Dana Inc. hedges debt with euro-denominated swaps
Ticker: DAN · Form: 10-Q · Filed: Jul 31, 2024 · CIK: 26780
Sentiment: neutral
Topics: debt-management, hedging, derivatives, currency-risk
TL;DR
Dana Inc. locked in a 3.850% euro rate on its April 2025 Notes via swaps to hedge currency risk.
AI Summary
Dana Incorporated filed its 10-Q for the period ending June 30, 2024. The company entered into 8-year cross-currency swaps to convert its April 2025 Notes into euro-denominated debt at a fixed rate of 3.850%. This move aims to manage currency risk associated with its debt obligations.
Why It Matters
This financial maneuver by Dana Inc. aims to stabilize its debt costs by locking in a fixed euro interest rate, mitigating potential fluctuations from currency exchange rates.
Risk Assessment
Risk Level: medium — The company's use of derivative instruments like cross-currency swaps introduces complexity and potential counterparty risk, although it's intended to mitigate currency fluctuations.
Key Numbers
- 3.850% — Fixed Euro Interest Rate (Achieved through cross-currency swaps on April 2025 Notes)
- 8-year — Swap Duration (Term of the cross-currency swaps entered into by Dana Inc.)
Key Players & Entities
- Dana Incorporated (company) — Filer of the 10-Q
- April 2025 Notes (dollar_amount) — Debt instrument subject to currency swaps
- 3.850% (dollar_amount) — Fixed interest rate after currency swap conversion
- 20240630 (date) — End of the reporting period
FAQ
What is the primary purpose of the cross-currency swaps entered into by Dana Incorporated?
The cross-currency swaps have the effect of economically converting the April 2025 Notes to euro-denominated debt at a fixed rate of 3.850%, aiming to manage currency risk.
What is the maturity of the debt instrument being hedged?
The debt instrument is referred to as the 'April 2025 Notes'.
What is the fixed interest rate Dana Incorporated achieved on its euro-denominated debt after the swap?
Dana Incorporated achieved a fixed rate of 3.850%.
How long are the cross-currency swaps for?
The cross-currency swaps are 8-year swaps.
Where can additional details about derivative instruments be found?
Additional information regarding derivative instruments, including currency-related forward contracts and cash flow hedges, can be found in Note 12 of the filing.
Filing Stats: 4,922 words · 20 min read · ~16 pages · Grade level 15.5 · Accepted 2024-07-31 10:38:44
Key Financial Figures
- $0.01 — Section 12(b) of the Act: Common stock $0.01 par value DAN New York Stock Exchan
Filing Documents
- dan20240630_10q.htm (10-Q) — 2384KB
- ex_689100.htm (EX-10.1) — 13KB
- ex_680622.htm (EX-31.1) — 15KB
- ex_680623.htm (EX-31.2) — 12KB
- ex_680624.htm (EX-32) — 6KB
- ex_689100img001.jpg (GRAPHIC) — 3KB
- 0001437749-24-024009.txt ( ) — 11850KB
- dan-20240630.xsd (EX-101.SCH) — 90KB
- dan-20240630_cal.xml (EX-101.CAL) — 77KB
- dan-20240630_def.xml (EX-101.DEF) — 548KB
- dan-20240630_lab.xml (EX-101.LAB) — 449KB
- dan-20240630_pre.xml (EX-101.PRE) — 592KB
- dan20240630_10q_htm.xml (XML) — 2725KB
– FINANCIAL INFORMATION
PART I – FINANCIAL INFORMATION Item 1
Financial Statements
Financial Statements 3 Consolidated Statement of Operations (Unaudited) 3 Consolidated Statement of Comprehensive Income (Unaudited) 4 Consolidated Balance Sheet (Unaudited) 5 Consolidated Statement of Cash Flows (Unaudited) 6
Notes to Consolidated Financial Statements (Unaudited)
Notes to Consolidated Financial Statements (Unaudited) 7 Item 2
Management's Discussion and Analysis of Financial Condition and Results of Operations
Management's Discussion and Analysis of Financial Condition and Results of Operations 25 Item 3
Quantitative and Qualitative Disclosures About Market Risk
Quantitative and Qualitative Disclosures About Market Risk 38 Item 4
Controls and Procedures
Controls and Procedures 38
– OTHER INFORMATION
PART II – OTHER INFORMATION Item 1
Legal Proceedings
Legal Proceedings 39 Item 1A
Risk Factors
