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: March 31, ~~2016~~2017

Commission File Number: 1-1063

Dana ~~Holding Corporation~~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, ~~or a~~ smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated ~~filer” and~~filer,” “smaller reporting ~~company”~~company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer þ	Accelerated filer o	Non-accelerated filer o	Smaller reporting company 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 ~~147,884,663~~144,559,475 shares of the registrant’s common stock outstanding at April ~~8, 2016.~~21, 2017.

DANA ~~HOLDING CORPORATION~~INCORPORATED – FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED MARCH 31, ~~2016~~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	2428

Item 3	Quantitative and Qualitative Disclosures About Market Risk	3744

Item 4	Controls and Procedures	3744

PART II – OTHER INFORMATION

Item 1	Legal Proceedings	3845

Item 1A	Risk Factors	3845

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	3845

Item 6	Exhibits	3845

Signatures		3946
Exhibit Index		4047

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Dana ~~Holding Corporation~~Incorporated

Consolidated Statement of Operations (Unaudited)

(In millions, except per share amounts)


	Three Months Ended March 31,					Three Months Ended March 31,
	2016		2015			2017			2016
Net sales	$	1,449	$	1,608		$	1,701		$	1,449
Costs and expenses
Cost of sales	1,250		1,380			1,438			1,250
Selling, general and administrative expenses	98		100			121			98
Amortization of intangibles	2		5			2			2
Restructuring charges, net	1		1			2			1
Loss on extinguishment of debt			(2		)
Other income, net	1		12
Income before interest expense and income taxes	99		132
Other expense, net						(9		)	(2		)
Income before interest and income taxes						129			96
Interest income						3			3
Interest expense	27		28			27			27
Income before income taxes	72		104			105			72
Income tax expense	24		31			30			24
Equity in earnings of affiliates			1			5
Net income	48		74			80			48
Less: Noncontrolling interests net income	3		11			5			3
Less: Redeemable noncontrolling interest net income
Net income attributable to the parent company	$	45	$	63		$	75		$	45

Net income per share attributable to the parent company
Basic	$	0.30	$	0.38		$	0.52		$	0.30
Diluted	$	0.30	$	0.38		$	0.51		$	0.30

Weighted-average shares outstanding - Basic	149.4		164.7
Weighted-average shares outstanding - Diluted	149.9		166.0
Weighted-average common shares outstanding
Basic						144.6			149.4
Diluted						145.9			149.9

Cash dividends declared per share	$	0.06	$	0.05		$	0.06		$	0.06

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

Dana ~~Holding Corporation~~Incorporated

Consolidated Statement of Comprehensive Income (Unaudited)

(In millions)

Three Months Ended
March 31,
2016 2015
Net income $ 48
$ 74
Less: Noncontrolling interests net income 3
11
Net income attributable to the parent company 45
63

Other comprehensive income (loss) attributable to the parent company, net of tax:

Currency translation adjustments 29
(99 )
Hedging gains and losses 3
(1 )
Investment and other gains and losses 2
1
Defined benefit plans 7
16
Other comprehensive income (loss) attributable to the parent company 41
(83 )

Other comprehensive income (loss) attributable to noncontrolling interests, net of tax:

Currency translation adjustments 1

Defined benefit plans
1
Other comprehensive income attributable to noncontrolling interests 1
1

Total comprehensive income (loss) attributable to the parent company 86
(20 )
Total comprehensive income attributable to noncontrolling interests 4
12
Total comprehensive income (loss) $ 90
$ (8 )



	Three Months Ended March 31,
	2017			2016
Net income	$	80		$	48
Other comprehensive income (loss), net of tax:
Currency translation adjustments	30			30
Hedging gains and losses	(4		)	3
Investment and other gains and losses				2
Defined benefit plans	5			7
Other comprehensive income	31			42
Total comprehensive income	111			90
Less: Comprehensive income attributable to noncontrolling interests	(7		)	(4		)
Less: Comprehensive loss attributable to redeemable noncontrolling interest	1
Comprehensive income attributable to the parent company	$	105		$	86

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

Dana ~~Holding Corporation~~Incorporated

Consolidated Balance Sheet (Unaudited)

(In millions, except share and per share amounts)


	March 31, 2016			December 31, 2015			March 31, 2017			December 31, 2016
Assets
Current assets
Cash and cash equivalents	$	669		$	791		$	423		$	707
Marketable securities	164			162			31			30
Accounts receivable
Trade, less allowance for doubtful accounts of $5 in 2016 and 2015	804			673
Trade, less allowance for doubtful accounts of $7 in 2017 and $6 in 2016							1,009			721
Other	133			115			129			110
Inventories
Raw materials	325			303			376			321
Work in process and finished goods	345			322			438			317
Other current assets	123			108			98			78
Total current assets	2,563			2,474			2,504			2,284
Goodwill	91			80			134			90
Intangibles	112			102			180			109
Deferred tax assets							578			588
Other noncurrent assets	342			353			60			226
Investments in affiliates	150			150			158			150
Property, plant and equipment, net	1,210			1,167			1,676			1,413
Total assets	$	4,468		$	4,326		$	5,290		$	4,860

Liabilities and equity
Current liabilities
Notes payable, including current portion of long-term debt	$	27		$	22		$	213		$	69
Accounts payable	795			712			1,028			819
Accrued payroll and employee benefits	130			145			150			149
Taxes on income	19			19			22			15
Other accrued liabilities	181			193			203			201
Total current liabilities	1,152			1,091			1,616			1,253
Long-term debt, less debt issuance costs of $21 in 2016 and 2015	1,574			1,553
Long-term debt, less debt issuance costs of $20 in 2017 and $21 in 2016							1,623			1,595
Pension and postretirement obligations	523			521			569			565
Other noncurrent liabilities	335			330			255			205
Total liabilities	3,584			3,495			4,063			3,618
Commitments and contingencies (Note 13)
Commitments and contingencies (Note 14)
Redeemable noncontrolling interest							44
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, 148,074,536 and 150,068,040 shares outstanding	2			2
Common stock, 450,000,000 shares authorized, $0.01 par value, 144,541,593 and 143,938,280 shares outstanding							2			2
Additional paid-in capital	2,313			2,311			2,334			2,327
Accumulated deficit	(374		)	(410		)
Treasury stock, at cost (2,412,087 and 23,963 shares)	(30		)	(1		)
Retained earnings							82			195
Treasury stock, at cost (6,957,065 and 6,812,784 shares)							(86		)	(83		)
Accumulated other comprehensive loss	(1,133		)	(1,174		)	(1,254		)	(1,284		)
Total parent company stockholders' equity	778			728			1,078			1,157
Noncontrolling equity	106			103
Noncontrolling interests							105			85
Total equity	884			831			1,183			1,242
Total liabilities and equity	$	4,468		$	4,326		$	5,290		$	4,860

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

Dana ~~Holding Corporation~~Incorporated

Consolidated Statement of Cash Flows (Unaudited)

(In millions)


	Three Months Ended March 31,						Three Months Ended March 31,
	2016			2015			2017			2016
Operating activities
Net income	$	48		$	74		$	80		$	48
Depreciation	41			39			49			41
Amortization of intangibles	2			6			3			2
Amortization of deferred financing charges	1			1			1			1
Call premium on senior notes				2
Earnings of affiliates, net of dividends received	2			1			(5		)	2
Stock compensation expense	2			3			4			2
Deferred income taxes	4			5			10			4
Pension contributions, net	(7		)	(5		)	(2		)	(7		)
Change in working capital	(128		)	(141		)	(133		)	(128		)
Other, net	8			(5		)	4			8
Net cash used in operating activities	(27		)	(20		)
Net cash provided by (used in) operating activities							11			(27		)

Investing activities
Purchases of property, plant and equipment	(71		)	(62		)	(96		)	(71		)
Acquisition of business	(18		)
Acquisition of businesses, net of cash acquired							(184		)	(18		)
Purchases of marketable securities	(12		)	(11		)	(11		)	(12		)
Proceeds from sales of marketable securities	3			10						3
Proceeds from maturities of marketable securities	8			6			13			8
Other	(2		)	(2		)	(4		)	(2		)
Net cash used in investing activities	(92		)	(59		)	(282		)	(92		)

Financing activities
Net change in short-term debt	11			6			(1		)	11
Repayment of letters of credit				(4		)
Proceeds from long-term debt	32			18						32
Repayment of long-term debt	(24		)	(56		)	(17		)	(24		)
Call premium on senior notes				(2		)
Dividends paid to common stockholders	(9		)				(9		)	(9		)
Distributions to noncontrolling interests	(1		)	(1		)	(1		)	(1		)
Repurchases of common stock	(28		)	(63		)				(28		)
Other	(1		)	(2		)	2			(1		)
Net cash used in financing activities	(20		)	(104		)	(26		)	(20		)

Net decrease in cash and cash equivalents	(139		)	(183		)	(297		)	(139		)
Cash and cash equivalents – beginning of period	791			1,121			707			791
Effect of exchange rate changes on cash balances	17			(53		)	13			17
Cash and cash equivalents – end of period	$	669		$	885		$	423		$	669

Non-cash investing activity
Purchases of property, plant and equipment held in accounts payable							$	106		$	45

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

Dana ~~Holding Corporation~~Incorporated

Index to Notes to Consolidated Financial Statements



1.	Organization and Summary of Significant Accounting Policies

2.	Acquisitions

3.	Disposal Groups ~~and Impairment of Long-Lived Assets~~

4.	Goodwill and Other Intangible Assets

5.	Restructuring of Operations

6.	Stockholders' Equity

7.	Redeemable Noncontrolling Interest

8.	Earnings per Share

8.9.	Stock Compensation

9.10.	Pension and Postretirement Benefit Plans

~~10.~~11.	Marketable Securities

~~11.~~12.	Financing Agreements

~~12.~~13.	Fair Value Measurements and Derivatives

~~13.~~14.	Commitments and Contingencies

~~14.~~15.	Warranty Obligations

~~15.~~16.	Income Taxes

~~16.~~17.	Other ~~Income,~~Expense, Net

~~17.~~18.	Segments

~~18.~~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 ~~Holding Corporation~~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 ~~presentation~~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 ~~2015~~2016 Form 10-K. ~~Certain prior~~

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 expense, net. Prior year amounts have been reclassified to conform to the ~~2016~~2017 presentation.

In the first quarter of 2015, we identified an error attributable to the calculation of noncontrolling interests net income of a subsidiary. The error resulted in an understatement of noncontrolling equity and noncontrolling interests net income and a corresponding overstatement of parent company stockholders' equity and net income attributable to the parent company in prior periods. Based on our assessments of qualitative and quantitative factors, the error and related impacts were not considered material to the financial statements of the prior periods to which they relate. The error was corrected in March 2015 by increasing noncontrolling interests net income by $9. The correction was not considered material to our 2015 net income attributable to the parent company.

Recently adopted accounting pronouncements

In ~~September 2015,~~October 2016, the Financial Accounting Standards Board (FASB) issued ~~an amendment~~Accounting Standard Update (ASU) 2016-16, Income Taxes – Intra-Entity Transfers of Assets Other Than Inventory, guidance that ~~eliminates~~simplifies the ~~requirement to restate prior period financial statements for measurement period adjustments in~~ accounting for ~~business combinations. Entities must~~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 ~~adjustments to provisional amounts that are identified during~~ the ~~measurement period in~~income tax consequences of an intra-entity transfer of an asset other than inventory when the ~~reporting period in~~transfer occurs. The new guidance, which ~~the adjustment amounts are determined. This guidance became~~requires modified retrospective application, becomes effective January 1, ~~2016 and requires prospective application~~2018 with early adoption permitted in 2017 prior to ~~qualifying business combinations.~~

~~In May 2015,~~ the FASB issued guidance that modifies disclosures related to investments for which fair value is measured using the net asset value (or its equivalent) per share practical expedient by eliminating the requirement to categorize such assets under the fair value hierarchy. The new guidance also eliminates the requirement to include in certain disclosures those investments that are merely eligible to be measured using the practical expedient, limiting the disclosures to those investments actually valued under that approach. This guidance became effective January 1, 2016 and requires retrospective application. We are currently evaluating the impact this guidance will have on our year-end pension asset disclosures.

In April 2015, the FASB issued an amendment to provide explicit guidance about a customer's accounting for fees paid in a cloud computing arrangement. If a cloud computing arrangement includes a software license, then the customer must account for the software license elementissuance of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, then the customer must account for the arrangement as a service contract.interim financial statements. We adopted ~~the new~~this guidance effective January 1, ~~2016. Applying~~2017. The adoption of the ~~amendment to all arrangements entered into or materially modified after~~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 ~~effective date did not have an~~following standards during the first quarter of 2017, none of which had a material impact on our ~~consolidated~~ financial ~~statements.~~statements or financial statement disclosures:

In April 2015, the FASB issued guidance to provide for a practical expedient that permits an entity to measure defined benefit plan assets and obligations as of the month end that is closest to the date of a significant event, such as a plan amendment, settlement or curtailment, that calls for a remeasurement in accordance with existing requirements. An entity is

required to disclose the accounting policy election and the date used to measure defined benefit plan assets and obligations. The new guidance was effective January 1, 2016 and did not impact our consolidated financial statements.

In February 2015, the FASB released updated consolidation guidance that entities must use to evaluate specific ownership and contractual arrangements that lead to a consolidation conclusion. The updates could change consolidation outcomes affecting presentation and disclosures. The new guidance was effective January 1, 2016 and did not impact our consolidated financial statements.

In June 2014, the FASB issued guidance to provide clarity on whether to treat a performance target that could be achieved after the requisite service period as a performance condition that affects vesting or as a nonvesting condition that affects the grant-date fair value of a share-based payment award. Generally, an award with a performance target also requires an employee to render service until the performance target is achieved. In some cases, however, the terms of an award may provide that the performance target could be achieved after an employee completes the requisite service period. The amendment requires that a performance target that affects vesting and extends beyond the end of the service period be treated as a performance condition and not as a factor in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. The new guidance was effective January 1, 2016 and did not impact our consolidated financial statements.



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 March ~~2016,~~2017, the FASB issued ~~simplification~~ASU 2017-07, Retirement Benefits – Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, guidance that requires entities to ~~eliminate~~present the ~~requirement to retrospectively apply the equity method~~service cost component of accounting upon obtaining significant influence over an investment that it previously accounted for under the cost basis or at fair value. That is, it is no longer required to restate all periods as if the equity method had been in effect during all previous periods that the investment had been held. The guidance applies to covered transactions that occur after December 31, 2016. Early adoption is permitted. The significance of this guidance for us is dependent on any qualifying future investments.net

~~In March 2016,~~

periodic pension cost and net periodic postretirement benefit cost in the ~~FASB issued guidance that simplifies the embedded derivative analysis for debt instruments containing contingent call or put options.~~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 amendment clarifies that an exercise contingency does not need to be evaluated to determine whether it relates to interest rates and credit risk in an embedded derivative analysis. That is, a contingent put or call option embedded in a debt instrument would be evaluated for possible separate accounting as a derivative instrument without regardrules related to the ~~nature~~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 ~~exercise contingency.~~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, ~~2017 and must be applied on a modified retrospective basis to all existing and future debt instruments.~~2018. Early adoption is permitted. We ~~are currently evaluating the impact~~do not expect this guidance ~~will~~to have a material impact on our consolidated financial ~~statements.~~statements in the near term as the service components and related net periodic benefit costs are not significantly different.

In ~~March 2016,~~January 2017, the FASB issued ASU 2017-04, Goodwill – Simplifying the Test for Goodwill Impairment,guidance that ~~clarifies the hedge accounting impact when there~~simplifies how an entity is ~~a change in one~~required to test goodwill for impairment by eliminating Step 2 of the ~~counterparties to a derivative contract.~~goodwill impairment test. The new guidance ~~clarifies that a change in~~quantifies goodwill impairment as the ~~counterparty to a derivative contract~~amount by ~~itself does not require~~which the ~~dedesignation~~carrying amount of a ~~hedging relationship provided~~reporting unit, including goodwill, exceeds its fair value, with the impairment loss limited to the total amount of goodwill allocated to that ~~all other hedge accounting criteria continue to be met.~~reporting unit. This guidance becomes effective January 1, ~~2018~~2020 and ~~can~~will be applied on ~~either~~ a prospective ~~basis or a modified retrospective~~ basis. Early adoption is ~~permitted.~~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 issuedASU 2016-02, Leases, its new lease accounting standard. The primary focus of the standard ~~addresses~~is on the accounting ofby lessees. ItThis standard requires ~~all~~ 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 ~~previous~~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. ~~This guidance becomes effective January 1, 2019. Early~~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, ~~is permitted.~~including our assessment of the likelihood of renewal of leases that provide such an option. We ~~are currently evaluating~~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 issuedASU 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 November 2015, the FASB issued guidance that simplifies the balance sheet classification of deferred taxes. Current GAAP requires an entity to separate deferred income tax liabilities and assets into current and noncurrent amounts in a classified statement of financial position. This amendment simplifies the presentation to require that all deferred tax liabilities and assets be classified as noncurrent on the balance sheet. The guidance does not change the existing requirement that only permits offsetting within a jurisdiction. The change to noncurrent classification will have an impact on working capital. This guidance becomes effective January 1, 2017 and allows for prospective or retrospective application, with appropriate disclosures. Early adoption is permitted. We are currently evaluating the impact this guidance will have on our consolidated financial statements.

In July 2015, the FASB issued an amendment that changes the measurement principle for inventory from the lower of cost or market to lower of cost and net realizable value. This amendment only addresses the measurement of inventory if its value declines or is impaired. The guidance on determining the cost of inventory is not being amended. This guidance becomes effective January 1, 2017 and requires prospective application. Early adoption is permitted. Adoption of this guidance will have no impact on our consolidated financial statements.

In May 2014, the FASB issuedASU 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. ~~In July 2015, the FASB adopted a one-year deferral of this guidance. In March 2016, the FASB issued an amendment to clarify the principal versus agent assessment in a revenue transaction.~~ This guidance will be effective January 1, 2018 ~~with the option to adopt the standard as of the original effective date, January 1, 2017.~~for Dana. The guidance allows for either a full retrospective or a modified retrospective transition method. We are ~~currently~~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 many 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. In addition, we are evaluating how the new guidance may impact our accounting for customer tooling, engineering and design services and pre-production costs. We continue to evaluate the impact this guidance will have on our ~~consolidated~~ 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 $1, which were charged to Other 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 quarter of 2017, the business contributed sales of $11 and a de minimis net loss.

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 intend to refinance 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.



Total purchase consideration	$	181

Cash and cash equivalents	$	75
Accounts receivable - Trade	74
Accounts receivable - Other	10
Inventories	137
Other current assets	6
Goodwill	39
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 17 years, and property, plant and equipment is being depreciated on a straight-line basis over useful lives ranging from three to 30 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 $6, which were charged to Other 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 quarter of 2017, the businesses contributed sales of $69 and a net loss of $2.

