Delaware | 26-1531856 | |
(State of incorporation) | (IRS Employer Identification Number) | |
3939 Technology Drive, Maumee, OH | 43537 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o |
(Do not check if a smaller reporting company) |
10-Q Pages | ||
PART I – FINANCIAL INFORMATION | ||
Item 1 | Financial Statements | |
Consolidated Statement of Operations (Unaudited) | ||
Consolidated Statement of Comprehensive Income (Unaudited) | ||
Consolidated Balance Sheet (Unaudited) | ||
Consolidated Statement of Cash Flows (Unaudited) | ||
Notes to Consolidated Financial Statements (Unaudited) | ||
Item 2 | Management’s Discussion and Analysis of Financial Condition and Results of Operations | |
Item 3 | Quantitative and Qualitative Disclosures About Market Risk | |
Item 4 | Controls and Procedures | |
PART II – OTHER INFORMATION | ||
Item 1 | Legal Proceedings | |
Item 1A | Risk Factors | |
Item 2 | Unregistered Sales of Equity Securities and Use of Proceeds | |
Item 6 | Exhibits | |
Signatures | ||
Exhibit Index |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Net sales | $ | 1,800 | $ | 1,936 | $ | 3,476 | $ | 3,900 | |||||||
Costs and expenses | |||||||||||||||
Cost of sales | 1,541 | 1,663 | 3,003 | 3,361 | |||||||||||
Selling, general and administrative expenses | 105 | 110 | 208 | 223 | |||||||||||
Amortization of intangibles | 18 | 19 | 37 | 38 | |||||||||||
Restructuring charges, net | 4 | 19 | 6 | 24 | |||||||||||
Other income, net | 18 | 8 | 20 | 7 | |||||||||||
Income from continuing operations before interest expense and income taxes | 150 | 133 | 242 | 261 | |||||||||||
Interest expense | 21 | 20 | 42 | 41 | |||||||||||
Income from continuing operations before income taxes | 129 | 113 | 200 | 220 | |||||||||||
Income tax expense | 35 | 27 | 62 | 64 | |||||||||||
Equity in earnings of affiliates | 3 | 2 | 7 | 6 | |||||||||||
Income from continuing operations | 97 | 88 | 145 | 162 | |||||||||||
Income (loss) from discontinued operations | (1 | ) | 1 | 1 | |||||||||||
Net income | 96 | 89 | 146 | 162 | |||||||||||
Less: Noncontrolling interests net income | 4 | 3 | 12 | 6 | |||||||||||
Net income attributable to the parent company | 92 | 86 | 134 | 156 | |||||||||||
Preferred stock dividend requirements | 7 | 7 | 15 | 15 | |||||||||||
Net income available to common stockholders | $ | 85 | $ | 79 | $ | 119 | $ | 141 | |||||||
Net income per share available to parent company common stockholders: | |||||||||||||||
Basic: | |||||||||||||||
Income from continuing operations | $ | 0.59 | $ | 0.52 | $ | 0.80 | $ | 0.96 | |||||||
Income (loss) from discontinued operations | $ | (0.01 | ) | $ | 0.01 | $ | 0.01 | $ | — | ||||||
Net income | $ | 0.58 | $ | 0.53 | $ | 0.81 | $ | 0.96 | |||||||
Diluted: | |||||||||||||||
Income from continuing operations | $ | 0.44 | $ | 0.40 | $ | 0.62 | $ | 0.73 | |||||||
Income from discontinued operations | $ | — | $ | — | $ | 0.01 | $ | — | |||||||
Net income | $ | 0.44 | $ | 0.40 | $ | 0.63 | $ | 0.73 | |||||||
Weighted-average common shares outstanding | |||||||||||||||
Basic | 145.9 | 147.9 | 146.9 | 147.7 | |||||||||||
Diluted | 211.9 | 214.6 | 213.1 | 214.7 | |||||||||||
Dividends declared per common share | $ | 0.05 | $ | 0.05 | $ | 0.10 | $ | 0.10 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Net income | $ | 96 | $ | 89 | $ | 146 | $ | 162 | |||||||
Less: Noncontrolling interests net income | 4 | 3 | 12 | 6 | |||||||||||
Net income attributable to the parent company | 92 | 86 | 134 | 156 | |||||||||||
Other comprehensive income (loss) attributable to the parent company, net of tax: | |||||||||||||||
Currency translation adjustments | (47 | ) | (79 | ) | (64 | ) | (35 | ) | |||||||
Change in unrealized hedging gains and losses | (6 | ) | (3 | ) | 8 | ||||||||||
Change in unrealized investment and other gains and losses | (10 | ) | (1 | ) | (9 | ) | 1 | ||||||||
Defined benefit plans | 6 | 4 | 14 | 6 | |||||||||||
Other comprehensive loss attributable to the parent company | (57 | ) | (76 | ) | (62 | ) | (20 | ) | |||||||
Other comprehensive income (loss) attributable to noncontrolling interests, net of tax: | |||||||||||||||
Currency translation adjustments | (3 | ) | (1 | ) | (5 | ) | |||||||||
Other comprehensive loss attributable to noncontrolling interests | (3 | ) | (1 | ) | (5 | ) | — | ||||||||
Total comprehensive income attributable to the parent company | 35 | 10 | 72 | 136 | |||||||||||
Total comprehensive income attributable to noncontrolling interests | 1 | 2 | 7 | 6 | |||||||||||
Total comprehensive income | $ | 36 | $ | 12 | $ | 79 | $ | 142 |
June 30, 2013 | December 31, 2012 | ||||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 1,030 | $ | 1,059 | |||
Marketable securities | 97 | 60 | |||||
Accounts receivable | |||||||
Trade, less allowance for doubtful accounts of $8 in 2013 and 2012 | 975 | 818 | |||||
Other | 163 | 170 | |||||
Inventories | |||||||
Raw materials | 394 | 388 | |||||
Work in process and finished goods | 379 | 354 | |||||
Other current assets | 122 | 104 | |||||
Total current assets | 3,160 | 2,953 | |||||
Goodwill | 100 | 101 | |||||
Intangibles | 273 | 325 | |||||
Other noncurrent assets | 252 | 324 | |||||
Investments in affiliates | 210 | 202 | |||||
Property, plant and equipment, net | 1,179 | 1,239 | |||||
Total assets | $ | 5,174 | $ | 5,144 | |||
Liabilities and equity | |||||||
Current liabilities | |||||||
Notes payable, including current portion of long-term debt | $ | 74 | $ | 101 | |||
Accounts payable | 938 | 766 | |||||
Accrued payroll and employee benefits | 150 | 160 | |||||
Accrued restructuring costs | 15 | 23 | |||||
Taxes on income | 69 | 63 | |||||
Other accrued liabilities | 169 | 197 | |||||
Total current liabilities | 1,415 | 1,310 | |||||
Long-term debt | 824 | 803 | |||||
Pension and postretirement obligations | 669 | 715 | |||||
Other noncurrent liabilities | 355 | 368 | |||||
Total liabilities | 3,263 | 3,196 | |||||
Commitments and contingencies (Note 13) | |||||||
Parent company stockholders' equity | |||||||
Preferred stock, 50,000,000 shares authorized | |||||||
Series A, $0.01 par value, 2,500,000 shares outstanding | 242 | 242 | |||||
Series B, $0.01 par value, 5,072,591 and 5,221,199 shares outstanding | 497 | 511 | |||||
Common stock, $0.01 par value, 450,000,000 shares authorized, 145,695,504 and 148,264,067 outstanding | 2 | 2 | |||||
Additional paid-in capital | 2,703 | 2,668 | |||||
Accumulated deficit | (658 | ) | (762 | ) | |||
Treasury stock, at cost (6,966,217 and 1,797,988 shares) | (115 | ) | (25 | ) | |||
Accumulated other comprehensive loss | (858 | ) | (793 | ) | |||
Total parent company stockholders' equity | 1,813 | 1,843 | |||||
Noncontrolling equity | 98 | 105 | |||||
Total equity | 1,911 | 1,948 | |||||
Total liabilities and equity | $ | 5,174 | $ | 5,144 |
Six Months Ended June 30, | |||||||
2013 | 2012 | ||||||
Operating activities | |||||||
Net income | $ | 146 | $ | 162 | |||
Depreciation | 82 | 96 | |||||
Amortization of intangibles | 43 | 44 | |||||
Amortization of deferred financing charges | 3 | 3 | |||||
Unremitted earnings of affiliates | (6 | ) | (4 | ) | |||
Stock compensation expense | 9 | 10 | |||||
Deferred income taxes | (5 | ) | |||||
Pension contributions, net | (20 | ) | (181 | ) | |||
Interest payment received on payment-in-kind note receivable | 26 | ||||||
Change in working capital | (84 | ) | (139 | ) | |||
Other, net | (12 | ) | 5 | ||||
Net cash provided by (used in) operating activities | 187 | (9 | ) | ||||
Investing activities | |||||||
Purchases of property, plant and equipment | (71 | ) | (71 | ) | |||
Acquisition of business | (8 | ) | |||||
Principal payment received on payment-in-kind note receivable | 33 | ||||||
Purchases of marketable securities | (66 | ) | (8 | ) | |||
Proceeds from sales of marketable securities | 24 | 4 | |||||
Proceeds from maturities of marketable securities | 5 | 3 | |||||
Other | 8 | 4 | |||||
Net cash used in investing activities | (75 | ) | (68 | ) | |||
Financing activities | |||||||
Net change in short-term debt | (1 | ) | 43 | ||||
Proceeds from long-term debt | 57 | 29 | |||||
Repayment of long-term debt | (48 | ) | (5 | ) | |||
Deferred financing payments | (3 | ) | |||||
Dividends paid to preferred stockholders | (15 | ) | (15 | ) | |||
Dividends paid to common stockholders | (15 | ) | (15 | ) | |||
Distributions to noncontrolling interests | (2 | ) | (2 | ) | |||
Repurchases of common stock | (86 | ) | |||||
Payments to acquire noncontrolling interests | (7 | ) | |||||
Other | 3 | 1 | |||||
Net cash provided by (used in) financing activities | (117 | ) | 36 | ||||
Net decrease in cash and cash equivalents | (5 | ) | (41 | ) | |||
Cash and cash equivalents – beginning of period | 1,059 | 931 | |||||
Effect of exchange rate changes on cash balances | (24 | ) | (9 | ) | |||
Cash and cash equivalents – end of period | $ | 1,030 | $ | 881 |
1. | Organization and Summary of Significant Accounting Policies |
2. | Acquisitions and Divestitures |
3. | Discontinued Operations |
4. | Goodwill and Other Intangible Assets |
5. | Restructuring of Operations |
6. | Stockholders' Equity |
7. | Earnings per Share |
8. | Stock Compensation |
