 2020:
Notional Amount (U.S. Dollar Equivalent)
Total
Undesignated
Designated
$
84 $
Maturity
129 Aug-2021
Functional Currency
U.S. dollar
Euro
British pound
South African rand
Thai baht
Canadian dollar
Brazilian real
Indian rupee
Chinese renminbi
Total forward contracts
Traded Currency
Canadian dollar, Mexican peso
U.S. dollar, Australian dollar,
Swiss franc, Chinese renminbi,
Hungarian forint, Indian rupee,
Japanese yen, Mexican peso,
Singapore dollar
U.S. dollar, euro
U.S. dollar, euro
U.S. dollar, euro
U.S. dollar
U.S. dollar, euro
U.S. dollar, euro, British pound
Canadian dollar, euro
U.S. dollar
Euro
Total currency swaps
Total currency derivatives
euro
U.S. dollar
$
72
1
6
5
29
197
343
775
1,118
1,315 $
45 $
4
5
7
31
10
81
6
189
—
189 $
Jan-2024
76
6 Apr-2021
7
Jan-2021
37 Dec-2021
5 Aug-2021
39 Sep-2021
Jan-2022
81
6
Jan-2021
386
343 Nov-2027
Jun-2026
775
1,118
1,504
Designated cash flow hedges — With respect to contracts designated as cash flow hedges, changes in fair value during the period
in which the contracts remain outstanding are reported in OCI to the extent such contracts remain effective. Effectiveness is
measured by using regression analysis to determine the degree of correlation between the change in the fair value of the derivative
instrument and the change in the associated foreign currency exchange rates. Changes in fair value of contracts not designated as
76
cash flow hedges or as net investment hedges are recognized in other income (expense), net in the period in which the changes
occur. Realized gains and losses from currency-related forward contracts associated with forecasted transactions or from other
derivative instruments, including those that have been designated as cash flow hedges and those that have not been designated, are
recognized in the same line item in the consolidated statement of operations in which the underlying forecasted transaction or
other hedged item is recorded. Accordingly, amounts are potentially recorded in sales, cost of sales or, in certain circumstances,
other income (expense), net.
The following table provides a summary of deferred gains (losses) reported in AOCI as well as the amount expected to be
reclassified to income in one year or less:
Deferred Gain (Loss) in AOCI
Forward Contracts
Collar
Cross-Currency Swaps
Total
December 31, 2020 December 31, 2019
9 $
$
(6 )
3
6 $
6 $
(3 )
(36 )
(33 ) $
$
Gain (loss) expected
to be reclassified into
income in one year
or less
9
9
The following table provides a summary of the location and amount of gains or losses recognized in the consolidated
statement of operations associated with cash flow hedging relationships:
Derivatives Designated as Cash Flow Hedges
Total amounts of income and expense line items presented in the
consolidated statement of operations in which the effects of cash flow
hedges are recorded
$
(Gain) or loss on cash flow hedging relationships
Foreign currency forwards
2020
Net sales
Cost of sales
Other income
(expense), net
7,106 $
6,485 $
22
Amount of (gain) loss reclassified from AOCI into income
1
18
Cross-currency swaps
Amount of (gain) loss reclassified from AOCI into income
Derivatives Designated as Cash Flow Hedges
Total amounts of income and expense line items presented in the
consolidated statement of operations in which the effects of cash flow
hedges are recorded
$
(Gain) or loss on cash flow hedging relationships
Foreign currency forwards
99
2019
Net sales
Cost of sales
Other income
(expense), net
8,620 $
7,489 $
(25 )
Amount of (gain) loss reclassified from AOCI into income
(9 )
Cross-currency swaps
Amount of (gain) loss reclassified from AOCI into income
Derivatives Designated as Cash Flow Hedges
Total amounts of income and expense line items presented in the
consolidated statement of operations in which the effects of cash flow
hedges are recorded
$
(Gain) or loss on cash flow hedging relationships
Foreign currency forwards
(24 )
2018
Net sales
Cost of sales
Other income
(expense), net
8,143 $
6,986 $
(29 )
Amount of (gain) loss reclassified from AOCI into income
(1 )
Cross-currency swaps
Amount of (gain) loss reclassified from AOCI into income
(55 )
The amounts reclassified from AOCI into income for the cross-currency swaps represent an offset to a foreign exchange loss
on our foreign currency-denominated intercompany and external debt instruments.
77
Certain of our hedges of forecasted transactions have not formally been designated as cash flow hedges. As undesignated
forward contracts, the changes in the fair value of such contracts are included in earnings for the duration of the outstanding
forward contract. Any realized gain or loss on the settlement of such contracts is recognized in the same period and in the same
line item in the consolidated statement of operations as the underlying transaction. The following table provides a summary of the
location and amount of gains or losses recognized in the consolidated statement of operations associated with undesignated
hedging relationships.
Derivatives Not Designated as Hedging
Instruments
Foreign currency forward contracts
Foreign currency forward contracts
$
2020
2019
2018
— $
(6 )
— $
(14 )
Location of Gain or (Loss)
Recognized in Income
(5 ) Cost of sales
(5 ) Other income (expense), net
Amount of Gain (Loss) Recognized in Income
During the first quarter of 2019 we settled the outstanding undesignated Swiss franc notional deal contingent forward related
to the ODS acquisition for $21, resulting in a realized loss of $13 included in other income (expense), net in the first quarter of
2019.
