Edgar Filing: DANA INC

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(In millions)

Grant Date
Fair Value*

Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 10-Q

Quarterly Report Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

For the quarterly period ended: June 30, 2017

Commission File Number: 1-1063

Dana Incorporated

(Exact name of registrant as specified in its charter)



Delaware		26-1531856
(State of incorporation)		(IRS Employer Identification Number)

3939 Technology Drive, Maumee, OH		43537
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (419) 887-3000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer þ	Non-accelerated filer o	Smaller reporting company o
Accelerated filer o	(Do not check if a smaller reporting company)	Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No þ

APPLICABLE ONLY TO CORPORATE ISSUERS:

There were 144,683,448 shares of the registrant’s common stock outstanding at July 21, 2017.

DANA INCORPORATED – FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2017

TABLE OF CONTENTS



		10-Q Pages

PART I – FINANCIAL INFORMATION

Item 1	Financial Statements
	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)	7

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30

Item 3	Quantitative and Qualitative Disclosures About Market Risk	49

Item 4	Controls and Procedures	49

PART II – OTHER INFORMATION

Item 1	Legal Proceedings	50

Item 1A	Risk Factors	50

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	50

Item 6	Exhibits	50

Signatures		51
Exhibit Index		52

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Dana Incorporated

Consolidated Statement of Operations (Unaudited)

(In millions, except per share amounts)



	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Net sales	$	1,840		$	1,546		$	3,541		$	2,995
Costs and expenses
Cost of sales	1,564			1,313			3,002			2,563
Selling, general and administrative expenses	133			106			254			204
Amortization of intangibles	3			2			5			4
Restructuring charges, net	10			5			12			6
Other income (expense), net				5			(9		)	3
Income before interest and income taxes	130			125			259			221
Loss on extinguishment of debt	(6		)	(17		)	(6		)	(17		)
Interest income	2			2			5			5
Interest expense	27			30			54			57
Income before income taxes	99			80			204			152
Income tax expense	31			29			61			53
Equity in earnings of affiliates	5			4			10			4
Net income	73			55			153			103
Less: Noncontrolling interests net income	5			2			10			5
Less: Redeemable noncontrolling interests net loss	(3		)				(3		)
Net income attributable to the parent company	$	71		$	53		$	146		$	98

Net income per share available to common stockholders
Basic	$	0.48		$	0.36		$	1.00		$	0.66
Diluted	$	0.47		$	0.36		$	0.99		$	0.66

Weighted-average common shares outstanding
Basic	144.8			146.6			144.7			148.0
Diluted	146.2			147.0			146.1			148.4

Cash dividends declared per share	$	0.06		$	0.06		$	0.12		$	0.12

The accompanying notes are an integral part of the consolidated financial statements.

Dana Incorporated

Consolidated Statement of Comprehensive Income (Unaudited)

(In millions)



	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Net income	$	73		$	55		$	153		$	103
Other comprehensive income (loss), net of tax:
Currency translation adjustments	(31		)	(24		)	(1		)	6
Hedging gains and losses	5			(13		)	1			(10		)
Investment and other gains and losses				1						3
Defined benefit plans	5			6			10			13
Other comprehensive income (loss)	(21		)	(30		)	10			12
Total comprehensive income	52			25			163			115
Less: Comprehensive income attributable to noncontrolling interests	(6		)	(2		)	(13		)	(6		)
Less: Comprehensive loss attributable to redeemable noncontrolling interests							1
Comprehensive income attributable to the parent company	$	46		$	23		$	151		$	109

The accompanying notes are an integral part of the consolidated financial statements.

Dana Incorporated

Consolidated Balance Sheet (Unaudited)

(In millions, except share and per share amounts)



	June 30, 2017			December 31, 2016
Assets
Current assets
Cash and cash equivalents	$	568		$	707
Marketable securities	36			30
Accounts receivable
Trade, less allowance for doubtful accounts of $8 in 2017 and $6 in 2016	1,061			721
Other	165			110
Inventories
Raw materials	404			321
Work in process and finished goods	448			317
Other current assets	93			78
Total current assets	2,775			2,284
Goodwill	136			90
Intangibles	180			109
Deferred tax assets	577			588
Other noncurrent assets	65			226
Investments in affiliates	156			150
Property, plant and equipment, net	1,708			1,413
Total assets	$	5,597		$	4,860

Liabilities and equity
Current liabilities
Notes payable, including current portion of long-term debt	$	31		$	69
Accounts payable	1,116			819
Accrued payroll and employee benefits	180			149
Taxes on income	35			15
Other accrued liabilities	225			201
Total current liabilities	1,587			1,253
Long-term debt, less debt issuance costs of $25 in 2017 and $21 in 2016	1,841			1,595
Pension and postretirement obligations	579			565
Other noncurrent liabilities	318			205
Total liabilities	4,325			3,618
Commitments and contingencies (Note 14)
Redeemable noncontrolling interests	46
Parent company stockholders' equity
Preferred stock, 50,000,000 shares authorized, $0.01 par value, no shares outstanding	—			—
Common stock, 450,000,000 shares authorized, $0.01 par value, 144,656,276 and 143,938,280 shares outstanding	2			2
Additional paid-in capital	2,339			2,327
Retained earnings	143			195
Treasury stock, at cost (6,965,195 and 6,812,784 shares)	(86		)	(83		)
Accumulated other comprehensive loss	(1,279		)	(1,284		)
Total parent company stockholders' equity	1,119			1,157
Noncontrolling interests	107			85
Total equity	1,226			1,242
Total liabilities and equity	$	5,597		$	4,860

The accompanying notes are an integral part of the consolidated financial statements.

