DANA Inc Fair Value Disclosure

Note 14.  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:

 

							Fair Value
Category		Balance Sheet Location		Fair Value Level			December 31, 2025				December 31, 2024
Currency forward contracts
Cash flow hedges		Accounts receivable - Other		2			$	21			$	9
Cash flow hedges		Other accrued liabilities		2				1				27
Undesignated		Accounts receivable - Other		2				4				8
Undesignated		Other accrued liabilities		2				7				13
Currency swaps
Cash flow hedges		Other noncurrent assets		2								23
Cash flow hedges		Other noncurrent liabilities		2				25
Undesignated		Other noncurrent liabilities		2				2				5

 

Fair Value Level 1 assets and liabilities reflect quoted prices in active markets. Fair Value Level 2 assets and liabilities reflect the use of significant other observable inputs.

 

Fair value of financial instruments — The financial instruments that are not carried in our balance sheet at fair value are as follows:

 

					2025								2024
		Fair Value Level			Carrying Value				Fair Value				Carrying Value				Fair Value
Long-term debt		2			$	2,418			$	2,444			$	2,510			$	2,492

 

Foreign currency derivatives — Our foreign currency derivatives include forward contracts associated with forecasted transactions, primarily involving the purchases and sales of inventory through the next fifteen months, as well as currency swaps associated with certain recorded external notes payable and intercompany loans receivable and payable. Periodically, our foreign currency derivatives also include net investment hedges of certain of our investments in foreign operations.

 

We have executed fixed-to-fixed cross-currency swaps in conjunction with the issuance of certain notes to eliminate the variability in the functional-currency-equivalent cash flows due to changes in exchange rates associated with the forecasted principal and interest payments. All of the underlying designated financial instruments, and any subsequent replacement debt, have been designated as the hedged items in each respective cash flow hedge relationship, as shown in the table below. Designated as cash flow hedges of the forecasted principal and interest payments of the underlying designated financial instruments, or subsequent replacement debt, all of the swaps economically convert the underlying designated financial instruments into the functional currency of each respective holder. The impact of the interest rate differential between the inflow and outflow rates on all fixed-to-fixed cross-currency swaps is recognized during each period as a component of interest expense.

 

The following fixed-to-fixed cross-currency swaps were outstanding at  December 31, 2025:

 

Underlying Financial Instrument												Derivative Financial Instrument
Description		Type		Face Amount				Rate				Notional Amount				Traded Amount				Inflow Rate				Outflow Rate
Luxembourg Intercompany Notes		Receivable		€	278				3.70	%		€	278			$	300				5.38	%			3.70	%
Undesignated 2026 Swap												$	188			€	169				6.50	%			5.14	%
Undesignated Offset 2026 Swap												€	169			$	188				3.13	%			6.50	%

 

The designated swaps are expected to be highly effective in offsetting the corresponding currency-based changes in cash outflows related to the underlying designated financial instruments. Based on our qualitative assessment that the critical terms of all of the underlying designated financial instruments and all of the associated swaps match and that all other required criteria have been met, we do not expect to incur any ineffectiveness. As effective cash flow hedges, changes in the fair value of the swaps will be recorded in OCI during each period. Additionally, to the extent the swaps remain effective, the appropriate portion of AOCI will be reclassified to earnings each period as an offset to the foreign exchange gain or loss resulting from the remeasurement of the underlying designated financial instruments. See Note 13 for additional information about the April 2025 Notes. To the extent the swaps are no longer effective, changes in their fair values will be recorded in earnings.

 

The total notional amount of outstanding foreign currency forward contracts, involving the exchange of various currencies, was $898 at December 31, 2025 and $1,147 at December 31, 2024. The total notional amount of outstanding foreign currency swaps, including the fixed-to-fixed cross-currency swaps, was $712 at December 31, 2025 and $951 at December 31, 2024.