Net investment hedges — We periodically designate derivative contracts or underlying non-derivative financial instruments as net
investment hedges. With respect to contracts designated as net investment hedges, we apply the forward method, but for non-
derivative financial instruments designated as net investment hedges, we apply the spot method. Under both methods, we report
changes in fair value in the CTA component of OCI during the period in which the contracts remain outstanding to the extent such
contracts and non-derivative financial instruments remain effective.
Note 16. Commitments and Contingencies
Product liabilities — Accrued product liability costs were $1 and $10 for product liability costs at December 31, 2020 and 2019.
We had also recognized amounts recoverable from third parties of $11 and $13 at the respective dates. Payments made to
claimants precede recovery of amounts from third parties, and may result in recoverable amounts in excess of the total liability.
We estimate these liabilities based on current information and assumptions about the value and likelihood of the claims against us.
Environmental liabilities — Accrued environmental liabilities were $10 and $13 at December 31, 2020 and 2019. We consider the
most probable method of remediation, current laws and regulations and existing technology in estimating our environmental
liabilities.
Guarantee of lease obligations — In connection with the divestiture of our Structural Products business in 2010, leases
covering three U.S. facilities were assigned to a U.S. affiliate of Metalsa. Under the terms of the sale agreement, we will guarantee
the affiliate’s performance under the leases, which run through June 2025, including approximately $6 of annual payments. In the
event of a required payment by Dana as guarantor, we are entitled to pursue full recovery from Metalsa of the amounts paid under
the guarantee and to take possession of the leased property.
Other legal matters — We are subject to various pending or threatened legal proceedings arising out of the normal course of
business or operations. In view of the inherent difficulty of predicting the outcome of such matters, we cannot state what the
eventual outcome of these matters will be. However, based on current knowledge and after consultation with legal counsel, we
believe that any liabilities that may result from these proceedings will not have a material adverse effect on our liquidity, financial
condition or results of operations.
78
Note 17. Warranty Obligations
We record a liability for estimated warranty obligations at the dates our products are sold. We record the liability based on our
estimate of costs to settle future claims. Adjustments to our estimated costs at time of sale are made as claim experience and other
new information becomes available. Obligations for service campaigns and other occurrences are recognized as adjustments to
prior estimates when the obligation is probable and can be reasonably estimated.
Changes in warranty liabilities —
Balance, beginning of period
Amounts accrued for current period sales
Adjustments of prior estimates
Settlements of warranty claims
Acquisitions
Currency impact
Balance, end of period
Note 18. Income Taxes
Income tax expense (benefit) —
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)
2020
2019
2018
101 $
35
1
(42 )
3
98 $
75 $
35
2
(35 )
24
101 $
2020
2019
2018
14 $
79
93
(23 )
(12 )
(35 )
58 $
13 $
92
105
(104 )
(33 )
(137 )
(32 ) $
76
37
(1 )
(35 )
(2 )
75
14
128
142
(47 )
(17 )
(64 )
78
$
$
$
$
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 before income taxes —
U.S. operations
Non-U.S. operations
Earnings before income taxes
2020
2019
2018
$
$
(128 ) $
115
(13 ) $
(166 ) $
337
171 $
26
468
494
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 2010.
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. 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.
U.S. tax reform legislation —Beginning in 2018, the Tax Cuts and Jobs Act ("Act") may trigger a taxable deemed dividend to the
extent that the annual earnings of our foreign subsidiaries exceed a specified threshold, based on the value of tangible foreign
operating assets. The deemed dividend, if any, from this global intangible low-taxed income (GILTI) may be offset by the use of
other tax attributes in that year, and specifically, the GILTI rules may impact the amount of cash tax savings that net operating
losses provide. The SEC staff has indicated that a company should make and disclose certain policy elections related to accounting
for GILTI. As to whether we will recognize deferred taxes for basis differences expected to reverse as GILTI or account for the
effect of GILTI as a period cost when incurred, we intend to account for the tax effect of GILTI as a period cost. As to the
realizability of the tax benefit provided by net operating losses, we are electing to utilize the tax law ordering approach.
79
Effective tax rate reconciliation —
U.S. federal income tax rate
(3 )
21
36
21
103
21
2020
2019
2018
$
%
$
%
$
%
Adjustments resulting from:
State & local income taxes, net of
federal benefit
Non-US income / expense
Credits & tax incentives
US foreign derived intangible
income
US tax & withholding tax on non-
US earnings
Intercompany sale of certain
operating assets
Settlement and return adjustments
Enacted change in tax rates
Pension settlement
Mexican non-deductible cost of
goods sold
Goodwill impairment
Miscellaneous items
Valuation allowance adjustments
Effective income tax rate
6
(5 )
(55 )
(46 )
39
423
(24 )
185
20
(154 )
27
3
(2 )
17
8
6
60
58
(207 )
(23 )
15
(130 )
(61 )
(46 )
(462 )
(446 )
(1 )
25
(62 )
(4 )
21
(19 )
3
73
(1 )
15
(37 )
(2 )
12
(11 )
2
43
6
23
(87 )
14
5
29
6
(2 )
(102 )
(32 )
(1 )
(60 )
(19 )
1
(22 )
78
1
5
(18 )
3
1
6
1
—
(4 )
16
During 2020, we recognized tax expense of $60 for additional valuation allowances in foreign jurisdictions due to reduced
income projections. We also recognized a benefit of $26 for the release of valuation allowance in Australia, based on recent
history of profitability and increased income projections. For the year, we also recognized tax benefits of $37 related to tax actions
that adjusted federal tax credits. A pre-tax goodwill impairment charge of $51 with an associated income tax benefit of $1 was
recorded. In conjunction with the completion of the intercompany sale of certain assets to a non-U.S. affiliate, tax expense of $12
was recorded, including the corresponding foreign derived intangible income benefit.