Dana Incorporated

Consolidated Statement of Cash Flows (Unaudited)

(In millions)



	Six Months Ended June 30,
	2017			2016
Operating activities
Net income	$	153		$	103
Depreciation	104			84
Amortization of intangibles	6			4
Amortization of deferred financing charges	3			2
Call premium on debt	5			12
Write-off of deferred financing costs	1			5
Earnings of affiliates, net of dividends received	(2		)	3
Stock compensation expense	10			7
Deferred income taxes	5			5
Pension contributions, net	(3		)	(9		)
Gain on sale of subsidiary	(3		)
Change in working capital	(104		)	(83		)
Other, net	5			7
Net cash provided by operating activities	180			140

Investing activities
Purchases of property, plant and equipment	(169		)	(130		)
Acquisition of businesses, net of cash acquired	(184		)	(18		)
Purchases of marketable securities	(17		)	(25		)
Proceeds from sales of marketable securities	1			4
Proceeds from maturities of marketable securities	13			22
Proceeds from sale of subsidiary	3
Other	1			(3		)
Net cash used in investing activities	(352		)	(150		)

Financing activities
Net change in short-term debt	(79		)	12
Proceeds from long-term debt	400			441
Repayment of long-term debt	(288		)	(376		)
Call premium on debt	(5		)	(12		)
Deferred financing payments	(6		)	(10		)
Dividends paid to common stockholders	(17		)	(18		)
Distributions to noncontrolling interests	(3		)	(3		)
Repurchases of common stock				(81		)
Other	1
Net cash provided by (used in) financing activities	3			(47		)

Net decrease in cash and cash equivalents	(169		)	(57		)
Cash and cash equivalents – beginning of period	707			791
Effect of exchange rate changes on cash balances	30			11
Cash and cash equivalents – end of period	$	568		$	745

Non-cash investing activity
Purchases of property, plant and equipment held in accounts payable	$	113		$	64

The accompanying notes are an integral part of the consolidated financial statements.

Dana Incorporated

Index to Notes to Consolidated Financial Statements



1.	Organization and Summary of Significant Accounting Policies

2.	Acquisitions

3.	Disposal Groups

4.	Goodwill and Other Intangible Assets

5.	Restructuring of Operations

6.	Stockholders' Equity

7.	Redeemable Noncontrolling Interest

8.	Earnings per Share

9.	Stock Compensation

10.	Pension and Postretirement Benefit Plans

11.	Marketable Securities

12.	Financing Agreements

13.	Fair Value Measurements and Derivatives

14.	Commitments and Contingencies

15.	Warranty Obligations

16.	Income Taxes

17.	Other Income (Expense), Net

18.	Segments

19.	Equity Affiliates

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. As a global provider of high technology driveline (axles, driveshafts and transmissions), sealing and thermal-management products our customer base includes virtually every major vehicle manufacturer in the global light vehicle, medium/heavy vehicle and off-highway markets.

The terms "Dana," "we," "our" and "us," when used in this report, are references to Dana. These references include the subsidiaries of Dana unless otherwise indicated or the context requires otherwise.

Summary of significant accounting policies

Basis of presentation — Our consolidated financial statements 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 2016 Form 10-K.

We have added the subtotal "Income before interest and income taxes" to our consolidated statement of operations. Interest income, interest expense and loss on extinguishment of debt are presented below the new subtotal but above the subtotal "Income before income taxes." Interest income was previously included in Other income (expense), net. Prior year amounts have been reclassified to conform to the 2017 presentation.

In the third quarter of 2016, we identified an error attributable to our second quarter 2016 calculation of cash used for purchases of property, plant and equipment. While the error had no impact on the total net cash flows presented for the period it did result in a misclassification between net cash provided by operating activities and net cash used in investing activities. Purchases of property, plant and equipment previously presented for the six months ended June 30, 2016 have been reduced by $18 to reflect the correction with a corresponding offset to the change in working capital.

Recently adopted accounting pronouncements

In October 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2016-16, Income Taxes – Intra-Entity Transfers of Assets Other Than Inventory, guidance that simplifies the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. GAAP had prohibited the recognition in earnings of current and deferred income taxes for an intra-entity transfer until the asset was sold to an outside party or recovered through use. This amendment simplifies the accounting by requiring entities to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The new guidance, which requires modified retrospective application, becomes effective January 1, 2018 with early adoption permitted in 2017 prior to the issuance of interim financial statements. We adopted this guidance effective January 1, 2017. The adoption of the new guidance resulted in a decrease in Other current assets of $10, a decrease in Other noncurrent assets of $169 and a decrease in Retained earnings at January 1, 2017 of $179.

We also adopted the following standards during the first half of 2017, none of which had a material impact on our financial statements or financial statement disclosures:



Standard		Effective Date
2016-07	Investments – Equity Method and Joint Ventures – Simplifying the Transition to the Equity Method of Accounting	January 1, 2017
2016-06	Derivatives and Hedging – Contingent Put and Call Options in Debt Instruments	January 1, 2017
2016-05	Derivatives and Hedging – Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships	January 1, 2017
2015-11	Inventory – Simplifying the Measurement of Inventory	January 1, 2017

Recently issued accounting pronouncements

In May 2017, the FASB issued ASU 2017-09, Stock Compensation – Scope of Modification Accounting, guidance that clarifies that all changes to share-based payment awards are not necessarily accounted for as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award changes as a result of the change in terms or conditions. This guidance is effective prospectively beginning January 1, 2018. Early adoption is permitted. This guidance will apply to any future modifications. We do not expect this guidance to have a material impact on our consolidated financial statements.

In March 2017, the FASB issued ASU 2017-07, Retirement Benefits – Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, guidance that requires entities to present the service cost component of net periodic pension cost and net periodic postretirement benefit cost in the income statement line items where they report compensation cost. Entities will present all other components of net benefit cost outside operating income, if this subtotal is presented. The rules related to the timing of when costs are recognized or how they are measured have not changed. This amendment only impacts where those costs are reflected within the income statement. In addition, only the service cost component will be eligible for capitalization in inventory and other assets. This guidance becomes effective January 1, 2018. Early adoption is permitted. We do not expect this guidance to have a material impact on our consolidated financial statements in the near term as the service components and related net periodic benefit costs are not significantly different.

In January 2017, the FASB issued ASU 2017-04, Goodwill – Simplifying the Test for Goodwill Impairment, guidance that simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 of the goodwill impairment test. The new guidance quantifies goodwill impairment as the amount by which the carrying amount of a reporting unit, including goodwill, exceeds its fair value, with the impairment loss limited to the total amount of goodwill allocated to that reporting unit. This guidance becomes effective for us January 1, 2020 and will be applied on a prospective basis. Early adoption is permitted for impairment tests performed after January 1, 2017. We do not expect the adoption of this guidance to impact our consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, Business Combinations – Clarifying the Definition of a Business, guidance that revises the definition of a business. The definition of a business affects many areas of accounting, including acquisitions, disposals, goodwill impairment and consolidation. When substantially all of the fair value of gross assets acquired is concentrated in a single asset (or a group of similar assets), the asset acquired would not represent a business. To be considered a business, an acquisition would have to include an input and a substantive process that together significantly contribute to the ability to create outputs. The new guidance provides a framework to evaluate when an input and a substantive process are present. This guidance becomes effective January 1, 2018. Early adoption is permitted.