9. | Pension and Postretirement Benefit Plans |
10. | Marketable Securities |
11. | Financing Agreements |
12. | Fair Value Measurements and Derivatives |
13. | Commitments and Contingencies |
14. | Warranty Obligations |
15. | Income Taxes |
16. | Other Income, Net |
17. | Segments |
18. | Equity Affiliates |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Sales | $ | — | $ | 13 | $ | — | $ | 26 | |||||||
Cost of sales | 1 | 11 | 1 | 22 | |||||||||||
Restructuring expense | 1 | 1 | 2 | ||||||||||||
Other income (expense), net | 3 | (2 | ) | ||||||||||||
Pre-tax income (loss) | (1 | ) | 1 | 1 | — | ||||||||||
Income tax expense | — | — | — | — | |||||||||||
Income (loss) from discontinued operations | $ | (1 | ) | $ | 1 | $ | 1 | $ | — |
June 30, 2013 | December 31, 2012 | ||||||||||||||||||||||||
Weighted Average Useful Life (years) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||||||||||
Amortizable intangible assets | |||||||||||||||||||||||||
Core technology | 7 | $ | 92 | $ | (75 | ) | $ | 17 | $ | 93 | $ | (69 | ) | $ | 24 | ||||||||||
Trademarks and trade names | 16 | 4 | (1 | ) | 3 | 4 | (1 | ) | 3 | ||||||||||||||||
Customer relationships | 8 | 525 | (357 | ) | 168 | 538 | (325 | ) | 213 | ||||||||||||||||
Non-amortizable intangible assets | |||||||||||||||||||||||||
Trademarks and trade names | 65 | 65 | 65 | 65 | |||||||||||||||||||||
Used in research and development activities | 20 | 20 | 20 | 20 | |||||||||||||||||||||
$ | 706 | $ | (433 | ) | $ | 273 | $ | 720 | $ | (395 | ) | $ | 325 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Charged to cost of sales | $ | 3 | $ | 3 | $ | 6 | $ | 6 | |||||||
Charged to amortization of intangibles | 18 | 19 | 37 | 38 | |||||||||||
Total amortization | $ | 21 | $ | 22 | $ | 43 | $ | 44 |
Remainder of 2013 | 2014 | 2015 | 2016 | 2017 | |||||||||||||||
Amortization expense | $ | 43 | $ | 49 | $ | 22 | $ | 20 | $ | 17 |
Employee Termination Benefits | Exit Costs | Total | |||||||||
Balance at March 31, 2013 | $ | 21 | $ | 12 | $ | 33 | |||||
Activity during the period: | |||||||||||
Charges to restructuring | 9 | 1 | 10 | ||||||||
Adjustments of accruals | (6 | ) | (6 | ) | |||||||
Cash payments | (10 | ) | (2 | ) | (12 | ) | |||||
Balance at June 30, 2013, including noncurrent portion | $ | 14 | $ | 11 | $ | 25 | |||||
Balance at December 31, 2012 | $ | 27 | $ | 13 | $ | 40 | |||||
Activity during the period: | |||||||||||
Charges to restructuring | 10 | 3 | 13 | ||||||||
Adjustments of accruals | (7 | ) | (7 | ) | |||||||
Discontinued operations charges | 1 | 1 | |||||||||
Cash payments | (16 | ) | (6 | ) | (22 | ) | |||||
Balance at June 30, 2013, including noncurrent portion | $ | 14 | $ | 11 | $ | 25 |
Expense Recognized | Future Cost to Complete | ||||||||||||||
Prior to 2013 | 2013 | Total to Date | |||||||||||||
LVD | $ | 18 | $ | 2 | $ | 20 | $ | 8 | |||||||
Power Technologies | 9 | 9 | 2 | ||||||||||||
Commercial Vehicle | 19 | 6 | 25 | 7 | |||||||||||
Off-Highway | 8 | (3 | ) | 5 | 1 | ||||||||||
Corporate | 1 | 1 | |||||||||||||
Discontinued operations | 4 | 1 | 5 | 4 | |||||||||||
Total | $ | 58 | $ | 7 | $ | 65 | $ | 22 |
2013 | 2012 | |||||||||||||||||||||||
Three Months Ended June 30, | Attributable to Parent | Attributable to Non- controlling Interests | Total Equity | Attributable to Parent | Attributable to Non- controlling Interests | Total Equity | ||||||||||||||||||
Balance, March 31 | $ | 1,847 | $ | 101 | $ | 1,948 | $ | 1,853 | $ | 105 | $ | 1,958 | ||||||||||||
Total comprehensive income | 35 | 1 | 36 | 10 | 2 | 12 | ||||||||||||||||||
Preferred stock dividends | (7 | ) | (7 | ) | (7 | ) | (7 | ) | ||||||||||||||||
Common stock dividends | (7 | ) | (7 | ) | (8 | ) | (8 | ) | ||||||||||||||||
Distributions to noncontrolling interests | (4 | ) | (4 | ) | (8 | ) | (8 | ) | ||||||||||||||||
Common stock share repurchases | (62 | ) | (62 | ) | ||||||||||||||||||||
Stock compensation | 9 | 9 | 4 | 4 | ||||||||||||||||||||
Stock withheld for employee taxes | (2 | ) | (2 | ) | (1 | ) | (1 | ) | ||||||||||||||||
Balance, June 30 | $ | 1,813 | $ | 98 | $ | 1,911 | $ | 1,851 | $ | 99 | $ | 1,950 | ||||||||||||
Six Months Ended June 30, | ||||||||||||||||||||||||
Balance, December 31 | $ | 1,843 | $ | 105 | $ | 1,948 | $ | 1,737 | $ | 101 | $ | 1,838 | ||||||||||||
Total comprehensive income | 72 | 7 | 79 | 136 | 6 | 142 | ||||||||||||||||||
Preferred stock dividends | (15 | ) | (15 | ) | (15 | ) | (15 | ) | ||||||||||||||||
Common stock dividends | (15 | ) | (15 | ) | (15 | ) | (15 | ) | ||||||||||||||||
Distributions to noncontrolling interests | (5 | ) | (5 | ) | (8 | ) | (8 | ) | ||||||||||||||||
Common stock share repurchases | (86 | ) | (86 | ) | ||||||||||||||||||||
Adjustments to paid-in capital for purchase of noncontrolling interests | 6 | 6 | ||||||||||||||||||||||
Adjustments to other comprehensive income for purchase of noncontrolling interests | (3 | ) | (3 | ) | ||||||||||||||||||||
Purchase of noncontrolling interests | (9 | ) | (9 | ) | ||||||||||||||||||||
Stock compensation | 15 | 15 | 9 | 9 | ||||||||||||||||||||
Stock withheld for employee taxes | (4 | ) | (4 | ) | (1 | ) | (1 | ) | ||||||||||||||||
Balance, June 30 | $ | 1,813 | $ | 98 | $ | 1,911 | $ | 1,851 | $ | 99 | $ | 1,950 |
Parent Company Stockholders | |||||||||||||||||||
Foreign Currency Translation | Hedging | Investments | Defined Benefit Plans | Accumulated Other Comprehensive Income (Loss) | |||||||||||||||
Balance, March 31, 2013 | $ | (219 | ) | $ | 7 | $ | 13 | $ | (602 | ) | $ | (801 | ) | ||||||
Other comprehensive income (loss): | |||||||||||||||||||
Currency translation adjustments | (47 | ) | (47 | ) | |||||||||||||||
Holding gains (losses) | (3 | ) | (2 | ) | (5 | ) | |||||||||||||
Reclassification of amount to net income (a) | (3 | ) | (8 | ) | (11 | ) | |||||||||||||
Amortization of net actuarial losses included in net periodic benefit cost (b) | 6 | 6 | |||||||||||||||||
Other comprehensive income (loss) | (47 | ) | (6 | ) | (10 | ) | 6 | (57 | ) | ||||||||||
Balance, June 30, 2013 | $ | (266 | ) | $ | 1 | $ | 3 | $ | (596 | ) | $ | (858 | ) | ||||||
Balance, March 31, 2012 | $ | (148 | ) | $ | (2 | ) | $ | 12 | $ | (456 | ) | $ | (594 | ) | |||||
Other comprehensive income (loss): | |||||||||||||||||||
Currency translation adjustments | (79 | ) | (79 | ) | |||||||||||||||
Holding gains (losses) | (4 | ) | (1 | ) | (5 | ) | |||||||||||||
Reclassification of amount to net income (a) | 4 | 4 | |||||||||||||||||
Amortization of net actuarial losses included in net periodic benefit cost (b) | 4 | 4 | |||||||||||||||||
Other comprehensive income (loss) | (79 | ) | — | (1 | ) | 4 | (76 | ) | |||||||||||
Balance, June 30, 2012 | $ | (227 | ) | $ | (2 | ) | $ | 11 | $ | (452 | ) | $ | (670 | ) |
Balance, December 31, 2012 | $ | (198 | ) | $ | 3 | $ | 12 | $ | (610 | ) | $ | (793 | ) | ||||||
Other comprehensive income (loss): | |||||||||||||||||||
Currency translation adjustments | (64 | ) | (64 | ) | |||||||||||||||
Holding gains (losses) | 2 | (1 | ) | 1 | |||||||||||||||
Reclassification of amount to net income (a) | (5 | ) | (8 | ) | (13 | ) | |||||||||||||
Venezuelan bolivar devaluation | 2 | 2 | |||||||||||||||||
Amortization of net actuarial losses included in net periodic benefit cost (b) | 12 | 12 | |||||||||||||||||
Other comprehensive income (loss) | (64 | ) | (3 | ) | (9 | ) | 14 | (62 | ) | ||||||||||
Adjustment for purchase of noncontrolling interests | (4 | ) | 1 | (3 | ) | ||||||||||||||
Balance, June 30, 2013 | $ | (266 | ) | $ | 1 | $ | 3 | $ | (596 | ) | $ | (858 | ) | ||||||
Balance, December 31, 2011 | $ | (192 | ) | $ | (10 | ) | $ | 10 | $ | (458 | ) | $ | (650 | ) | |||||
Other comprehensive income (loss): | |||||||||||||||||||
Currency translation adjustments | (35 | ) | (35 | ) | |||||||||||||||
Holding gains (losses) | 4 | 1 | 5 | ||||||||||||||||
Reclassification of amount to net income (a) | 6 | 6 | |||||||||||||||||
Net actuarial loss | (1 | ) | (1 | ) | |||||||||||||||
Amortization of net actuarial losses included in net periodic benefit cost (b) | 7 | 7 | |||||||||||||||||
Tax expense | (2 | ) | (2 | ) | |||||||||||||||
Other comprehensive income (loss) | (35 | ) | 8 | 1 | 6 | (20 | ) | ||||||||||||
Balance, June 30, 2012 | $ | (227 | ) | $ | (2 | ) | $ | 11 | $ | (452 | ) | $ | (670 | ) |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Income from continuing operations | $ | 97 | $ | 88 | $ | 145 | $ | 162 | |||||||
Less: Noncontrolling interests | 4 | 3 | 12 | 6 | |||||||||||
Less: Preferred stock dividend requirements | 7 | 7 | 15 | 15 | |||||||||||
Income from continuing operations available to common stockholders - Numerator basic | 86 | 78 | 118 | 141 | |||||||||||
Preferred stock dividend requirements | 7 | 7 | 15 | 15 | |||||||||||
Numerator diluted | $ | 93 | $ | 85 | $ | 133 | $ | 156 | |||||||
Net income available to common stockholders - Numerator basic | $ | 85 | $ | 79 | $ | 119 | $ | 141 | |||||||
Preferred stock dividend requirements | 7 | 7 | 15 | 15 | |||||||||||
Numerator diluted | $ | 92 | $ | 86 | $ | 134 | $ | 156 | |||||||
Weighted-average number of shares outstanding - Denominator basic | 145.9 | 147.9 | 146.9 | 147.7 | |||||||||||