During 2019, we recognized a benefit of $22 for the release of valuation allowance in a subsidiary in Brazil based on recent
history of profitability and increased income projections. A pre-tax pension settlement charge of $259 was recorded, resulting in
income tax expense of $11 and a valuation allowance release of $18. For the year, we also recognized benefits for the release of
valuation allowance in the US of $34 based on increased income projections and $30 based on the development of a tax planning
strategy related to federal tax credits. Partially offsetting this benefit in the US was $6 of expense related to a US state law
change. During the second quarter of 2019, we also recorded tax benefits of $48 related to tax actions that adjusted federal tax
credits.
During 2018, we recognized a benefit of $44 related to U.S. state law changes and the development and implementation of a
tax planning strategy which adjusted federal tax credits, along with federal and state net operating losses and the associated
valuation allowances. We also recognized benefits of $11 relating to the reversal of a provision for an uncertain tax
position, $5 relating to the release of valuation allowances in the US based on improved income projections and $7 due to
permanent reinvestment assertions. Partially offsetting these benefits was $5 of expense to settle outstanding tax matters in a
foreign jurisdiction.
Foreign income repatriation — We continue to analyze and adjust the estimated impact of the non-U.S. income and withholding
tax liabilities based on the amount and source of these earnings, as well as the expected means through which those earnings may
be taxed. We recognized net expense of $6 in 2020, $3 in 2019 and a net benefit of $7 in 2018, 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 $9, $10 and $11 during 2020, 2019 and 2018 related to the actual transfer of funds to the U.S. The unrecognized tax liability
associated with the operations in which we are permanently reinvested is $5 at December 31, 2020.
The earnings of our certain non-U.S. subsidiaries may be repatriated to the U.S. in the form of repayments of intercompany
borrowings. Certain of our international operations had intercompany loan obligations to the U.S. totaling $1,338 at the end
of 2020. Included in this amount are intercompany loans and related interest accruals with an equivalent value of $21 which are
denominated in a foreign currency and considered to be permanently invested.
80
Valuation allowance adjustments — We have recorded valuation allowances in several entities where the recent history of
operating losses does not allow us to satisfy the “more likely than not” criterion for the recognition of deferred tax assets.
Consequently, there is no income tax expense or benefit recognized on the pre-tax income or losses in these jurisdictions as
valuation allowances are adjusted to offset the associated tax expense or benefit.
When evaluating the need for a valuation allowance we consider all components of comprehensive income, and we weigh the
positive and negative evidence, putting greater reliance on objectively verifiable 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 the
historical financial results due to activities that were either new to the business or not expected to recur in the future, in order to
identify the core earnings of the business. A sustained period of profitability, after considering changes to the historical results due
to implemented actions and nonrecurring events, along with positive expectations for future profitability are necessary to reach a
determination that a valuation allowance should be released. In 2020, we recognized a benefit of $26 for the release of valuation
allowance in a subsidiary in Australia based on recent history of profitability and increased income projections. During the third
quarter of 2019, we recognized a benefit of $22 for the release of a valuation allowance in a subsidiary in Brazil based on recent
history of profitability and increased income projections.
Deferred tax assets and liabilities — Temporary differences and carryforwards give rise to the following deferred tax assets and
liabilities.
2020
2019
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
Intangibles
Leasing activities
Total
Valuation allowances
Deferred tax assets
Unremitted earnings
Intangibles
Depreciation
Other
Deferred tax liabilities
Net deferred tax assets
$
$
240 $
92
149
76
234
47
25
5
17
43
928
(259 )
669
(10 )
(87 )
(97 )
572 $
258
87
124
81
244
42
19
6
46
907
(190 )
717
(4 )
(34 )
(104 )
(33 )
(175 )
542
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, 2020. 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.
81
Deferred
Tax
Asset
Valuation
Allowance
Earliest
Carryforward Year of
Period
Expiration
Net operating losses
U.S. federal
U.S. state
Brazil
France
Australia
Italy
Germany
Lithuania
South Africa
Spain
U.K.
Canada
India
China
Total
$
$
40 $
61
14
8
26
31
6
1
2
1
7
28
1
14
240 $
—
(33 ) Various
20
(5 ) Unlimited
Unlimited
Unlimited
(27 ) Unlimited
(6 ) Unlimited
Unlimited
Unlimited
Unlimited
(7 ) Unlimited
(25 )
(14 )
(117 )
20
8
5
2030
2021
2022
2028
2021
In addition to the NOL carryforwards listed in the table above, we have deferred tax assets related to capital loss
carryforwards of $47 which are fully offset with valuation allowances at December 31, 2020. We also have deferred tax assets
of $234 related to other credit carryforwards which are partially offset with $19 of valuation allowances at December 31, 2020.
The capital losses can be carried forward indefinitely while the other credits are generally available for 10 to 20 years.
The use of our $190 U.S. federal NOL as of December 31, 2020 is subject to limitation due to the change in ownership of our
stock in January 2008. 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. However, there
can be no assurance that trading in our shares will not affect another change in ownership under the IRC which could 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 and $12 was
accrued on the uncertain tax positions at December 31, 2020 and 2019.