In November 2016, the FASB released ASU 2016-18, Statement of Cash Flows – Restricted Cash, guidance that addresses the diversity in practice in the classification and presentation of changes in restricted cash on the statement of cash flows. Amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This guidance becomes effective January 1, 2018 and must be applied on a retrospective basis. This guidance is not expected to have a material impact on our consolidated statement of cash flows.

In August 2016, the FASB released ASU 2016-15, Statement of Cash Flows – Classification of Certain Cash Receipts and Cash Payments, guidance intended to reduce diversity in practice in how certain cash receipts and cash payments are classified in the statement of cash flows. This guidance becomes effective January 1, 2018 and must be applied on a retrospective basis. This guidance is not expected to have a material impact on our consolidated statement of cash flows.

In June 2016, the FASB issued ASU 2016-13, Credit Losses – Measurement of Credit Losses on Financial Instruments, new guidance for the accounting for credit losses on certain financial instruments. This guidance introduces a new approach to estimating credit losses on certain types of financial instruments and modifies the impairment model for available-for-sale debt

securities. This guidance, which becomes effective January 1, 2020, is not expected to have a material impact on our consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases, its new lease accounting standard. The primary focus of the standard is on the accounting by lessees. This standard requires lessees to recognize a right-of-use asset and a lease liability for virtually all leases (other than leases that meet the definition of a short-term lease) on the balance sheet. The recognition, measurement and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from current GAAP. Operating leases will result in straight-line expense while finance leases will result in a front-loaded expense pattern in the income statement. Quantitative and qualitative disclosures are required to provide insight into the extent of revenue and expense recognized and expected to be recognized from leasing arrangements. Approximately three-fourths of our global lease portfolio represents leases of real estate, including manufacturing, assembly and office facilities, while the remainder represents leases of personal property, including manufacturing, material handling and IT equipment. Many factors will impact the ultimate measurement of the lease obligation to be recognized upon adoption, including our assessment of the likelihood of renewal of leases that provide such an option. We continue to evaluate the impact this guidance will have on our consolidated financial statements. This guidance becomes effective January 1, 2019 with early adoption permitted.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Recognition and Measurement of Financial Assets and Financial Liabilities, an amendment that addresses the recognition, measurement, presentation and disclosure of certain financial instruments. Investments in equity securities currently classified as available-for-sale and carried at fair value, with changes in fair value reported in other comprehensive income (OCI), will be carried at fair value determined on an exit price notion and changes in fair value will be reported in net income. The new guidance also affects the assessment of deferred tax assets related to available-for-sale securities, the accounting for liabilities for which the fair value option is elected and the disclosures of financial assets and financial liabilities in the notes to the financial statements. This guidance, which becomes effective January 1, 2018, is not expected to have a material impact on our consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, Revenue – Revenue from Contracts with Customers, guidance that requires companies to recognize revenue in a manner that depicts the transfer of promised goods or services to customers in amounts that reflect the consideration a company expects to be entitled to in exchange for those goods or services. The new guidance will also require new disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. This guidance will be effective January 1, 2018 for Dana. The guidance allows for either a full retrospective or a modified retrospective transition method. We are in the process of assessing our customer contracts, identifying contractual provisions that may result in a change in the timing or the amount of revenue recognized in comparison with current guidance, as well as assessing the enhanced disclosure requirements of the new guidance. Under current guidance we generally recognize revenue when products are shipped and risk of loss has transferred to the customer. Under the proposed requirements, the customized nature of some of our products and contractual provisions in certain of our customer contracts that provide us with an enforceable right to payment, may require us to recognize revenue prior to the product being shipped to the customer. We are also assessing pricing provisions contained in certain of our customer contracts. Pricing provisions contained in some of our customer contracts represent variable consideration or may provide the customer with a material right, potentially resulting in a different allocation of the transaction price than under current guidance. We continue to evaluate the impact this guidance will have on our financial statements.

Note 2. Acquisitions

USM – Warren — On March 1, 2017, we acquired certain assets and liabilities relating to the Warren, Michigan production unit of U.S. Manufacturing Corporation (USM). The production unit acquired is in the business of manufacturing axle housings, extruded tubular products and machined components for the automotive industry. The acquisition will increase Dana's revenue from light and commercial vehicle manufacturers and will vertically integrate a significant element of Dana's supply chain. It also provides Dana with new lightweight product and process technologies.

USM contributed certain assets and liabilities relating to its Warren, Michigan production unit to Warren Manufacturing LLC (USM – Warren), a newly created legal entity, and Dana acquired all of the company units of USM – Warren. The company units were acquired by Dana free and clear of any liens. We paid $104 at closing, including $25 to effectively settle trade payable obligations originating from product purchases Dana made from USM prior to the acquisition, and have recorded a receivable of $1 to reflect purchase price adjustments determined under the terms of the agreement. The acquisition has been accounted for as a business combination. The purchase consideration and the preliminary allocation to the acquisition date fair values of the assets acquired are presented in the following table:



Total purchase consideration	$	78

Accounts receivable - Trade	17
Inventories	9
Other current assets	4
Goodwill	4
Intangibles	33
Property, plant and equipment	50
Accounts payable	(35		)
Accrued payroll and employee benefits	(3		)
Other accrued liabilities	(1		)
Total purchase consideration allocation	$	78

The purchase consideration and fair value of the assets acquired and liabilities assumed are preliminary and could be revised as a result of adjustments made to the purchase price, additional information obtained regarding liabilities assumed and revisions of provisional estimates of fair values, including but not limited to, the completion of independent appraisals and valuations related to property, plant and equipment and intangibles.

Goodwill recognized in this transaction is primarily attributable to synergies expected to arise after the acquisition and the assembled workforce and is deductible for tax purposes. Intangibles includes $30 allocated to customer relationships and $3 allocated to developed technology. We used the relief from royalty method, an income approach, to value developed technology. We used the multi-period excess earnings method, an income approach, to value customer relationships. We used a replacement cost method to value fixed assets. The developed technology and customer relationship intangible assets are being amortized on a straight-line basis over eighteen and eleven years, respectively, and property, plant and equipment is being depreciated on a straight-line basis over useful lives ranging from one to twelve years.