Employee compensation-related shares, including stock options | 1.4 | 2.0 | 1.6 | 2.3 | |||||||||||
Conversion of preferred stock | 64.6 | 64.7 | 64.6 | 64.7 | |||||||||||
Denominator diluted | 211.9 | 214.6 | 213.1 | 214.7 |
Weighted-average Per Share | ||||||||||
Granted (In millions) | Exercise Price | Grant Date Fair Value | ||||||||
Stock options | 0.9 | $ | 16.21 | $ | 7.46 | |||||
SARs | 0.2 | $ | 16.19 | $ | 7.45 | |||||
RSUs | 0.5 | $ | 16.26 |
Options | SARs | ||||
Expected term (in years) | 6.00 | 6.00 | |||
Risk-free interest rate | 1.07 | % | 1.07 | % | |
Dividend yield | 1.41 | % | 1.41 | % | |
Expected volatility | 55.80 | % | 55.80 | % |
Pension | ||||||||||||||||||||||||
2013 | 2012 | OPEB - Non-U.S. | ||||||||||||||||||||||
Three Months Ended June 30, | U.S. | Non-U.S. | U.S. | Non-U.S. | 2013 | 2012 | ||||||||||||||||||
Interest cost | $ | 19 | $ | 3 | $ | 22 | $ | 3 | $ | 1 | $ | 2 | ||||||||||||
Expected return on plan assets | (29 | ) | (29 | ) | (1 | ) | ||||||||||||||||||
Service cost | 2 | 1 | ||||||||||||||||||||||
Amortization of net actuarial loss | 5 | 1 | 4 | |||||||||||||||||||||
Net periodic (benefit) cost | $ | (5 | ) | $ | 6 | $ | (3 | ) | $ | 3 | $ | 1 | $ | 2 | ||||||||||
Six Months Ended June 30, | ||||||||||||||||||||||||
Interest cost | $ | 38 | $ | 6 | $ | 43 | $ | 6 | $ | 2 | $ | 3 | ||||||||||||
Expected return on plan assets | (58 | ) | (56 | ) | (1 | ) | ||||||||||||||||||
Service cost | 3 | 2 | ||||||||||||||||||||||
Amortization of net actuarial loss | 10 | 2 | 7 | |||||||||||||||||||||
Net periodic (benefit) cost | $ | (10 | ) | $ | 11 | $ | (6 | ) | $ | 7 | $ | 2 | $ | 3 |
June 30, 2013 | December 31, 2012 | ||||||||||||||||||||||
Cost | Unrealized Gain (Loss) | Fair Value | Cost | Unrealized Gain (Loss) | Fair Value | ||||||||||||||||||
U.S. government securities | $ | 25 | $ | — | $ | 25 | $ | 7 | $ | — | $ | 7 | |||||||||||
Corporate securities | 28 | (1 | ) | 27 | 11 | 11 | |||||||||||||||||
Certificates of deposit | 15 | 15 | 16 | 16 | |||||||||||||||||||
Other | 32 | (2 | ) | 30 | 25 | 1 | 26 | ||||||||||||||||
Total marketable securities | $ | 100 | $ | (3 | ) | $ | 97 | $ | 59 | $ | 1 | $ | 60 |
Interest Rate | June 30, 2013 | December 31, 2012 | ||||||||
Senior Notes due 2019 | 6.50% | $ | 400 | $ | 400 | |||||
Senior Notes due 2021 | 6.75% | 350 | 350 | |||||||
Other indebtedness | 107 | 109 | ||||||||
Total | 857 | 859 | ||||||||
Less: current maturities | 33 | 56 | ||||||||
Total long-term debt | $ | 824 | $ | 803 |
Remaining Borrowing Availability | Base Rate | LIBOR Rate | ||||
Greater than $350 | 0.50 | % | 1.50 | % | ||
Greater than $150 but less than or equal to $350 | 0.75 | % | 1.75 | % | ||
$150 or less | 1.00 | % | 2.00 | % |
Fair Value Measurements Using | ||||||||||||||||
Quoted Prices in Active Markets | Significant Inputs Observable | Significant Inputs Unobservable | ||||||||||||||
June 30, 2013 | Total | (Level 1) | (Level 2) | (Level 3) | ||||||||||||
Notes receivable - noncurrent asset | $ | 75 | $ | — | $ | — | $ | 75 | ||||||||
Marketable securities - current asset | 97 | 57 | 40 | |||||||||||||
Currency forward contracts - current asset | 2 | 2 | ||||||||||||||
Currency forward contracts - current liability | 1 | 1 | ||||||||||||||
December 31, 2012 | ||||||||||||||||
Notes receivable - noncurrent asset | $ | 129 | $ | — | $ | — | $ | 129 | ||||||||
Marketable securities - current asset | 60 | 37 | 23 | |||||||||||||
Currency forward contracts - current asset | 4 | 4 | ||||||||||||||
Currency forward contracts - current liability | 1 | 1 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
Notes receivable, including current portion | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Beginning of period | $ | 133 | $ | 119 | $ | 129 | $ | 116 | ||||||||
Accretion of value (interest income) | 3 | 3 | 7 | 7 | ||||||||||||
Payment received | (61 | ) | (61 | ) | ||||||||||||
Other | (1 | ) | ||||||||||||||
End of period | $ | 75 | $ | 122 | $ | 75 | $ | 122 |
June 30, 2013 | December 31, 2012 | ||||||||||||||
Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||
Senior notes | $ | 750 | $ | 794 | $ | 750 | $ | 805 | |||||||
Other indebtedness | 107 | 106 | 109 | 107 | |||||||||||
Total | $ | 857 | $ | 900 | $ | 859 | $ | 912 |
Notional Amount (U.S. Dollar Equivalent) | ||||||||||||||||
Functional Currency | Traded Currency | Designated as Cash Flow Hedges | Undesignated | Total | Maturity | |||||||||||
U.S. dollar | Mexican peso | $ | 93 | $ | — | $ | 93 | Jun-14 | ||||||||
Euro | U.S. dollar, Canadian dollar, Hungarian forint, British pound, Swiss franc | 60 | 4 | 64 | Jun-14 | |||||||||||
British pound | U.S. dollar, Euro | 18 | 1 | 19 | Jun-14 | |||||||||||
Swedish krona | Euro | 16 | 2 | 18 | Jun-14 | |||||||||||
South African rand | U.S. dollar, Euro | 7 | 7 | Sep-13 | ||||||||||||
Indian rupee | U.S. dollar, British pound, Euro | 16 | 16 | Apr-14 | ||||||||||||
Total forward contracts | $ | 187 | $ | 30 | $ | 217 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Balance, beginning of period | $ | 63 | $ | 77 | $ | 66 | $ | 72 | |||||||
Amounts accrued for current period sales | 7 | 6 | 13 | 15 | |||||||||||
Adjustments of prior accrual estimates | 2 | 3 | |||||||||||||
Settlements of warranty claims | (10 | ) | (7 | ) | (19 | ) | (13 | ) | |||||||
Currency impact | (1 | ) | (1 | ) | (1 | ) | |||||||||
Balance, end of period | $ | 59 | $ | 77 | $ | 59 | $ | 77 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Interest income | $ | 5 | $ | 5 | $ | 12 | $ | 11 | |||||||
Foreign exchange gain (loss) | 4 | (1 | ) | (4 | ) | (10 | ) | ||||||||
Strategic transaction expenses | (2 | ) | (4 | ) | (2 | ) | |||||||||
Write off of deferred financing costs | (2 | ) | (2 | ) | |||||||||||
Recognition of unrealized gain on payment-in-kind note receivable | 5 | 5 | |||||||||||||
Impairment of long-lived assets | (2 | ) | |||||||||||||
Other | 8 | 4 | 13 | 10 | |||||||||||
Other income, net | $ | 18 | $ | 8 | $ | 20 | $ | 7 |
2013 | 2012 | |||||||||||||||||||||||
Three Months Ended June 30, | External Sales | Inter-Segment Sales | Segment EBITDA | External Sales | Inter-Segment Sales | Segment EBITDA | ||||||||||||||||||
LVD | $ | 673 | $ | 33 | $ | 71 | $ | 735 | $ | 44 | $ | 76 | ||||||||||||
Power Technologies | 265 | 6 | 39 | 262 | 6 | 37 | ||||||||||||||||||
Commercial Vehicle | 498 | 32 | 61 | 513 | 39 | 57 | ||||||||||||||||||
Off-Highway | 364 | 12 | 46 | 426 | 17 | 56 | ||||||||||||||||||
Eliminations and other | (83 | ) | (106 | ) | ||||||||||||||||||||
Total | $ | 1,800 | $ | — | $ | 217 | $ | 1,936 | $ | — | $ | 226 | ||||||||||||
Six Months Ended June 30, | ||||||||||||||||||||||||
LVD | $ | 1,292 | $ | 66 | $ | 112 | $ | 1,462 | $ | 102 | $ | 139 | ||||||||||||
Power Technologies | 521 | 11 | 75 | 530 | 11 | 77 | ||||||||||||||||||
Commercial Vehicle | 956 | 64 | 102 | 1,064 | 72 | 118 | ||||||||||||||||||
Off-Highway | 707 | 24 | 87 | 844 | 32 | 105 | ||||||||||||||||||
Eliminations and other | (165 | ) | (217 | ) | ||||||||||||||||||||
Total | $ | 3,476 | $ | — | $ | 376 | $ | 3,900 | $ | — | $ | 439 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Segment EBITDA | $ | 217 | $ | 226 | $ | 376 | $ | 439 | |||||||
Corporate expense and other items, net | (2 | ) | (4 | ) | (3 | ) | (7 | ) | |||||||
Depreciation | (40 | ) | (46 | ) | (82 | ) | (94 | ) | |||||||
Amortization of intangibles | (21 | ) | (22 | ) | (43 | ) | (44 | ) | |||||||
Restructuring | (4 | ) | (19 | ) | (6 | ) | (24 | ) | |||||||
Strategic transaction and other items | (3 | ) | (1 | ) | (6 | ) | (5 | ) | |||||||
Write off of deferred financing costs | (2 | ) | (2 | ) | |||||||||||
Recognition of unrealized gain on payment-in-kind note receivable | 5 | 5 | |||||||||||||
Impairment and loss on sale of assets | (3 | ) | (6 | ) | |||||||||||
Stock compensation expense | (4 | ) | (2 | ) | (9 | ) | (9 | ) | |||||||
Foreign exchange on intercompany loans and market value adjustments on forwards | (1 | ) | (1 | ) | |||||||||||
Interest expense | (21 | ) | (20 | ) | (42 | ) | (41 | ) | |||||||
Interest income | 5 | 5 | 12 | 11 | |||||||||||
Income from continuing operations before income taxes | 129 | 113 | 200 | 220 | |||||||||||
Income tax expense | 35 | 27 | 62 | 64 | |||||||||||
Equity in earnings of affiliates | 3 | 2 | 7 | 6 | |||||||||||
Income from continuing operations | 97 | 88 | 145 | 162 | |||||||||||
Income (loss) from discontinued operations | (1 | ) | 1 | 1 | |||||||||||
Net income | $ | 96 | $ | 89 | $ | 146 | $ | 162 |
Ownership Percentage | Investment | ||||
Dongfeng Dana Axle Co., Ltd. (DDAC) | 50% | $ | 153 | ||
Bendix Spicer Foundation Brake, LLC | 20% | 37 | |||
Axles India Limited | 48% | 8 | |||
All others as a group | Various | 10 | |||
Investments in equity affiliates | 208 | ||||
Investment in affiliates carried at cost | Various | 2 | |||
Investment in affiliates | $ | 210 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Sales | $ | 229 | $ | 165 | $ | 416 | $ | 378 | |||||||
Gross profit | $ | 25 | $ | 17 | $ | 45 | $ | 40 | |||||||
Pre-tax income | $ | 10 | $ | 3 | $ | 16 | $ | 9 | |||||||
Net income | $ | 10 | $ | 3 | $ | 16 | $ | 8 | |||||||