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 prior years tax positions
Increase related to current year tax positions
Decrease related to settlements
Balance, end of period
2020
2019
2018
$
$
119 $
(5 )
(1 )
3
9
(21 )
104 $
107 $
(10 )
13
9
119 $
119
(4 )
(15 )
8
10
(11 )
107
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 $68 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.
82
Note 19. Other Income (Expense), Net
2020
2019
2018
Non-service cost components of pension and OPEB costs
Government grants and incentives
Foreign exchange gain (loss)
Strategic transaction expenses, net of transaction breakup fee income
Gain on investment in Hyliion
Non-income tax legal judgment
Gain on liquidation of foreign subsidiary
Other, net
Other income (expense), net
$
$
(10 ) $
14
8
(20 )
33
(3 )
22 $
(23 ) $
15
(11 )
(41 )
6
12
17
(25 ) $
(15 )
12
(12 )
(18 )
4
(29 )
Foreign exchange gains and losses on cross-currency intercompany loan balances that are not of a long-term investment
nature are included above. Foreign exchange gains and losses on intercompany loans that are permanently invested are reported in
OCI.
Strategic transaction expenses relate primarily to costs incurred in connection with acquisition and divestiture related
activities, including costs to complete the transaction and post-closing integration costs. Strategic transaction expenses in 2020
were primarily attributable to the acquisition of ODS and Nordresa and certain other strategic initiatives. Strategic transaction
expenses in 2019 were primarily attributable to the acquisition of ODS. Strategic transaction expenses in 2018 were primarily
attributable to our bid to acquire the driveline business of GKN plc., our acquisition of an ownership interest in TM4, our pending
acquisition of the ODS and integration costs associated with our acquisitions of BFP and BPT, and were partially offset by
a $40 transaction breakup fee associated with the GKN plc. transaction. See Note 2 for additional information.
We held $16 of convertible notes receivable from our investment in Hyliion Inc. On October 1, 2020, Hyliion Inc. completed
its merger with Tortoise Acquisition Corp. The business combination resulted in the combined company being renamed Hyliion
Holdings Corp. (Hyliion), with its common stock being listed on the New York Stock Exchange under the ticker symbol HYLN.
Effective with the completed merger, our notes receivable were converted into 2,988,229 common shares of HYLN. Our
investment in Hyliion will be included in noncurrent marketable securities and carried at fair value with changes in fair value
included in net income in future periods. The strategic partnership with Hyliion establishes Dana as the preferred supplier for e-
propulsion systems to Hyliion as long as Dana maintains a minimum equity investment in Hyliion.
During the first quarter of 2019, we won a legal judgment regarding the methodology used to calculate PIS/COFINS tax on
imports into Brazil.
During the fourth quarter of 2019, we liquidated a foreign subsidiary. The resulting non-cash gain is attributable to the
recognition of accumulated currency translation adjustments.
Note 20. Revenue from Contracts with Customers
We generate revenue from selling production parts to original equipment manufacturers (OEMs) and service parts to OEMs
and aftermarket customers. While we provide production and service parts to certain OEMs under awarded multi-year programs,
these multi-year programs do not contain any commitment to volume by the customer. As such, individual customer releases or
purchase orders represent the contract with the customer. Our customer contracts do not provide us with an enforceable right to
payment for performance completed to date throughout the contract term. As such, we recognize part sales revenue at the point in
time when the parts are shipped, and risk of loss has transferred to the customer. We have elected to continue to include shipping
and handling fees billed to customers in revenue, while including costs of shipping and handling in costs of sales. Taxes collected
from customers are excluded from revenues and credited directly to obligations to the appropriate government agencies. Payment
terms with our customers are established based on industry and regional practices and generally do not exceed 180 days.
We continually seek new business opportunities and at times provide incentives to our customers for new program
awards. We evaluate the underlying economics of each payment made to our customers to determine the proper accounting by
understanding the nature of the payment, the rights and obligations in the contract, and other relevant facts and
circumstances. Upfront payments to our customers are capitalized if we determine that the payments are incremental and incurred
only if the new business is obtained and we expect to recover these amounts from the customer over the term of the new business
program. We recognize a reduction to revenue as products that the upfront payments are related to are transferred to the customer,
based on the total amount of products expected to be sold over the term of the program. We evaluate the amounts capitalized each
period for recoverability and expense any amounts that are no longer expected to be recovered. We had $8 and $5 recorded in
other current assets and $45 and $37 recorded in other noncurrent assets at December 31, 2020 and December 31, 2019.
83
Certain of our customer contracts include rebate incentives. We estimate expected rebates and accrue the corresponding
refund liability, as a reduction of revenue, at the time covered product is sold to the customer based on anticipated customer
purchases during the rebate period and contractual rebate percentages. Refund liabilities are included in other accrued liabilities on
our consolidated balance sheet. We provide standard fitness for use warranties on the products we sell, accruing for estimated
costs related to product warranty obligations at time of sale. See Note 17 for additional information.
Contract liabilities are primarily comprised of cash deposits made by customers with cash in advance payment terms.
Generally, our contract liabilities turn over frequently given our relatively short production cycles. Contract liabilities
were $27 and $23 at December 31, 2020 and December 31, 2019. Contract liabilities are included in other accrued liabilities on
our consolidated balance sheet.