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	9
Total purchase consideration	$	69

Accounts receivable - Trade	$	1
Accounts receivable - Other	1
Inventories	10
Goodwill	6
Intangibles	3
Property, plant and equipment	59
Accounts payable	(2		)
Accrued payroll and employee benefits	(9		)
Total purchase consideration allocation	$	69

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 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 ~~were~~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 ~~Impairment of Long-Lived Assets~~

~~Disposal of operations in Venezuela~~ — ~~In December 2014, we entered~~manage personal injury asbestos claims retained by the reorganized Dana Corporation which was merged into an agreement to divest our Light Vehicle operations in Venezuela (the disposal group) to an unaffiliated company for no consideration. Upon classification of the disposal group as held for sale in December 2014, we recognized an $80 loss to adjust the carrying value of theDCLLC. DCLLC had net assets of ~~our operations~~$165 at the time of sale including cash and cash equivalents, marketable securities and rights to insurance coverage in ~~Venezuela~~place to ~~fair value less cost~~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 ~~sell.~~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. In the event the conditions associated with the retained purchase price of $3 are satisfied in the future, income of $3 will be recognized at such time. Following completion of the sale, Dana has no obligation with respect to current or future asbestos claims.

~~Upon completion~~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 ~~disposal group in January 2015, we recognized a~~$12 gain ~~of $5~~ on ~~the~~ derecognition of the noncontrolling interest in a former Venezuelan subsidiary in other income, net. We also credited other comprehensive loss attributable to the parent for $10 and other comprehensive loss attributable to noncontrolling interests for $1 to eliminate the unrecognized pension expense recorded in accumulated other comprehensive loss.

~~Impairment of long-lived assets~~ — On February 1, 2011, we entered into an agreement with SIFCO S.A. (SIFCO), a leading producer of steer axles and forged components in South America. In return for payment of $150 to SIFCO, we acquired the distribution rights to SIFCO's commercial vehicle steer axle systems as well as an exclusive long-term supply agreement for key driveline components. Our Commercial Vehicle operating segmentinterest. Nippon Reinz had sales ~~attributable to SIFCO supplied axles and parts~~ of ~~$98 and $225~~$42 in ~~2015 and 2014.~~2016 through the transaction date.

This agreement was accounted for as a business combination for financial reporting purposes. The aggregate fair value of the net assets acquired were allocated primarily to the exclusivity provisions of the supply agreement as a contract-based intangible asset and recorded within our Commercial Vehicle operating segment. Fair value was also allocated to fixed assets and an embedded lease obligation. The intangible asset were being amortized and the fixed assets were being depreciated on a straight-line basis over ten years. The embedded lease obligations were being amortized using the effective interest method over the ten-year useful lives of the related fixed assets.

On April 22, 2014, SIFCO and affiliated companies filed for judicial reorganization before Bankruptcy Court in São Paulo, Brazil and an ancillary Chapter 15 proceeding before the Bankruptcy Court of the Southern District of New York. The Brazilian bankruptcy case has subsequently been moved to the 5th Lower Civil Court in the Judicial District of Jundiai, the location of SIFCO's principal operations. Until the third quarter of 2015, SIFCO complied with the terms of the supply agreement. In August 2015, SIFCO discontinued production of our orders and failed to comply with provisions of the supply agreement. We obtained a judicial injunction requiring that SIFCO release any finished product in their possession that was produced pursuant to the supply agreement, resume production and parts supply pursuant to the terms of the supply agreement and cease communications with our customers regarding direct sale of parts. SIFCO contested the injunction we obtained, without success, and refused to comply with injunction. Through a judicial seizure order issued on September 9, 2015, we were successful in obtaining the release of the finished product.

Based on SIFCO's refusal to comply with the terms of the supply agreement and the court injunctions as noted above, we believed that the carrying amount of the contract-based intangible asset is not recoverable and therefore, tested the associated asset group for impairment as of September 30, 2015 under ASC 360-10. Based upon management's conclusion that there were no future economic benefit and related cash flows associated with the long-lived assets of this asset group, which is comprised predominantly of the intangible asset, management concluded that the fair value of the asset group was de minimis and accordingly recorded a full impairment charge of $36 in the third quarter of 2015.

On October 27, 2015, we entered into an interim agreement with SIFCO under which they have continued to supply us product while pursuing various mutually satisfactory longer-term alternatives. While agreeing on suitable short-term arrangements with SIFCO, we have preserved the ability to pursue the legal rights and remedies available to us to enforce compliance with the original supply agreement. Our ability to maintain continued uninterrupted product supply to satisfy our customer commitments is somewhat uncertain, dependent on continued mutually satisfactory interim arrangements with SIFCO and the outcome of their reorganization proceedings.

Note 4. Goodwill and Other Intangible Assets

Goodwill — The ~~carrying amount of goodwill attributable to each of our operating segments at March 31, 2016 were as follows: Off-Highway — $84 and Power Technologies — $7. The~~ change in the carrying amount of goodwill in ~~2016~~2017 is due to currency fluctuation and the ~~acquisition~~acquisitions of ~~an aftermarket distribution business.~~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
Currency impact			1						1
Balance, March 31, 2017	$	4	$	7	$	117	$	6	$	134

Components of other intangible assets —


		March 31, 2016							December 31, 2015								March 31, 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		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	$	88	$	(85	)	$	3	$	86	$	(83	)	$	3	7	$	92	$	(84	)	$	8	$	88	$	(83	)	$	5
Trademarks and trade names	12	5		(1		)	4		3		(2		)	1		15	18		(2		)	16		6		(2		)	4
Customer relationships	7	400		(380		)	20		383		(370		)	13		8	449		(378		)	71		389		(374		)	15
Non-amortizable intangible assets
Trademarks and trade names		65					65		65					65			65					65		65					65
Used in research and development activities		20					20		20					20			20					20		20					20
		$	578	$	(466	)	$	112	$	557	$	(455	)	$	102		$	644	$	(464	)	$	180	$	568	$	(459	)	$	109

The net carrying amounts of intangible assets, other than goodwill, attributable to each of our operating segments at March 31, ~~2016~~2017 were as follows: Light Vehicle — ~~$23,~~$55, Commercial Vehicle — ~~$35,~~$36, Off-Highway — ~~$36~~$76 and Power Technologies — ~~$18.~~

$13.

Amortization expense related to amortizable intangible assets —


	Three Months Ended March 31,				Three Months Ended March 31,
	2016		2015		2017		2016
Charged to cost of sales	$	—	$	1	$	1	$	—
Charged to amortization of intangibles	2		5		2		2
Total amortization	$	2	$	6	$	3	$	2

The following table provides the estimated aggregate pre-tax amortization expense related to intangible assets for each of the next five years based on March 31, ~~2016~~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 2016 2017 2018 2019 2020
Amortization expense $ 7
$ 6
$ 3
$ 2
$ 1



	Remainder of 2017		2018		2019		2020		2021
Amortization expense	$	9	$	9	$	8	$	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 first quarter of ~~2016,~~2017, we continued to execute our previously announced actions. Restructuring expense during the first quarter of ~~2016~~2017 was $1$2 and primarily represented continuing exit costs.

During the first quarter of ~~2015,~~2016, restructuring expense of $1 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			Employee Termination Benefits			Exit Costs			Total
Balance at December 31, 2015	$	9		$	8		$	17
Balance at December 31, 2016										$	32		$	6		$	38
Charges to restructuring				1			1			—			2			2
Cash payments	(1		)	(2		)	(3		)	(12		)	(2		)	(14		)
Balance at March 31, 2016	$	8		$	7		$	15
Balance at March 31, 2017										$	20		$	6		$	26

At March 31, ~~2016~~2017, the accrued employee termination benefits include costs to reduce approximately ~~100~~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 March 31, ~~2016.~~2017.


	Expense Recognized						Future Cost to Complete		Expense Recognized						Future Cost to Complete
	Prior to 2016		2016		Total to Date		Future Cost to Complete		Prior to 2017		2017		Total to Date		Future Cost to Complete
Light Vehicle	$	9	$	—	$	9	$	2	$	10	$	1	$	11	$	1
Commercial Vehicle	25		1		26		12		41		1		42		14
Off-Highway									6				6
Total	$	34	$	1	$	35	$	14	$	57	$	2	$	59	$	15

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.

~~Actions approved subsequent to the balance sheet date~~ — During April 2016, we approved and announced the closure of our Commercial Vehicle manufacturing facility in Glasgow, Kentucky. The closure is expected to be completed by mid-2017. Specific actions to implement the closure are still being evaluated. At present, we expect that completion of this action will require cash expenditures in the range of $15 to $20, including restructuring charges for employee separation and equipment relocation costs, capital investment costs for supplier tooling and other exit costs.

Note 6. Stockholders’ Equity

Common stock — Our Board of Directors declared a quarterly cash dividend of six cents per share of common stock in the first quarter of ~~2016.~~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 ~~an expansion of our existing~~a common stock share repurchase program ~~from $1,400~~up to $1,700 on January 11, 2016. The program expires on December 31, 2017. ~~Under the program, we spent $28 to repurchase 2,264,692 shares of our common stock during the first quarter of 2016 through open market transactions.~~ Approximately ~~$272~~$219 remained available under the program for future share repurchases as of March 31, ~~2016~~.2017.

Changes in equity —


	2016									2015									2017									2016
Three Months Ended March 31,	Attributable to Parent			Attributable to Non- controlling Interests			Total Equity			Attributable to Parent			Attributable to Non- controlling Interests			Total Equity			Attributable to Parent			Attributable to Non- controlling Interests			Total Equity			Attributable to Parent			Attributable to Non- controlling Interests			Total Equity
Balance, December 31	$	728		$	103		$	831		$	1,080		$	100		$	1,180		$	1,157		$	85		$	1,242		$	728		$	103		$	831
Total comprehensive income (loss)	86			4			90			(20		)	12			(8		)
Adoption of ASU 2016-16 tax adjustment, January 1, 2017																			(179		)				(179		)							—
Net income																			75			5			80			45			3			48
Other comprehensive income																			30			2			32			41			1			42
Common stock dividends	(9		)				(9		)	(8		)				(8		)	(9		)				(9		)	(9		)				(9		)
Distributions to noncontrolling interests				(1		)	(1		)				(1		)	(1		)				(1		)	(1		)				(1		)	(1		)
Common stock share repurchases	(28		)				(28		)	(63		)				(63		)							—			(28		)				(28		)
Derecognition of noncontrolling interests							—						(5		)	(5		)
Increase from business combination																						14			14									—
Stock compensation	2						2			4						4			7						7			2						2
Stock withheld for employee taxes	(1		)				(1		)	(2		)				(2		)	(3		)				(3		)	(1		)				(1		)
Balance, March 31	$	778		$	106		$	884		$	991		$	106		$	1,097		$	1,078		$	105		$	1,183		$	778		$	106		$	884

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														Parent Company Stockholders
	Foreign Currency Translation			Hedging			Investments		Defined Benefit Plans			Accumulated Other Comprehensive Income (Loss)			Foreign Currency Translation			Hedging			Investments		Defined Benefit Plans			Total
Balance, December 31, 2016															$	(646	)	$	(34	)	$	—	$	(604	)	$	(1,284	)
Other comprehensive income (loss):
Currency translation adjustments															34											34
Holding loss on net investment hedge															(5		)									(5		)
Holding gains and losses																		(12		)						(12		)
Reclassification of amount to net income (a)																		6								6
Reclassification adjustment for net actuarial losses included in net periodic benefit cost (b)																							8			8
Tax (expense) benefit																		2					(3		)	(1		)
Other comprehensive income (loss)															29			(4		)	—		5			30
Balance, March 31, 2017															$	(617	)	$	(38	)	$	—	$	(599	)	$	(1,254	)

Balance, December 31, 2015	$	(608	)	$	(4	)	$	2	$	(564	)	$	(1,174	)	$	(608	)	$	(4	)	$	2	$	(564	)	$	(1,174	)
Other comprehensive income:
Other comprehensive income (loss):
Currency translation adjustments	29											29			29											29
Holding gains and losses				1			2					3						1			2					3
Reclassification of amount to net income (a)				2								2						2								2
Reclassification adjustment for net actuarial losses included in net periodic benefit cost (b)									7			7											7			7
Other comprehensive income	29			3			2		7			41			29			3			2		7			41
Balance, March 31, 2016	$	(579	)	$	(1	)	$	4	$	(557	)	$	(1,133	)	$	(579	)	$	(1	)	$	4	$	(557	)	$	(1,133	)

Balance, December 31, 2014	$	(427	)	$	(9	)	$	5	$	(566	)	$	(997	)
Other comprehensive income (loss):
Currency translation adjustments	(101		)									(101		)
Holding loss on net investment hedge	2											2
Holding gains and losses				(6		)	1					(5		)
Reclassification of amount to net income (a)				5								5
Reclassification adjustment for net actuarial losses included in net periodic benefit cost (b)									6			6
Elimination of net prior service costs and actuarial losses of disposal group									10			10
Other comprehensive income (loss)	(99		)	(1		)	1		16			(83		)
Balance, March 31, 2015	$	(526	)	$	(10	)	$	6	$	(550	)	$	(1,080	)

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

(b) See Note 910 for additional details.

~~Upon completion~~

Note 7. Redeemable Noncontrolling Interest

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 interest. The terms of the ~~divestiture~~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 ~~our operations in Venezuela in January 2015, we eliminated~~BFP and BPT. See Note 2 for additional information.

Redeemable noncontrolling interests reflected as of the ~~unrecognized pension expense and~~balance sheet date are the greater of the redeemable noncontrolling interest ~~related~~balances adjusted for comprehensive income items and distributions or the redemption values (i.e., the "floor"). Redeemable noncontrolling interest adjustments of redemption value to ~~our former Venezuelan subsidiaries.~~the floor are reflected in retained earnings and are included as an adjustment to net income available to parent company stockholders in the calculation of earnings per share. There were no current period adjustments to reflect a redemption value in excess of carrying value. See Note ~~3 for additional information regarding the disposal group held for sale at the end~~8.

Reconciliation of ~~2014 and divested~~changes in ~~January 2015.~~redeemable noncontrolling interest —



Three months ended March 31,	2017
Balance, December 31	$	—
Initial fair value of redeemable noncontrolling interest of acquired business	45
Comprehensive income (loss) adjustments:
Other comprehensive income (loss) attributable to redeemable noncontrolling interest	(1		)
Retained earnings adjustments:
Adjustments to redemption value	—
Balance, March 31	$	44

Note 7.8. Earnings per Share

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


	Three Months Ended March 31,				Three Months Ended March 31,
	2016		2015		2017		2016
Numerator - Basic and Diluted:
Net income attributable to the parent company	$	45	$	63
Net income attributable to the parent company - Numerator basic					$	75	$	45
Less: Redeemable noncontrolling interest adjustment to redemption value					—
Net income available to common stockholders - Numerator diluted					$	75	$	45

Denominator:
Weighted-average shares outstanding - Basic	149.4		164.7		144.6		149.4
Employee compensation-related shares, including stock options	0.5		1.3		1.3		0.5
Weighted-average shares outstanding - Diluted	149.9		166.0		145.9		149.9

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 ~~1.9~~0.5 million and ~~0.2~~1.9 million CSEs from the calculations of diluted earnings per share in ~~2016~~2017 and ~~2015~~2016 as the effect of including them would have been anti-dilutive.

Note 8.9. 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 ~~the first quarter of 2016.~~2017.


		Weighted-average Per Share
	Granted (In millions)	Grant Date Fair Value		Granted (In millions)	Grant Date Fair Value*
RSUs	1.1	$	13.24	0.7	$	19.51
PSUs	0.4	$	13.21	0.3	$	18.63

* 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 ~~total shareholder return~~margin targets, ~~relative to peer companies. For~~with an even distribution between the ~~portion of the award based on the return on invested capital performance metric, we~~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 ~~award is~~awards are not dividend protected. For the portion of the award based on shareholder returns, we estimated the fair value of the PSUs at grant date using various assumptions as part of a Monte Carlo simulation. The expected term represents the period from the grant date to the end of the three-year performance period. The risk-free interest rate of 1.00% was based on U.S. Treasury constant maturity rates at the grant date. The dividend yield of 1.40% was calculated by dividing the expected annual dividend by the average stock price over the prior year. The expected volatility of 33.4% was based on historical volatility over the prior three years using daily stock price observations.

We received $4 of cash from the exercise of stock options related to 0.3 million shares. We paid $1 of cash to settle RSUs ~~during 2016~~ and issued 0.4 million shares of common stock based on the vesting of ~~RSUs.~~RSUs during 2017. We recognized stock compensation expense of $4 and $2 during the first quarter of 2017 and ~~$3 during 2016 and 2015.~~2016. At March 31, ~~2016,~~2017, the total unrecognized compensation cost related to the nonvested awards granted and expected to vest was ~~$34.~~$36. This cost is expected to be recognized over a weighted-average period of ~~2.4~~2.2 years.

Note 9.10. 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																Pension
	2016						2015						OPEB - Non-U.S.				2017						2016						OPEB - Non-U.S.
Three Months Ended March 31,	U.S.			Non-U.S.			U.S.			Non-U.S.			2016		2015		U.S.			Non-U.S.			U.S.			Non-U.S.			2017		2016
Interest cost	$	13		$	2		$	17		$	2		$	1	$	1	$	13		$	2		$	13		$	2		$	1	$	1
Expected return on plan assets	(23		)	(1		)	(27		)	(1		)					(21		)	(1		)	(23		)	(1		)
Service cost				1						2										1						1
Amortization of net actuarial loss	5			2			5			1							6			2			5			2
Net periodic benefit cost (credit)	$	(5	)	$	4		$	(5	)	$	4		$	1	$	1	$	(2	)	$	4		$	(5	)	$	4		$	1	$	1

Pension expense ~~was a credit of $1~~ for 2017 increased modestly versus the ~~three months ended March 31, 2016, unchanged from the comparable~~same period in ~~2015~~2016 as ~~the effect~~a result of a lower assumed return on plan assets ~~was offset by a reduction~~and an increase in amortization of the net actuarial loss in the interest component. Approximately $4 of the reduction in interest resulted from adopting a full yield curve approach to estimating interest expense effective at the beginning of 2016. The new method applies the specific spot rates along the yield curve used in the most recent remeasurement of the benefit obligation, resulting in a more precise estimate.U.S.

Note ~~10.~~11. Marketable Securities


	March 31, 2016						December 31, 2015						March 31, 2017						December 31, 2016
	Cost		Unrealized Gain (Loss)		Fair Value		Cost		Unrealized Gain (Loss)		Fair Value		Cost		Unrealized Gain (Loss)		Fair Value		Cost		Unrealized Gain (Loss)		Fair Value
U.S. government securities	$	37	$	—	$	37	$	38	$	—	$	38	$	2	$	—	$	2	$	2	$	—	$	2
Corporate securities	40				40		42				42		3				3		2				2
Certificates of deposit	23				23		18				18		22				22		22				22
Other	60		4		64		62		2		64		4				4		4				4
Total marketable securities	$	160	$	4	$	164	$	160	$	2	$	162	$	31	$	—	$	31	$	30	$	—	$	30

U.S. government securities include bonds issued by government-sponsored agencies and Treasury notes. Corporate securities ~~include~~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 and after one year through five years totals $22 and ~~after five years through ten years total $43, $53 and $4~~$5 at March 31, ~~2016.~~2017.