Dana's equity earnings in affiliate | $ | 3 | $ | — | $ | 6 | $ | 2 |
Actual | |||||||||||
(Units in thousands) | Dana 2013 Outlook | 2012 | 2011 | ||||||||
North America | |||||||||||
Light Vehicle (Total) | 15,900 | to | 16,100 | 15,441 | 13,125 | ||||||
Light Truck (full frame) | 3,400 | to | 3,500 | 3,464 | 3,181 | ||||||
Medium Truck (Classes 5-7) | 180 | to | 190 | 188 | 167 | ||||||
Heavy Truck (Class 8) | 255 | to | 265 | 279 | 255 | ||||||
Agricultural Equipment | 65 | to | 75 | 75 | 69 | ||||||
Construction Equipment | 155 | to | 165 | 163 | 149 | ||||||
Europe (including E. Europe) | |||||||||||
Light Vehicle | 18,000 | to | 19,000 | 19,265 | 20,089 | ||||||
Medium/Heavy Truck | 390 | to | 410 | 400 | 430 | ||||||
Agricultural Equipment | 245 | to | 255 | 255 | 240 | ||||||
Construction Equipment | 290 | to | 300 | 322 | 320 | ||||||
South America | |||||||||||
Light Vehicle | 4,400 | to | 4,600 | 4,290 | 4,318 | ||||||
Medium/Heavy Truck | 195 | to | 205 | 172 | 219 | ||||||
Agricultural Equipment | 50 | to | 55 | 48 | 47 | ||||||
Construction Equipment | 15 | to | 20 | 19 | 19 | ||||||
Asia-Pacific | |||||||||||
Light Vehicle | 41,500 | to | 42,500 | 40,786 | 36,803 | ||||||
Medium/Heavy Truck | 1,500 | to | 1,600 | 1,492 | 1,720 | ||||||
Agricultural Equipment | 675 | to | 715 | 750 | 682 | ||||||
Construction Equipment | 550 | to | 590 | 614 | 615 |
2013 Outlook | 2012 | 2011 | |||||||
Sales | ~ $7,000 | $ | 7,224 | $ | 7,544 | ||||
Adjusted EBITDA * | ~ $800 | $ | 781 | $ | 765 | ||||
Free Cash Flow ** | $265 - $285 | $ | 175 | $ | 174 |
* | Adjusted EBITDA is a non-GAAP financial measure discussed under Segment EBITDA within the Segment Results of Operations discussion below. See Item 7 of our 2012 Form 10-K for a reconciliation of 2012 and 2011 adjusted EBITDA to net income. |
** | Free cash flow is a non-GAAP financial measure, which we have defined as cash provided by (used in) operating activities less purchases of property, plant and equipment. We believe this measure is useful to investors in evaluating the operational cash flow of the company inclusive of the spending required to maintain the operations. Free cash flow is neither intended to represent nor be an alternative to the measure of net cash provided by (used in) operating activities reported under GAAP. Free cash flow may not be comparable to similarly titled measures reported by other companies. See Item 7 of our 2012 Form 10-K for a reconciliation of 2012 and 2011 free cash flow to net cash flows provided by operating activities. |
Three Months Ended June 30, | |||||||||||
2013 | 2012 | Increase/(Decrease) | |||||||||
Net sales | $ | 1,800 | $ | 1,936 | $ | (136 | ) | ||||
Cost of sales | 1,541 | 1,663 | (122 | ) | |||||||
Gross margin | 259 | 273 | (14 | ) | |||||||
Selling, general and administrative expenses | 105 | 110 | (5 | ) | |||||||
Amortization of intangibles | 18 | 19 | (1 | ) | |||||||
Restructuring charges, net | 4 | 19 | (15 | ) | |||||||
Other income, net | 18 | 8 | 10 | ||||||||
Income from continuing operations before interest expense and income taxes | $ | 150 | $ | 133 | $ | 17 | |||||
Income from continuing operations | $ | 97 | $ | 88 | $ | 9 | |||||
Income (loss) from discontinued operations | $ | (1 | ) | $ | 1 | $ | (2 | ) | |||
Net income attributable to the parent company | $ | 92 | $ | 86 | $ | 6 |
Three Months Ended June 30, | Amount of Change Due To | ||||||||||||||||||||||
2013 | 2012 | Increase/(Decrease) | Currency Effects | Acquisitions and Divestitures | Organic Change | ||||||||||||||||||
North America | $ | 800 | $ | 945 | $ | (145 | ) | $ | 1 | $ | (12 | ) | $ | (134 | ) | ||||||||
Europe | 517 | 550 | (33 | ) | (1 | ) | (32 | ) | |||||||||||||||
South America | 271 | 225 | 46 | (40 | ) | 86 | |||||||||||||||||
Asia Pacific | 212 | 216 | (4 | ) | 2 | (6 | ) | ||||||||||||||||
Total | $ | 1,800 | $ | 1,936 | $ | (136 | ) | $ | (38 | ) | $ | (12 | ) | $ | (86 | ) |
Six Months Ended June 30, | |||||||||||
2013 | 2012 | Increase/(Decrease) | |||||||||
Net sales | $ | 3,476 | $ | 3,900 | $ | (424 | ) | ||||
Cost of sales | 3,003 | 3,361 | (358 | ) | |||||||
Gross margin | 473 | 539 | (66 | ) | |||||||
Selling, general and administrative expenses | 208 | 223 | (15 | ) | |||||||
Amortization of intangibles | 37 | 38 | (1 | ) | |||||||
Restructuring charges, net | 6 | 24 | (18 | ) | |||||||
Other income, net | 20 | 7 | 13 | ||||||||
Income from continuing operations before interest expense and income taxes | $ | 242 | $ | 261 | $ | (19 | ) | ||||
Income from continuing operations | $ | 145 | $ | 162 | $ | (17 | ) | ||||
Income from discontinued operations | $ | 1 | $ | 1 | |||||||
Net income attributable to the parent company | $ | 134 | $ | 156 | $ | (22 | ) |
Six Months Ended June 30, | Amount of Change Due To | ||||||||||||||||||||||
2013 | 2012 | Increase/(Decrease) | Currency Effects | Acquisitions Divestitures | Organic Change | ||||||||||||||||||
North America | $ | 1,522 | $ | 1,909 | $ | (387 | ) | $ | 2 | $ | (23 | ) | $ | (366 | ) | ||||||||
Europe | 1,020 | 1,102 | (82 | ) | (4 | ) | (78 | ) | |||||||||||||||
South America | 491 | 449 | 42 | (65 | ) | 107 | |||||||||||||||||
Asia Pacific | 443 | 440 | 3 | (1 | ) | 4 | |||||||||||||||||
Total | $ | 3,476 | $ | 3,900 | $ | (424 | ) | $ | (68 | ) | $ | (23 | ) | $ | (333 | ) |
Amount of Change Due To | |||||||||||||||||||||||
Three Months Ended June 30, | 2013 | 2012 | Increase/(Decrease) | Currency Effects | Acquisitions and Divestitures | Organic Change | |||||||||||||||||
LVD | $ | 673 | $ | 735 | $ | (62 | ) | $ | (33 | ) | $ | — | $ | (29 | ) | ||||||||
Power Technologies | 265 | 262 | 3 | (3 | ) | 6 | |||||||||||||||||
Commercial Vehicle | 498 | 513 | (15 | ) | (7 | ) | (8 | ) | |||||||||||||||
Off-Highway | 364 | 426 | (62 | ) | 5 | (12 | ) | (55 | ) | ||||||||||||||
Total | $ | 1,800 | $ | 1,936 | $ | (136 | ) | $ | (38 | ) | $ | (12 | ) | $ | (86 | ) | |||||||
Six Months Ended June 30, | |||||||||||||||||||||||
LVD | $ | 1,292 | $ | 1,462 | $ | (170 | ) | $ | (44 | ) | $ | — | $ | (126 | ) | ||||||||
Power Technologies | 521 | 530 | (9 | ) | (6 | ) | (3 | ) | |||||||||||||||
Commercial Vehicle | 956 | 1,064 | (108 | ) | (24 | ) | (84 | ) | |||||||||||||||
Off-Highway | 707 | 844 | (137 | ) | 6 | (23 | ) | (120 | ) | ||||||||||||||
Total | $ | 3,476 | $ | 3,900 | $ | (424 | ) | $ | (68 | ) | $ | (23 | ) | $ | (333 | ) |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
Segment EBITDA | 2013 | 2012 | Increase/(Decrease) | 2013 | 2012 | Increase/(Decrease) | |||||||||||||||||
LVD | $ | 71 | $ | 76 | $ | (5 | ) | $ | 112 | $ | 139 | $ | (27 | ) | |||||||||
Power Technologies | 39 | 37 | 2 | 75 | 77 | (2 | ) | ||||||||||||||||
Commercial Vehicle | 61 | 57 | 4 | 102 | 118 | (16 | ) | ||||||||||||||||
Off-Highway | 46 | 56 | (10 | ) | 87 | 105 | (18 | ) | |||||||||||||||
Total Segment EBITDA | 217 | 226 | (9 | ) | 376 | 439 | (63 | ) | |||||||||||||||
Corporate expense and other items, net | (2 | ) | (4 | ) | 2 | (3 | ) | (7 | ) | 4 | |||||||||||||
Structures EBITDA | 3 | (3 | ) | 5 | (5 | ) | |||||||||||||||||
Adjusted EBITDA * | 215 | 225 | (10 | ) | 373 | 437 | (64 | ) | |||||||||||||||
Depreciation and amortization | (61 | ) | (68 | ) | 7 | (125 | ) | (138 | ) | 13 | |||||||||||||
Restructuring | (4 | ) | (19 | ) | 15 | (6 | ) | (24 | ) | 18 | |||||||||||||
Interest expense, net | (16 | ) | (15 | ) | (1 | ) | (30 | ) | (30 | ) | — | ||||||||||||
Structures EBITDA | (3 | ) | 3 | (5 | ) | 5 | |||||||||||||||||
Other ** | (5 | ) | (7 | ) | 2 | (12 | ) | (20 | ) | 8 | |||||||||||||
Income from continuing operations before income taxes | 129 | 113 | 16 | 200 | 220 | (20 | ) | ||||||||||||||||
Income tax expense | 35 | 27 | 8 | 62 | 64 | (2 | ) | ||||||||||||||||
Equity in earnings of affiliates | 3 | 2 | 1 | 7 | 6 | 1 | |||||||||||||||||
Income from continuing operations | 97 | 88 | 9 | 145 | 162 | (17 | ) | ||||||||||||||||
Income (loss) from discontinued operations | (1 | ) | 1 | (2 | ) | 1 | 1 | ||||||||||||||||
Net income | $ | 96 | $ | 89 | $ | 7 | $ | 146 | $ | 162 | $ | (16 | ) |
** | Other includes write off of deferred financing costs, recognition of unrealized gain on payment-in-kind note receivable, strategic transaction expenses, stock compensation expense, loss on sales of assets, impairment of long-lived assets and foreign exchange costs and benefits. See Note 17 to the consolidated financial statements in Item 1 of Part I for additional details. |
Cash and cash equivalents | $ | 1,030 | |
Less: Deposits supporting obligations | (23 | ) | |
Available cash | 1,007 | ||
Additional cash availability from lines of credit in the U.S. and Europe | 394 | ||
Marketable securities | 97 | ||
Total global liquidity | $ | 1,498 |
U.S. | Non-U.S. | Total | |||||||||
Cash and cash equivalents | $ | 179 | $ | 699 | $ | 878 | |||||
Cash and cash equivalents held as deposits | 1 | 22 | 23 | ||||||||
Cash and cash equivalents held at less than wholly-owned subsidiaries | 129 | 129 | |||||||||
Consolidated cash balance | $ | 180 | $ | 850 | $ | 1,030 |
Six Months Ended June 30, | |||||||
2013 | 2012 | ||||||
Cash used for working capital | $ | (84 | ) | $ | (139 | ) | |