Disaggregation of revenue —
The following table disaggregates revenue for each of our operating segments by geographical market:
2020
North America
Europe
South America
Asia Pacific
Total
2019
North America
Europe
South America
Asia Pacific
Total
2018
North America
Europe
South America
Asia Pacific
Total
Light
Vehicle
Commercial
Vehicle
Off-
Highway
Power
Technologies
Total
$
$
$
$
$
$
2,228 $
346
108
356
3,038 $
2,679 $
325
137
468
3,609 $
2,477 $
347
186
565
3,575 $
693 $
192
200
96
1,181 $
948 $
233
312
118
1,611 $
908 $
271
308
125
1,612 $
252 $
1,260
32
426
1,970 $
317 $
1,617
40
386
2,360 $
141 $
1,423
34
246
1,844 $
429 $
411
18
59
917 $
529 $
431
20
60
1,040 $
580 $
443
18
71
1,112 $
3,602
2,209
358
937
7,106
4,473
2,606
509
1,032
8,620
4,106
2,484
546
1,007
8,143
Note 21. Segments, Geographical Area and Major Customer Information
We are a global provider of high-technology products to virtually every major vehicle manufacturer in the world. We also
serve the stationary industrial market. Our technologies include drive systems (axles, driveshafts, transmissions, and wheel and
track drives); motion systems (winches, slew drives, and hub drives); electrodynamic technologies (motors, inverters, software and
control systems, battery-management systems, and fuel cell plates); sealing solutions (gaskets, seals, cam covers, and oil pan
modules); thermal-management technologies (transmission and engine oil cooling, battery and electronics cooling, charge air
cooling, and thermal-acoustical protective shielding); and digital solutions (active and passive system controls and descriptive and
predictive analytics). We serve our global light vehicle, medium/heavy vehicle and off-highway markets through four operating
segments – Light Vehicle Drive Systems (Light Vehicle), Commercial Vehicle Drive and Motion Systems (Commercial Vehicle),
Off-Highway Drive and Motion Systems (Off-Highway) and Power Technologies, which is the center of excellence for sealing
and thermal-management technologies that span all customers in our on-highway and off-highway markets. These operating
segments have global responsibility and accountability for business commercial activities and financial performance.
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.
84
Segment information —
2020
Light Vehicle
Commercial Vehicle
Off-Highway
Power Technologies
Eliminations and other
Total
2019
Light Vehicle
Commercial Vehicle
Off-Highway
Power Technologies
Eliminations and other
Total
2018
Light Vehicle
Commercial Vehicle
Off-Highway
Power Technologies
Eliminations and other
Total
Inter-
External
Segment
Sales
Sales
Segment
EBITDA
Capital
Spend
Depreciation Assets
Net
$
3,038 $
1,181
1,970
917
$
7,106 $
$
3,609 $
1,611
2,360
1,040
$
8,620 $
$
3,575 $
1,612
1,844
1,112
$
8,143 $
104 $
71
44
19
(238 )
— $
124 $
100
17
23
(264 )
— $
133 $
107
12
23
(275 )
— $
239 $
36
234
94
603 $
438 $
138
330
117
1,023 $
398 $
146
285
149
978 $
131 $
41
67
38
49
326 $
179 $
52
85
46
64
426 $
195 $
27
36
36
31
325 $
167 $
34
91
32
21
345 $
149 $
37
87
30
19
322 $
124 $
38
43
30
25
260 $
1,432
808
1,348
360
146
4,094
1,369
897
1,364
367
124
4,121
1,288
811
707
363
29
3,198
Net assets include accounts receivable, inventories, other current assets, goodwill, intangibles, investments in affiliates, other
noncurrent assets, net property, plant and equipment, accounts payable and current accrued liabilities.
Reconciliation of segment EBITDA to consolidated net income —
Segment EBITDA
$
Corporate expense and other items, net
Depreciation
Amortization
Non-service cost components of pension and OPEB costs
Restructuring charges, net
Stock compensation expense
Strategic transaction expenses, net of transaction breakup fee income
Amounts attributable to previously divested/closed operations
Impairment of goodwill and indefinite-lived intangible asset
Gain on investment in Hyliion
Acquisition related inventory adjustments
Non-income tax legal judgment
Pension settlement charges
Gain on disposal group held for sale
Gain on liquidation of foreign subsidiary
Other items
Earnings before interest and income taxes
Loss on extinguishment of debt
Interest income
Interest expense
Earnings (loss) before income taxes
Income tax expense (benefit)
Equity in earnings of affiliates
Net income (loss)
$
85
2020
2019
2018
603 $
(10 )
(345 )
(20 )
(10 )
(34 )
(14 )
(20 )
(1 )
(51 )
33
(7 )
124
(8 )
9
138
(13 )
58
20
(51 ) $
1,023 $
(4 )
(322 )
(17 )
(23 )
(29 )
(19 )
(41 )
(5 )
(6 )
(13 )
6
(259 )
12
(11 )
292
(9 )
10
122
171
(32 )
30
233 $
978
(21 )
(260 )
(10 )
(15 )
(25 )
(16 )
(18 )
(20 )
3
(17 )
579
11
96
494
78
24
440
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
2020
2019
$
$
4,094 $
1,863
1,419
7,376 $
4,121
1,769
1,330
7,220
Geographic information — Of our 2020 consolidated net sales, the U.S., Italy, Germany and China account for 48%, 14%, 6% and
5%, respectively. No other country accounted for more than 5% of our consolidated net sales during 2020. 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
Asia Pacific
China
Other Asia Pacific
Total
Total
$
2020
Net Sales
2019
2018
2020
Long-Lived Assets
2019
2018
3,404 $
198
3,602
993
429
787
2,209
358
379
558
937
7,106 $
4,069 $
404
4,473
1,186
478
942
2,606
509
321
711
1,032
8,620 $
3,613 $
493
4,106
971
513
1,000
2,484
546
311
696
1,007
8,143 $
957 $
106
1,063
972 $
105
1,077
252
132
310
694
97
248
131
265
644
126
860
87
947
138
133
241
512
129
111
286
397
2,251 $
106
312
418
2,265 $
91
171
262
1,850
Sales to major customers — Ford and FCA are the only individual customers to whom sales have exceeded 10% of our consolidated
sales in each of the past three years. Sales to Ford were $1,436 (20%) in 2020, $1,753 (20%) in 2019 and $1,646 (20%) in 2018.