The results of operations of the business are reported in our Light Vehicle operating segment from the date of acquisition. As a result of the acquisition, we incurred transaction related expenses totaling $4, which were charged to Other income (expense), net. The pro forma effects of this acquisition would not materially impact our reported results for any period presented, and as a result no pro forma financial statements are presented. During the first half of 2017, the business contributed sales of $41 and net income of $3.

BFP and BPT — On February 1, 2017, we acquired 80% ownership interests in Brevini Fluid Power S.p.A. (BFP) and Brevini Power Transmission S.p.A. (BPT) from Brevini Group S.p.A. (Brevini). The acquisition expands our Off-Highway operating segment product portfolio to include technologies for tracked vehicles, doubling our addressable market for off-highway driveline systems and establishing Dana as the only off-highway solutions provider that can manage the power to both move the equipment and perform its critical work functions. This acquisition also brings a platform of technologies that can be leveraged in our light and commercial-vehicle end markets, helping to accelerate our hybridization and electrification initiatives.

We paid $181 at closing, using cash on hand, and refinanced a significant portion of the debt assumed in the transaction during the first half of 2017. The purchase price is subject to adjustment upon determination of the net indebtedness and net working capital levels of BFP and BPT as of the closing date. The terms of the agreement provide Dana the right to call half of Brevini’s noncontrolling interests in BFP and BPT, and Brevini the right to put half of its noncontrolling interests in BFP and BPT to Dana, assuming Dana does not exercise its call right, after the 2017 BFP and BPT financial statements have been approved by the board of directors. Further, Dana has the right to call Brevini’s remaining noncontrolling interests in BFP and BPT, and Brevini the right to put its remaining noncontrolling interests in BFP and BPT to Dana, assuming Dana does not exercise its call right, after the 2019 BFP and BPT financial statements have been approved by the board of directors. The call and put prices are based on the amount Dana paid to acquire its initial 80% interest in BFP and BPT subject to adjustment based on the actual EBITDA and free cash flows, as defined in the agreement, of BFP and BPT. In connection with the acquisition of BFP and BPT, Dana agreed to purchase certain real estate currently being leased by BPT from a Brevini affiliate for €25 in the event that sale to a third party has not occurred by November 1, 2017.



Total purchase consideration	$	181

Cash and cash equivalents	$	75
Accounts receivable - Trade	74
Accounts receivable - Other	17
Inventories	137
Other current assets	6
Goodwill	32
Intangibles	41
Deferred tax assets	1
Other noncurrent assets	4
Property, plant and equipment	146
Notes payable, including current portion of long-term debt	(131		)
Accounts payable	(51		)
Accrued payroll and employee benefits	(14		)
Other accrued liabilities	(19		)
Long-term debt	(51		)
Pension and postretirement obligations	(12		)
Other noncurrent liabilities	(15		)
Redeemable noncontrolling interest	(45		)
Noncontrolling interests	(14		)
Total purchase consideration allocation	$	181

Goodwill recognized in this transaction is primarily attributable to synergies expected to arise after the acquisition and the assembled workforce, is not deductible for tax purposes and will be assigned to and evaluated for impairment at the operating segment level. Intangibles includes $29 allocated to customer relationships and $12 allocated to trademarks and trade names. We used the multi-period excess earnings method, an income approach, to value the customer relationships. We used the relief from royalty method, an income approach, to value customer trademarks and trade names. We used a replacement cost method to value fixed assets. We used a discounted cash flow approach to value the redeemable noncontrolling interests, inclusive of the put and call provisions. We used both discounted cash flow and cost approaches to value the noncontrolling interests. The customer relationships and trademarks and trade names intangible assets are being amortized on a straight-line basis over seventeen years, and property, plant and equipment is being depreciated on a straight-line basis over useful lives ranging from three to fifteen years.

The results of operations of the businesses are reported in our Off-Highway operating segment from the date of acquisition. As a result of the acquisition, we incurred transaction related expenses totaling $7, which were charged to Other income (expense), net. The pro forma effects of this acquisition would not materially impact our reported results for any period presented, and as a result no pro forma financial statements are presented. During the first half of 2017, the businesses contributed sales of $179 and a net loss of $13, inclusive of a restructuring charge recorded in the second quarter of 2017. See Note 5 for more information.

SIFCO — On December 23, 2016, we acquired strategic assets of SIFCO S.A.'s (SIFCO) commercial vehicle steer axle systems and related forged components businesses. The acquisition enables us to enhance our vertically integrated supply chain, which will further improve our cost structure and customer satisfaction by leveraging SIFCO's extensive experience and knowledge of sophisticated forged components. In addition to strengthening our position as a central source for products that use forged and machined parts throughout the region, this acquisition enables us to better accommodate the local content requirements of our customers, which reduces their import and other region-specific costs.

SIFCO contributed the strategic assets to SJT Forjaria Ltda., a newly created legal entity, and Dana acquired all of the issued and outstanding quotas of SJT Forjaria Ltda. The strategic assets were acquired by Dana free and clear of any liens, claims or encumbrances. The acquisition was funded using cash on hand and has been accounted for as a business combination.

The purchase consideration and the related allocation to the acquisition date fair values of the assets acquired are presented in the following table:



Purchase price, cash consideration	$	60
Purchase price, deferred consideration	10
Total purchase consideration	$	70

Accounts receivable - Trade	$	1
Accounts receivable - Other	1
Inventories	10
Goodwill	7
Intangibles	3
Property, plant and equipment	59
Accounts payable	(2		)
Accrued payroll and employee benefits	(9		)
Total purchase consideration allocation	$	70

Goodwill recognized in this transaction is primarily attributable to synergies expected to arise after the acquisition and the assembled workforce and is deductible for tax purposes. Intangibles includes $2 allocated to developed technology and $1 allocated to trade names. We used the relief from royalty method, an income approach, to value developed technology and trade names. We used a replacement cost method to value fixed assets. The developed technology and trade name intangible assets are being amortized on a straight-line basis over seven and five years respectively, and property, plant and equipment is being depreciated on a straight-line basis over useful lives ranging from three to ten years.