Note ~~11.~~12. Financing Agreements

Long-term debt at —


		March 31, 2016					December 31, 2015							March 31, 2017					December 31, 2016
	Interest Rate	Principal		Unamortized Debt Issue Costs			Principal		Unamortized Debt Issue Costs			Interest Rate		Principal		Unamortized Debt Issue Costs			Principal		Unamortized Debt Issue Costs
Senior Notes due February 15, 2021	6.750%	$	350	$	(4	)	$	350	$	(4	)
Senior Notes due September 15, 2021	5.375%	450		(6		)	450		(6		)	5.375%		$	450	$	(5	)	$	450	$	(5	)
Senior Notes due September 15, 2023	6.000%	300		(4		)	300		(5		)	6.000%		300		(4		)	300		(4		)
Senior Notes due December 15, 2024	5.500%	425		(6		)	425		(6		)	5.500%		425		(5		)	425		(6		)
Senior Notes due June 1, 2026												6.500%	*	375		(6		)	375		(6		)
Other indebtedness		81		(1		)	66							202					120
Total		$	1,606	$	(21	)	$	1,591	$	(21	)			$	1,752	$	(20	)	$	1,670	$	(21	)


*	In conjunction with the issuance of the June 2026 Notes we entered into two 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%. See Note 13 for additional information.

Interest on the senior notes is payable semi-annually. Other indebtedness includes borrowings from various financial institutions, capital lease obligations, ~~and~~ the unamortized fair value adjustment related to a terminated interest rate ~~swap.~~swap and the financial liability related to a build-to-suit lease. The increase in other indebtedness during the first quarter of 2017 is primarily due to our acquisition of BPT and BFP. See Note 122 for additional information regarding the acquisition and Note 13 for additional information on the terminated interest rate swap.

Senior notes — On ~~December 9, 2014, we elected~~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%. 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 will be recorded as deferred costs and amortized to interest expense over the life of the notes. The proceeds from the offering will be used to repay indebtedness of our BPT and BFP subsidiaries and indebtedness of a wholly-owned subsidiary in Brazil and to redeem ~~$40~~$100 of our ~~previously outstanding February 2019~~September 2021 Notes. In conjunction with the issuance of the April 2025 Notes, ~~effective January 8, 2015~~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 ~~103.000%~~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%

During April 2017, we redeemed $100 of our September 2021 Notes pursuant to a tender offer at a weighted average price equal to 104.031% plus accrued and unpaid interest. The $5 loss on extinguishment of debt to be recorded in April 2017 includes the redemption premium and transaction costs associated with the tender offer and the write-off of $1 of previously deferred financing costs associated with the September 2021 Notes.

On ~~March 16, 2015,~~June 23, 2016, we redeemed ~~the remaining $15~~all of our February ~~2019~~2021 Notes at a price equal to ~~103.250%~~103.375% plus accrued and unpaid interest. The $2$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 ~~2019~~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 ~~our $500 revolving facility~~the Revolving Facility bear interest at a floating rate based on, at our option, the base rate or ~~LIBOR~~Eurodollar rate (each as described in the revolving credit agreement) plus a margin ~~based on the undrawn amounts available under the agreement~~ as set forth below:

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 %



	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. If the average daily unused portion of the revolving facility is less than~~ 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	%

~~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~~275 of the ~~revolving facility~~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 for Eurodollar rate advances based on a quarterly average availability under issued and undrawn letters of credit under the ~~revolving facility~~Revolving Facility and a per annum fronting fee of 0.125%, payable quarterly.

~~There were~~As of March 31, 2017, we had no outstanding borrowings under the ~~revolving facility at March 31, 2016 but~~Revolving Facility and we had utilized ~~$37~~$23 for letters of credit. ~~Based on our borrowing base collateral of $341, we~~We had ~~potential~~ availability at March 31, ~~2016~~2017 under the ~~revolving facility~~Revolving Facility of ~~$304~~$477 after deducting ~~the~~ outstanding borrowings and letters of credit.

Debt covenants — At March 31, ~~2016~~2017, we were in compliance with the covenants of our financing agreements. Under the ~~revolving facility~~Revolving Facility and the senior notes, we are required to comply with certain incurrence-based covenants customary for facilities of these ~~types.~~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 ~~12.~~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 Measurements Using						Fair Value
			Quoted Prices in Active Markets		Significant Other Observable Inputs
March 31, 2016	Total		(Level 1)		(Level 2)
Marketable securities	$	164	$	64	$	100
Currency forward contracts - Accounts receivable other
Category							Balance Sheet Location	Fair Value Level	March 31, 2017		December 31, 2016
Available-for-sale securities							Marketable securities	1	$	4	$	4
Available-for-sale securities							Marketable securities	2	27		26
Currency forward contracts
Cash flow hedges							Accounts receivable other	2	3		2
Cash flow hedges	1				1		Other accrued liabilities	2	—		4
Undesignated	1				1		Accounts receivable other	2	2		1
Currency forward contracts - Other accrued liabilities
Undesignated							Other accrued liabilities	2	1		1
Currency swaps
Cash flow hedges	2				2		Other noncurrent liabilities	2	29		12
Undesignated	1				1		Other accrued liabilities	2	2		3
Currency swaps - Accounts receivable other
Undesignated	9				9
Currency swaps - Other accrued liabilities
Undesignated	8				8

December 31, 2015
Marketable securities	$	162	$	64	$	98
Currency forward contracts - Accounts receivable other
Cash flow hedges	1				1
Undesignated	2				2
Currency forward contracts - Other accrued liabilities
Cash flow hedges	5				5
Undesignated	1				1
Currency swaps - Accounts receivable other
Undesignated	4				4
Currency swaps - Other accrued liabilities
Undesignated	9				9

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:


	March 31, 2016				December 31, 2015				March 31, 2017				December 31, 2016
	Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value
Senior notes	$	1,525	$	1,525	$	1,525	$	1,552	$	1,550	$	1,608	$	1,550	$	1,612
Other indebtedness*	81		71		66		56		202		185		120		101
Total	$	1,606	$	1,596	$	1,591	$	1,608	$	1,752	$	1,793	$	1,670	$	1,713

* The carrying value includes the unamortized portion of a fair value adjustment related to a terminated interest rate swap.


*	The carrying value includes the unamortized portion of a fair value adjustment related to a terminated interest rate swap at both dates. The carrying value and fair value also include a financial liability associated with a build-to-suit lease arrangement at both dates.

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). See Note 12 for additional information about financing agreements.

Fair value measurements on a nonrecurring basis — Certain assets are measured at fair value on a nonrecurring basis. These are long-lived assets that are subject to fair value adjustments only in certain circumstances. These assets include intangible assets and property, plant and equipment which may be written down to fair value when they are held for sale or as a result of impairment.

Interest rate derivatives — Our portfolio of derivative financial instruments periodically includes interest rate swaps designed to mitigate our interest rate risk. As of March 31, ~~2016,~~2017, no fixed-to-floating interest rate swaps remain outstanding. However, ~~an $8~~a $7 fair value adjustment to the carrying amount of our December 2024 Notes, associated with a fixed-to-floating interest rate swap that had been executed but was subsequently terminated during 2015, remains deferred at March 31, ~~2016.~~2017. This amount is being amortized as a reduction of interest expense through the period ending December 2024, the scheduled maturity date of the December 2024 Notes. The amount amortized as a reduction of interest expense was not material during the ~~first~~ quarter ~~of 2016.~~ended March 31, 2017.

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 ~~seventeen~~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.

During February 2017, in conjunction with the issuance of an aggregate $15 of U.S. dollar-denominated short-term notes payable by one of our Brazilian subsidiaries (the "Brazilian Notes"), we executed fixed-to-fixed cross-currency swaps with the same critical terms as the Brazilian Notes. Additionally, in conjunction with the issuance of €281 of euro-denominated intercompany notes payable, issued by certain of our Luxembourg subsidiaries (the "Luxembourg Intercompany Notes") and payable to USD-functional Dana, Inc., we executed fixed-to-fixed cross-currency swaps with the same critical terms as the Luxembourg Intercompany Notes. The risk management objective of these swaps is to eliminate the variability in the functional-currency-equivalent cash flows due to changes in the U.S. dollar / Brazilian real and euro / U.S. dollar exchange rates associated with the forecasted principal and interest payments on the respective underlying instruments.

During March 2017, in conjunction with the planned April 2017 issuance of the $400 of U.S. dollar-denominated April 2025 Notes by euro-functional Dana Financing Luxembourg S.à r.l., we executed fixed-to-fixed cross-currency swaps with the same critical terms as the April 2025 Notes to eliminate the variability in the functional-currency-equivalent cash flows due to changes in the U.S. dollar / euro exchange rates associated with the forecasted principal and interest payments.

During May 2016, in conjunction with the issuance of the $375 of U.S. dollar-denominated June 2026 Notes by euro-functional Dana Financing Luxembourg S.à r.l., we executed fixed-to-fixed cross-currency swaps with the same critical terms as the June 2026 Notes to eliminate the variability in the functional-currency-equivalent cash flows due to changes in the U.S. dollar / euro 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.

Summary of Fixed-to-Fixed Cross-Currency Swaps —



Underlying Financial Instrument						Derivative Financial Instrument
Description	Type	Face Amount		Rate		Designated Notional Amount		Traded Amount		Inflow Rate		Outflow Rate
Outstanding at March 31, 2017
June 2026 Notes	Payable	$	375	6.50	%	$	375	€	338	6.50	%	5.14	%
Brazilian Notes	Payable	$	15	3.80	%	$	15	R$	47	3.80	%	13.58	%
Luxembourg Intercompany Notes	Receivable	€	281	3.91	%	€	281	$	300	6.00	%	3.91	%

Issued during April 2017
April 2025 Notes	Payable	$	400	5.75	%	$	400	€	371	5.75	%	3.85	%

All of the 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 12 for additional information about the June 2026 Notes and the April 2025 Notes.

In the event our ongoing assessment demonstrates that the critical terms of either the swaps or the underlying designated financial instruments have changed, or that there have been adverse developments regarding counterparty risk, we will use the long haul method to assess ineffectiveness of the hedging relationship. To the extent the swaps are no longer effective, changes in their fair values will be recorded in earnings. During the first quarter of 2017, deferred losses of $11 associated with all of the fixed-to-fixed cross-currency swaps were recorded in OCI and reflect the net impact of a $17 unfavorable change in the fair value of the swaps and a $6 reclassification from AOCI to earnings. The reclassification from AOCI to earnings represents an offset to a foreign exchange remeasurement gain on all of the designated debt instruments outstanding during the quarter ended March 31, 2017.

The total notional amount of outstanding foreign currency forward contracts, involving the exchange of various currencies, was ~~$191 as of~~ $200 at March 31, ~~2016~~2017 and ~~$212~~ ~~as of~~ $143 at December 31, ~~2015~~.2016. The total notional amount of outstanding foreign currency swaps, including but not limited to the fixed-to-fixed cross-currency swaps, was ~~$155~~ ~~as of~~$1,129 at March 31, ~~2016~~2017 and ~~$219 as of~~$571 at December 31, ~~2015.~~2016.

The following currency derivatives were outstanding at March 31, ~~2016~~2017:


		Notional Amount (U.S. Dollar Equivalent)								Notional Amount (U.S. Dollar Equivalent)
Functional Currency	Traded Currency	Designated as Cash Flow Hedges		Undesignated		Total		Maturity	Traded Currency	Designated as Cash Flow Hedges		Undesignated		Total		Maturity
U.S. dollar	Mexican peso, euro	$	60	$	2	$	62	Jun-17	Mexican peso, euro	$	91	$	—	$	91	Jun-18
Euro	U.S. dollar, Canadian dollar, Hungarian forint, British pound, Swiss franc, Indian rupee, Russian ruble	44		13		57		Aug-17	U.S. dollar, Canadian dollar, Hungarian forint, British pound, Swiss franc, Indian rupee, Russian ruble	26		4		30		Jun-18
British pound	U.S. dollar, Euro	5				5		Jun-17	U.S. dollar, Euro	3				3		May-18
Swedish krona	Euro	13				13		Jun-17	Euro	19				19		May-18
South African rand	U.S. dollar, Euro			16		16		Sep-16	U.S. dollar, Euro, Thai baht			9		9		Sep-17
Thai baht	U.S. dollar, Australian dollar			18		18		Dec-16	U.S. dollar, Australian dollar			4		4		Jun-17
Canadian dollar	U.S. dollar			4		4		Mar-17	U.S. dollar			15		15		Jun-18
Brazilian real	Euro			4		4		Mar-17	Euro			2		2		Mar-18
Indian rupee	U.S. dollar, British pound, Euro			12		12		Feb-17	U.S. dollar, British pound, Euro			27		27		Jun-18
Total forward contracts		122		69		191				139		61		200

U.S. dollar	Mexican peso			85		85		Apr-16	Euro, Canadian dollar	300		20		320		Sep-23
Euro	Canadian dollar, British pound			70		70		Dec-16	U.S. dollar, British pound	775		18		793		Jun-26
Brazilian real									U.S. dollar	15				15		Feb-18
South African rand									U.S. dollar			1		1		Sep-17
Total currency swaps		—		155		155				1,090		39		1,129
Total currency derivatives		$	122	$	224	$	346			$	1,229	$	100	$	1,329

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)~~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,~~Other expense, net in the period in which the changes occur. Realized gains and losses from currency-related forward contracts, including those that have been designated as cash flow hedges and those that have not been designated, are recognized in ~~other income,~~Other expense, net.

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 cumulative translation adjustment (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 first quarter of 2017, we designated the principal amount of an existing non-derivative Mexican peso-denominated intercompany note payable (the "MXN-denominated intercompany note") by Dana European Holdings Luxembourg S.à r.l. to Dana de Mexico Corporacion S. de R.L. de C.V., one of our Mexican subsidiaries, as a net investment hedge of the equivalent portion of the investment in the associated Mexican operations. At March 31, 2017, the principal amount of the MXN-denominated intercompany note is 1,465 Mexican pesos, or approximately $78.

During the first quarter of 2017, we recorded a deferred loss of $5 in the CTA component of OCI associated with the MXN-denominated intercompany note. Amounts recorded in CTA remain deferred in AOCI until such time as the investments in the associated subsidiaries are substantially liquidated. See also Note 6.

Amounts to be reclassified to earnings — Deferred gains or losses associated with effective cash flow hedges of forecasted transactions are reported in AOCI and are reclassified to earnings in the same periods in which the underlying transactions affect earnings. Amounts expected to be reclassified to earnings assume no change in the current hedge relationships or to March 31, ~~2016~~2017 exchange rates. Deferred ~~losses~~gains of $1$3 at March 31, ~~2016~~2017 are expected to be reclassified to earnings during the next twelve months, compared to deferred losses of $4$2 at December 31, ~~2015~~2016. Amounts reclassified from AOCI to earnings arising from the discontinuation of cash flow hedge accounting treatment were not material during the first quarter of ~~2016.~~2017.

Note ~~13.~~14. Commitments and Contingencies

~~Asbestos personal injury liabilities~~ — As part of our reorganization in 2008, assets and liabilities associated with personal injury asbestos claims were retained in Dana Corporation which was then merged into Dana Companies, LLC (DCLLC), a consolidated wholly-owned limited liability company. The assets of DCLLC include insurance rights relating to coverage against these liabilities, marketable securities and other assets which are considered sufficient to satisfy its liabilities. DCLLC had approximately ~~25,000~~ ~~active pending asbestos personal injury liability claims at both~~ ~~March 31, 2016~~ ~~and~~ ~~December 31, 2015. DCLLC had accrued~~ ~~$75~~ ~~for indemnity and defense costs for settled, pending and future claims at~~ ~~March 31, 2016, compared to~~ ~~$78~~ at ~~December 31, 2015. A~~ ~~fifteen-year time horizon was used to estimate the value of this liability.~~

At ~~March 31, 2016, DCLLC had recorded~~ ~~$49~~ ~~as an asset for probable recovery from insurers for the pending and projected asbestos personal injury liability claims, compared to~~ ~~$51~~ ~~recorded at~~ ~~December 31, 2015~~. The recorded asset represents our assessment of the capacity of our current insurance agreements to provide for the payment of anticipated defense and indemnity costs for pending claims and projected future demands. The recognition of these recoveries is based on our assessment of our right to recover under the respective contracts and on the financial strength of the insurers. DCLLC has coverage agreements in place with insurers confirming substantially all of the related coverage and payments are being received on a timely basis. The financial strength of these insurers is reviewed at least annually with the assistance of a third party. The

~~recorded asset does not represent the limits of the insurance coverage, but rather the amount DCLLC would expect to recover if the accrued indemnity and defense costs were paid in full.~~

DCLLC continues to process asbestos personal injury claims in the normal course of business, is separately managed and has an independent board member. The independent board member is required to approve certain transactions including dividends or other transfers of $1 ~~or more of value to Dana. Dana Holding Corporation has no obligation to increase its investment in or otherwise support DCLLC.~~

~~Other product~~Product liabilities — We had accrued $14 and $5 for ~~non-asbestos~~ product liability costs at March 31, ~~2016~~2017 and December 31, ~~2015~~2016~~, with no~~ and $4 for an expected recovery ~~expected~~ from third parties at ~~either date.~~both dates. We estimate these liabilities based on assumptions about the value of the claims and about the likelihood of recoveries against us derived from our historical experience and current information.

Environmental liabilities — Accrued environmental liabilities were ~~$10~~$7 at March 31, ~~2016~~2017 and ~~$11~~$8 at December 31, ~~2015~~2016. We consider the most probable method of remediation, current laws and regulations and existing technology in estimating our environmental liabilities.

Guarantee of lease obligations — In connection with the divestiture of our Structural Products business in 2010, leases covering three U.S. facilities were assigned to a U.S. affiliate of Metalsa. Under the terms of the sale agreement, we will guarantee the affiliate’s performance under the leases, which run through June 2025, including approximately $6 of annual payments. In the event of a required payment by Dana as guarantor, we are entitled to pursue full recovery from Metalsa of the amounts paid under the guarantee and to take possession of the leased property.

Other legal matters — We are subject to various pending or threatened legal proceedings arising out of the normal course of business or operations. In view of the inherent difficulty of predicting the outcome of such matters, we cannot state what the eventual outcome of these matters will be. However, based on current knowledge and after consultation with legal counsel, we believe that any liabilities that may result from these proceedings will not have a material adverse effect on our liquidity, financial condition or results of operations.

In November 2013, we received an arbitration notice from Sypris Solutions, Inc. (Sypris), formerly our largest supplier, alleging damage claims under the long-term supply agreement that expired on December 31, 2014. The arbitration proceedings related to these claims concluded in the second quarter of 2015 with Sypris being awarded immaterial damages. Sypris also alleged that Dana and Sypris entered into a new binding long-term supply agreement in July 2013. Dana filed suit against Sypris requesting declaratory judgment that the parties did not enter into a new supply agreement. During the first quarter of 2015, the court granted summary judgment in Dana’s favor, rejecting Sypris’ position that a new contract was formed in July 2013. The Ohio Sixth District Court of Appeals upheld the summary judgment ruling in December 2015 and that decision is no longer subject to appeal. It is uncertain whether Sypris will pursue its remaining claim that Dana failed to negotiate in good faith under the 2007 agreement. Dana maintains that this claim is without merit.

On September 25, 2015, the Brazilian antitrust authority (“CADE”) announced an investigation of an alleged cartel involving a former Dana business in Brazil and various competitors related to sales of shock absorbers between 2000 and 2014. We divested this business as a part of the sale of our aftermarket business in 2004. Dana’s policy is to cooperate with governmental investigations. We cannot predict the duration, scope or ultimate outcome of this matter. Based on the information currently available to us, we do not believe this matter will result in a material liability to Dana.

