11. SUPPLEMENTAL GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

Holdings has no significant assets other than its 100% ownership in AAM, Inc. and no direct subsidiaries other than AAM, Inc. The 7.75% Notes, 6.625% Notes, 6.25% Notes and 5.125% Notes are senior unsecured obligations of AAM Inc.; all of which are fully and unconditionally guaranteed by Holdings and substantially all domestic subsidiaries of AAM, Inc, which are 100% indirectly owned by Holdings.

These Condensed Consolidating Financial Statements are prepared under the equity method of accounting whereby the investments in subsidiaries are recorded at cost and adjusted for the parent’s share of the subsidiaries’ cumulative results of operations, capital contributions and distributions, and other equity changes.



Condensed Consolidating Statements of Income
Three Months Ended September 30,
(in millions)
	Holdings			AAM Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Elims			Consolidated
2014
Net sales
External	$	—		$	300.9		$	56.9		$	593.0		$	—		$	950.8
Intercompany	—			2.7			64.1			5.3			(72.1		)	—
Total net sales	—			303.6			121.0			598.3			(72.1		)	950.8
Cost of goods sold	—			291.9			100.5			481.4			(72.1		)	801.7
Gross profit	—			11.7			20.5			116.9			—			149.1
Selling, general and administrative expenses	—			55.0			—			9.0			—			64.0
Operating income (loss)	—			(43.3		)	20.5			107.9			—			85.1
Non-operating income (expense), net	—			(25.8		)	2.0			(1.4		)	—			(25.2		)
Income (loss) before income taxes	—			(69.1		)	22.5			106.5			—			59.9
Income tax expense	—			6.6			0.1			4.6			—			11.3
Earnings (loss) from equity in subsidiaries	48.6			68.5			(9.1		)	—			(108.0		)	—
Net income (loss) before royalties and dividends	48.6			(7.2		)	13.3			101.9			(108.0		)	48.6
Royalties and dividends	—			55.8			—			(55.8		)	—			—
Net income after royalties and dividends	48.6			48.6			13.3			46.1			(108.0		)	48.6
Other comprehensive loss	(25.2		)	(25.2		)	(19.0		)	(22.2		)	66.4			(25.2		)
Comprehensive income (loss)	$	23.4		$	23.4		$	(5.7	)	$	23.9		$	(41.6	)	$	23.4




	Holdings		AAM Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Elims			Consolidated
2013
Net sales
External	$	—	$	162.6		$	57.8		$	600.4		$	—		$	820.8
Intercompany	—		5.0			55.2			1.7			(61.9		)	—
Total net sales	—		167.6			113.0			602.1			(61.9		)	820.8
Cost of goods sold	—		170.1			97.2			490.1			(61.9		)	695.5
Gross profit (loss)	—		(2.5		)	15.8			112.0			—			125.3
Selling, general and administrative expenses	—		48.1			—			9.7			—			57.8
Operating income (loss)	—		(50.6		)	15.8			102.3			—			67.5
Non-operating income (expense), net	—		(30.6		)	2.5			(1.7		)	—			(29.8		)
Income (loss) before income taxes	—		(81.2		)	18.3			100.6			—			37.7
Income tax expense	—		0.9			—			5.2			—			6.1
Earnings (loss) from equity in subsidiaries	31.6		50.7			(1.5		)	—			(80.8		)	—
Net income (loss) before royalties and dividends	31.6		(31.4		)	16.8			95.4			(80.8		)	31.6
Royalties and dividends	—		63.0			—			(63.0		)	—			—
Net income after royalties and dividends	31.6		31.6			16.8			32.4			(80.8		)	31.6
Other comprehensive income (loss)	17.0		17.0			(0.8		)	(1.7		)	(14.5		)	17.0
Comprehensive income	$	48.6	$	48.6		$	16.0		$	30.7		$	(95.3	)	$	48.6