The results of operations of the business are reported in our Commercial Vehicle operating segment from the date of acquisition. As a result of the acquisition, we incurred transaction related expenses totaling $5 during 2016, which were charged to Other income (expense), net. The pro forma effects of this acquisition would not materially impact our reported results for any period presented, and as a result no pro forma financial statements are presented.

Magnum — On January 29, 2016, we acquired the aftermarket distribution business of Magnum^® Gaskets (Magnum), a U.S.-based supplier of gaskets and sealing products for automotive and commercial-vehicle applications, for a purchase price of $18 at closing and additional cash payments of up to $2 contingent upon the achievement of certain sales metrics over a future two-year period. As of the closing date of the acquisition, the contingent consideration was assigned a fair value of approximately $1. Assets acquired included trademarks and trade names, customer relationships and goodwill. The results of operations of Magnum are reported within our Power Technologies operating segment. We acquired Magnum using cash on hand. The pro forma effects of this acquisition would not materially impact our reported results for any period presented, and as a result no pro forma financial statements are presented.

Note 3. Disposal Groups

Divestiture of Dana Companies — On December 30, 2016, we completed the divestiture of Dana Companies, LLC (DCLLC), a consolidated wholly-owned limited liability company that was established as part of our reorganization in 2008 to hold and manage personal injury asbestos claims retained by the reorganized Dana Corporation which was merged into DCLLC. DCLLC had net assets of $165 at the time of sale including cash and cash equivalents, marketable securities and rights to insurance coverage in place to satisfy a significant portion of its liabilities. We received cash proceeds of $88 – $29 net of cash divested – with $3 retained by the purchaser subject to the satisfaction of certain future conditions that we expect will be achieved in 2017. We recognized a pre-tax loss of $77 in 2016 upon completion of the transaction. During the second quarter of 2017 the conditions associated with the retained purchase price were satisfied. Dana received the remaining proceeds and recognized $3 of income in Other income (expense), net. Following completion of the sale, Dana has no obligation with respect to current or future asbestos claims.

Divestiture of Nippon Reinz — On November 30, 2016, we sold our 53.7% interest in Nippon Reinz Co. Ltd. (Nippon Reinz) to Nichias Corporation. Dana received net cash proceeds of $5 and recognized a pre-tax loss of $3 on the divestiture of Nippon Reinz, inclusive of the $12 gain on derecognition of the noncontrolling interest. Nippon Reinz had sales of $42 in 2016 through the transaction date.

Note 4. Goodwill and Other Intangible Assets

Goodwill — The change in the carrying amount of goodwill in 2017 is primarily due to currency fluctuation and the acquisitions of USM – Warren and 80% interests in BFP and BPT. See Note 2 for additional information.

Changes in the carrying amount of goodwill by segment —



	Light Vehicle		Commercial Vehicle		Off-Highway			Power Technologies		Total
Balance, December 31, 2016	$	—	6		$	78		$	6	$	90
Acquisitions	4				39					43
Purchase accounting adjustments			1		(7		)			(6		)
Currency impact					9					9
Balance, June 30, 2017	$	4	$	7	$	119		$	6	$	136

Components of other intangible assets —



		June 30, 2017							December 31, 2016
	Weighted Average Useful Life (years)	Gross Carrying Amount		Accumulated Impairment and Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Impairment and Amortization			Net Carrying Amount
Amortizable intangible assets
Core technology	7	$	94	$	(86	)	$	8	$	88	$	(83	)	$	5
Trademarks and trade names	15	19		(3		)	16		6		(2		)	4
Customer relationships	8	461		(390		)	71		389		(374		)	15
Non-amortizable intangible assets
Trademarks and trade names		65					65		65					65
Used in research and development activities		20					20		20					20
		$	659	$	(479	)	$	180	$	568	$	(459	)	$	109

The net carrying amounts of intangible assets, other than goodwill, attributable to each of our operating segments at June 30, 2017 were as follows: Light Vehicle — $54, Commercial Vehicle — $36, Off-Highway — $78 and Power Technologies — $12.

Amortization expense related to amortizable intangible assets —



	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Charged to cost of sales	$	—	$	—	$	1	$	—
Charged to amortization of intangibles	3		2		5		4
Total amortization	$	3	$	2	$	6	$	4

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, 2017 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.



	Remainder of 2017		2018		2019		2020		2021
Amortization expense	$	7	$	9	$	7	$	7	$	7

Note 5. Restructuring of Operations

Our restructuring activities have historically included rationalizing our operating footprint by consolidating facilities, positioning operations in lower cost locations and reducing overhead costs. In recent years, however, in response to lower demand and other market conditions in certain businesses, our focus has primarily been headcount reduction initiatives to reduce operating 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 2017, we approved plans to implement certain headcount reduction initiatives in our Off-Highway business as part of the BPT and BFP acquisition integration which resulted in restructuring expense of $8, primarily for severance and benefit costs. In each of this year's first and second quarters, we recognized restructuring expense of $2 primarily for exist costs associated with continued execution of previously announced actions.

During the second quarter of 2016, we announced closure of our Commercial Vehicle manufacturing facility in Glasgow, Kentucky. Including costs associated with this closure and other previously announced initiatives, restructuring expense during the second quarter of 2016 was $4 of severance and benefits costs and $1 of exit costs. Restructuring expense of $1 in last year's first quarter also primarily represented continuing exit costs associated with previously announced actions.

Accrued restructuring costs and activity, including noncurrent portion —



	Employee Termination Benefits			Exit Costs			Total
Balance at March 31, 2017	$	20		$	6		$	26
Charges to restructuring	8			2			10
Cash payments	(3		)	(2		)	(5		)
Currency impact	1						1
Balance at June 30, 2017	$	26		$	6		$	32

Balance at December 31, 2016	$	32		$	6		$	38
Charges to restructuring	8			4			12
Cash payments	(15		)	(4		)	(19		)
Currency impact	1						1
Balance at June 30, 2017	$	26		$	6		$	32

At June 30, 2017, the accrued employee termination benefits include costs to reduce approximately 400 employees to be completed over the next year. The exit costs relate primarily to lease continuation obligations.

Cost to complete — The following table provides project-to-date and estimated future restructuring expenses for completion of our approved restructuring initiatives for our business segments at June 30, 2017.