Note ~~14.~~15. Warranty Obligations

We record a liability for estimated warranty obligations at the dates our products are sold. We record the liability based on our estimate of costs to settle future claims. Adjustments to our estimated costs at time of sale are made as claim experience and other new information becomes available.

Obligations for service campaigns and other occurrences are recognized as adjustments to prior estimates when the obligation is probable and can be reasonably estimated.

Changes in warranty liabilities —


	Three Months Ended March 31,						Three Months Ended March 31,
	2016			2015			2017			2016
Balance, beginning of period	$	56		$	47		$	66		$	56
Acquisitions							8
Amounts accrued for current period sales	7			7			7			7
Adjustments of prior estimates	5			2			3			5
Settlements of warranty claims	(10		)	(8		)	(12		)	(10		)
Currency impact	1			(2		)	1			1
Balance, end of period	$	59		$	46		$	73		$	59

Note ~~15.~~16. Income Taxes

We estimate the effective tax rate expected to be applicable for the full fiscal year and use that rate to provide for income taxes in interim reporting periods. We also recognize the tax impact of certain unusual or infrequently occurring items, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, in the interim period in which they occur.

We have generally not recognized tax benefits on losses generated in several entities ~~including those in the U.S.,~~ where the recent history of operating losses does not allow us to satisfy the “more likely than not” criterion for the recognition of deferred tax assets. Consequently, there is no income tax expense or benefit recognized on the pre-tax income or losses in these jurisdictions as valuation allowances are adjusted to offset the associated tax expense or benefit.

We record interest and penalties related to uncertain tax positions as a component of income tax expense. Net interest expense for the periods presented herein is not significant.

We reported income tax expense related to operations of ~~$24~~$30 and ~~$31~~$24 for the quarters ended March 31, 2017 and 2016. Our effective tax rates were 29% and 33% in 2017 and 2016, ~~and 2015. The~~respectively, with $3 from the amortization of the prepaid tax asset increasing the rate in 2016. Our effective income tax rates vary from the U.S. federal statutory rate of 35% due to establishment, release and adjustment of valuation allowances in several countries, nondeductible expenses, local tax incentives in several countries outside the U.S., different statutory tax rates outside the U.S. and withholding taxes related to repatriations of international earnings to the U.S. Tax expense in 2016 included $3 from the amortization of a prepaid tax asset related to an intercompany transaction completed in 2015. Our effective tax rates were 33% and 30% in 2016 and 2015.earnings.

We provide for U.S. federal income and non-U.S. withholding taxes on the earnings of our non-U.S. operations that are not considered to be permanently reinvested. Accordingly, we continue to analyze and adjust the estimated tax impact of the income and non-U.S. withholding tax liabilities based on the amount and source of these earnings. As part of the annual effective tax rate, we recognized net expense of $2 and $1 ~~for the quarters ended March 31,~~in 2017 and 2016 ~~and 2015~~ related to future income taxes and non-U.S. withholding taxes on repatriations from operations that are not permanently reinvested. We also paid withholding taxes of $2 and $1 during ~~the first quarter of~~2017 and 2016 ~~and 2015~~ related to the actual transfer of funds to the U.S. and transfers of funds between foreign subsidiaries.

~~At March 31, 2016, we have a valuation allowance against our deferred~~The adoption of new accounting guidance at the beginning of 2017 resulted in the $179 write-off of certain tax assets, primarily a prepaid tax recorded in conjunction with the U.S. When evaluating the continued need for this valuation allowance we consider all components of comprehensive income, and we weight the positive and negative evidence, putting greater reliance on objectively verifiable historical evidence than on projections of future profitability that are dependent on actions that have not occurred as of the assessment date. We also consider changes to historical profitability of actions occurring in the year of assessment that have a sustained effect on future profitability, the effect on historical profits of nonrecurring events, as well as tax planning strategies. These effects included items such as the lost future interest income resulting from the prepayment on and subsequentintercompany sale of the payment-in-kind callable note receivable, the additional interest expense resulting from the $750 senior unsecured notes payable issued in July 2013 and the effects of the intercompany transfer of an affiliate's stock and certain operating assets ~~by a U.S. subsidiary of the company~~ to a non-U.S. ~~affiliate. A sustained period of profitability, after considering historical changes from implemented actions and nonrecurring events, along with positive expectations~~affiliate in 2015. See Note 1 for future profitability are necessary for a determination that a valuation allowance should be released. Our U.S. operations have experienced improved profitability in recent years, but our analysis of the income of the U.S. operations, including changes to the historical income for the effects of developments through the current date and planned future actions, demonstrated historical losses as of March 31, 2016. Therefore, we have not achieved a level of sustained historical profitability that would, in our judgment, support a release of the valuation allowance at March 31, 2016.additional information.

Note ~~16.~~17. Other ~~Income,~~Expense, Net

Three Months Ended
March 31,
2016 2015
Interest income $ 3
$ 3
Foreign exchange loss (2 )

Strategic transaction expenses (2 ) (1 )
Gain on derecognition of noncontrolling interest 5
Gain on sale of marketable securities

1
Other 2
4
Other income, net $ 1
$ 12



	Three Months Ended March 31,
	2017			2016
Government grants and incentives	$	2		$	1
Foreign exchange loss	(2		)	(2		)
Strategic transaction expenses	(11		)	(2		)
Insurance and other recoveries				1
Other, net	2
Other expense, net	$	(9	)	$	(2	)

Foreign exchange gains and losses on cross-currency intercompany loan balances that are not of a long-term investment nature are included above. Foreign exchange gains and losses on intercompany loans that are permanently invested are reported in OCI.

~~Upon completion~~Strategic transaction expenses relate primarily to costs incurred in connection with acquisition and divestiture related activities, including integration costs. The increase in strategic transaction expenses in 2017 is primarily attributable to our acquisitions of ~~the disposal of our operations in Venezuela in January 2015, we recognized a gain on the derecognition of the noncontrolling interest in a former Venezuelan subsidiary.~~BFP and BPT from Brevini and USM – Warren from USM. See Note 2 for additional information.

Note ~~17.~~18. Segments

We are a global provider of ~~high technology driveline, sealing and thermal-management~~high-technology products ~~for~~to virtually every major vehicle and engine manufacturer in the ~~on-highway~~world. We also serve the stationary industrial market. Our technologies include drive and motion products (axles, driveshafts, planetary hub drives, power-transmission products, tire-management products, and transmissions); sealing solutions (gaskets, seals, heat shields, and fuel-cell plates); thermal-management technologies (transmission and engine oil cooling, battery and electronics cooling, and exhaust-gas heat recovery); and fluid-power products (pumps, valves, motors, and controls). We serve our global light vehicle, medium/heavy vehicle and off-highway ~~markets. Our driveline products~~markets through four operating segments – ~~axles, driveshafts and transmissions – are delivered through our~~ Light Vehicle Driveline Technologies (Light Vehicle), Commercial Vehicle Driveline Technologies (Commercial Vehicle), Off-Highway Drive and ~~Off-Highway operating segments. Our fourth global operating segment –~~Motion Technologies (Off-Highway) and Power Technologies, –which is the center of excellence for ~~the~~ sealing and ~~thermal~~thermal-management technologies that span all customers in our on-highway and off-highway markets. These operating segments have global responsibility and accountability for business commercial activities and financial performance.

Dana evaluates the performance of its operating segments based on external sales and segment EBITDA. Segment EBITDA is a primary driver of cash flows from operations and a measure of our ability to maintain and continue to invest in our operations and provide shareholder returns. Our segments are charged for corporate and other shared administrative costs. Segment EBITDA may not be comparable to similarly titled measures reported by other companies.

Segment information —


	2016							2015							2017							2016
Three Months Ended March 31,	External Sales		Inter-Segment Sales			Segment EBITDA		External Sales		Inter-Segment Sales			Segment EBITDA		External Sales		Inter-Segment Sales			Segment EBITDA		External Sales		Inter-Segment Sales			Segment EBITDA
Light Vehicle	$	613	$	32		$	58	$	637	$	37		$	64	$	761	$	29		$	89	$	613	$	32		$	58
Commercial Vehicle	333		22			26		433		25			35		329		23			28		333		22			26
Off-Highway	241		9			32		284		11			39		328		8			45		241		9			32
Power Technologies	262		3			35		254		4			38		283		4			50		262		3			35
Eliminations and other			(66		)					(77		)					(64		)					(66		)
Total	$	1,449	$	—		$	151	$	1,608	$	—		$	176	$	1,701	$	—		$	212	$	1,449	$	—		$	151

Reconciliation of segment EBITDA to consolidated net income —


	Three Months Ended March 31,						Three Months Ended March 31,
	2016			2015			2017			2016
Segment EBITDA	$	151		$	176		$	212		$	151
Corporate expense and other items, net	(3		)				(7		)	(3		)
Depreciation	(41		)	(39		)	(49		)	(41		)
Amortization of intangibles	(2		)	(6		)	(3		)	(2		)
Restructuring	(1		)	(1		)	(2		)	(1		)
Stock compensation expense	(2		)	(3		)	(4		)	(2		)
Strategic transaction expenses	(2		)	(1		)	(11		)	(2		)
Acquisition related inventory adjustments							(6		)
Other items	(4		)				(1		)	(4		)
Distressed supplier costs	(1		)							(1		)
Amounts attributable to previously divested/closed operations	1									1
Gain on derecognition of noncontrolling interest				5
Loss on extinguishment of debt				(2		)
Interest expense	(27		)	(28		)	(27		)	(27		)
Interest income	3			3			3			3
Income before income taxes	72			104			105			72
Income tax expense	24			31			30			24
Equity in earnings of affiliates				1			5
Net income	$	48		$	74		$	80		$	48

Note ~~18.~~19. 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 March 31, ~~2016~~2017 —


	Ownership Percentage	Investment		Ownership Percentage	Investment
Dongfeng Dana Axle Co., Ltd. (DDAC)	50%	$	81	50%	$	88
Bendix Spicer Foundation Brake, LLC	20%	50		20%	49
Axles India Limited	48%	7		48%	8
Taiway Ltd.				14%	5
All others as a group		10			6
Investments in equity affiliates		148			156
Investments in affiliates carried at cost		2			2
Investments in affiliates		$	150		$	158

Summarized financial information for DDAC —

Three Months Ended
March 31,
2016 2015
Sales $ 120
$ 154
Gross profit $ 10
$ 11
Pre-tax loss $ (3 ) $ (2 )
Net loss $ (2 ) $ (2 )
Dana's equity in loss of affiliate $ (2 ) $ (2 )



	Three Months Ended March 31,
	2017		2016
Sales	$	190	$	120
Gross profit	$	24	$	10
Income (loss) before income taxes	$	8	$	(3	)
Net income (loss)	$	7	$	(2	)
Dana's equity in earnings (loss) of affiliate	$	3	$	(2	)

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Dollars in millions)

Management's discussion and analysis of financial condition and results of operations should be read in conjunction with the financial statements and accompanying notes in this report.

Forward-Looking Information

Statements in this report (or otherwise made by us or on our behalf) that are not entirely historical constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements can often be identified by words such as “anticipates,” “expects,” “believes,” “intends,” “plans,” “predicts,” “seeks,” “estimates,” “projects,” “outlook,” “may,” “will,” “should,” “would,” “could,” “potential,” “continue,” “ongoing” and similar expressions, variations or negatives of these words. These statements represent the present expectations of Dana ~~Holding Corporation~~Incorporated and its consolidated subsidiaries (Dana) based on our current information and assumptions. Forward-looking statements are inherently subject to risks and uncertainties. Our plans, actions and actual results could differ materially from our present expectations due to a number of factors, including those discussed below and elsewhere in this report and in our other filings with the Securities and Exchange Commission (SEC). All forward-looking statements speak only as of the date made and we undertake no obligation to publicly update or revise any forward-looking statement to reflect events or circumstances that may arise after the date of this report.

Management Overview

Dana is headquartered in Maumee, Ohio, and was incorporated in Delaware in 2007. AsWe are a global provider of ~~high technology driveline, sealing and thermal-management~~high-technology products ~~our customer base includes~~to virtually every major vehicle and engine manufacturer in the world. We also serve the stationary industrial market. Our technologies include drive and motion products (axles, driveshafts, planetary hub drives, power-transmission products, tire-management products, and transmissions); sealing solutions (gaskets, seals, heat shields, and fuel-cell plates); thermal-management technologies (transmission and engine oil cooling, battery and electronics cooling, and exhaust-gas heat recovery); and fluid-power products (pumps, valves, motors, and controls). We serve our global light vehicle, medium/heavy vehicle and off-highway ~~markets. Our driveline products~~markets through four business units – ~~axles, driveshafts and transmissions – are delivered through our~~ Light Vehicle Driveline Technologies (Light Vehicle), Commercial Vehicle Driveline Technologies (Commercial Vehicle), Off-Highway Drive and ~~Off-Highway Driveline~~Motion Technologies (Off-Highway) ~~operating segments. Our fourth operating segment –~~and Power Technologies, –which is the center of excellence for ~~the~~ sealing and ~~thermal~~thermal-management technologies that span all customers in our on-highway and off-highway markets. We have a diverse customer base and geographic footprint, which minimizes our exposure to individual market and segment declines. At March 31, ~~2016,~~2017, we employed approximately ~~23,600~~27,900 people, operated in 2534 countries and had 90more than 100 major facilities housing manufacturing and distribution operations, technical and engineering centers and administrative offices.

External sales by operating segment for the ~~quarters~~periods ended March 31, ~~2016~~2017 and ~~2015~~2016 are as follows:


	Three Months Ended March 31,								Three Months Ended March 31,
	2016				2015				2017				2016
			% of				% of				% of				% of
	Dollars		Total		Dollars		Total		Dollars		Total		Dollars		Total
Light Vehicle	$	613	42.3	%	$	637	39.6	%	$	761	44.8	%	$	613	42.3	%
Commercial Vehicle	333		23.0	%	433		26.9	%	329		19.3	%	333		23.0	%
Off-Highway	241		16.6	%	284		17.7	%	328		19.3	%	241		16.6	%
Power Technologies	262		18.1	%	254		15.8	%	283		16.6	%	262		18.1	%
Total	$	1,449			$	1,608			$	1,701			$	1,449

See Note 1718 to our consolidated financial statements in Item 1 of Part I for further financial information about our operating segments.

Our internet address is www.dana.com. The inclusion of our website address in this report is an inactive textual reference only and is not intended to include or incorporate by reference the information on our website into this report.

Operational and Strategic Initiatives

In 2016 we outlined our current enterprise strategy which leverages our strong technology foundation and our commitment to continuous improvement. Our strategy places increased focus leveraging resources across the organization, satisfying customer requirements, expanding products and markets and accelerating commercialization of new technology.

Central to our strategy is leveraging our core operations by sharing our capabilities, technology, assets and people across the enterprise, leading to improved execution and increased customer satisfaction. Although we have taken significant strides to improve our profitability and margins, particularly through streamlining and rationalizing our manufacturing activities, we believe additional opportunities remain to further improve our cost performance. Leveraging investments across multiple end markets and making disciplined, value enhancing acquisitions, will allow us to bring product to market faster, grow our top-line sales and enhance financial returns.

Strengthening customer centricity and expanding global markets are key elements of our strategy that focus on market penetration. Foundational to growing the business is directing the entire organization to putting the customer at the center of our value system and shifting from transactional to relationship-based interactions. These relationships are built on a foundation of providing unparalleled technology with exceptional quality, delivery and value. With even stronger relationships we will be better positioned to support our customers’ most important global and flagship programs and capitalize on future growth opportunities.

We continue to enhance and expand our global footprint, optimizing it to capture growth across all of our end markets. Specifically, our manufacturing and technology center footprint positions us to support customers globally – an important factor as many of our customers are increasingly focused on common solutions for global platforms. While growth opportunities are present in each region of the world, we have a primary focus on building our presence and local capability in the Asia Pacific region. Over the ~~past several~~last few years, we have ~~focused~~opened two new engineering facilities in the region and recently new gear manufacturing facilities were established in India and Thailand.

In addition to Asia, we see further growth opportunity in Eastern Europe where we've commenced construction of a new gear manufacturing facility in Hungary. This will be our third facility in the country and will give us the capability to cost effectively manufacture gears, one of our core technologies, and efficiently service our customers within the region.

The final two elements of our enterprise strategy, commercializing new technology and accelerating hybridization and electrification, focus on ~~maintaining~~opportunities for product expansion. Bringing new innovations to market as industry leading products will drive growth as our new products and technology provide our customers with cutting edge solutions, address end user needs and capitalize on key market trends. An example is our industry leading electronically disconnecting all-wheel drive technology, which we believe is the most fuel efficient rapidly disconnecting system in the market, was recently selected by a ~~strong overall financial position — driving profitability~~major global customer for a significant new global vehicle platform – opening up new commercial channels for us in the passenger car, crossover and sport utility vehicle markets.

Initiatives to capitalize on evolving hybridization and electrification vehicle trends are a core ingredient of the current strategy. In addition to our current technologies in battery cooling and fuel cells, this element of the strategy is leveraging our electronics controls expertise across all our business units and applications such as advanced vehicle hybridization and electrification initiatives. We are working with customers to develop new solutions for those markets where electrification will be adopted first such as hybrids, buses and urban delivery vehicles. These new solutions, which include advanced electric propulsion systems with fully integrated motors and controls, are included in our ~~business, simplifying our capital structure, maintaining strong cash flows~~recently launched Spicer Electrified portfolio of products.

The development and ~~addressing structural costs. We have also strengthened and streamlined our operating segments~~implementation of this enterprise strategy is positioning Dana to grow profitably over the next few years due to increased customer focus onas we leverage our core ~~competencies of driveline~~capabilities, expand into new markets, develop and commercialize new technologies ~~sealing systems~~including for hybrid and ~~thermal management. With an experienced leadership team, we believe that we are well-positioned to place increasing focus on profitable growth and shareholder returns.~~

electric vehicles.

Shareholder returns and capital structure actions — When evaluating capital structure initiatives, we balance our growth opportunities and shareholder value initiatives with maintaining a strong balance sheet and access to capital. Our strong financial position has enabled us to simplify our capital structure while providing returns to our ~~common~~ shareholders in the form of cash dividends and reduction in the number of ~~common share equivalents~~shares outstanding. Over the past ~~three~~four years, we returned ~~$1,400~~$1,481 of cash to shareholders in connection with redemption of all of our preferred stock and repurchase of common shares. From program inception in 2012 through December 31, ~~2015,~~2016, we repurchased 67approximately 74 million shares, inclusive of the common share equivalent reduction resulting from redemption of preferred shares. ~~In January 2016,~~Remaining share repurchase authorization under the

program approved by our Board of Directors ~~approved the expansion of our share repurchase program from $1,400 to $1,700, and during the first quarter of 2016 we repurchased 2.3 million shares for $28. Additionally, we~~is $219. We declared and paid quarterly common stock dividends over the past four years, raising the dividend from five cents to six cents per share in the second quarter of 2015.