Sales to FCA (via a directed supply relationship) exceeded the threshold in 2020 at $839 (12%), 2019 at $988 (11%) and 2018 at
$911 (11%).
Note 22. Equity Affiliates
We have a number of investments in entities that engage in the manufacture and supply of vehicular parts (primarily axles,
axle housing and driveshafts) and electronic control units.
Dividends received from equity affiliates were $27, $21 and $20 in 2020, 2019 and 2018.
Equity method investments exceeding $5 at December 31, 2020 —
Dongfeng Dana Axle Co., Ltd. (DDAC)
ROC-Spicer, Ltd.
Pi Innovo Holdings Limited
Axles India Limited
All others as a group
Investments in equity affiliates
Investments in affiliates carried at cost
Investments in affiliates
Ownership
Percentage
50%
50%
49%
48%
$
$
Investment
99
21
17
8
5
150
2
152
86
On February 5, 2020, we acquired an additional ownership interest in Ashwoods. The additional interest, along with our
existing ownership interest, provided us with a controlling financial interest in Ashwoods. As such, we ceased accounting for our
investment in Ashwoods under the equity method. See Note 2 for additional information.
On October 1, 2020, we received a $4 cash dividend from Bendix Spicer Foundation Brake, LLC (BSFB). Immediately
following the receipt of the cash dividend, we sold our 20% ownership interest in BSFB to Bendix Commercial Vehicle Systems
LLC. We received $50, consisting of $21 in cash, a note receivable of $25 and deferred proceeds of $4. The proceeds received
approximated the carrying value of our investment in BSFB. The note receivable and deferred proceeds are due in one year and
bear interest at 1.65%.
On October 20, 2020, we acquired a 49% ownership interest in Pi Innovo Holdings Limited (Pi Innovo) for consideration of
$17, using cash on hand. The consideration paid is subject to adjustment based on cash and working capital balances as of the
closing date. Pi Innovo designs, develops and manufactures electronic control units spanning a range of applications and
industries. We are accounting for our investment in Pi Innovo by applying the equity method.
On December 16, 2020, we sold a portion of our ownership interest in ROC-Spicer, Ltd. (ROC-Spicer) to China Motor
Corporation (CMC), reducing our ownership interest in ROC-Spicer to 50%. In conjunction with the decrease in our ownership
interest, the ROC-Spicer shareholders agreement was amended, eliminating our controlling financial interest in ROC-Spicer. Upon
our loss of control, we recognized a $2 loss to other income (expense), net on the deconsolidation of ROC-Spicer. Of the $2 loss,
$1 is related to the remeasurement of our retained investment in ROC-Spicer. The $21 fair value of our retained interest in ROC-
Spicer was determined based on the share sale to CMC. Our retained investment in ROC-Spicer is being accounted for by
applying the equity method.
Our equity method investment in ROC-Spicer is included in the net assets of our Light Vehicle operating segment. Our equity
method investments in DDAC, Pi Innovo and Axles India Limited are included in the net assets of our Commercial Vehicle
operating segment.
The carrying value of our equity method investments at December 31, 2020 was $17 more than our share of the affiliates’
book value, with our recent investment in Pi Innovo accounting for $16 of the basis difference. We are still in the process of
completing the valuation of Pi Innovo’s assets and liabilities, but expect the $16 basis difference to be attributed to a combination
of identified intangible assets and goodwill.
87
Dana Incorporated
Quarterly Results (Unaudited)
(In millions, except per share amounts)
2020
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
2019
Net sales
Gross margin
Net income
Net income (loss) attributable to the parent company
Net income (loss) per share available to parent company common
stockholders
Basic
Diluted
First
Second
Quarter
Third
Quarter
Fourth
Quarter
Quarter
$
$
$
$
1,926 $
206 $
38 $
58 $
1,078 $
(10 ) $
(173 ) $
(174 ) $
1,994 $
214 $
45 $
45 $
2,108
211
39
40
$
$
0.40 $
0.40 $
(1.20 ) $
(1.20 ) $
0.31 $
0.31 $
0.28
0.27
First
Second
Quarter
Third
Quarter
Fourth
Quarter
Quarter
$
$
$
$
2,163 $
300 $
101 $
98 $
2,306 $
326 $
(66 ) $
(68 ) $
2,164 $
282 $
112 $
111 $
1,987
223
86
85
$
$
0.68 $
0.68 $
(0.47 ) $
(0.47 ) $
0.77 $
0.77 $
0.59
0.58
_________________________________________________________
Note: Gross margin is net sales less cost of sales.