Risk Factors 39 Item 2 Unregistered Sales of Equity Securities and Use of Proceeds 39 Item 5 Other Information 39 Item 6 Exhibits 39
Signatures
Signatures 40 2 Table of Contents
– FINANCIAL INFORMATION
PART I – FINANCIAL INFORMATION
FINANCIAL STATEMENTS
ITEM 1. FINANCIAL STATEMENTS Dana Incorporated Consolidated Statement of Operations (Unaudited) (In millions, except per share amounts) Three Months Ended Six Months Ended June 30, June 30, 2024 2023 2024 2023 Net sales $ 2,738 $ 2,748 $ 5,473 $ 5,392 Costs and expenses Cost of sales 2,483 2,477 4,974 4,892 Selling, general and administrative expenses 132 144 271 284 Amortization of intangibles 4 4 7 7 Restructuring charges, net 12 3 17 4 Loss on disposal group held for sale ( 1 ) ( 30 ) Other income (expense), net ( 2 ) 4 9 Earnings before interest and income taxes 104 124 174 214 Loss on extinguishment of debt ( 1 ) ( 1 ) Interest income 2 5 6 9 Interest expense 39 39 78 73 Earnings before income taxes 67 89 102 149 Income tax expense 54 55 91 85 Equity in earnings of affiliates 3 2 5 3 Net income 16 36 16 67 Less: Noncontrolling interests net income 5 5 10 9 Less: Redeemable noncontrolling interests net (loss) income ( 5 ) 1 ( 13 ) Net income attributable to the parent company $ 16 $ 30 $ 19 $ 58 Net income per share available to common stockholders Basic $ 0.11 $ 0.21 $ 0.13 $ 0.40 Diluted $ 0.11 $ 0.21 $ 0.13 $ 0.40 Weighted-average common shares outstanding Basic 145.0 144.3 144.9 144.1 Diluted 145.1 144.4 144.9 144.3 The accompanying notes are an integral part of the consolidated financial statements. 3 Table of Contents Dana Incorporated Consolidated Statement of Comprehensive Income (Unaudited) (In millions) Three Months Ended Six Months Ended June 30, June 30, 2024 2023 2024 2023 Net income $ 16 $ 36 $ 16 $ 67 Other comprehensive income (loss), net of tax: Currency translation adjustments ( 46 ) ( 7 ) ( 66 ) 18 Hedging gains and losses ( 26 ) 3 ( 28 ) 18 Defined benefit plans 4 5 1 Other comprehensive (loss) income ( 68 ) ( 4 ) ( 89 ) 37 Total comprehensive (loss) income ( 52 ) 32 ( 73 ) 104 Less: Comprehensive inc
Notes to Consolidated Financial Statements (Unaudited)
Notes to Consolidated Financial Statements (Unaudited) (In millions, except share and per share amounts) Note 1. Organization and Summary of Significant Accounting Policies General Dana Incorporated (Dana) is headquartered in Maumee, Ohio and was incorporated in Delaware in 2007. Dana is a global provider of high technology driveline (axles, driveshafts and transmissions); sealing and thermal-management products; and motors, power inverters, and control systems for electric vehicles with a customer base that includes virtually every major vehicle manufacturer in the global light vehicle, medium/heavy vehicle and off-highway markets. The terms "Dana," "we," "our" and "us," when used in this report, are references to Dana. These references include the subsidiaries of Dana unless otherwise indicated or the context requires otherwise. Summary of significant accounting policies Basis of presentation — Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information. These statements are unaudited, but in the opinion of management include all adjustments (consisting only of normal recurring adjustments) necessary for a fair statement of the results for the interim periods. The results reported in these consolidated financial statements should not necessarily be taken as indicative of results that may be expected for the entire year. The financial information included herein should be read in conjunction with the consolidated financial statements in Item 8 of our Annual Report on Form 10 -K for the year ended December 31, 2023 (the 2023 Form 10 -K). Certain prior year amounts have been reclassified to conform to the current presentation. Recently adopted accounting pronouncements We did not adopt any new accounting pronou ncements during the six months ended June 30, 2024 . Recently issued accounting pronouncements We do not expect any recently iss