We have taken advantage of the lower interest rate environment to refinance our senior notes at lower rates while extending the maturities. In December 2014 and the first quarter of 2015, we completed the redemption of ~~our senior~~ notes maturing in 2019, replacing them with ~~senior~~ notes ~~having lower interest rates and~~ maturing in 2024. ~~Additionally, in~~During the ~~fourth~~second quarter of ~~2014,~~2016, we redeemed notes maturing in 2021, replacing them with notes maturing in 2026. In April 2017, we completed a ~~voluntary program offered~~$400 note offering, the proceeds of which will be used to ~~deferred vested salaried participants in our U.S. pension plans. With this program, we reduced plan benefit obligations by $171 with lump sum payments~~extend maturities on nearly $400 of ~~$133 from plan assets.~~

~~Technology leadership~~ — With a clear focus on market-based value drivers, global-mega trends and customer sustainability objectives and requirements, we are driving innovation to create differentiated value for our customers, enabling a “market pull” product pipeline. Our sealing and thermal engine expertise provides us with early insight into some of the critical design factors important to our customers. When combined with our drivetrain expertise, we are able to collaborate with our customers on complete power conveyance solutions, from the engine through the vehicle driveline. We are committed to making investments and diversifying our product offerings to strengthen our competitive position in our core driveline, sealing and thermal technologies businesses, creating value for our customers through improved fuel efficiency, emission control, electric and hybrid electric solutions, durability and cost of ownership, software integration and systems solutions. Our industry leading electronically actuated disconnecting all wheel drive technology, which we believe is the most fuel efficient rapidly disconnecting system in the market, was recently selected by one of our major customers for a significant new global vehicle platform - opening up new commercial channels for us in the passenger car, crossover and sport utility vehicle markets. A strategic alliance with Fallbrook Technologies Inc. (Fallbrook) provides us the opportunity to leverage leading edge continuously variable planetary (CVP) technology into the development of advanced drivetrain and transmission solutions for customers in our light vehicle and off-highway markets.

Additional engineering and operational investment is being channeled into reinvigorating our product portfolio and capitalizing on technology advancement opportunities. Combined engineering centers of our Light Vehicle and Commercial Vehicle segments allow us the opportunity to better share technologies among these businesses. New engineering facilities in India and China were opened in the past few years and are now on line, more than doubling our engineering presence in the Asia Pacific region with state-of-the-art development and test capabilities that globally support each of our businesses. Additionally, in 2014, we opened a new technology center in Cedar Park, Texas to support our CVP technology development initiatives.

~~Geographic expansion~~ — Our manufacturing and technology center footprint positions us to support customers globally - an important factor as many of our customers are increasingly focused on common powertrain solutions for global platforms. While growth opportunities are present in each region of the world, we have a primary focus on building our presence and local capability in the Asia Pacific region, especially India and China. In addition to new engineering facilities in those countries, new gear manufacturing facilities were recently established in India and Thailand. We have expanded our China off-highway activities and we believe there is considerable opportunity for growth in this market.indebtedness at significantly lower interest rates.

Aftermarket opportunities — We have a global group dedicated to identifying and developing aftermarket growth opportunities that leverage the capabilities within our existing businesses – targeting increased future aftermarket sales. In January 2016, we completed the acquisition of ~~Magnum~~^®Magnum® Gaskets' (Magnum) aftermarket distribution business which includes the Magnum brand, product portfolio, existing customer contracts and distribution rights. The Magnum brand is the third largest aftermarket sealing brand in the U.S. and Canada, providing us with access to new customers for sealing products and an additional aftermarket channel for other products.

Selective acquisitions — Our ~~current~~ acquisition focus is ~~to identify~~principally directed at “bolt-on” or adjacent acquisition opportunities that have a strategic fit with our existing core businesses, particularly opportunities that support our ~~growth initiatives~~enterprise strategy and enhance the value proposition of our ~~customer~~ product offerings. Any potential acquisition will be evaluated in the same manner we currently consider customer program opportunities and other uses of capital – with a disciplined financial approach designed to ensure profitable growth and increased shareholder value.

Acquisitions

~~New~~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 ~~channels~~vehicle end markets, helping to accelerate our hybridization and electrification initiatives. The acquisition is expected to add approximately $350 of sales and $35 of adjusted EBITDA in 2017.

We paid $181 at closing using cash on hand and assumed debt of $182 as part of the transaction. 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 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. Reference is made to Note 2 of the consolidated financial statements in Item 1 of Part I for the allocation of purchase consideration to assets acquired and liabilities assumed. The results of operations of these businesses are reported within our Off-Highway operating segment.

USM – Warren — ~~In each~~On March 1, 2017, we completed the purchase of Warren Manufacturing LLC (USM – Warren), which holds certain assets and liabilities of the former Warren, Michigan production unit of U.S. Manufacturing Corporation (USM). With this transaction, we acquired proprietary tube-manufacturing processes and light-weighting intellectual property for axle tubes and shafts. Significant content was previously purchased from USM. Vertically integrating this content strengthens the supply chain for several of our ~~operating segments, we have customer, geographic~~most strategic customers. The new product and ~~product growth opportunities. By leveraging~~process technologies for light-weighting will assist our ~~relentless pursuit~~customers in achieving their sustainability and fuel efficiency goals. The USM – Warren operation employs approximately 800 people and is expected to contribute approximately $75 of ~~customer satisfaction, innovative technology~~sales and ~~differentiated products, we believe there are opportunities to open new, as well as further penetrate existing, commercial channels.~~$15 of adjusted EBITDA in 2017.

~~Manufacturing excellence/cost management~~We paid $104 for this business at closing, including $25 to effectively settle trade payable obligations originating from product purchases Dana made from USM prior to the acquisition. ~~— Although~~The purchase price is subject to customary post-closing adjustments for working capital and other items, which we ~~have taken significant strides~~currently estimate will reduce the purchase price by $1. No debt was assumed with this transaction which was funded using cash on hand. Reference is made to ~~improve~~Note 2 of the consolidated financial statements in Item 1 of Part I for the allocation of purchase consideration to assets acquired and liabilities assumed. The results of operations of the USM – Warren business are reported within our ~~profitability~~Light Vehicle operating segment.

SIFCO —On December 23, 2016, we acquired strategic assets of the commercial vehicle steer axle systems and ~~margins, particularly through streamlining and rationalizing~~related forged components businesses of SIFCO. The acquisition enables us to enhance our ~~manufacturing activities and administrative support processes, we believe additional opportunities remain to~~vertically integrated supply chain, which will further improve our ~~financial performance. We have ramped up~~cost structure and customer satisfaction by leveraging SIFCO's extensive experience and knowledge of sophisticated forged components. In addition to strengthening our ~~material cost efforts to ensure~~position as a central source for products that ~~we are rationalizing our supply base~~use forged and obtaining appropriate competitive pricing. We have embarked on information technology initiatives to reduce and streamline systems and supporting costs. With a continued emphasis on process improvements and productivity throughout the organization, we expect cost reductions to continue contributing to future margin improvement.

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.

As part of the acquisition, we added two manufacturing facilities and approximately 1,400 employees. The strategic assets were acquired by Dana free and clear of any liens, claims or encumbrances, and without assumption of any legacy liabilities of SIFCO. We had sales of $86 in 2016 resulting from business conducted under the previous supply agreement with SIFCO. The additional business relationships obtained as a result of the acquisition are expected to generate incremental sales of approximately $50 at current production levels.

The SIFCO purchase price was $69, with the payment of $9 of the purchase price deferred until December 2017 pending any claims under indemnification provisions of the purchase agreement. Reference is made to Note 2 of the consolidated financial statements in Item 1 of Part I for the allocation of purchase consideration to assets acquired and liabilities assumed. The results of operations of the SIFCO related business are reported within our Commercial Vehicle operating segment.

Magnum — On January 29, 2016, we acquired the aftermarket distribution business of 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.

Divestitures

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 derecognition of the related noncontrolling interest. Nippon Reinz had sales of $42 in 2016 through the transaction date.

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. The assets of DCLLC at time of sale included cash and marketable securities along with the rights to insurance coverage in place to satisfy a significant portion of its liabilities. We received net cash proceeds of $29 at closing on December 30, 2016, 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. In the event the conditions associated with the retained purchase price of $3 are satisfied in the future, income of $3 will be recognized at such time. Following completion of the sale, Dana has no obligation with respect to current or future asbestos claims. The sale of this business also enhanced our available liquidity since the net proceeds from the sale are available for use in our core businesses.

Trends in Our Markets

Global Vehicle Production (Full Year)


				Actual					Actual
(Units in thousands)	Dana 2016 Outlook			2015	2014	Dana 2017 Outlook			2016	2015
North America
Light Truck (Full Frame)	4,300	to	4,400	4,136	3,834	4,200	to	4,300	4,450	4,136
Light Vehicle Engines	16,000	to	16,500	15,510	15,119	15,800	to	16,200	15,849	15,474
Medium Truck (Classes 5-7)	230	to	240	237	226	235	to	250	233	237
Heavy Truck (Class 8)	240	to	260	323	297	190	to	210	228	323
Agricultural Equipment	50	to	55	58	64	50	to	60	53	58
Construction/Mining Equipment	145	to	155	158	158	150	to	160	150	158
Europe (including Eastern Europe)
Light Truck	8,800	to	8,900	8,525	7,790	9,300	to	9,500	9,313	8,546
Light Vehicle Engines	22,500	to	23,000	22,423	21,510	23,800	to	24,300	23,364	22,570
Medium/Heavy Truck	440	to	445	435	397	440	to	470	471	434
Agricultural Equipment	190	to	195	202	220	190	to	210	193	202
Construction/Mining Equipment	295	to	305	299	301	290	to	310	290	299
South America
Light Truck	900	to	950	941	1,146	1,000	to	1,050	980	940
Light Vehicle Engines	2,100	to	2,150	2,488	3,176	2,000	to	2,100	2,141	2,439
Medium/Heavy Truck	70	to	80	88	167	75	to	85	70	88
Agricultural Equipment	30	to	35	32	43	25	to	35	29	32
Construction/Mining Equipment	10	to	15	13	17	10	to	15	10	13
Asia-Pacific
Light Truck	24,000	to	25,000	24,132	22,337	26,500	to	27,500	27,448	24,160
Light Vehicle Engines	48,500	to	49,500	47,247	46,497	50,000	to	51,500	50,524	47,209
Medium/Heavy Truck	1,400	to	1,450	1,383	1,573	1,450	to	1,550	1,661	1,383
Agricultural Equipment	655	to	690	676	710	680	to	720	648	676
Construction/Mining Equipment	390	to	410	405	509	380	to	410	396	405

North America

Light vehicle markets — Improving economic conditions during the past few years have contributed to increased light vehicle sales and production levels in North America. ~~Release~~Overall economic conditions in North America continue to be relatively favorable with improving employment levels and upward trending consumer confidence. There continues, however, to be considerable uncertainty with the recent transition to new government leadership in the United States, and the potential impact on the economy of future actions initiated by the new administration. The North America light vehicle market is beginning to show signs of weakening demand levels. Strong sales levels the past few years have significantly addressed built-up demand to replace older ~~vehicles, greater availability~~vehicles. Increasing interest rates, high levels of ~~credit, stronger~~ consumer ~~confidence~~debt and ~~other factors~~declining used car prices are developments that are likely to constrict demand for new vehicles. To date, these effects have ~~combined to stimulate new vehicle~~been most notable in passenger car sales. ~~Light~~While first-quarter 2017 light vehicle sales ~~in 2015~~ increased about 6%2% from ~~2014, with~~2016, passenger car sales ~~that year being up 6%~~declined by about 4% from ~~2013. The~~the first quarter of 2016. Helped by continued low fuel prices, light truck market demand continued to be relatively strong in ~~early 2016 with~~ this year's first quarter, with sales up 7% ~~from the same period of 2015.~~compared to last year. Many of our programs are focused in the full frame light truck segment. Sales in this segment were ~~especially strong the past two years, being~~ up about ~~9% in 2015 and 8% in 2014.~~5%. Production levels were reflective of the stronger light vehicle sales. Production of approximately ~~17.5~~4.5 million light vehicles in ~~2015~~the first quarter of 2017 was 3%2% higher than in ~~2014, after~~2016, with passenger car production ~~increased about~~down 4% and light truck production 5% ~~the preceding year.~~higher. Light vehicle engine production was ~~similarly higher, up 2%~~impacted more by developments in ~~2015~~the passenger car segment and ~~6% in 2014.~~down 1% from last year's first quarter. In the key full frame light truck segment, first-quarter 2017 production levels

increased about ~~8% in 2015~~5% compared ~~with an increase~~to the same period of 6% in 2014. Production levels in the first quarter of this year continued to follow the sales pattern, with light vehicle production higher than last year's first quarter by about 5%, light vehicle engine build up 9% and full frame light truck production up 17%.2016. Days’ supply of total light vehicles in the U.S. at the end of March ~~2016~~2017 was around 65, up slightly from 61 days at December 2015 and 58 days at the end of March 2015. In the full frame light truck segment, this year's strong first quarter production raised inventory levels at the end of March to 7572 days, up from 62 days at the end of ~~2015~~December 2016 and 6766 days at the end of March ~~2015.~~

~~Looking ahead to~~2016. In the remainder of 2016, we believe the North American markets will continue to be relatively strong. Generally improved employment levels, low fuel prices and relatively stable consumer confidence are expected to provide a favorable economic climate. We've increased our current outlook for 2016, with light vehicle engine production now expected to be around 16.0 to 16.5 million units and full frame light truck segment, inventory levels increased to 83 days at the end of March 2017, up from 65 days at the end of December 2016 and 76 days at the end of March 2016.

For the remainder of 2017, we expect a generally solid economic climate in North America. However, with the strength in this market the past couple years, we believe slightly lower production ~~expected~~levels are likely. Our full year 2017 outlook for light

vehicle engine production is 15.8 to ~~be in the range of 4.3 to 4.4~~16.2 million units, ~~increases~~flat to an increase of 42% compared with 2016. In the full frame light truck segment where the past two years have been especially strong, our 2017 production outlook is 4.2 to 4.3 million units, a decrease of 3 to 6% from ~~2015.~~2016.

Medium/heavy vehicle markets — ~~Similar to~~The commercial vehicle market is similarly impacted by many of the same macroeconomic developments impacting the light vehicle ~~market,~~market. Strong production levels in the ~~commercial vehicle~~heavy truck segment ~~benefited~~in 2014 and first half of 2015 led to more trucks than required for freight demand. As a consequence, production levels in 2016 and 2017 have been scaled back. Class 8 production in the first quarter of 2017 is down approximately 26% from ~~an improving~~first-quarter 2016 production levels. Demand and production levels in the medium duty segment have been aligned and relatively stable, more commensurate with the relatively slow, steady economic growth in North ~~America economy in recent years, leading to increased medium~~America. Medium duty Classes 5-7 truck production in this year's first quarter was down about 4% compared with the ~~past two years. After increasing 12% in 2014, medium duty production increased another 4% in 2015. In the~~ first three months of 2016.

Class 8 ~~segment,~~order levels have been improving in recent months, and production levels ~~increased 21% in 2014 and another 8% in 2015~~for the remainder of the year are expected to ~~around 323,000 units. Medium duty production has been relatively stable~~improve sequentially from this year's first quarter. Although we have maintained our February outlook for full year with first quarter 2016 production being up about 2% from the same period last year. In the Class 8 segment, order levels and production began declining in the second half of 2015. As expected, first quarter 20162017 Class 8 production ~~is about 19% lower than last year's first quarter.~~

~~Our full year Class 8~~at 190 to 210 million units, we currently expect that production ~~outlook remains at 240,000~~will be nearer the high end of the range, comparable to ~~260,000 units, a decrease of around 20 to 26% from 2015. However, based on~~ the ~~current level of orders,~~2016 build level. In the medium duty segment, we expect 2017 production ~~will likely be closer to the low end of our range. Our medium duty production outlook is unchanged and expected~~ to be ~~relatively~~in the range of 235,000 to 250,000 units, comparable ~~with 2015.~~to up about 7% from 2016.

Markets Outside of North America

Light vehicle markets — Signs of an improved overall European economy have been evident, albeit mixed at times, during the past few years. Reflective of a modestly improved economy, light vehicle production levels have increased with light vehicle engine production being up about 4% in 2016 after increasing 5% in 2015, ~~after increasing 3% in 2014~~ and light truck production being higher by 9%9 to 10% in ~~2015 after being up about 7% in 2014. A stable to modestly improving current economic environment contributed to~~each of the past two years. Overall market improvement continued ~~year-over-year production increases, with light vehicle engine build~~ in the first quarter of ~~2016 being~~2017 as light vehicle engine production increased about ~~1% higher than the same period of last year~~7% and light truck production was up about 13% compared to the first three months of last year. The United Kingdom's decision to withdraw from the European Union along with political developments in ~~this year's first quarter increasing about 8%. We~~other European countries has cast an element of uncertainty around continued economic improvement in the region. At present, we expect overall stable to improving economic conditions across the ~~current economic stability to persist~~entire region in ~~2016. As such, our~~2017. Our full year ~~forecast~~2017 outlook for light vehicle engines and light trucks is unchanged ~~and reflects light truck and~~from February, with production levels expected to be up 2 to 4% for light vehicle ~~engine production that is relatively comparable~~engines and flat to or up ~~slightly from 2015.~~2% for light trucks. The economic climate in most South America markets the past ~~couple~~few years has been weak, volatile and challenging. ~~Light truck~~After significant production ~~declined 12%~~declines in 2014 and ~~was down another 17%~~2015, there were signals of the demand levels having bottomed out in ~~2015. Light~~2016. Production levels in the first quarter of 2017 were reflective of a potentially improving market. This year's first- quarter light vehicle engine production was ~~similarly down 16%~~up 12% compared to the same period in ~~2014~~2016 and ~~another 22% in 2015. During the first quarter~~light truck production was higher by about 25%. Pending further evidence of ~~2016, we've seen continuing market weakness~~sustained improvement our full year 2017 outlook for South America light vehicle markets is unchanged from February, with ~~this year's first quarter~~ light truck production up 2 to 7% and light vehicle engine production ~~being lower than any quarter of 2015. Year-over-year first quarter light truck and light vehicle engine production was 14% and 29% lower than last year. With the region now expected~~down 2 to ~~be somewhat weaker over the full year, we've lowered our 2016 outlook to levels that are flat to down 15%~~7% compared with ~~2015.~~2016. The Asia Pacific markets have been relatively strong the past few years. Light truck production increased 9%8% in ~~2014~~2015 and was up another 8%14% in ~~2015,~~2016, while light vehicle engine production increased 3%2% in ~~2014~~2015 and another 1%7% in ~~2015.~~2016. This year's first quarter exhibited signs of continuing growth in the region. First quarter ~~2016~~2017 light vehicle engine build increased 4% and light truck production ~~in the region~~ was uphigher by 7% when compared with the same period ~~of 2015, with year-over-year first-quarter light vehicle engine build being comparable.~~last year. Our full year ~~outlooks are unchanged. We expect to see continued growth in 2016, with year-over-year~~2017 outlook for the Asia Pacific light vehicle markets has light truck production ~~being~~ flat to updown 4% and light vehicle engine production ~~being higher by about 3~~down 1% to ~~5%.~~up 2% compared with 2016.