	Expense Recognized						Future Cost to Complete
	Prior to 2017		2017		Total to Date		Future Cost to Complete
Light Vehicle	$	10	$	1	$	11	$	1
Commercial Vehicle	41		3		44		13
Off-Highway	6		8		14
Total	$	57	$	12	$	69	$	14

The future cost to complete includes estimated separation costs, primarily those associated with one-time benefit programs, and exit costs through 2021, 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.

Note 6. Stockholders’ Equity

Common stock — Our Board of Directors declared quarterly cash dividends of six cents per share of common stock in the first and second quarters of 2017. Dividends accrue on restricted stock units (RSUs) granted under our stock compensation program and will be paid in cash or additional units when the underlying units vest.

Share repurchase program — Our Board of Directors approved a common stock share repurchase program up to $1,700 on January 11, 2016. The program expires on December 31, 2017. Approximately $219 remained available under the program for future share repurchases as of June 30, 2017.

Changes in equity —



	2017									2016
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	$	1,078		$	105		$	1,183		$	778		$	106		$	884
Net income	71			5			76			53			2			55
Other comprehensive income (loss)	(25		)	1			(24		)	(30		)				(30		)
Common stock dividends	(8		)				(8		)	(9		)				(9		)
Redeemable noncontrolling interests adjustment to redemption value	(2		)				(2		)							—
Distributions to noncontrolling interests				(4		)	(4		)				(13		)	(13		)
Common stock share repurchases							—			(53		)				(53		)
Stock compensation	5						5			4						4
Balance, June 30	$	1,119		$	107		$	1,226		$	743		$	95		$	838

Six Months Ended June 30,
Balance, December 31	$	1,157		$	85		$	1,242		$	728		$	103		$	831
Adoption of ASU 2016-16 tax adjustment, January 1, 2017	(179		)				(179		)							—
Net income	146			10			156			98			5			103
Other comprehensive income	5			3			8			11			1			12
Common stock dividends	(17		)				(17		)	(18		)				(18		)
Redeemable noncontrolling interests adjustment to redemption value	(2		)				(2		)							—
Distributions to noncontrolling interests				(5		)	(5		)				(14		)	(14		)
Common stock share repurchases							—			(81		)				(81		)
Increase from business combination				14			14									—
Stock compensation	12						12			6						6
Stock withheld for employee taxes	(3		)				(3		)	(1		)				(1		)
Balance, June 30	$	1,119		$	107		$	1,226		$	743		$	95		$	838

See Note 1 for additional information about adoption of new accounting guidance on January 1, 2017.

Changes in each component of accumulated other comprehensive income (AOCI) of the parent —




	Parent Company Stockholders
	Foreign Currency Translation			Hedging			Investments		Defined Benefit Plans			Total
Balance, March 31, 2017	$	(617	)	$	(38	)	$	—	$	(599	)	$	(1,254	)
Other comprehensive income (loss):
Currency translation adjustments	(32		)									(32		)
Holding loss on net investment hedge	(3		)									(3		)
Holding gains and losses				(63		)						(63		)
Reclassification of amount to net income (a)				68								68
Reclassification adjustment for net actuarial losses included in net periodic benefit cost (b)									7			7
Tax expense									(2		)	(2		)
Other comprehensive income (loss)	(35		)	5			—		5			(25		)
Balance, June 30, 2017	$	(652	)	$	(33	)	$	—	$	(594	)	$	(1,279	)

Balance, March 31, 2016	$	(579	)	$	(1	)	$	4	$	(557	)	$	(1,133	)
Other comprehensive income (loss):
Currency translation adjustments	(24		)									(24		)
Holding gains and losses				(14		)	1					(13		)
Reclassification of amount to net income (a)				1								1
Reclassification adjustment for net actuarial losses included in net periodic benefit cost (b)									6			6
Other comprehensive income (loss)	(24		)	(13		)	1		6			(30		)
Balance, June 30, 2016	$	(603	)	$	(14	)	$	5	$	(551	)	$	(1,163	)



Balance, December 31, 2016	$	(646	)	$	(34	)	$	—	$	(604	)	$	(1,284	)
Other comprehensive income (loss):
Currency translation adjustments	2											2
Holding loss on net investment hedge	(8		)									(8		)
Holding gains and losses				(75		)						(75		)
Reclassification of amount to net income (a)				74								74
Reclassification adjustment for net actuarial losses included in net periodic benefit cost (b)									15			15
Tax (expense) benefit				2					(5		)	(3		)
Other comprehensive income (loss)	(6		)	1			—		10			5
Balance, June 30, 2017	$	(652	)	$	(33	)	$	—	$	(594	)	$	(1,279	)

Balance, December 31, 2015	$	(608	)	$	(4	)	$	2	$	(564	)	$	(1,174	)
Other comprehensive income (loss):
Currency translation adjustments	5											5
Holding gains and losses				(13		)	3					(10		)
Reclassification of amount to net income (a)				3								3
Reclassification adjustment for net actuarial losses included in net periodic benefit cost (b)									13			13
Other comprehensive income (loss)	5			(10		)	3		13			11
Balance, June 30, 2016	$	(603	)	$	(14	)	$	5	$	(551	)	$	(1,163	)

(a) Foreign currency contract and investment reclassifications are included in Other income (expense), net.

(b) See Note 10 for additional details.

Note 7. Redeemable Noncontrolling Interests

In connection with the acquisition of a controlling interest in Brevini Fluid Power S.p.A. (BFP) and Brevini Power Transmission S.p.A. (BPT) from Brevini Group S.p.A. (Brevini) on February 1, 2017, we recognized $45 for Brevini's 20% redeemable noncontrolling interests. The terms of the agreement provide Dana the right to call Brevini's noncontrolling interests in BFP and BPT, and Brevini the right to put its noncontrolling interests in BFP and BPT to Dana, assuming Dana does not exercise its call rights, at dates and prices defined in the agreement. The call and put prices are based on the amount Dana paid to acquire its initial ownership interest in BFP and BPT subject to adjustment based on the actual EBITDA and free cash flows, as defined in the agreement, of BFP and BPT. See Note 2 for additional information.

Redeemable noncontrolling interests reflected as of the balance sheet date are the greater of the redeemable noncontrolling interest balances adjusted for comprehensive income items and distributions or the redemption values (i.e., the "floor"). Redeemable noncontrolling interest adjustments of redemption value to the floor are recorded in retained earnings and included as an adjustment to net income available to parent company stockholders in the calculation of earnings per share. During the second quarter of 2017 there was a $2 adjustment to reflect a redemption value in excess of carrying value. See Note 8.