Other cash provided by operations | 271 | 130 | |||||
Net cash provided by (used in) operating activities | 187 | (9 | ) | ||||
Net cash used in investing activities | (75 | ) | (68 | ) | |||
Net cash provided by (used in) financing activities | (117 | ) | 36 | ||||
Net decrease in cash and cash equivalents | $ | (5 | ) | $ | (41 | ) |
Calendar Month | Number of Shares Purchased | Average Price Paid per Share | Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs | ||||||||||
April | 1,276,090 | $ | 16.65 | 1,276,090 | $ | 190 | ||||||||
May | 1,215,200 | $ | 17.65 | 1,215,200 | $ | 169 | ||||||||
June | 1,058,500 | $ | 18.68 | 1,058,500 | $ | 899 |
DANA HOLDING CORPORATION | |||
Date: | July 25, 2013 | By: | /s/ William G. Quigley III |
William G. Quigley III | |||
Executive Vice President and | |||
Chief Financial Officer |
Exhibit No. | Description | |
10.1 | Second Amended and Restated Revolving Credit and Guaranty Agreement, dated as of June 20, 2013, among Dana Holding Corporation, as the borrower; the guarantors party thereto; Citibank, N.A., as administrative agent and collateral agent; the banks, financial institutions and other institutional lenders party thereto, each as a lender; Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as lead arrangers and joint bookrunners; Bank of America, N.A., as syndication agent; and Barclays Bank PLC, Deutsche Bank Securities Inc., JPMorgan Chase Bank, N.A., UBS Securities LLC and Wells Fargo Bank, N.A., as documentation agents. Filed as Exhibit 10.1 to Registrant's Current Report on Form 8-K dated June 20, 2013 and incorporated herein by reference. | |
10.2 | Amended and Restated Security Agreement, dated as of June 20, 2013, among Dana Holding Corporation, the guarantors party thereto and Citibank, N.A., as collateral agent. Filed as Exhibit 10.2 to Registrant's Current Report on Form 8-K dated June 20, 2013 and incorporated herein by reference. | |
31.1 | Rule 13a-14(a)/15d-14(a) Certification by Chief Executive Officer | |
31.2 | Rule 13a-14(a)/15d-14(a) Certification by Chief Financial Officer | |
32 | Section 1350 Certifications (furnished only) | |
101 | 101.INS XBRL Instance Document | |
101.SCH XBRL Schema Document | ||
101.CAL XBRL Calculation Linkbase Document | ||
101.LAB XBRL Labels Linkbase Document | ||
101.PRE XBRL Presentation Linkbase Document | ||
101.DEF XBRL Definition Linkbase Document |
1. | I have reviewed this Quarterly Report on Form 10-Q of Dana Holding Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ Roger J. Wood | |
Roger J. Wood | |
President and Chief Executive Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of Dana Holding Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ William G. Quigley III | |
William G. Quigley III | |
Executive Vice President and | |
Chief Financial Officer |
(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. |
/s/ Roger J. Wood | |
Roger J. Wood | |
President and Chief Executive Officer | |
/s/ William G. Quigley III | |
William G. Quigley III | |
Executive Vice President and | |
Chief Financial Officer |
Equity Affiliates - Additional Information (Details) (USD $)
In Millions, unless otherwise specified |
Jun. 30, 2013
|
---|---|
Equity Method Investments and Joint Ventures [Abstract] | |
Threshold for reporting equity method investments | $ 5 |
Equity Affiliates - Summarized Financial Information for DDAC and Other Equity Affiliates (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Schedule of Equity Method Investments [Line Items] | ||||
Dana's equity earnings in affiliate | $ 3 | $ 2 | $ 7 | $ 6 |
Dongfeng Dana Axle Co., Ltd. (DDAC)
|
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Schedule of Equity Method Investments [Line Items] | ||||
Sales | 229 | 165 | 416 | 378 |
Gross profit | 25 | 17 | 45 | 40 |
Pre-tax income | 10 | 3 | 16 | 9 |
Net income | 10 | 3 | 16 | 8 |
Dana's equity earnings in affiliate | $ 3 | $ 0 | $ 6 | $ 2 |
Financing Agreements
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Jun. 30, 2013
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financing Agreements | Financing Agreements Long-term debt at —
The weighted-average interest rate on the senior notes was 6.62%. Interest on the senior notes is payable semi-annually on February 15 and August 15. Revolving facility — On June 20, 2013, we received commitments from existing lenders for a $500 amended and restated revolving credit facility (the Amended Revolving Facility) which expires on June 20, 2018. In connection with Amended Revolving Facility, we paid $3 in deferred financing costs to be amortized to interest expense over the life of the facility. We wrote off $2 of previously deferred financing costs associated with our prior revolving credit facility to other income, net. The Amended Revolving Facility is guaranteed by all of our domestic subsidiaries except for Dana Credit Corporation and Dana Companies, LLC and their respective subsidiaries (the guarantors) and grants a first priority lien on Dana's and the guarantors' accounts receivable and inventories and, under certain circumstances, to the extent Dana and the guarantors grant a first-priority lien on certain other assets and property, a second-priority lien on such other assets and property. Advances under the Amended Revolving Facility bear interest at a floating rate based on, at our option, the base rate or London Interbank Offered Rate (LIBOR) (each as described in the revolving credit agreement) plus a margin based on the undrawn amounts available under the agreement as set forth below:
Commitment fees are applied based on the average daily unused portion of the available amounts under the Amended Revolving Facility. If the average daily unused portion of the revolving facility is less than 50%, the applicable fee will be 0.25% per annum. If the average daily unused portion of the revolving facility is equal to or greater than 50%, the applicable fee will be 0.375% per annum. Up to $300 of the revolving facility may be applied to letters of credit, which reduces availability. We pay a fee for issued and undrawn letters of credit in an amount per annum equal to the applicable LIBOR margin based on quarterly average availability under the revolving facility and a per annum fronting fee of 0.125%, payable quarterly. There were no borrowings under the revolving facility at June 30, 2013 but we had utilized $70 for letters of credit. Based on our borrowing base collateral of $373, we had potential availability at June 30, 2013 under the revolving facility of $303 after deducting the outstanding letters of credit. European receivables loan facility — Certain of our European subsidiaries participate in an accounts receivable backed credit facility (the European Facility) which permits borrowings of up to €75 ($98 at the June 30, 2013 exchange rate). Availability through the European Facility is subject to the existence of adequate levels of supporting accounts receivable. Advances from the European Facility bear interest based on the LIBOR applicable to the currency in which each advance is denominated or an Alternate Base Rate (as defined). We pay a fee on the unused amount of the European Facility, in addition to other customary fees. At June 30, 2013, we had no borrowings under the European Facility. As of June 30, 2013, we had potential availability of $91 based on the effective borrowing base. The European Facility expires in March 2016. Debt covenants — At June 30, 2013, we were in compliance with the covenants of our financing agreements. Under the Amended Revolving Facility and the senior notes, we are required to comply with certain incurrence-based covenants customary for facilities of these types. |
Goodwill and Other Intangible Assets
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Jun. 30, 2013
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets | Goodwill and Other Intangible Assets Goodwill — Our goodwill is assigned to our Off-Highway operating segment. The changes in the carrying amount of goodwill are due to currency fluctuations. Components of other intangible assets —
The net carrying amounts of intangible assets, other than goodwill, attributable to each of our operating segments at June 30, 2013 were as follows: LVD — $16, Power Technologies — $23, Commercial Vehicle — $149 and Off-Highway — $85. Amortization expense related to amortizable intangible assets —
The following table provides the estimated aggregate pre-tax amortization expense related to intangible assets for each of the next five years based on June 30, 2013 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.
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Equity Affiliates
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Jun. 30, 2013
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Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Affiliates | Equity Affiliates We have a number of investments in entities that engage in the manufacture of vehicular parts — primarily axles, driveshafts and wheel-end braking systems — supplied to OEMs. Equity method investments exceeding $5 at June 30, 2013 —
Summarized financial information for DDAC —