Medium/heavy vehicle markets — Some of the same factors referenced above that affected light vehicle markets outside of North America similarly affected the medium/heavy markets, albeit with improvements in the medium/heavy truck market being a little slower to manifest. Signs of a strengthening European market emerged in 2015 and 2016 with medium/heavy truck production increasing about 9% each year. Market strengthening continued in ~~2015 being up about 10%~~the first quarter of 2017 with first quarter production increasing by 5% compared with the same period last year. Our full year outlook is unchanged from ~~the preceding year. In this year's first three months,~~February, reflecting 2017 medium/heavy truck production ~~increased about 2%~~being flat to down 7% compared ~~with~~to last ~~year's first quarter. For the full year 2016, our outlook is unchanged. We expect Europe medium/heavy truck production to be up modestly from 2015.~~year. A weakening South America economic climate beginning in 2014 led to medium/heavy truck production declining ~~about 23%~~47% in ~~2014~~2015 and another ~~49%~~20% in ~~2015.~~2016. As with the light vehicle markets, we've seen additional weakness in South America in early 2016. Sequentially, first quarter truck production was about the same as last year's fourth quarter but down 18% compared with last year's third quarter. With the demand having weakened over the coursewe have begun to see some signs of 2015, the year-over-year first quarter medium/heavy truck production comparison reflects a decrease of about 35%. With South America now expected to be somewhat weaker, we've lowered our full year 2016 outlook reflecting a year-over-year decline in medium/heavy truck production of around 9 to 20%. The medium/heavy truck market in Asia Pacific

was sluggish the past two years, being up a modest 3% in 2014 and declining about 12% in 2015 as a slowdown in the China market materialized. While the China market is expected to be comparable to up modestly in 2016, an improving ~~India market is expected to help improve production~~economic conditions in the region. ~~First quarter 2016~~First-quarter 2017 medium/heavy truck production was up ~~about 11%~~5% from the same period last, and we believe continuing improvement is likely as we move through 2017. Our full year 2017 outlook is unchanged at 75,000 to 85,000 units, an increase of 7 to 21% from 2016. A stronger than expected China market and an improving India market contributed to higher medium/heavy truck production in the Asia Pacific region of about 20% in 2016. Production in this year's first quarter was especially strong – up 32% from the first quarter of last year. ~~For~~This year's strong first quarter was driven in part by impending regulations in China that limit axle load and weight which accelerated buying during the ~~full year~~last half of 2016 and into 2017 prior to the new regulations becoming effective. We expect to see lower second half 2017 production and have maintained our February outlook ~~is unchanged~~ with medium/heavy truck production ~~expected~~outlook for the region being about 7 to ~~be 1 to 5% higher~~13% lower than ~~in 2015.~~2016.

Off-Highway Markets — Our off-highway business has a large presence outside of North America, with ~~more than~~approximately 75% of its sales coming from Europe and ~~more than 10%~~15% from South America and Asia Pacific combined. We serve several segments of the diverse off-highway market, including construction, agriculture, mining and material handling. Our largest markets are the construction/mining and agricultural equipment ~~segments. After experiencing increased global demand in 2011 and 2012, these markets~~segments which have been relatively weak over the past ~~three~~few years. Global demand in the agriculture market was down about 11% in 2014, ~~and~~ 7% in ~~2015.~~2015 and 5% in 2016. The construction/mining segment weakened about 4% in 2014, ~~and~~ 11% in ~~2015. We currently expect these markets to be somewhat weaker than~~2015 and 3% in 2016. During this year's first quarter, we experienced an uplift in overall market demand. Although we've maintained our ~~previous outlook in February, with demand levels in both segments~~full year outlooks, we believe the high end of outlooks are now ~~expected to range from flat to down 4% compared to 2015.~~more likely.

Foreign Currency and Brexit Effects

Weaker international currencies relative to the U.S. dollar have had a significant impact on our sales and results of operations the past few years. The United Kingdom's decision to exit the European Union ("Brexit") has provided further uncertainty and potential volatility around European currencies, along with uncertain effects of future trade and other cross-border activities of the United Kingdom with the European Union and other countries. With new government leadership in ~~2015.~~the U.S. assuming control in early 2017, there is added uncertainly around future economic and trade policy and its potential impact on the U.S. dollar relative to other currencies. Approximately 54% of our consolidated first-quarter 2017 sales were outside the U.S., with euro zone countries, Mexico, Brazil and ~~Brazil~~the United Kingdom accounting for approximately ~~41%~~42%, 8%, 8% and 7%6% of our non-U.S. sales. The potential impact of future U.S. economic and trade policy has led to significant weakening of the Mexican peso against the U.S. dollar since the U.S. presidential election in November 2016. Although sales in Argentina and South Africa are each less than 5% of our non-U.S. sales, exchange rate movements of those countries have also significantly impacted sales. Translation of our international activities at average exchange rates in 2015 as compared to average rates in 2014 reduced sales by $516, with $268 attributable to a weaker euro and $91 to a weaker Brazil real. In ~~this year's first quarter,~~2016, weaker international currencies ~~compared to last year's first quarter~~ reduced sales by ~~$72.~~another $173. A weaker ~~Brazil~~Argentine peso, British pound, Mexican peso, South African rand and Brazilian real ~~and Argentina peso~~ reduced ~~South America~~ sales by ~~$29,~~$70, $23, $19, $18 and $11. The euro was relatively stable in 2016. Weaker international currencies are expected to be a headwind to sales again in 2017. First-quarter 2017 sales were adversely impacted by $6 due to currency translation as compared to the same period in 2016, with a weaker euro, British pound and ~~South Africa rand reducing Europe region~~Mexican peso being partially offset by a stronger Brazilian real. Based on our current sales and exchange rate outlook, which includes a somewhat stronger Brazilian real than previously forecast, we expect the full year 2017 impact of currency translation to reduce sales by ~~$16.~~about $75. Our ~~current full year 2016 sales~~2017 outlook ~~anticipates overall weaker international currencies reducing year-over-year sales by $200 to $300, with~~is based on an assumed euro/U.S. dollar rate of 1.05 to 1.10, ~~to 1.05 and~~a U.S. dollar/Brazil real rate of 3.50 to 4.00, a British pound/U.S. dollar rate of 1.20 to ~~4.25. A~~1.30 and a U.S. dollar/Mexican peso rate of 20.00 to 22.00. At sales levels in our current outlook for 2017, a 5% movement on the euro ~~and~~would impact our annual sales by approximately $65 to $75. A 5% change on the Brazil real, British pound, Mexican peso, Thailand baht and China yuan rates would impact ~~2016~~our annual sales in ~~our outlook~~each of those countries by approximately ~~$65 and~~ $10 ~~respectively.~~to $20.

Brazil Market

The Brazil market is an important market for our Commercial Vehicle segment, representing about 17% of this segment's first-quarter 2017 sales. Our medium/heavy truck sales in Brazil account for more than 75% of our total sales in the country. Reduced market demand resulting from the weak economic environment in Brazil in 2015 ~~has~~ led to production levels in the light vehicle and medium/heavy duty ~~vehicle~~truck markets that ~~are~~were lower by about 22% and 44% from 2014. Continued weakness in 2016 resulted in further reductions in medium/heavy truck production of about 20% and a light vehicle production decline of around 10%. As a consequence, sales by our operations in Brazil for ~~2015 were $240,~~2016 approximated $200, down from ~~$505 the preceding year. Continuing weakness occurred~~about $500 in this year's first quarter, with light vehicle production being about 13% lower than last year's fourth quarter and about 21% lower than last year's third quarter. Sequentially, first-quarter 2016 medium/heavy truck production was comparable with last year's fourth quarter and about 17% lower than last year's third quarter. The full year outlook for Brazil now has light vehicle production down about 15% and medium/heavy truck production lower by about 11% from 2015. Our medium/heavy duty presence is particularly significant, with approximately 75% of our 2015 and first-quarter 2016 Brazil sales originating in our Commercial Vehicle operating segment.2014. In response to the challenging economic conditions in this country, we implemented restructuring and other cost reduction actions ~~in 2015~~the past two years and continue to trim costs to the extent practicable. As discussed in Note 2 to our consolidated financial statements in Item 1, ~~one~~we completed a transaction in December 2016 that provided us with the underlying assets and personnel supporting our pre-existing business with a supplier along with some incremental business. With this transaction, we have enhanced our competitive position in the market and should benefit significantly in future years as the Brazilian markets rebound. As indicated above, first quarter 2017 vehicle production levels in South America were higher than the same period of ~~our major suppliers~~last year. Brazil was a significant contributor to that performance with light truck production in this year's first quarter being higher by more than 30% and medium/heavy truck production being up about 3%. The first-quarter performance is ~~operating with judicial oversight under reorganization proceedings~~an indication perhaps of the onset of improving market conditions in Brazil. We are continuing to operate under an interim agreement with this supplier while continuing to evaluate alternatives to ensuring continued uninterrupted product supply to satisfy our customer commitments.

Commodity Costs

The cost of our products may be significantly impacted by changes in raw material commodity prices, the most important to us being those of various grades of steel, aluminum, copper and brass. The effects of changes in commodity prices are reflected directly in our purchases of commodities and indirectly through our purchases of products such as castings, forgings, bearings and component parts that include commodities. Most of our major customer agreements provide for the sharing of significant commodity price changes with those customers. Where such formal agreements are not present, we have historically

been successful implementing price adjustments that largely compensate for the inflationary impact of material costs. Material cost changes will customarily have some impact on our financial results as customer pricing adjustments typically lag commodity price changes.

~~Lower commodity prices decreased our costs by approximately $7 in the first three months of 2016, while higher~~Higher commodity prices increased our costs by approximately $2$5 in the first quarter of 2017, while in the same period of ~~2015.~~2016 lower commodity prices decreased costs by $7. Material recovery and other pricing actions ~~reduced~~increased first-quarter 2017 sales by ~~about $8 in this~~$2 and reduced last year's first ~~three months, while first-quarter 2015~~quarter sales ~~were increased~~ by ~~$15 from such actions.~~

$8.

Sales, Earnings and Cash Flow Outlook


	2016 Outlook	2015		2014		2017 Outlook	2016		2015
Sales	$5,800 - $6,000	$	6,060	$	6,617	$6,200 - $6,400	$	5,826	$	6,060
Adjusted EBITDA	$640 - $670	$	652	$	746	$695 - $725	$	660	$	652
Net cash provided by operating activities						$410 - $450	$	384	$	406
Purchases of property, plant and equipment						$350 - $370	$	322	$	260
Free Cash Flow	$120 - $140	$	146	$	276	$50 - $90	$	62	$	146

Adjusted EBITDA and Free Cash Flow are non-GAAP financial measures. See the Non-GAAP Financial Measures discussion below for definitions of our non-GAAP financial measures and reconciliations to the most directly comparable U.S. generally accepted accounting principles (GAAP) measures. We have not provided a reconciliation of our adjusted EBITDA outlook to the most comparable GAAP measure of net income. Providing net income guidance is potentially misleading and not practical given the difficulty of projecting event driven transactional and other non-core operating items that are included in net income, including restructuring actions, asset impairments and income tax valuation adjustments. The accompanying reconciliations of these non-GAAP measures with the most comparable GAAP measures for the historical periods presented are indicative of the reconciliations that will be prepared upon completion of the periods covered by the non-GAAP guidance.

During the past ~~three~~two years, weaker international currencies relative to the U.S. dollar were the most significant factor reducing our sales. ~~Lower~~The sales reduction attributable to currency ~~over the three-year period approximated $900, with a reduction of more than $500 occurring in 2015. We divested our Venezuela operation in January~~during 2015 ~~which further reduced consolidated sales by approximately $100.~~and 2016 was $689. Adjusted for currency and divestiture effects, sales in the past two years were relatively comparable, with new customer programs largely offsetting the impacts of overall weaker end user demand across our ~~sales have been relatively stable.~~global businesses. We experienced uneven end user markets, with some being relatively strong and others somewhat weak, and the conditions across the regions of the world differing quite dramatically. ~~New business with customers has largely offset the lower sales attributable to overall weaker end user demand.~~ Our February outlook for ~~2016 includes additional~~full year 2017 sales included the Brevini acquisition which closed February 1, 2017. Our net new business backlog will increase sales by about $175, with overall stronger market demand also expected to contribute to higher sales. Partially offsetting these increases are currency headwinds from further weakening of international currencies inagainst the ~~range of $200 to $300. Increased sales from new business coming on line in 2016 is~~U.S. dollar that are currently expected to ~~partially offset~~reduce 2017 sales by about $75. With the ~~currency related reduction, with~~closing of the USM transaction on March 1, 2017, we have maintained our February outlook at $6,200 to $6,400, but now expect to be at the high end ~~user market demand remaining relatively comparable to 2015.~~of the range.

~~Over the past three years, adjusted~~Adjusted EBITDA margin as a percent of sales has remained relatively constant at around 11% despite certain markets being weak and volatile. Where practicable, we have aligned our cost with weaker demand levels in certain markets. We continue to focus on margin improvement through right sizing and rationalizing our manufacturing operations, implementing other cost reduction initiatives and ensuring that customer programs are competitively priced. ~~With a continued focus on cost and new business coming on at competitive rates, we expect to see a slight margin improvement in 2016.~~ Further margin improvement ~~following 2016~~beyond 2017 is anticipated as we expect to see increased end user demand in certain markets, along with continued benefit from additional new business and cost reduction actions. As with sales, we have maintained our February outlook for full year 2017 Adjusted EBITDA, but with the closure of the USM transaction this past quarter, we currently expect to be near the upper end of the range.

~~Free~~We have generated positive free cash flow ~~generation has been strong~~ the past three years ~~as we benefited from strong earnings and closely managed working~~while increasing capital ~~and capital spend requirements.~~spending to support organic business growth through launching new business with customers. Free cash flow in ~~2014 benefited~~2015 declined from the receipt of $40 of interest from the sale of an in-kind note receivable. Lower pension contributions, restructuring payments and cash taxes also benefited free cash flow in 2014, while increased new program launches resulted in higher capital spending. The lower free cash flow in 2015 is primarilyprevious year due to lower earnings and increased capital spend to support new program launches, with lower cash taxes and restructuring payments providing a partial offset. ~~During the first quarter of~~Reduced free cash flow in 2016 ~~we were successful~~is primarily attributable to our continued success in being ~~selected by certain~~awarded significant new customer programs. Although many of ~~our major customers for new programs. Although~~the recent program wins are not scheduled to begin production until 2018, these programs ~~will require~~required capital investment ~~during~~beginning in 2016. As such, cash used for capital investments in 2016 was $62 higher than in 2015. An elevated level of capital spending will continue into 2017, with such expenditures expected to approximate $350 to $370. The USM transaction resulted in first-quarter 2017 free cash flow being reduced by $25 as a portion of the ~~remainder of this year.~~cash paid at closing was treated as having effectively settled trade payables owed to USM for product purchases prior to the acquisition. As such, we now expect to be nearer the low end of our February outlook for full year 2017 free cash flow. The

higher level of earnings in our businesses for the year will largely offset the increased ~~our expected~~level of capital spend, resulting in 2017 free cash flow that is relatively comparable to the preceding year. The higher level of capital spend in ~~2016 by $40~~recent years associated with increased new program launches is expected to a range of $320 to $340 and correspondingly reduced our 2016 free cash flow outlook to $120 to $140. Other free cash flow elements were unchanged from our previous outlook. Net interest will consume cash of around $90, with estimated cash taxes being about $90, restructuring expenditures about $25 and pension contributions around $15 – all relatively comparable with 2015.dissipate after 2017.

Among our Operational and Strategic Initiatives are increased focus on and investment in product technology – delivering products and technology that are key to bringing solutions to issues of paramount importance to our customers. ~~This, more than anything, is what will position us for profitable future growth.~~ Our success on this front is measured, in part, by our sales backlog which is net new business received that will be launching in the future and adding to our base annual sales. This backlog excludes replacement business and represents incremental sales associated with new programs for which we have received formal customer awards. At December 31, ~~2015,~~2016, our sales backlog of net new business for the ~~2016~~2017 through ~~2018~~2019 period was $750. This current backlog ~~compares~~is comparable to aour three-year sales backlog at the end of ~~2014~~2015, with new business wins that ~~approximated $680 when adjusted for current exchange rates~~added sales approximating $150 being offset by reductions to the backlog to reflect the effects of weaker international currencies relative to the U.S. dollar and ~~market~~reduced demand ~~– an increase of 10%.~~levels now expected during the three-year period.

Summary Consolidated Results of Operations (Year-to-Date, ~~2016~~2017 versus ~~2015)~~2016)


	Three Months Ended March 31,												Three Months Ended March 31,
	2016				2015								2017					2016
	Dollars		% of Net Sales		Dollars			% of Net Sales		Increase/ (Decrease)			Dollars			% of Net Sales		Dollars			% of Net Sales		Increase/ (Decrease)
Net sales	$	1,449			$	1,608				$	(159	)	$	1,701				$	1,449				$	252
Cost of sales	1,250		86.3	%	1,380			85.8	%	(130		)	1,438			84.5	%	1,250			86.3	%	188
Gross margin	199		13.7	%	228			14.2	%	(29		)	263			15.5	%	199			13.7	%	64
Selling, general and administrative expenses	98		6.8	%	100			6.2	%	(2		)	121			7.1	%	98			6.8	%	23
Amortization of intangibles	2				5					(3		)	2					2					—
Restructuring charges, net	1				1					—			2					1					1
Loss on extinguishment of debt					(2		)			2
Other income, net	1				12					(11		)
Income before interest expense and income taxes	99				132					(33		)
Other expense, net													(9		)			(2		)			(7		)
Income before interest and income taxes													129					96					33
Interest income													3					3					—
Interest expense	27				28					(1		)	27					27					—
Income before income taxes	72				104					(32		)	105					72					33
Income tax expense	24				31					(7		)	30					24					6
Equity in earnings of affiliates					1					(1		)	5										5
Net income	48				74					(26		)	80					48					32
Less: Noncontrolling interests net income	3				11					(8		)	5					3					2
Less: Redeemable noncontrolling interests net income																							—
Net income attributable to the parent company	$	45			$	63				$	(18	)	$	75				$	45				$	30

Sales — The following table shows changes in our sales by geographic region.


	Three Months Ended March 31,							Amount of Change Due To								Three Months Ended March 31,						Amount of Change Due To
	2016		2015		Increase/ (Decrease)			Currency Effects			Acquisitions		Organic Change			2017		2016		Increase/ (Decrease)		Currency Effects			Acquisitions (Divestitures)		Organic Change
North America	$	782	$	834	$	(52	)	$	(8	)	$	2	$	(46	)	$	902	$	782	$	120	$	(3	)	$	17	$	106
Europe	410		463		(53		)	(21		)			(32		)	489		410		79		(12		)	50		41
South America	66		117		(51		)	(30		)			(21		)	106		66		40		10			11		19
Asia Pacific	191		194		(3		)	(13		)			10			204		191		13		(1		)	2		12
Total	$	1,449	$	1,608	$	(159	)	$	(72	)	$	2	$	(89	)	$	1,701	$	1,449	$	252	$	(6	)	$	80	$	178

Sales in the first quarter of ~~2016~~2017 were ~~$159 lower~~$252 higher than in ~~the same period in 2015.~~2016. Weaker international currencies decreased sales by ~~$72.~~$6. The acquisitions of BFP, BPT, SIFCO, USM – Warren and Magnum in 2016 and 2017 generated a quarter-over-quarter increase in sales of $91, with the divestiture of Nippon Reinz providing a reduction of $11. A volume-related organic sales ~~decrease~~increase of ~~$81~~$178 resulted primarily from ~~weaker~~stronger light truck markets, strengthening global Off-Highway demand ~~lower commercial vehicle production~~and contributions from new business. Reduced demand levels in ~~North America and Brazil and lower sales with a major~~the North America commercial vehicle ~~customer, partially~~market provided a partial offset ~~by stronger overall light vehicle volume levels in North America, Europe and Asia Pacific. Cost recovery pricing actions reduced sales by an additional $8.~~to the volume-related organic increase.