 

The following currency derivatives were outstanding at  December 31, 2025:

 

				Notional Amount (U.S. Dollar Equivalent)
Functional Currency		Traded Currency		Designated				Undesignated				Total			Maturity
U.S. dollar		Canadian dollar, Mexican peso		$	254			$	77			$	331		Dec-2026
Euro		U.S. dollar, Australian dollar, British pound, Hungarian forint, Mexican peso, Swedish krona			311				8				319		Sep-2027
British pound		U.S. dollar, euro			26				21				47		Sep-2026
South African rand		U.S. dollar, euro, Thai baht							35				35		May-2026
Thai baht		U.S. dollar							15				15		Jan-2026
Canadian dollar		U.S. dollar			21				11				32		Aug-2026
Brazilian real		U.S. dollar, euro			30				14				44		Jun-2026
Indian rupee		U.S. dollar, euro, British pound							69				69		Dec-2026
Mexican peso		U.S. dollar							5				5		Jan-2026
Australian dollar		U.S. dollar, euro							1				1		Jan-2026
Total forward contracts					642				256				898
U.S. dollar		euro			326				198				524		Nov-2027
Euro		U.S. dollar							188				188		Jun-2026
Total currency swaps					326				386				712
Total currency derivatives				$	968			$	642			$	1,610

 

Designated cash flow hedges — With respect to contracts designated as cash flow hedges, changes in fair value during the period in which the contracts remain outstanding are reported in OCI to the extent such contracts remain effective. Effectiveness is measured by using regression analysis to determine the degree of correlation between the change in the fair value of the derivative instrument and the change in the associated foreign currency exchange rates. Changes in fair value of contracts not designated as cash flow hedges or as net investment hedges are recognized in other income (expense), net in the period in which the changes occur. Realized gains and losses from currency-related forward contracts associated with forecasted transactions or from other derivative instruments, including those that have been designated as cash flow hedges and those that have not been designated, are recognized in the same line item in the consolidated statement of operations in which the underlying forecasted transaction or other hedged item is recorded. Accordingly, amounts are potentially recorded in sales, cost of sales or, in certain circumstances, other income (expense), net.

 

The following table provides a summary of deferred gains (losses) reported in AOCI as well as the amount expected to be reclassified to income in one year or less:

 

		Deferred Gain (Loss) in AOCI
		December 31, 2025				December 31, 2024				Gain (loss) expected to be reclassified into income in one year or less
Forward Contracts		$	20			$	(35	)		$	20
Cross-Currency Swaps			2				(3	)
Total		$	22			$	(38	)		$	20

 

The following table provides a summary of the location and amount of gains or losses recognized in the consolidated statement of operations associated with cash flow hedging relationships:

 

Derivatives Designated as Cash Flow Hedges			2025				2024				2023
Total amounts of income and expense line items presented in the consolidated statement of operations in which the effects of cash flow hedges are recorded
Net sales		$	7,500			$	7,734			$	7,613
Cost of sales			6,898				7,356				7,236
Other income (expense), net			(46	)			(21	)			(14	)
(Gain) or loss on cash flow hedging relationships
Foreign currency forwards
Amount of (gain) loss reclassified from AOCI into income
Cost of sales			2				(11	)			(34	)
Other income (expense), net			(6	)			18				(8	)
Cross-currency swaps
Amount of (gain) loss reclassified from AOCI into income
Other income (expense), net			51				(37	)			19

 

The amounts reclassified from AOCI into income for the cross-currency swaps represent an offset to a foreign exchange loss on our foreign currency-denominated intercompany and external debt instruments.

 

Certain of our hedges of forecasted transactions have not formally been designated as cash flow hedges. As undesignated forward contracts, the changes in the fair value of such contracts are included in earnings for the duration of the outstanding forward contract. Any realized gain or loss on the settlement of such contracts is recognized in the same period and in the same line item in the consolidated statement of operations as the underlying transaction. The following table provides a summary of the location and amount of gains or losses recognized in the consolidated statement of operations associated with undesignated hedging relationships.

 

Derivatives Not Designated as Hedging Instruments			2025				2024				2023
Gain or (loss) recognized in income
Foreign currency forward contracts
Cost of sales		$	3			$	3			$	(2	)
Other income (expense), net			(36	)			3				(9	)

 

Net investment hedges — We periodically designate derivative contracts or underlying non-derivative financial instruments as net investment hedges. With respect to contracts designated as net investment hedges, we apply the forward method, but for non-derivative financial instruments designated as net investment hedges, we apply the spot method. Under both methods, we report changes in fair value in the CTA component of OCI during the period in which the contracts remain outstanding to the extent such contracts and non-derivative financial instruments remain effective. During the second quarter of 2024, we entered into foreign currency forwards with a notional value of $100 that we designated as a net investment hedge of the foreign currency exposure related to a China renminbi denominated subsidiary. These forwards matured in  September 2025. During the third quarter of 2024, we entered into foreign currency forwards with a notional value of $122 that we designated as a net investment hedge of the foreign currency exposure related to a euro denominated subsidiary. These forwards matured in  November 2025.