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Fair Value Measurements and Derivatives - Additional Information (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2013
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Jun. 30, 2013
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Mar. 31, 2013
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Dec. 31, 2012
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Fair Value Disclosures [Abstract] | ||||
Unobservable Input Risk Premium | 2.50% | |||
Notional amounts of derivatives | $ 217 | $ 217 | $ 217 | |
Deferred gains (losses) which are reported in AOCI that are expected to be reclassified to earnings during the next twelve months | 1 | 1 | 7 | 3 |
Deferred gains (losses) which are reported in AOCI that are reclassified to earnings during the current period | $ 3 | $ 5 |
Stock Compensation - Granted Awards Activity (Details) (USD $)
In Millions, unless otherwise specified |
6 Months Ended |
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Jun. 30, 2013
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Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Stock options - Granted | 0.9 |
Stock options - Weighted Average Per Share Exercise Price | $ 16.21 |
Stock options - Weighted Average Per Share Date Fair Value | $ 7.46 |
SARs
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Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Other than options - Granted | 0.2 |
Other than options - Weighted Average Per Share Exercise Price | $ 16.19 |
Other than options - Weighted Average Per Share Grant Date Fair Value | $ 7.45 |
RSUs
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Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Other than options - Granted | 0.5 |
Other than options - Weighted Average Per Share Grant Date Fair Value | $ 16.26 |
Fair Value Measurements and Derivatives
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Jun. 30, 2013
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements and Derivatives | 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:
Changes in Level 3 recurring fair value measurements —
The notes receivable balance represents a payment-in-kind callable note, due 2019, obtained in connection with a divestiture in 2004. The fair value of the note is derived using a discounted cash flow technique and capped at the callable value. The discount rate used in the calculation is the current yield of the publicly traded debt of the operating subsidiary of the obligor, adjusted by a 250 basis point risk premium. The significant unobservable input used to fair value the note is the risk premium. A significant increase in the risk premium may result in a lower fair value measurement. A significant decrease in the risk premium would not result in a higher fair value measurement due to the callable value cap. The fair value of the note at June 30, 2013 equaled the callable value. Fair value of financial instruments – The fair values of financial instruments that do not approximate carrying values in our balance sheet are as follows:
The fair value of our senior notes is estimated based upon a market approach (Level 2) while the fair value of our other indebtedness is based upon an income approach (Level 2). Fair value measurements on a nonrecurring basis — In addition to items that are measured at fair value on a recurring basis, we also have long-lived assets that may be measured at fair value on a nonrecurring basis. These assets include intangible assets and property, plant and equipment which may be written down to fair value as a result of impairment. Foreign currency derivatives — The total notional amounts of outstanding foreign currency forward contracts, comprised of currency forward contracts involving the exchange of various currencies, were $217 as of June 30, 2013 and December 31, 2012. The following currency forward contracts were outstanding at June 30, 2013 and are primarily associated with forecasted transactions involving the purchases and sales of inventory through the next twelve months:
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 other comprehensive income (OCI) to the extent such contracts remain effective. Changes in fair value of those contracts that are not designated as cash flow hedges are reported in income in the period in which the changes occur. Forward contracts associated with product-related transactions are marked to market in cost of sales while other contracts are marked to market through other income, net. Amounts recorded in AOCI are ultimately reclassified to earnings in the same periods in which the underlying transactions affect earnings. Amounts to be reclassified to earnings — Deferred gains of $1 at June 30, 2013, which are reported in AOCI, are expected to be reclassified to earnings during the next twelve months. Amounts expected to be reclassified to earnings assume no change in the current hedge relationships or to June 30, 2013 market rates. Deferred gains at December 31, 2012 of $3 had increased to $7 at March 31, 2013, of which $3 and $5 were reclassified from AOCI to earnings in the quarter and six months ended June 30, 2013. The remainder of the change in the amounts deferred in AOCI is primarily attributable to the fluctuation of the U.S. dollar against the Mexican peso during the first half of 2013. |
Restructuring of Operations - Restructuring Charges and Related Payments and Adjustments (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | ||||||||||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
Total Restructuring Costs
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Mar. 31, 2013
Total Restructuring Costs
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Jun. 30, 2012
Total Restructuring Costs
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Mar. 31, 2012
Total Restructuring Costs
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Jun. 30, 2013
Employee Termination Benefits
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Jun. 30, 2012
Employee Termination Benefits
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Mar. 31, 2012
Employee Termination Benefits
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Jun. 30, 2013
Employee Termination Benefits
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Jun. 30, 2013
Exit Costs
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Jun. 30, 2012
Exit Costs
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Mar. 31, 2012
Exit Costs
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Jun. 30, 2013
Exit Costs
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Restructuring Cost and Reserve [Line Items] | ||||||||||||||||
Restructuring charges | $ 4 | $ 19 | $ 6 | $ 24 | $ 4 | $ 3 | $ 20 | $ 6 | $ 3 | $ 7 | $ 4 | $ 1 | $ 13 | $ 2 | ||
Restructuring Reserve [Roll Forward] | ||||||||||||||||
Beginning balance | 33 | 40 | 21 | 27 | 12 | 13 | ||||||||||
Charges to restructuring | 10 | 13 | 9 | 10 | 1 | 3 | ||||||||||
Adjustments of accruals | (6) | (7) | (6) | (7) | ||||||||||||
Discontinued operations charges | 1 | 1 | ||||||||||||||
Cash payments | (12) | (22) | (10) | (16) | (2) | (6) | ||||||||||
Ending Balance | $ 25 | $ 25 | $ 14 | $ 14 | $ 11 | $ 11 |
Stock Compensation - Key Assumptions as Part of Black-Scholes Option Pricing Model (Details)
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6 Months Ended |
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Jun. 30, 2013
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Stock Options
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Share based Compensation Arrangement by Share based Payment Award, Fair Value Assumptions, Method Used [Line Items] | |
Expected term (in years) | 6 years |
Risk-free interest rate | 1.07% |
Dividend yield | 1.41% |
Expected volatility | 55.80% |
SARs
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Share based Compensation Arrangement by Share based Payment Award, Fair Value Assumptions, Method Used [Line Items] | |
Expected term (in years) | 6 years |
Risk-free interest rate | 1.07% |
Dividend yield | 1.41% |
Expected volatility | 55.80% |
Segments (Tables)
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Jun. 30, 2013
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment information —
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Reconciliation of Segment EBITDA to Consolidated | Reconciliation of segment EBITDA to consolidated net income —
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Goodwill and Other Intangible Assets (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Other Intangible Assets | Components of other intangible assets —
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Amortization Expense Related to Amortizable Intangible Assets | Amortization expense related to amortizable intangible assets —
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Estimated Aggregate Pre-tax Amoritzation Expense Related to Intangible Assets | The following table provides the estimated aggregate pre-tax amortization expense related to intangible assets for each of the next five years based on June 30, 2013 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.