The North America organic sales ~~reduction~~increase of 6%14% was driven principally by stronger production levels on certain of our key light truck programs. Partially offsetting the higher light vehicle demand was a decline in ~~Class 8~~medium/heavy truck production of about 19%, reduced sales levels with a major commercial vehicle customer and weaker Off-Highway demand. These effects were partially offset by increases in full frame light truck production of around 17% and in light vehicle engine build of 9% and by higher sales from new customer programs.15%.

Excluding currency effects, principally from a weaker euro and British pound, and ~~South African rand, our~~the increased sales of $50 attributable to the BFP and BPT acquisitions, first-quarter 2017 sales in Europe ~~in the first quarter of 2016~~ were ~~7% lower~~10% higher than in ~~2015. Weaker Off-Highway~~ 2016. As a result of improving market conditions in Europe, each of our operating segments experienced increased sales from higher production/demand ~~was the primary driver of this reduction in sales.~~levels.

South America sales in ~~this year's~~the first quarter ~~were impacted by weaker currencies in~~of 2017 benefited from a stronger Brazil real and ~~Argentina.~~increased sales from the SIFCO acquisition. Excluding these effects, sales were ~~down 18%~~up 29% from the ~~same period in 2015.~~first quarter of 2016. The organic sales ~~decrease~~increase in the region was ~~primarily~~ driven largely by ~~lower~~stronger production levels, with light truck production up about 25% and medium/heavy truck production ~~levels, which were down about 35%, and a decrease in light truck production of about 14%~~higher by 5%.

Asia Pacific sales in this year's first quarter were ~~relatively comparable to 2015. Weaker currencies in Thailand, India and China contributed to~~7% higher than the ~~currency-related sales reduction.~~same period of 2016. The 5% organic sales increase ~~resulted~~of 6% in this region was due primarily ~~from increased~~to stronger light vehicle production levels ~~in the region~~and off-highway segment demand, along with contributions from new customer programs.

Cost of sales and gross margin — Cost of sales ~~declined $130, or 9%, in~~for the first quarter of ~~2016~~2017 increased $188, or 15%, when compared to ~~the same period in 2015.~~2016. Similar to the factors affecting sales, the ~~reduction~~increase was primarily due to ~~currency effects and lower~~higher overall sales ~~volumes.~~volumes and the inclusion of acquired businesses. Cost of sales as a percent of ~~this year's~~2017 sales was 50180 basis points ~~higher~~lower than in the ~~same period~~previous year. Cost of ~~last year. Underabsorption~~sales attributed to net acquisitions, which included $6 of the incremental cost assigned to inventory as part of business combination accounting, amounted to $72, or 90.0% of the sales of those businesses. Excluding the effects of acquisitions and divestitures, cost of sales as percent of sales declined from 86.2% of sales in the first quarter of 2016 to 84.2% of sales in 2017 – a ~~result~~reduction of ~~lower sales volumes contributed to the increase~~200 basis points. This reduction in cost of sales as a percent of ~~sales. Compared~~sales was largely attributable to ~~last year, first quarter 2016 engineering and product development costs increased $7 and warranty expense was~~better cost absorption as the higher ~~by $3. Partially offsetting these~~sales volume prompted increases ~~were~~in manufacturing activity. Cost of sales also benefited from material cost savings of ~~$19 and the elimination~~approximately $17, which more than offset an increase in material commodity prices of ~~supplier transition costs in our Commercial Vehicle segment, which totaled $8 in the first quarter of 2015.~~$5.

Gross margin of ~~$199~~$263 for ~~the first quarter of 2016 decreased $29~~2017 increased $64 from ~~the same period in 2015, representing 13.7%~~2016. Gross margin as a percent of sales was 15.5% in ~~2016~~2017, 180 basis points higher than in 2016. Acquisitions net of divestitures added $8 of gross margin. The margin improvement as ~~compared to 14.2%~~a percent of sales ~~in 2015. The 50 basis point reduction in gross margin~~ was driven principally ~~driven~~ by ~~lower sales volumes,~~ the cost of sales factors referenced ~~above and pricing actions which reduced first quarter year-over-year margin by $8.~~above.

Selling, general and administrative expenses (SG&A) — SG&A expenses in ~~2016~~2017 were ~~$98 (6.8%~~$121 (7.1% of sales) as compared to ~~$100 (6.2%~~$98 (6.8% of sales) in ~~2015. Salary~~2016. SG&A attributed to net acquisitions was $13. Excluding the increase associated with acquisitions and divestitures, SG&A expenses as a percent of sales were comparable with the same period of 2016. Of the $10 million year-over-year first-quarter increase exclusive of net acquisitions, salary and benefits expenses ~~in the first quarter of 2016~~ were ~~comparable to 2015~~$5 higher, while selling ~~expense~~ and other discretionary spending ~~declined $2.~~increased $5.

Amortization of intangibles — The ~~reduction of $3~~increase in amortization of intangibles ~~is primarily attributable to certain customer related intangibles becoming~~acquired as part of the acquisitions completed in late 2016 and the first quarter of 2017 was offset by reduced expense from fully ~~amortized.~~amortized intangibles.

Restructuring charges — Restructuring charges in both periods ~~were attributable~~relate to ~~ongoing exit costs associated with~~ previously announced ~~facility closure and realignment~~restructuring actions.

During April 2016, we approved and announced the closure of our Commercial Vehicle manufacturing facility in Glasgow, Kentucky. The closure is expected to be completed by mid-2017. Specific actions to implement the closure are still being evaluated. At present, we expect that completion of this action will require cash expenditures in the range of $15 to $20, including restructuring charges for employee separation and equipment relocation costs, capital investment costs for supplier tooling and other exit costs.

Other ~~income,~~expense, net — The following table shows the major components of other ~~income,~~expense, net.



	Three Months Ended March 31,
	2017			2016
Government grants and incentives	$	2		$	1
Foreign exchange loss	(2		)	(2		)
Strategic transaction expenses	(11		)	(2		)
Insurance recoveries				1
Other	2
Other expense, net	$	(9	)	$	(2	)

~~Upon completion~~The higher level of strategic transaction expenses in 2017 is primarily attributable to the ~~divestiture~~Brevini and USM transactions which were completed in the first quarter of ~~our operations in Venezuela in January 2015, we recognized a $5 gain on the derecognition of the noncontrolling interest in one of our former Venezuelan subsidiaries.~~2017. See ~~Notes 3 and 16~~Note 17 to our consolidated financial statements in Item 1 of Part I for additional information.

~~Loss~~Interest income and interest expense — Interest income was $3 in both 2017 and 2016. Interest expense was $27 in both 2017 and 2016. A lower average interest rate on ~~extinguishment of~~borrowings was offset by higher average debt —~~Actions to refinance a portion of our long-term~~levels in 2017. Average debt ~~that commenced in the fourth quarter of 2014~~levels were ~~completed~~higher in the first quarter of ~~2015,~~2017 than in last year's first quarter, in part due to debt of $182 assumed in connection with ~~expense recognized for~~ the ~~call premium incurred~~Brevini acquisition. As discussed in Note 12 to our consolidated financial statements in Item 1 of Part I, Dana Financing Luxembourg S.à r.l. issued $375 of its June 2026 Notes on May 27, 2016 and we redeemed $350 of our February 2021 Notes on June 23, 2016. In conjunction with the ~~write-off~~issuance of ~~unamortized~~the June 2026 Notes, we entered into two 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%. Through intercompany financing ~~costs~~arrangements and associated ~~with debt extinguished~~fixed-to-fixed cross-currency swaps in the first quarter of ~~2015.~~

~~Interest expense~~ ~~— Interest expense was $27 and $28 in 2016 and 2015.~~2017, we effectively converted the fixed U.S. dollar rate on our September 2023 Notes to a fixed euro rate of 3.91%. Average effective interest rates, inclusive of amortization of debt issuance costs, approximated 5.9% and 6.5% in ~~both 2016~~2017 and ~~2015.~~2016.

Income tax expense — Income ~~tax~~taxes expense for the first quarter was ~~$24~~$30 in 2017 and ~~$31~~$24 in 2016, resulting in effective tax rates of 29% and ~~2015.~~33%, respectively. The effective income tax rates vary from the U.S. federal statutory rate of 35% primarily due to valuation allowances in several countries, nondeductible expenses, different statutory rates outside the U.S. and withholding taxes. ~~The~~Jurisdictions with effective tax rates lower than the U.S. tax rate ~~was 33%~~of 35% decreased the overall effective rate in both years. Tax expense in 2016 ~~as compared to 30% in 2015. In 2016, the primary factors for the effective rate being less than the 35% U.S. statutory rate~~ included ~~the jurisdictional profit mix and valuation allowance effects partially offset by tax expense~~$3 of ~~$3 from the~~ amortization of a prepaid tax asset related to an intercompany transaction completed in 2015. ~~The primary factors for 2015 were~~As disclosed in Note 1 of the ~~jurisdictional profit mix and valuation allowance effects.~~consolidated financial statements in Item 1 of Part I, we adopted new accounting guidance in 2017 which resulted in the prepaid tax asset at the beginning of 2017 being written off directly to retained earnings. Accordingly, there is no amortization expense relating to the prepaid tax asset in 2017.

In ~~the U.S. and certain other~~ countries where our ~~recent~~ history of operating losses ~~does~~did not allow us to satisfy the “more likely than not” criterion for recognition of deferred tax ~~assets. Therefore, there is~~assets, we have generally recognized no income tax ~~recognized~~ on the pre-tax income or losses ~~in these jurisdictions~~ as valuation allowance adjustments offset the associated tax effects. ~~See Note 15 to our consolidated financial statements in Item 1~~Following the release of ~~Part I for a discussion of the factors considered in our quarterly evaluation of the~~ valuation allowances ~~against~~on our U.S. deferred tax ~~assets.~~assets in the fourth quarter of 2016, tax effects relating to U.S. income in 2017 are no longer being offset by adjustments to the valuation allowance.

Equity in earnings of affiliates — Net earnings from equity investments ~~were~~was $5 in 2017 compared with de minimis earnings in ~~2016 and $1 in 2015.~~2016. Equity in earnings from Bendix Spicer Foundation Brake, LLC (BSFB) ofwere $3 in 2017 and $2 in ~~2016 were offset by a loss~~2016. Our share of ~~$2 from~~ Dongfeng Dana Axle Co., Ltd. (DDAC)~~. Equity in earnings from BSFB of~~ operating results was $3 in ~~2015 were partially offset by~~2017 and a loss of $2 ~~from DDAC.~~in 2016.

Noncontrolling interests net income— AsThe increased level of earnings attributable to noncontrolling interests is generally attributable to increased earnings of the consolidated operations that are less than wholly-owned. The redeemable noncontrolling interest relates to the Brevini business we acquired in the first quarter of 2017 on which we have a call option as described more fully ~~discussed~~ in Note ~~1 to our~~2 of the consolidated financial statements in Item 1 ~~the first quarter~~ of ~~2015 included $9 for correction of previously reported noncontrolling interests net income.~~Part I.

Segment Results of Operations ~~(2016~~(2017 versus ~~2015)~~2016)

Light Vehicle


	Three Months								Three Months
	Sales			Segment EBITDA			Segment EBITDA Margin		Sales			Segment EBITDA			Segment EBITDA Margin
2015	$	637		$	64		10.0	%
2016									$	613		$	58		9.5	%
Volume and mix	13			2					152			25
Performance	(1		)	(4		)			2			12
Currency effects	(36		)	(4		)			(6		)	(6		)
2016	$	613		$	58		9.5	%
2017									$	761		$	89		11.7	%

Light Vehicle sales in ~~2016~~2017 were reduced by currency translation effects, primarily as a result of a weaker ~~Argentina~~Mexico peso ~~Thailand baht, South Africa rand,~~ and British ~~pound sterling. Sales in this year's first quarter, exclusive~~pound. The acquisition of USM at March 1, 2017 contributed $11 to sales. Exclusive of currency and acquisition effects, first-quarter 2017 sales were 2%23% higher than in ~~2015.~~the first quarter of last year. The volume-related increases were driven primarily by stronger production ~~levels. Although overall~~levels in all regions. North America full frame light truck production in ~~the first quarter of 2016~~2017 was up ~~17% from the same period~~5%, although a number of ~~2015,~~our key programs in this comparison was significantly impacted by a vehicle platform that does not have significant Dana product. Exclusive of this vehicle, full frame light truck production in North America was about 8% higher.segment were up more significantly. Light truck production in Europe, South America and Asia Pacific was stronger by 8%13%, 25% and 7%~~. Partially offsetting these production increases were lower~~ compared to 2016. Sales in this segment also benefited from new customer programs, including $24 relating to a program previously supported by our Commercial Vehicle segment that moved to Light Vehicle in mid-2016 when the axle used to support the program was replaced with an axle produced by the Light Vehicle segment. Customer pricing and cost recovery impacts increased quarter-over-quarter sales ~~from a discontinued program in Europe and weaker South America demand.~~by $2.

Light Vehicle segment EBITDA of ~~$58 for the first three months of 2016 is $6 lower~~$89 in 2017 was $31 higher than in ~~2015. Weaker international currencies~~the same period of 2016. Higher sales volumes from overall stronger production levels and new business provided a benefit of $25, while currency effects, inclusive of transaction losses, reduced segment EBITDA by ~~$4, with~~$6. The year-over-year performance-related earnings improvement was driven by $8 from material savings, pricing and recovery net ~~higher sales volumes providing a benefit~~ of ~~$2. The performance-related reduction of $4 is primarily attributable to lower engineering~~increased commodity costs. Start-up and ~~product development~~launch-related costs reduced segment EBITDA by $7. Net cost ~~recovery from customers in this year's first quarter along with start-up costs associated with a higher level of new program launches.~~

reductions and other items increased earnings by $11.

Commercial Vehicle


	Three Months								Three Months
	Sales			Segment EBITDA			Segment EBITDA Margin		Sales			Segment EBITDA			Segment EBITDA Margin
2015	$	433		$	35		8.1	%
2016									$	333		$	26		7.8	%
Volume and mix	(60		)	(9		)			(14		)	(8		)
Volume and mix - Brazil	(19		)	(5		)
Performance	(1		)	8					3			14
Currency effects	(20		)	(3		)			7			(4		)
2016	$	333		$	26		7.8	%
2017									$	329		$	28		8.5	%

~~The currency-related reduction~~Currency effects which increased sales in ~~sales was~~the first quarter of 2017 were primarily due to a ~~weaker~~year-over-year stronger Brazil ~~real and Mexico peso.~~real. The acquisition of the SIFCO business late in 2016 contributed $10 to first-quarter 2017 sales. After adjusting for the effects of currency and acquisitions, 2016 sales in our Commercial Vehicle segment decreased ~~18%~~6% compared to ~~2015.~~2016. The volume-related reduction was primarily attributable to ~~weaker~~lower sales in North America where Class 8 production was down about 26%, medium duty Classes 5-7 production was down 4% and a program having sales of $24 was transfered to the Light Vehicle segment who began supplying the axle for the program in mid-2016. Stronger end market demand in Brazil ~~where year-over-year medium/heavy truck production was down about 35%,~~and Europe provided a ~~decline in first quarter~~partial offset to lower North America ~~Class 8 production of about 19% and lower sales with a major North America customer.~~sales.

Commercial Vehicle segment EBITDA of ~~$26 in this year's first quarter~~$28 was ~~$9 lower~~$2 higher than in ~~2015.~~2016. Lower sales volumes reduced 2016 segment EBITDA by ~~$14, with weaker international currencies reducing earnings by another $3. Partially~~$8. Currency effects reduced segment EBITDA due to the translation of losses at a stronger Brazil real and to currency transaction losses. More than offsetting ~~these reductions~~the effects of lower volume was improved year-over-year performance-related segment EBITDA ~~improvement~~ of ~~$8, principally due to supplier transition costs incurred in last year's first quarter~~$14, resulting from lower warranty expense of $6, customer pricing and recovery of $3, net material cost savings ~~in 2016.~~of $2, and other net cost reduction of $3.

Off-Highway


	Three Months								Three Months
	Sales			Segment EBITDA			Segment EBITDA Margin		Sales			Segment EBITDA		Segment EBITDA Margin
2015	$	284		$	39		13.7	%
2016									$	241		$	32	13.3	%
Volume and mix	(33		)	(8		)			26			6
Acquisition of BFP and BPT									69			6
Performance	(2		)	3					(3		)	1
Currency effects	(8		)	(2		)			(5		)
2016	$	241		$	32		13.3	%
2017									$	328		$	45	13.7	%

~~The year-over-year reduction in sales due to currency~~Currency effects, ~~resulted principally~~primarily from a weaker ~~euro. Currency-adjusted~~euro, reduced sales by $5. The acquisition of the Brevini business on February 1, 2017 added sales of $69 to the first quarter of 2017. After adjusting sales for these two items, first-quarter ~~2016~~2017 sales were ~~down 12%~~higher by 10% compared to ~~2015,~~2016, primarily from ~~lower~~higher global end-market demand.

Off-Highway segment EBITDA of ~~$32~~$45 in 2017 was up $13 from 2016, primarily from the ~~first quarter~~acquisition of ~~2016~~Brevini and increased sales volume. The performance-related earnings improvement was ~~down $7~~principally from ~~2015. Segment EBITDA reductions due to currency effects and lower sales volumes were partially offset by~~year-over-year material cost savings of $4 which more than offset reduced customer pricing and other ~~cost reduction actions which provided a net $3 performance-related earnings improvement.~~items.

Power Technologies


	Three Months								Three Months
	Sales			Segment EBITDA			Segment EBITDA Margin		Sales			Segment EBITDA		Segment EBITDA Margin
2015	$	254		$	38		15.0	%
2016									$	262		$	35	13.4	%
Volume and mix	20			4					23			11
Performance	(4		)	(6		)						4
Currency effects	(8		)	(1		)			(2		)
2016	$	262		$	35		13.4	%
2017									$	283		$	50	17.7	%

Power Technologies primarily serves the light vehicle market but also sells product to the medium/heavy truck and off-highway markets. ~~A weaker euro and Canadian dollar were the primary drivers of the reduced sales due to currency.~~ Net of currency effects and a reduction of $10 attributable to the Nippon Reinz divestiture in the fourth quarter of 2016, sales in ~~2016~~the first quarter of 2017 increased ~~about 6% compared~~13%, primarily due to ~~2015, principally from~~overall stronger market ~~demand. Increases in~~

~~light vehicle engine build of 9% in North America~~demand and ~~1% in Europe were the primary drivers of the volume increase.~~new customer programs.

Segment EBITDA of ~~$35~~$50 in 2017 was $15 higher than in 2016, ~~was $3 lower than in 2015. The performance-related reduction in~~driven primarily by higher sales volumes. Performance-related segment EBITDA ~~was primarily driven by increased engineering and development expense, customer pricing~~improved in 2017 due principally to net material cost savings and other cost ~~increases.~~reductions.