During 2020, our quarterly results were significantly impacted by the global COVID-19 pandemic, with the impact being
most severe during the second quarter. Net income for the first quarter of 2020 includes a $51 pre-tax goodwill impairment charge
and $34 of net income tax benefits related to discrete items. Net loss for the second quarter includes a $5 pre-tax charge for the
write-off of deferred financing costs and $56 of net income tax expense related to discrete items. Net income for the fourth quarter
includes a $33 pre-tax gain on notes receivable conversion and subsequent adjustment of shares to fair value, a $3 pre-tax charge
for the write-off of deferred financing costs and $14 of net income tax benefits related to discrete items.
Net income for the first quarter of 2019 includes $16 of net income tax benefits related to discrete items. Net loss for the
second quarter of 2019 includes a $258 pre-tax pension settlement charge related to the termination of one of our U.S. defined
benefit pension plans and $87 of net income tax benefits related to discrete items. Net income for the third quarter of
2019 includes $22 of income tax benefit related to a discrete item. Net income for the fourth quarter of 2019 includes a $6 pre-tax
goodwill impairment charge and a $9 pre-tax loss on extinguishment of debt.
88
Dana Incorporated
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
Accounts Receivable - Allowance for
Doubtful Accounts
2020
2019
2018
Inventory Reserves
2020
2019
2018
Deferred Tax Assets - Valuation Allowance
2020
2019
2018
$
$
$
$
$
$
$
$
$
9 $
9 $
8 $
64 $
51 $
53 $
— $
2 $
3 $
23 $
25 $
15 $
190 $
281 $
301 $
60 $
(102 ) $
(31 ) $
(1 ) $
— $
— $
(14 ) $
(16 ) $
(11 ) $
— $
— $
— $
(1 ) $
(2 ) $
(2 ) $
3 $
4 $
(6 ) $
9 $
11 $
11 $
7
9
9
76
64
51
259
190
281
89
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, 2020, 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, 2020, 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, 2020 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,” “Board
Leadership Structure," "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 21, 2021, 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 21, 2021, which sections are hereby incorporated
herein by reference.
90
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 21, 2021,
which section is hereby incorporated herein by reference.
Equity Compensation Plan Information
The following table contains information at December 31, 2020 about shares of stock which may be issued under our equity
compensation plans, all of which have been approved by our shareholders.
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 Under
Equity Compensation
Plans (Excluding
Securities Reflected in
Column (a))
3.8 $
16.27
3.8 $
16.27
3.1
3.1
(Shares in millions) Plan Category
Equity compensation plans approved by security
holders
Equity compensation plans not approved by
security holders
Total
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, 2020.
(2) Calculated without taking into account the 3.2 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 21, 2021, 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 Registered Public Accounting Firm" of
Dana's definitive Proxy Statement relating to the Annual Meeting of Shareholders to be held on April 21, 2021, which section is
hereby incorporated herein by reference.
91
Item 15. Exhibits and Financial Statement Schedules
PART IV
(a) List of documents filed as a part of this report:
1.
2.
3.
4.
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 the Consolidated Financial Statements
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.
Exhibits
10-K
Pages
39
41
41
42
43
44
45
86
87
No.
2.1
3.1
3.2
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
10.1*
10.2*
Description
Share and Loan Purchase Agreement, dated July 29, 2018 among OC Oerlikon Corporation AG, Pfäffikon and
Dana International S.à r.l. Filed as Exhibit 2.1 to the Registrant's Current Report on Form 8-K filed August 2,
2018 and incorporated herein by reference.
Third Amended and Restated Certification of Incorporation of Dana Incorporated. Filed as Exhibit 3.1 to the
Registrant’s Current Report on Form 8-K filed May 2, 2018 and incorporated herein by reference.
Amended and Restated Bylaws of Dana Incorporated, effective as of May 2, 2018. Filed as Exhibit 3.2 to the
Registrant’s Current Report on Form 8-K filed May 2, 2018 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.
Third Supplemental Indenture, dated as of December 9, 2014, with respect to the Indenture, dated as of 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.
Indenture, dated as of May 27, 2016, among Dana Luxembourg Financing S.à r.l., 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 May 27, 2016, and incorporated herein by reference.
Indenture, dated as of April 4, 2017, among Dana Luxembourg Financing S.à r.l., Dana Incorporated and Wells
Fargo Bank, National Association, as trustee. Filed as Exhibit 4.1 to Registrant's Current Report on Form 8-K
dated April 4, 2017, and incorporated herein by reference.
Fourth Supplemental Indenture, dated as of November 20, 2019, with respect to the Indenture, dated January
28, 2011, between Dana Incorporated and Wells Fargo Bank, National Association, as trustee. Filed as Exhibit
4.1 to Registrant’s Current Report on Form 8-K dated November 20, 2019, and incorporated herein by
reference.
Sixth Supplemental Indenture, dated as of June 19, 2020, with respect to the Indenture, dated January 28, 2011,
between Dana Incorporated and Wells Fargo Bank, National Association, as trustee. Filed as Exhibit 4.1 to the
Registrant's Current Report on Form 8-K, dated June 19, 2020, and incorporated herein by reference.
Description of Dana Incorporated Common Stock. Filed as Exhibit 4.9 to the Registrant's Annual Report on
Form 10-K for the year ended December 31, 2019, and incorporated herein by reference.
Executive Employment Agreement dated August 11, 2015, by and between James K. Kamsickas and Dana
Incorporated. Filed as Exhibit 10.1 to Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 2015, and incorporated herein by reference.