Reconciliation of changes in redeemable noncontrolling interests —



June 30, 2017	Three Months Ended			Six Months Ended
Balance, beginning of period	$	44		$	—
Initial fair value of redeemable noncontrolling interests of acquired business				45
Comprehensive income (loss) adjustments:
Net income (loss) attributable to redeemable noncontrolling interests	(3		)	(3		)
Other comprehensive income (loss) attributable to redeemable noncontrolling interests	3			2
Retained earnings adjustments:
Adjustment to redemption value	2			2
Balance, June 30	$	46		$	46

Note 8. Earnings per Share

Reconciliation of the numerators and denominators of the earnings per share calculations —



	Three Months Ended June 30,					Six Months Ended June 30,
	2017			2016		2017			2016
Net income attributable to the parent company	$	71		$	53	$	146		$	98
Less: Redeemable noncontrolling interests adjustment to redemption value	(2		)			(2		)
Net income available to common stockholders - Numerator basic and diluted	$	69		$	53	$	144		$	98

Denominator:
Weighted-average shares outstanding - Basic	144.8			146.6		144.7			148.0
Employee compensation-related shares, including stock options	1.4			0.4		1.4			0.4
Weighted-average shares outstanding - Diluted	146.2			147.0		146.1			148.4

The share count for diluted earnings per share is computed on the basis of the weighted-average number of common shares outstanding plus the effects of dilutive common stock equivalents (CSEs) outstanding during the period. We excluded 0.3 million and 2.1 million CSEs from the calculations of diluted earnings per share for the second quarters of 2017 and 2016 and excluded 0.2 million and 2.1 million CSEs for the year-to-date periods of 2017 and 2016 as the effect of including them would have been anti-dilutive.

Note 9. Stock Compensation

The Compensation Committee of our Board of Directors approved the grant of RSUs and performance share units (PSUs) shown in the table below during 2017.

* Weighted-average per share

We calculated the fair value of the RSUs at grant date based on the closing market price of our common stock at the date of grant. The number of PSUs that ultimately vest is contingent on achieving specified return on invested capital targets and specified margin targets, with an even distribution between the two targets. We estimated the fair value of the PSUs at grant date based on the closing market price of our common stock at the date of grant adjusted for the value of assumed dividends over the period because the awards are not dividend protected.

We received $5 of cash from the exercise of stock options related to 0.4 million shares. We paid $2 of cash to settle SARs and RSUs and issued 0.5 million shares of common stock based on the vesting of RSUs during 2017. We recognized stock compensation expense of $6 and $5 during the second quarters of 2017 and 2016 and $10 and $7 during the first half of 2017 and 2016. At June 30, 2017, the total unrecognized compensation cost related to the nonvested awards granted and expected to vest was $32. This cost is expected to be recognized over a weighted-average period of 2.0 years.

Note 10. Pension and Postretirement Benefit Plans

We have a number of defined contribution and defined benefit, qualified and nonqualified, pension plans covering eligible employees. Other postretirement benefits (OPEB), including medical and life insurance, are provided for certain employees upon retirement.

Components of net periodic benefit cost (credit) —



	Pension
	2017						2016						OPEB - Non-U.S.
Three Months Ended June 30,	U.S.			Non-U.S.			U.S.			Non-U.S.			2017		2016
Interest cost	$	13		$	2		$	13		$	2		$	1	$	1
Expected return on plan assets	(21		)	(1		)	(23		)
Service cost				2						1
Other										1
Amortization of net actuarial loss	6			1			5			1
Net periodic benefit cost (credit)	$	(2	)	$	4		$	(5	)	$	5		$	1	$	1

Six Months Ended June 30,
Interest cost	$	26		$	4		$	26		$	4		$	2	$	2
Expected return on plan assets	(42		)	(2		)	(46		)	(1		)
Service cost				3						2
Other										1
Amortization of net actuarial loss	12			3			10			3
Net periodic benefit cost (credit)	$	(4	)	$	8		$	(10	)	$	9		$	2	$	2

Pension expense for 2017 increased versus the same period in 2016 as a result of a lower assumed return on plan assets and an increase in amortization of the net actuarial loss in the U.S.

Note 11. Marketable Securities



	June 30, 2017						December 31, 2016
	Cost		Unrealized Gain (Loss)		Fair Value		Cost		Unrealized Gain (Loss)		Fair Value
U.S. government securities	$	3	$	—	$	3	$	2	$	—	$	2
Corporate securities	5				5		2				2
Certificates of deposit	23				23		22				22
Other	5				5		4				4
Total marketable securities	$	36	$	—	$	36	$	30	$	—	$	30

U.S. government securities include bonds issued by government-sponsored agencies and Treasury notes. Corporate securities are primarily debt securities. Other consists of investments in mutual and index funds. U.S. government securities, corporate debt and certificates of deposit maturing in one year or less, after one year through five years and after five years through ten years total $23, $5 and $3 at June 30, 2017.

Note 12. Financing Agreements

Long-term debt at —



			June 30, 2017					December 31, 2016
	Interest Rate		Principal		Unamortized Debt Issue Costs			Principal		Unamortized Debt Issue Costs
Senior Notes due September 15, 2021	5.375%		$	350	$	(4	)	$	450	$	(5	)
Senior Notes due September 15, 2023	6.000%		300		(4		)	300		(4		)
Senior Notes due December 15, 2024	5.500%		425		(5		)	425		(6		)
Senior Notes due April 15, 2025	5.750%	*	400		(6		)
Senior Notes due June 1, 2026	6.500%	*	375		(6		)	375		(6		)
Other indebtedness			21					120
Total			$	1,871	$	(25	)	$	1,670	$	(21	)

In conjunction with the issuance of the April 2025 Notes we entered into 8-year fixed-to-fixed cross-currency swaps which have the effect of economically converting the April 2025 Notes to euro-denominated debt at a fixed rate of 3.850%. See Note 13 for additional information. In conjunction with the issuance of the June 2026 Notes we entered into 10-year fixed-to-fixed cross-currency swaps which have the effect of economically converting the June 2026 Notes to euro-denominated debt at a fixed rate of 5.140%.

Interest on the senior notes is payable semi-annually. Other indebtedness includes borrowings from various financial institutions, capital lease obligations, the unamortized fair value adjustment related to a terminated interest rate swap and the financial liability related to a build-to-suit lease. See Note 13 for additional information on the terminated interest rate swap.