Non-GAAP Financial Measures

Adjusted EBITDA

We have defined adjusted EBITDA as ~~earnings from operations~~net income before interest, taxes, depreciation, amortization, equity grant expense, restructuring expense and other adjustments not related to our core operations (gain/loss on debt extinguishment, pension settlements, or divestitures, impairment, etc.). Adjusted EBITDA is ~~a primary driver of cash flows from operations and~~ a measure of our ability to maintain and continue to invest in our operations and provide shareholder returns. We use adjusted EBITDA in assessing the effectiveness of our business strategies, evaluating and pricing potential acquisitions and as a factor in making incentive compensation decisions. In addition to its use by management, we also believe adjusted EBITDA is a measure widely used by securities analysts, investors and others to evaluate financial performance of our company relative to other Tier 1 automotive suppliers. Adjusted EBITDA should not be considered a substitute for income before income taxes, net income or other results reported in accordance with GAAP. Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.

The following table provides a reconciliation of ~~segment EBITDA and~~net income to adjusted ~~EBITDA to net income.~~

EBITDA.


	Three Months Ended March 31,						Three Months Ended March 31,
	2016			2015			2017		2016
Segment EBITDA
Light Vehicle	$	58		$	64
Commercial Vehicle	26			35
Off-Highway	32			39
Power Technologies	35			38
Total Segment EBITDA	151			176
Corporate expense and other items, net	(3		)
Adjusted EBITDA	148			176
Net income							$	80	$	48
Equity in earnings of affiliates							5
Income tax expense							30		24
Income before income taxes							105		72
Depreciation and amortization	(43		)	(45		)	52		43
Restructuring	(1		)	(1		)	2		1
Interest expense, net	(24		)	(25		)	24		24
Other*	(8		)	(1		)	22		8
Income before income taxes	72			104
Income tax expense	24			31
Equity in earnings of affiliates				1
Net income	$	48		$	74
Adjusted EBITDA							$	205	$	148

Other includes stock compensation expense, strategic transaction expenses, ~~gain on derecognition of noncontrolling interest,~~ distressed supplier costs, amounts attributable to previously divested/closed operations, ~~loss on extinguishment of debt, write-off of deferred financing costs~~acquisition related inventory adjustments and other items. See Note 1718 to our consolidated financial statements in Item 1 of Part I for additional details.

Free Cash Flow

We have defined free cash flow as cash provided by 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 operating activities reported under GAAP. Free cash flow may not be comparable to similarly titled measures reported by other companies.

The following table reconciles ~~free cash flow to~~ net cash flows provided by operating ~~activities.~~

activities to free cash flow.


	Three Months Ended March 31,						Three Months Ended March 31,
	2016			2015			2017			2016
Net cash used in operating activities	$	(27	)	$	(20	)
Net cash provided by (used in) operating activities							$	11		$	(27	)
Purchases of property, plant and equipment	(71		)	(62		)	(96		)	(71		)
Free cash flow	$	(98	)	$	(82	)	$	(85	)	$	(98	)

Liquidity

~~Our global~~The following table provides a reconciliation of our liquidity, a non-GAAP measure, to cash and cash equivalents at March 31, ~~2016~~2017 ~~was as follows:~~:


Cash and cash equivalents	$	669		$	423
Less: Deposits supporting obligations	(9		)	(6		)
Available cash	660			417
Additional cash availability from revolving facility	304			477
Marketable securities	164			31
Total global liquidity	$	1,128
Total liquidity				$	925

Cash deposits are maintained to provide credit enhancement for certain agreements and are reported as part of cash and cash equivalents. For most of these deposits, the cash may be withdrawn if a comparable security is provided in the form of letters of credit. Accordingly, these deposits are not considered to be restricted.

Marketable securities are included as a component of ~~global~~ liquidity as these investments can be readily liquidated at our discretion.

Cash and marketable securities of $143 held by a wholly-owned subsidiary at March 31, 2016 can be transferred out of this subsidiary only if approved by its independent board member. Accordingly, accessing this component of global liquidity is uncertain.

The components of our March 31, ~~2016~~2017 consolidated cash balance were as follows:


	U.S.		Non-U.S.		Total		U.S.		Non-U.S.		Total
Cash and cash equivalents	$	208	$	354	$	562	$	68	$	231	$	299
Cash and cash equivalents held as deposits	2		7		9				6		6
Cash and cash equivalents held at less than wholly-owned subsidiaries	2		96		98		4		114		118
Consolidated cash balance	$	212	$	457	$	669	$	72	$	351	$	423

A portion of the non-U.S. cash and cash equivalents is utilized for working capital and other operating purposes. Several countries have local regulatory requirements that significantly restrict the ability of our operations to repatriate this cash. Beyond these restrictions, there are practical limitations on repatriation of cash from certain subsidiaries because of the resulting tax withholdings and subsidiary by-law restrictions which could limit our ability to access cash and other assets.

The principal sources of liquidity available for our future cash requirements are expected to be (i) cash flows from operations, (ii) cash and cash equivalents on hand and (iii) borrowings from our revolving facility. We believe that our overall liquidity and operating cash flow will be sufficient to meet our anticipated cash requirements for capital expenditures, working capital, debt obligations, common stock repurchases and other commitments during the next twelve months. While uncertainty surrounding the current economic environment could adversely impact our business, based on our current financial position, we believe it is unlikely that any such effects would preclude us from maintaining sufficient liquidity.

In April 2017, Dana Financing Luxembourg S.à r.l. completed the issuance of $400 of its April 2025 Notes. Net proceeds of the offering totaled $394. The net proceeds from the offering will be used to repay indebtedness of our BPT and BFP subsidiaries and indebtedness of a wholly-owned subsidiary in Brazil and to redeem $100 of our September 2021 Notes. The $100 of September 2021 Notes were extinguished in April 2017 pursuant to a tender offer at a weighted average price equal to 104.031% plus accrued and unpaid interest.

At March 31, ~~2016,~~2017, we had no outstanding borrowings under the ~~revolving facility but~~Revolving Facility and we had utilized ~~$37~~$23 for letters of credit. ~~Based on our borrowing base collateral, we~~We had availability ~~as of that date~~at March 31, 2017 under the ~~revolving facility~~Revolving Facility of ~~$304~~$477 after deducting ~~the~~ outstanding borrowings and letters of credit.

At March 31, ~~2016,~~2017, we were in compliance with the covenants of our financing agreements. Under the ~~revolving facility~~Revolving Facility and ~~the~~our senior notes, we are required to comply with certain incurrence-based covenants customary for facilities of these types.

The incurrence-based covenants in the ~~revolving facility~~Revolving Facility permit us to, among other things, (i) issue foreign subsidiary indebtedness, (ii) incur general secured indebtedness subject to a pro forma first lien net leverage ratio not to exceed 1.50:1.00 in the case of first lien debt and a pro forma secured net leverage ratio of 2.50:1.00 in the case of other secured debt and (iii) incur additional unsecured debt ~~so long as the~~subject to a pro forma ~~minimum fixed charge coverage~~total net leverage ratio ~~is at least 1.0:1.0.~~not to exceed 3.50:1.00. We may also make dividend payments in respect of our common stock as well as certain investments and acquisitions ~~so long as there is (i) at least $100 of~~subject to a pro forma ~~excess borrowing availability or (ii) at least $75~~total net leverage ratio of ~~pro forma excess borrowing availability and~~2.75:1.00. In addition, the ~~pro forma minimum fixed charge coverage~~Revolving Facility is subject to a financial covenant requiring us to maintain a first lien net leverage ratio ~~is at least 1.0:1.0.~~not to exceed 2.00:1.00. The indentures governing the senior notes include ~~similar~~other incurrence-based covenants that may subject us to additional specified limitations.

~~Our Board~~We did not repurchase any shares during the first quarter of ~~Directors approved an expansion of~~2017 under our existing $1,700 common stock share repurchase program. Approximately $219 remains available under the program ~~from $1,400 to $1,700 on January 11, 2016. During the first quarter of 2016, we paid $28 to acquire 2,264,692 shares of common stock in the open market.~~for future share repurchases.

From time to time, depending upon market, pricing and other conditions, as well as our cash balances and liquidity, we may seek to acquire our senior notes or other indebtedness or our common stock through open market purchases, privately negotiated transactions, tender offers, exchange offers or otherwise, upon such terms and at such prices as we may determine (or as may be provided for in the indentures governing the notes), for cash, securities or other consideration. There can be no assurance that we will pursue any such transactions in the future, as the pursuit of any alternative will depend upon numerous factors such as market conditions, our financial performance and the limitations applicable to such transactions under our financing and governance documents.

Cash Flow


	Three Months Ended March 31,						Three Months Ended March 31,
	2016			2015			2017			2016
Cash used for working capital	$	(128	)	$	(141	)
Cash used for changes in working capital							$	(133	)	$	(128	)
Other cash provided by operations	101			121			144			101
Net cash used in operating activities	(27		)	(20		)
Net cash provided by (used in) operating activities							11			(27		)
Net cash used in investing activities	(92		)	(59		)	(282		)	(92		)
Net cash used in financing activities	(20		)	(104		)	(26		)	(20		)
Net decrease in cash and cash equivalents	$	(139	)	$	(183	)	$	(297	)	$	(139	)

The table above summarizes our consolidated statement of cash flows.

Operating activities — Exclusive of working capital, other cash provided by operations was $144 and $101 in 2017 and ~~$121 in 2016 and 2015.~~2016. The year-over-year ~~decrease~~increase in other cash provided by operations is primarily attributable to ~~lower~~higher operating earnings in ~~2016.~~2017. Partially offsetting the stronger earnings performance were increased first-quarter 2017 payments for restructuring actions and transaction costs associated with acquisitions.

Working capital used cash of $133 and $128 in 2017 and ~~$141 in 2016 and 2015.~~2016. Cash of ~~$129~~$189 and ~~$173~~$132 was used to finance increased receivables in ~~2016~~2017 and ~~2015.~~2016. The higher level of cash required for receivables in 2017 was due primarily to higher year-over-year first-quarter sales. Cash of ~~$33~~$20 and ~~$64~~$33 was used to fund higher inventory levels in ~~2016~~2017 and ~~2015.~~2016. Partially offsetting cash used for higher receivables and inventory in both ~~2016~~2017 and ~~2015~~2016 was cash provided by increases in accounts payable and other net liabilities of ~~$34~~$76 and ~~$96.~~$37. The cash provided by accounts payable in 2017 was reduced by a payment of $25 in connection with the USM – Warren acquisition to settle trade payable obligations at the date of closing.

Investing activities — Expenditures for property, plant and equipment were $96 and $71 in 2017 and ~~$62~~2016. During 2017, we paid $106, net of cash acquired, to acquire 80% ownership interests in ~~the 2016~~BFP and ~~2015.~~BPT and $78 to acquire USM – Warren. During 2016, we paid $18 to acquire the aftermarket distribution business of Magnum. During ~~2016~~2017 and ~~2015,~~2016, purchases of marketable securities were funded by proceeds from sales and maturities of marketable securities.

Financing activities — During 2017, we made scheduled repayments of $5 at international locations and paid down $12 of BFP and BPT acquired indebtedness. During 2016, we made scheduled repayments of $24 and took out $32 of additional long-term debt at international locations. ~~During 2015, we redeemed $55 of our February 2019 Notes at a $2 premium and took out additional long-term debt at international locations.~~ We used $9 for dividend payments to common stockholders in both 2017 and 2016. We used $28 to repurchase 2,264,692 common shares ~~and $63 to repurchase 2,913,720 common shares during the first quarters of 2016 and 2015.~~in 2016.

~~Contractual Obligations~~Off-Balance Sheet Arrangements

There have been no material changes at March 31, ~~2016~~2017 in our ~~contractual obligations~~off-balance sheet arrangements from those reported or estimated in the disclosures in Item 7 of our ~~2015~~2016 Form 10-K.

Contractual Obligations

The acquisition of 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) in February 2017 included the assumption of approximately $324 of liabilities, increasing our contractual obligations at March 31, 2017 versus those reported in Item 7 of our 2016 Form 10-K. The terms of the related agreement provide Dana the right to call the noncontrolling interests in BFP and BPT held by Brevini, 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 redemption value of the redeemable noncontrolling interests in BFP and BPT was $44 at March 31, 2017. See Notes 2 and 7 to our consolidated financial statements in Item 1 of Part I for additional information.

The issuance of $400 of 2025 Notes in early April 2017 and the subsequent use of the related proceeds to repay indebtedness will extend the maturities on nearly $400 of indebtedness at significantly lower interest rates. See Note 12 to our consolidated financial statements in Item 1 of Part I for additional information.

Contingencies

For a summary of litigation and other contingencies, see Note 1314 to our consolidated financial statements in Item 1 of Part I. We believe that any liabilities beyond the amounts already accrued that may result from these contingencies will not have a material adverse effect on our liquidity, financial condition or results of operations.

Critical Accounting Estimates

The preparation of our consolidated financial statements in accordance with GAAP requires us to use estimates and make judgments and assumptions about future events that affect the reported amounts of assets, liabilities, revenue, expenses and the related disclosures. There have been no material changes in the application of our significant accounting policies or critical accounting estimates. Our significant accounting policies are described in Note 1 to our consolidated financial statements in Item 1 of Part I, as well as in Note 1 to our consolidated financial statements in Item 8 of our ~~2015~~2016 Form 10-K. Our critical accounting estimates are described in Item 7 of our ~~2015~~2016 Form 10-K.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

~~There~~During the first quarter of 2017, we executed certain refinancing activities and entered into derivative instruments to manage our debt portfolio. In conjunction with the issuance of $15 of USD-denominated external short-term notes payable in Brazil and €281 of intercompany notes payable by two of our Luxembourg subsidiaries, we executed fixed-to-fixed cross swaps with the same critical terms as the underlying financial instruments. We also designated an existing MXN 1,465 intercompany note payable by USD-functional Dana European Holdings Luxembourg S.à r.l. as a net investment hedge of the equivalent portion of the investment in the operations of Dana de Mexico Corporacion.

During April 2017, we issued $400 of April 2025 Notes through a wholly-owned subsidiary, Dana Financing Luxembourg S.à r.l. In conjunction with the issuance, we executed three fixed-to-fixed cross-currency swaps with the same critical terms as the April 2025 Notes. We used the $394 of proceeds from the April 2025 Notes to repay a portion of the indebtedness of Brevini Fluid Power S.p.A. and Brevini Power Transmission S.p.A., to repay indebtedness of a subsidiary in Brazil and to redeem $100 of our September 2021 Notes. See Notes 12 and 13 to our consolidated financial statements in Item 1 of Part I for additional information.

Other than the refinancing activities described above, there have been no material changes to market risk exposures related to changes in currency exchange rates, interest rates or commodity costs from those discussed in Item 7A of our ~~2015~~2016 Form 10-K.

Item 4. Controls and Procedures

Disclosure controls and procedures — We maintain disclosure controls and procedures that are designed to ensure that the information disclosed in the reports we file with the SEC under the Securities Exchange Act of 1934, as amended (the Exchange Act), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), as appropriate, to allow timely decisions regarding required disclosure.

Our management, with the participation of our CEO and CFO, has evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Report on Form 10-Q. Our CEO and CFO have concluded that, as of the end of the period covered by this Report on Form 10-Q, our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were effective.

Changes in internal control over financial reporting — There was no change in our internal control over financial reporting that occurred during our fiscal quarter ended March 31, ~~2016~~2017 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. During the quarter ended March 31, 2017, we acquired Warren Manufacturing LLC (USM – Warren) and 80% ownership interests in Brevini Fluid Power S.p.A. (BFP) and Brevini Power Transmission S.p.A. (BPT) and are currently integrating USM – Warren, BFP and BPT into our operations, compliance programs and internal control processes. As permitted by SEC guidance, management intends to exclude USM – Warren, BFP and BPT from its assessment of internal controls over financial reporting as of December 31, 2017.

CEO and CFO certifications — The certifications of our CEO and CFO that are attached to this report as Exhibits 31.1 and 31.2 include information about our disclosure controls and procedures and internal control over financial reporting. These

certifications should be read in conjunction with the information contained in this Item 4 and in Item 9A of Part II of our ~~2015~~2016 Form 10-K for a more complete understanding of the matters covered by the certifications.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

We are a party to various pending judicial and administrative proceedings that arose in the ordinary course of business. After reviewing the currently pending lawsuits and proceedings (including the probable outcomes, reasonably anticipated costs and expenses and our established reserves for uninsured liabilities), we do not believe that any liabilities that may result from these proceedings are reasonably likely to have a material adverse effect on our liquidity, financial condition or results of operations. Legal proceedings are also discussed in Note 1314 to our consolidated financial statements in Item 1 of Part I of this Form 10-Q.

Item 1A. Risk Factors

There have been no material changes in our risk factors disclosed in Item 1A of our ~~2015~~2016 Form 10-K.

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

Issuer's purchases of equity securities —- Our Board of Directors approved an expansion of our existing common stock share repurchase program from $1,400 to $1,700 on January 11, 2016. The share repurchase program expires on December 31, 2017. We repurchase shares utilizing available excess cash either in the open market or through privately negotiated transactions. The stock repurchases are subject to prevailing market conditions and other considerations. ~~Under~~During the ~~program, we used cash~~first quarter of ~~$28 to repurchase~~2017, there were no shares of our common stock ~~during~~repurchased under the ~~first quarter~~program. Approximately $219 remained available under the program for future share repurchases as of ~~2016.~~March 31, 2017.

Calendar Month Class or Series of Securities 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
January Common 428,595
$ 11.34
428,595
$ 295
February Common 1,019,482
$ 11.79
1,019,482
$ 283
March Common 816,615
$ 13.08
816,615
$ 272

Item 6. Exhibits

The Exhibits listed in the “Exhibit Index” are filed or furnished with this report.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.



		DANA ~~HOLDING CORPORATION~~INCORPORATED
Date:	~~April 21, 2016~~May 2, 2017	By:	/s/ Jonathan M. Collins
			Jonathan M. Collins
			~~Senior~~Executive Vice President and
			Chief Financial Officer

EXHIBIT INDEX



Exhibit No.	Description

3.1	Certificate of Amendment to the Second Restated Certificate of Incorporation of Dana Holding Corporation, effective as of August 1, 2016. Filed as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed August 1, 2016 and incorporated by reference herein.

3.2	Amended and Restated Bylaws of Dana Incorporated, effective as of August 1, 2016. Filed as Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed August 1, 2016 and incorporated by reference herein.

31.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer. Filed with this Report.

31.2	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer. Filed with this Report.

32	Section 1350 Certifications (pursuant to Section 906 of the Sarbanes-Oxley Act of 2002). Filed with this Report.

101	The following materials from Dana ~~Holding Corporation’s~~Incorporated’s Quarterly Report on Form 10-Q for the quarter ended March 31, ~~2016,~~2017, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Statement of Operations, (ii) the Consolidated Statement of Comprehensive Income, (iii) the Consolidated Balance Sheet, (iv) the Consolidated Statement of Cash Flows and (v) Notes to the Consolidated Financial Statements. Filed with this Report.

4047



	Remainder of 2016		2017		2018		2019		2020
Amortization expense	$	7	$	6	$	3	$	2	$	1



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	%



Calendar Month	Class or Series of Securities	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
January	Common	428,595	$	11.34	428,595	$	295
February	Common	1,019,482	$	11.79	1,019,482	$	283
March	Common	816,615	$	13.08	816,615	$	272