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Discontinued Operations (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Result from Discontinued Operation | The results of the discontinued operations were as follows:
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Goodwill and Other Intangible Assets - Estimated Aggregate Pre-Tax Amortization Expense Related to Intangible Assets (Details) (USD $)
In Millions, unless otherwise specified |
Jun. 30, 2013
|
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Goodwill and Intangible Assets Disclosure [Abstract] | |
Amortization expense remainder of 2013 | $ 43 |
Amortization expense 2014 | 49 |
Amortization expense 2015 | 22 |
Amortization expense 2016 | 20 |
Amortization expense 2017 | $ 17 |
Financing Agreements (Tables)
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6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt | Long-term debt at —
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Advances under Amdended Revolving Facility | Advances under the Amended Revolving Facility bear interest at a floating rate based on, at our option, the base rate or London Interbank Offered Rate (LIBOR) (each as described in the revolving credit agreement) plus a margin based on the undrawn amounts available under the agreement as set forth below:
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Acquisitions and Divestitures - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 6 Months Ended | 3 Months Ended | 12 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
|
Jun. 30, 2013
Fallbrook [Member]
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Dec. 31, 2012
Fallbrook [Member]
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Sep. 10, 2012
Fallbrook [Member]
|
Jun. 30, 2013
Fallbrook [Member]
Off-Highway
|
Jun. 30, 2013
Fallbrook [Member]
LVD
|
Mar. 31, 2012
Axle Differential and Brake Systems [Member]
|
Dec. 31, 2012
Axle Differential and Brake Systems [Member]
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Business Acquisitions and Investments in Equity Affiliates [Line Items] | |||||||||||
Business acquisition, purchase price | $ 20 | ||||||||||
Business acquisition, cash paid | 8 | 5 | 7 | ||||||||
Business acquisition, purchase price allocated to non-amortizable intangible assets | 20 | 12 | 8 | ||||||||
Proceeds in escrow | 12 | 12 | |||||||||
Cash proceeds from divestiture of business | 8 | ||||||||||
Asset impairment for sales of business based on our current estimate of the expected sales price | 2 | 2 | |||||||||
Sales of divested business | $ 32 |
Restructuring of Operations - Project-to-Date and Estimated Future Restructuring Costs (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 6 Months Ended | 30 Months Ended | 36 Months Ended | 6 Months Ended | 30 Months Ended | 36 Months Ended | 6 Months Ended | 30 Months Ended | 36 Months Ended | 6 Months Ended | 30 Months Ended | 36 Months Ended | 6 Months Ended | 30 Months Ended | 36 Months Ended | 6 Months Ended | 30 Months Ended | 36 Months Ended | 6 Months Ended | 30 Months Ended | 36 Months Ended | |||
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Jun. 30, 2013
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Jun. 30, 2012
|
Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
LVD
|
Dec. 31, 2012
LVD
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Jun. 30, 2013
LVD
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Jun. 30, 2013
Power Technologies
|
Dec. 31, 2012
Power Technologies
|
Jun. 30, 2013
Power Technologies
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Jun. 30, 2013
Commercial Vehicle
|
Dec. 31, 2012
Commercial Vehicle
|
Jun. 30, 2013
Commercial Vehicle
|
Jun. 30, 2013
Off-Highway
|
Dec. 31, 2012
Off-Highway
|
Jun. 30, 2013
Off-Highway
|
Jun. 30, 2013
Corporate and Other [Member]
|
Dec. 31, 2012
Corporate and Other [Member]
|
Jun. 30, 2013
Corporate and Other [Member]
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Jun. 30, 2013
Discontinued Operations
|
Dec. 31, 2012
Discontinued Operations
|
Jun. 30, 2013
Discontinued Operations
|
Jun. 30, 2013
Total Restructuring Costs including Cost Associated with Discontinued Operations
|
Dec. 31, 2012
Total Restructuring Costs including Cost Associated with Discontinued Operations
|
Jun. 30, 2013
Total Restructuring Costs including Cost Associated with Discontinued Operations
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Restructuring Cost and Reserve [Line Items] | |||||||||||||||||||||||||
Restructuring charges | $ 4 | $ 19 | $ 6 | $ 24 | $ 2 | $ 6 | $ (3) | $ 1 | $ 1 | $ 7 | |||||||||||||||
Expense Recognized | 18 | 20 | 9 | 9 | 19 | 25 | 8 | 5 | 1 | 4 | 5 | 58 | 65 | ||||||||||||
Future Cost to Complete | $ 8 | $ 2 | $ 7 | $ 1 | $ 4 | $ 22 |
Stock Compensation (Tables)
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6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Granted Awards Activity | The Compensation Committee of our Board of Directors approved the grant of stock options, stock appreciation rights (SARs) and restricted stock units (RSUs) shown in the table below during the first half of 2013.
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Key Assumptions as Part of Black-Scholes Option Pricing Model | We estimated fair values for options and SARs granted during 2013 using the following key assumptions as part of the Black-Scholes option pricing model. The expected term was estimated using the simplified method because the limited period of time our common stock has been publicly traded provides insufficient historical exercise data. The risk-free rate was based on U.S. Treasury security yields at the time of grant. The dividend yield was calculated by dividing the expected annual dividend by the average stock price of our common stock over the prior year. The expected volatility was estimated using a combination of the historical volatility of similar entities and the implied volatility of our exchange-traded options.