Senior notes — On April 4, 2017, Dana Financing Luxembourg S.à r.l., a wholly-owned subsidiary of Dana, issued $400 in senior notes (April 2025 Notes) at 5.750%, which are guaranteed by Dana. The April 2025 Notes were issued through a private placement and will not be registered under the U.S. Securities Act of 1933, as amended (the Securities Act). The April 2025 Notes were offered only to qualified institutional buyers in reliance on Rule 144A under the Securities Act and, outside the United States, only to non-U.S. investors in reliance on Regulation S under the Securities Act. The April 2025 Notes rank equally with Dana's other unsecured senior notes. Interest on the notes is payable on April 15 and October 15 of each year, beginning on October 15, 2017. The April 2025 Notes will mature on April 15, 2025. Net proceeds of the offering totaled $394. Financing costs of $6 were recorded as deferred costs and are being amortized to interest expense over the life of the April 2025 Notes. The proceeds from the offering were used to repay indebtedness of our BPT and BFP subsidiaries, repay indebtedness of a wholly-owned subsidiary in Brazil, redeem $100 of our September 2021 Notes and for general corporate purposes. The September 2021 Notes were redeemed on April 4, 2017 at a price equal to 104.031% plus accrued and unpaid interest. The $6 loss on extinguishment of debt includes the $4 redemption premium and the $1 write-off of previously deferred financing costs associated with the September 2021 Notes and the $1 redemption premium associated with the repayment of indebtedness of a wholly-owned subsidiary in Brazil. In conjunction with the issuance of the April 2025 Notes, we entered into eight-year fixed-to-fixed cross-currency swaps which have the effect of economically converting the April 2025 Notes to euro-denominated debt at a fixed rate of 3.850%. See Note 13 for additional information.

At any time prior to April 15, 2020, we may redeem up to 35% of the aggregate principal amount of the April 2025 Notes in an amount not to exceed the amount of proceeds of one or more equity offerings, at a price equal to 105.750% of the principal amount thereof, plus accrued and unpaid interest, if any, to the redemption date, provided that at least 50% of the original aggregate principal amount of the April 2025 Notes remains outstanding after the redemption.

Prior to April 15, 2020, we may redeem some or all of the April 2025 Notes at a redemption price of 100.000% of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, to the redemption date plus a “make-whole” premium. We have not separated the make-whole premium from the underlying debt instrument to account for it as a derivative instrument as the economic characteristics and the risks of this embedded derivative are clearly and closely related to the economic characteristics and risks of the underlying debt.

We may redeem some or all of the April 2025 Notes at the following redemption prices (expressed as percentages of principal amount), plus accrued and unpaid interest to the redemption date, if redeemed during the 12-month period commencing on April 15 in the years set forth below:



Year		Redemption Price
2020		104.313%
2021		102.875%
2022		101.438%
2023		100.000%
2024		100.000%

On June 23, 2016, we redeemed all of our February 2021 Notes at a price equal to 103.375% plus accrued and unpaid interest. The $16 loss on extinguishment of debt includes the $12 redemption premium and the $4 write-off of previously deferred financing costs associated with the February 2021 Notes.

Revolving facility — On June 9, 2016, we entered into a new $500 revolving credit facility (the Revolving Facility) which matures on June 9, 2021. The Revolving Facility refinanced and replaced our previous revolving credit facility. In connection with the Revolving Facility, we paid $3 in deferred financing costs to be amortized to interest expense over the life of the facility. We wrote off $1 of previously deferred financing costs associated with our prior revolving credit facility to loss on extinguishment of debt. Deferred financing costs on our Revolving Facility are included in Other noncurrent assets.

The Revolving Facility is guaranteed by all of our wholly-owned domestic subsidiaries, subject to certain exceptions, including exceptions for Dana Credit Corporation and its subsidiaries (the guarantors), and grants a first-priority lien on substantially all of the assets of Dana and the guarantors, subject to certain exceptions.

Advances under the Revolving Facility bear interest at a floating rate based on, at our option, the base rate or Eurodollar rate (each as described in the revolving credit agreement) plus a margin as set forth below:



	Margin
Total Net Leverage Ratio	Base Rate		Eurodollar Rate
Less than or equal to 1.00:1.00	0.50	%	1.50	%
Greater than 1.00:1.00 but less than or equal to 2.00:1.00	0.75	%	1.75	%
Greater than 2.00:1.00	1.00	%	2.00	%

Commitment fees are applied based on the average daily unused portion of the available amounts under the Revolving Facility as set forth below:



Total Net Leverage Ratio	Commitment Fee
Less than or equal to 1.00:1.00	0.250	%
Greater than 1.00:1.00 but less than or equal to 2.00:1.00	0.375	%
Greater than 2.00:1.00	0.500	%

Up to $275 of the Revolving Facility may be applied to letters of credit, which reduces availability. We pay a fee for issued and undrawn letters of credit in an amount per annum equal to the applicable margin for Eurodollar rate advances based on a

quarterly average availability under issued and undrawn letters of credit under the Revolving Facility and a per annum fronting fee of 0.125%, payable quarterly.

As of June 30, 2017, we had no outstanding borrowings under the Revolving Facility but we had utilized $23 for letters of credit. We had availability at June 30, 2017 under the Revolving Facility of $477 after deducting the outstanding letters of credit.

Debt covenants — At June 30, 2017, we were in compliance with the covenants of our financing agreements. Under the Revolving Facility and the senior notes, we are required to comply with certain incurrence-based covenants customary for facilities of these types and, in the case of the Revolving Facility, a maintenance covenant requiring us to maintain a first lien net leverage ratio not to exceed 2.00 to 1.00.

Note 13. 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	June 30, 2017		December 31, 2016
Available-for-sale securities	Marketable securities	1	$	5	$	4
Available-for-sale securities	Marketable securities	2	31		26
Currency forward contracts
Cash flow hedges	Accounts receivable other	2	6		2
Cash flow hedges	Other accrued liabilities	2	1		4
Undesignated	Accounts receivable other	2	1		1
Undesignated	Other accrued liabilities	2	1		1
Currency swaps
Cash flow hedges	Other noncurrent liabilities	2	94		12
Undesignated	Other accrued liabilities	2	1		3

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:

June 30, 2017