Form of Proprietary Interest Protection and Non-Solicitation Agreement. Filed as Exhibit 10.3 to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2011, and incorporated herein by
reference.
92
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
10.16
10.17
10.18
21
23
24
31.1
31.2
32
101
Dana Incorporated 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.
Dana Incorporated 2017 Omnibus Incentive Plan. Filed as Exhibit 10.1 to Registrant's Form S-8 Registration
Statement dated August 1, 2017, 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 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. 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.
Form of Restricted Stock Unit Agreement. 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. 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.
Dana Incorporated 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.
Dana Incorporated Executive Severance Plan. Filed as Exhibit 10.1 to Registrant’s Current Report on Form 8-
K dated June 24, 2008, and incorporated herein by reference.
Amended and Restated Change in Control Severance Plan, effective as of April 30, 2018. Filed as Exhibit 10.1
to Registrant's Current Report on Form 8-K dated April 30, 2018, and incorporated herein by reference.
Revolving Credit and Guaranty Agreement, dated as of June 9, 2016, among Dana Incorporated, as borrower,
the guarantors party thereto, Citibank, N.A., as administrative agent and collateral agent, and the other lenders
party thereto. Filed as Exhibit 10.1 to Registrant's Current Report on Form 8-K dated June 9, 2016, and
incorporated herein by reference.
Revolving Facility Security Agreement, dated as of June 9, 2016, from Dana Incorporated and the other
guarantors referred to therein, as guarantors, to Citibank, N.A., as collateral agent. Filed as Exhibit 10.2 to
Registrant's Current Report on Form 8-K dated June 9, 2016, and incorporated herein by reference.
Amendment No. 1 to Revolving Credit and Guaranty Agreement and Amendment No. 1 to the Revolving
Facility Security Agreement, dated as of August 17, 2017, among Dana Incorporated, certain domestic
subsidiaries of Dana Incorporated party thereto, Citibank, N.A., as administrative agent and collateral agent.
Filed as Exhibit 10.1 to Registrant's Current Report on Form 8-K dated August 18, 2017, and incorporated
herein by reference.
Amendment No. 2 to Credit and Guaranty Agreement, dated as of February 28, 2019, among Dana
Incorporated, as borrower, the guarantors party thereto, the lenders party thereto and Citibank, N.A., as
administrative agent and collateral agent. Filed as Exhibit 10.1 to Registrant’s Current Report on Form 8-K
dated March 1, 2019, and incorporated herein by reference.
Amendment No. 3 to Credit and Guaranty Agreement, dated as of August 30, 2019, among Dana Incorporated,
as a borrower, Dana International Luxembourg S.à r.l., as a borrower, the guarantors party thereto, the lenders
party thereto and Citibank, N.A., as administrative agent and collateral agent. Filed as Exhibit 10.1 to
Registrant’s Current Report on Form 8-K dated September 4, 2019, and incorporated herein by reference.
Amendment No. 4 to Credit and Guaranty Agreement and Amendment No. 2 to Security Agreement, dated as
of April 16, 2020, among Dana Incorporated, Dana International Luxembourg S.à.r.l., the guarantors party
thereto, Citibank, N.A. as administrative agent, and the lenders party thereto. Filed as Exhibit 10.4 to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, and incorporated herein by
reference.
List of Consolidated Subsidiaries of Dana Incorporated. 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 Incorporated’s Annual Report on Form 10-K for the year ended December
31, 2020, formatted in iXBRL (Inline 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 with this Report.
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
* Management contract or compensatory plan or arrangement.
93
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, 2021
By: /s/ James K. Kamsickas
DANA INCORPORATED
James K. Kamsickas
Chairman, 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 2021 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/ Jonathan M. Collins
Jonathan M. Collins
/s/ James D. Kellett
James D. Kellett
/s/ Rachel A. Gonzalez*
Rachel A. Gonzalez
/s/ Virginia A. Kamsky*
Virginia A. Kamsky
/s/ Bridget E. Karlin*
Bridget E. Karlin
/s/ Michael J. Mack, Jr.*
Michael J. Mack, Jr.
/s/ Raymond E. Mabus, Jr.*
Raymond E. Mabus, Jr.
/s/ R. Bruce McDonald*
R. Bruce McDonald
/s/ Diarmuid B. O'Connell*
Diarmuid B. O'Connell
/s/ Keith E. Wandell*
Keith E. Wandell
*By:
/s/ Douglas H. Liedberg
Douglas H. Liedberg, Attorney-in-Fact
Title
Chairman, President and Chief Executive Officer
(Principal Executive Officer)
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
Vice President and Chief Accounting Officer
(Principal Accounting Officer)
Director
Director
Director
Director
Director
Director
Director
Director
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 Incorporated;
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, 2021
/s/ James K. Kamsickas
James K. Kamsickas
Chairman, President and Chief Executive Officer
95
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, Jonathan M. Collins, certify that:
1. I have reviewed this Annual Report on Form 10-K of Dana Incorporated;
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, 2021
/s/ Jonathan M. Collins
Jonathan M. Collins
Executive Vice President and Chief Financial Officer
96
Exhibit 32
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
In connection with the Annual Report of Dana Incorporated (Dana) on Form 10-K for the year ended December 31, 2020, 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, 2021
/s/ James K. Kamsickas
James K. Kamsickas
Chairman, President and Chief Executive Officer
/s/ Jonathan M. Collins
Jonathan M. Collins
Executive Vice President and Chief Financial Officer
97
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