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Fair Value Measurements and Derivatives - Changes in Level 3 Recurring Fair Value Measurements (Details) (Notes Receivable, USD $)
In Millions, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Notes Receivable
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Fair Value Measurements [Line Items] | ||||
Beginning of period | $ 133 | $ 119 | $ 129 | $ 116 |
Accretion of value (interest income) | 3 | 3 | 7 | 7 |
Amounts received and other | (61) | (61) | (1) | |
End of period | $ 75 | $ 122 | $ 75 | $ 122 |
Other Income (Expense), Net - Table (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
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Other Income and Expenses [Abstract] | ||||
Interest income | $ 5 | $ 5 | $ 12 | $ 11 |
Foreign exchange gain (loss) | 4 | (1) | (4) | (10) |
Strategic transaction expenses | (2) | (4) | (2) | |
Write off of deferred financing costs | (2) | (2) | ||
Recognition of unrealized gain on payment-in-kind note receivable | 5 | 5 | ||
Impairment of long-lived assets | (2) | |||
Other | 8 | 4 | 13 | 10 |
Other income, net | $ 18 | $ 8 | $ 20 | $ 7 |
Warranty Obligations - Changes in Warranty Liabilities (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
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Product Warranties Disclosures [Abstract] | ||||
Balance, beginning of period | $ 63 | $ 77 | $ 66 | $ 72 |
Amounts accrued for current period sales | 7 | 6 | 13 | 15 |
Adjustments of prior accrual estimates | 2 | 3 | ||
Settlements of warranty claims | (10) | (7) | (19) | (13) |
Currency impact | (1) | (1) | (1) | |
Balance, end of period | $ 59 | $ 77 | $ 59 | $ 77 |
Organization and Summary of Significant Accounting Policies (Policies)
|
6 Months Ended |
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Jun. 30, 2013
|
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of presentation — Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information. These statements are unaudited, but in the opinion of management include all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the results for the interim periods. The results reported in these consolidated financial statements should not necessarily be taken as indicative of results that may be expected for the entire year. The financial information included herein should be read in conjunction with the consolidated financial statements in Item 8 of our 2012 Form 10-K. |
Discontinued Operations | Discontinued operations — We classify a business component that has been disposed of or classified as held for sale as discontinued operations if the cash flows of the component have been or will be eliminated from our ongoing operations and we will no longer have any significant continuing involvement in or with the component. The results of operations of our discontinued operations, including any gains or losses on disposition, are aggregated and presented on one line in the consolidated statement of operations. See Note 3 for additional information regarding our discontinued operations. |
Recently adopted accounting pronouncements | Recently adopted accounting pronouncements In December 2011, the Financial Accounting Standards Board (FASB) issued guidance to enhance disclosures about offsetting assets and liabilities. Entities are required to disclose both gross information and net information about both instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting arrangement. The guidance was effective January 1, 2013. The adoption of this guidance did not impact our financial condition or results of operations. |
Recently issued accounting pronouncements | Recently issued accounting pronouncements In March 2013, the FASB issued guidance to clarify existing requirements for the release - the recognition of an amount in the income statement - of the cumulative translation adjustment. The guidance applies to the release of cumulative translation adjustment when an entity ceases to have a controlling financial interest in a subsidiary or group of assets that is a business within a foreign entity. It also applies to the release of the cumulative translation adjustment when there is a loss of a controlling financial interest in a foreign entity or a step acquisition involving an equity method investment that is a foreign entity. The accounting for the financial interest within a foreign entity is the same regardless of the form of the transaction. The guidance will be applied to relevant transactions that occur on or after January 1, 2014. The impact related to this guidance is not presently determinable. In February 2013, the FASB issued guidance related to obligations resulting from joint and several liability arrangements where the amount of the obligation is fixed at the reporting date. Obligations within scope include certain debt arrangements and settled litigation but not contingencies, guarantees, retirement benefits or income taxes. The guidance, which is effective January 1, 2014, is not expected to impact our financial condition or results of operations. In July 2012, the FASB issued guidance to provide an option in a company's annual indefinite-lived intangible asset impairment test to first assess qualitative factors to determine whether the existence of events and circumstances indicate that it is more likely than not that an asset is impaired. If, after assessing all events and circumstances, it is determined that it is not more likely than not that the indefinite-lived intangible asset is impaired, then the entity is not required to take further action. However, if an entity concludes otherwise, then it is required to determine the fair value of the indefinite-lived intangible asset and perform the quantitative impairment test by comparing the fair value with the carrying amount. The changes are effective for annual and interim impairment tests performed after January 1, 2013. Adoption of this guidance will not impact our financial condition or results of operations. |
Acquisitions and Divestitures
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6 Months Ended |
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Jun. 30, 2013
|
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Acquisitions and Divestitures [Abstract] | |
Acquisitions and Divestitures | Acquisitions and Divestitures Fallbrook — On September 10, 2012, we entered into a strategic alliance with Fallbrook Technologies Inc. (Fallbrook). Among the agreements executed was an exclusive license agreement allowing Dana to engineer, produce and sell transmission components and other advanced powertrain solutions with Fallbrook’s continuously variable planetary (CVP) technology for passenger and certain off-highway vehicles in the end markets Dana serves. The exclusive license agreement, along with an engineering services agreement and key engineers hired from Fallbrook, provide Dana with intellectual property, processes, techniques, technical data, training, designs and drawings related to the development, application, use, manufacture and production of the CVP technology. The transaction with Fallbrook has been accounted for as a business combination. Dana paid Fallbrook $20 under the exclusive license agreement for the markets licensed to Dana; $7 was paid at closing, $5 was paid during the fourth quarter of 2012 and $8 was paid during the first half of 2013. The aggregate fair value of the assets acquired of $20 has been allocated to intangible assets used in research and development activities which are initially classified as indefinite-lived with $12 and $8 assigned to our Off-Highway and Light Vehicle Driveline (LVD) operating segments, respectively. We used the multi-period excess earnings method, an income approach, to value the intangible assets used in research and development activities. Divestiture of Structural Products business — In March 2010, we sold substantially all of the assets of our Structural Products business to Metalsa S.A. de C.V. (Metalsa). Approximately $12 of the proceeds was paid into escrow. The agreement provided for those funds to be released to Dana by June 2012; however, the buyer has presented claims to the escrow agent seeking indemnification from Dana. The escrow agent is precluded from releasing the funds held in escrow until Dana and the buyer resolve the issues underlying the claims. The parties are pursuing an arbitration process to resolve the issues with arbitration currently expected to take place during the fourth quarter. Dana does not presently believe that any obligation to indemnify the buyer will be material. Other — We completed the divestiture of our axle, differential and brake systems business serving the leisure, all-terrain and utility vehicle markets in August 2012. The total proceeds received of $8 approximated the net assets of the business following an asset impairment charge of $2 recorded in the first quarter of 2012. Sales of the divested business approximated $32 in 2012 through the date of the disposition. |
Restructuring of Operations
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6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Restructuring and Related Activities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring of Operations | Restructuring of Operations Our restructuring activities primarily include rationalizing our operating footprint by consolidating facilities, positioning operations in lower cost locations and reducing overhead costs. Restructuring expense includes costs associated with current and previously announced actions and is comprised of contractual and noncontractual separation costs and exit costs, including costs associated with lease continuation obligations and certain operating costs of facilities that we are in the process of closing. During the second quarter of 2013, we implemented certain headcount reduction initiatives, primarily in our Light Vehicle and Commercial Vehicle businesses in Argentina and Australia. New customer programs and other developments in our North American Light Vehicle business and a decision by our European Off-Highway business to in-source the manufacturing of certain parts resulted in the reversal of previously accrued severance obligations. Restructuring expense of $4, net of the aforementioned reversals, during the second quarter of 2013 is attributable to newly implemented and previously announced initiatives and includes $3 of severance and related benefits costs and $1 of exit costs. During the first quarter of 2013, restructuring expense of $3, including $1 associated with discontinued operations, was primarily attributable to exit costs associated with previously announced initiatives. During the second quarter of 2012, we implemented and recognized the costs of specific headcount reduction initiatives, primarily associated with certain of our South American operations. Additionally, we exited our Kalamazoo, Michigan facility and recognized the fair value of the associated lease continuation obligation. Total restructuring expense in the second quarter of 2012 to recognize the costs of these actions as well as costs associated with other previously announced initiatives was $20, including $1 associated with discontinued operations, and includes $7 of severance and related benefits costs and $13 of exit costs. During the first quarter of 2012, restructuring expense of $6, including $1 associated with discontinued operations, was attributable to costs associated with previously announced initiatives and included $4 of severance and related benefits costs and $2 of exit costs. Restructuring charges and related payments and adjustments —
At June 30, 2013, the accrued employee termination benefits relate to the reduction of approximately 400 employees to be completed over the next three years. The exit costs relate primarily to lease continuation obligations. We estimate cash expenditures to approximate $9 in 2013 and $16 thereafter. Cost to complete — The following table provides project-to-date and estimated future expenses for completion of our pending restructuring initiatives.
The future cost to complete includes estimated separation costs, primarily those associated with one-time benefit programs, and exit costs, including lease continuation costs, equipment transfers and other costs which are required to be recognized as closures are finalized or as incurred during the closure. |
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Segment Reporting [Abstract] | |
Number of operating segments | 4 |
Discontinued Operations
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Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations | Discontinued Operations The sale of substantially all of the assets of our Structural Products business in 2010 excluded the facility in Longview, Texas and its employees and manufacturing assets related to a significant customer contract. The customer contract was satisfied and operations concluded in August 2012. As a result of the cessation of all operations, the former Structural Products business is now presented as discontinued operations in the accompanying financial statements. The results of the discontinued operations were as follows:
The Longview facility was sold in March 2013 for an amount that approximated its carrying value. A previously closed plant in Canada remains on the balance sheet with a book value of $4 at June 30, 2013. Other assets and liabilities related to the discontinued operations at June 30, 2013 were not material. |
Discontinued Operations - Results of Discontinued Operations (Detail) (USD $)
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Discontinued Operations and Disposal Groups [Abstract] | ||||
Sales | $ 0 | $ 13 | $ 0 | $ 26 |
Cost of sales | 1 | 11 | 1 | 22 |
Restructuring expense | 1 | 1 | 2 | |
Other income (expense), net | 3 | (2) | ||
Pre-tax income (loss) | (1) | 1 | 1 | 0 |
Income tax expense | 0 | 0 | ||
Income (loss) from discontinued operations | $ (1) | $ 1 | $ 1 |
Restructuring of Operations (Tables)
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring Charges and Related Payments and Adjustments | Restructuring charges and related payments and adjustments —
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Project-to-Date and Estimated Future Restructuring Costs | Cost to complete — The following table provides project-to-date and estimated future expenses for completion of our pending restructuring initiatives.
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Pension and Postretirement Benefit Plans (Tables)
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Compensation and Retirement Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Net Periodic Benefit Costs | Components of net periodic benefit costs —
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Other Income (Expense), Net - Additional Information (Details) (USD $)
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Devaluation of Venezuelan Bolivar [Member]
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Devaluation of Venezuelan Bolivar [Member]
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Components of Other Income and Other Expenses [Line Items] | ||||||
Foreign exchange gain (loss) | $ 4 | $ (1) | $ (4) | $ (10) | $ 3 | $ (6) |
Other Income (Expense), Net (Tables)
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Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Income and Other Expenses |
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Income Taxes - Additional Information (Details) (USD $)
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3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2012
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Income Taxes [Line Items] | ||||
Income Tax Expense (Benefit) | $ 35 | $ 27 | $ 62 | $ 64 |
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate | 35.00% | 35.00% | 35.00% | 35.00% |
Income Tax Reconciliation, Repatriation of Foreign Earnings | 2 | 2 | 4 | 4 |
Deferred Tax Assets, Valuation Allowance | $ 800 | $ 800 |
Stock Compensation - Additional Information (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock options and SARs exercised, number of shares | 0.8 | |||
Cash received from the exercise of stock options | $ 7 | |||
Cash paid to settle SARs and performance share units | 2 | |||
Stock compensation expense | 4 | 3 | 9 | 10 |
Total unrecognized compensation cost related to the nonvested portions of all stock based awards granted and expected to vest | $ 26 | $ 26 | ||
Weighted-average period in which the total unrecognized compensation cost is expected to be recognized | 2 years 1 month 6 days | |||
RSUs
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Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares issued | 0.2 | |||
Performance Share Units
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Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares issued | 0.4 |