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Note 3 - Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2023

Goodwill and Intangible Assets Disclosure [Text Block]

Note 3. Goodwill and Other Intangible Assets

Goodwill — Our goodwill is tested for impairment annually as of October 31 for all of our reporting units, and more frequent if events or circumstances warrant such a review. For our 2023 annual impairment test, we performed a Step 0 qualitative approach for the Off-Highway reporting unit. Based on the results of the qualitative assessment, we determined that it is more likely than not that the fair value of our Off-Highway reporting unit exceeded its carrying value and as such, our goodwill was not considered impaired as of October 31, 2023.

We evaluated macro-economic conditions during the third quarter of 2022, including the impact of the Federal Reserve further increasing the risk-free interest rate, as well as the negative impact of sustained higher commodity costs, non-material cost increases and operational inefficiencies attributable to continued global supply chain disruptions. We believe that these conditions were factors in our market capitalization falling below the book value of net assets as of September 30, 2022. Accordingly, we concluded a triggering event had occurred and performed an interim goodwill impairment analyses for our Commercial Vehicle and Off-Highway reporting units.

Based on the results of our interim impairment analyses, we concluded that the carrying value exceeded fair value of our Commercial Vehicle reporting unit and we recorded a goodwill impairment charge of $191, representing a full impairment of goodwill assigned to the Commercial Vehicle reporting unit. Our analysis for the Off-Highway reporting unit indicated that the fair value exceeded the carrying value by a substantial amount and, accordingly, no impairment charge was required.

Changes in the carrying amount of goodwill by segment —

	Light Vehicle		Commercial Vehicle			Off-Highway			Power Technologies		Total
Balance, December 31, 2021	$	—	$	201		$	281		$	—	$	482
Impairment				(191	)							(191	)
Currency impact				(10	)		(22	)				(32	)
Balance, December 31, 2022		—		—			259			—		259
Currency impact							4					4
Balance, December 31, 2023	$	—	$	—		$	263		$	—	$	263

Non-amortizable intangible assets — Our non-amortizable intangible assets include a portion of our trademarks and trade names. Non-amortizable trademarks and trade names consist of the Dana®, Spicer® and TM4® trademarks and trade names utilized in our Commercial Vehicle and Off-Highway segments. We value trademarks and trade names using a relief from royalty method which is based on revenue streams. No impairment was recorded during the two years ended December 31, 2023 in connection with the required annual assessment for trademarks and trade names.

Amortizable intangible assets — Our amortizable intangible assets include core technology, customer relationships and a portion of our trademarks and trade names. Core technology includes the proprietary know-how and expertise that is inherent in our products and manufacturing processes. Customer relationships include the established relationships with our customers and the related ability of these customers to continue to generate future recurring revenue and income. Amortizable trademarks and trade names includes the Graziano™, Fairfield® and Brevini® trademarks and trade names utilized in our Off-Highway segment.

These assets are tested for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. We group the assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities and evaluate the asset group against the undiscounted future cash flows. We use our internal forecasts, which we update quarterly, to develop our cash flow projections. These forecasts are based on our knowledge of our customers’ production forecasts, our assessment of market growth rates, net new business, material and labor cost estimates, cost recovery agreements with customers and our estimate of savings expected from our restructuring activities. The most likely factors that would significantly impact our forecasts are changes in customer production levels and loss of significant portions of our business. Our valuation is applied over the life of the primary assets within the asset groups. If the undiscounted cash flows do not indicate that the carrying amount of the asset group is recoverable, an impairment charge is recorded if the carrying amount of the asset group exceeds its fair value based on discounted cash flow analyses or appraisals. There were no impairments recorded during the two years ended December 31, 2023.

Components of other intangible assets —

			December 31, 2023							December 31, 2022
	Weighted
	Average		Gross		Accumulated			Net		Gross		Accumulated			Net
	Useful Life		Carrying		Impairment and			Carrying		Carrying		Impairment and			Carrying
	(years)		Amount		Amortization			Amount		Amount		Amortization			Amount
Amortizable intangible assets
Core technology		8	$	159	$	(126	)	$	33	$	156	$	(116	)	$	40
Trademarks and trade names		13		29		(15	)		14		29		(13	)		16
Customer relationships		8		503		(441	)		62		498		(425	)		73
Non-amortizable intangible assets
Trademarks and trade names				73					73		72					72
			$	764	$	(582	)	$	182	$	755	$	(554	)	$	201

The net carrying amounts of intangible assets, other than goodwill, attributable to each of our operating segments at December 31, 2023 were as follows: Light Vehicle – $14, Commercial Vehicle – $59, Off-Highway – $105 and Power Technologies – $4.

Amortization expense related to amortizable intangible assets —

	2023		2022		2021
Charged to cost of sales	$	10	$	9	$	10
Charged to amortization of intangibles		13		14		14
Total amortization	$	23	$	23	$	24

The following table provides the estimated aggregate pre-tax amortization expense related to intangible assets for each of the next five years based on December 31, 2023 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.

		2024				2025				2026				2027				2028
Amortization expense		$	21			$	19			$	17			$	16			$	11