Condensed Consolidating Statements of Income
Nine Months Ended September 30,
(in millions)
	Holdings			AAM Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Elims			Consolidated
2014
Net sales
External	$	—		$	826.8		$	174.0		$	1,755.7		$	—		$	2,756.5
Intercompany	—			8.5			184.7			17.3			(210.5		)	—
Total net sales	—			835.3			358.7			1,773.0			(210.5		)	2,756.5
Cost of goods sold	—			812.3			303.0			1,431.7			(210.5		)	2,336.5
Gross profit	—			23.0			55.7			341.3			—			420.0
Selling, general and administrative expenses	—			155.6			0.1			26.9			—			182.6
Operating income (loss)	—			(132.6		)	55.6			314.4			—			237.4
Non-operating income (expense), net	—			(77.5		)	7.2			(3.1		)	—			(73.4		)
Income (loss) before income taxes	—			(210.1		)	62.8			311.3			—			164.0
Income tax expense	—			13.4			0.3			15.9			—			29.6
Earnings (loss) from equity in subsidiaries	134.4			191.3			(25.1		)	—			(300.6		)	—
Net income (loss) before royalties and dividends	134.4			(32.2		)	37.4			295.4			(300.6		)	134.4
Royalties and dividends	—			166.6			—			(166.6		)	—			—
Net income after royalties and dividends	134.4			134.4			37.4			128.8			(300.6		)	134.4
Other comprehensive income (loss)	(6.7		)	(6.7		)	(7.9		)	(10.7		)	25.3			(6.7		)
Comprehensive income	$	127.7		$	127.7		$	29.5		$	118.1		$	(275.3	)	$	127.7




	Holdings			AAM Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Elims			Consolidated
2013
Net sales
External	$	—		$	574.2		$	170.5		$	1,631.3		$	—		$	2,376.0
Intercompany	—			13.0			169.1			9.0			(191.1		)	—
Total net sales	—			587.2			339.6			1,640.3			(191.1		)	2,376.0
Cost of goods sold	—			566.3			293.3			1,355.7			(191.1		)	2,024.2
Gross profit	—			20.9			46.3			284.6			—			351.8
Selling, general and administrative expenses	—			149.3			—			28.6			—			177.9
Operating income (loss)	—			(128.4		)	46.3			256.0			—			173.9
Non-operating income (expense), net	—			(101.4		)	7.9			(6.6		)	—			(100.1		)
Income (loss) before income taxes	—			(229.8		)	54.2			249.4			—			73.8
Income tax expense (benefit)	—			(13.0		)	—			22.1			—			9.1
Earnings (loss) from equity in subsidiaries	64.7			115.6			(14.4		)	—			(165.9		)	—
Net income (loss) before royalties and dividends	64.7			(101.2		)	39.8			227.3			(165.9		)	64.7
Royalties and dividends	—			165.9			—			(165.9		)	—			—
Net income after royalties and dividends	64.7			64.7			39.8			61.4			(165.9		)	64.7
Other comprehensive loss	(0.8		)	(0.8		)	(14.4		)	(17.8		)	33.0			(0.8		)
Comprehensive income	$	63.9		$	63.9		$	25.4		$	43.6		$	(132.9	)	$	63.9



Condensed Consolidating Balance Sheets
(in millions)
	Holdings		AAM Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Elims			Consolidated
September 30, 2014
Assets
Current assets
Cash and cash equivalents	$	—	$	39.2	$	—	$	179.8	$	—		$	219.0
Accounts receivable, net	—		164.3		28.6		407.3		—			600.2
Intercompany receivables	—		170.9		164.0		10.1		(345.0		)	—
Inventories, net	—		62.3		32.1		154.8		—			249.2
Other current assets	—		39.9		3.0		65.6		—			108.5
Total current assets	—		476.6		227.7		817.6		(345.0		)	1,176.9
Property, plant and equipment, net	—		227.0		86.5		753.2		—			1,066.7
Goodwill	—		—		147.9		7.7		—			155.6
Intercompany notes and accounts receivable	—		327.3		216.8		—		(544.1		)	—
Other assets and deferred charges	—		665.0		45.8		115.6		—			826.4
Investment in subsidiaries	492.7		1,399.1		—		—		(1,891.8		)	—
Total assets	$	492.7	$	3,095.0	$	724.7	$	1,694.1	$	(2,780.9	)	$	3,225.6
Liabilities and stockholders’ equity
Current liabilities
Current portion of long-term debt	$	—	$	8.4	$	—	$	8.7	$	—		$	17.1
Accounts payable	—		156.0		47.3		293.0		—			496.3
Intercompany payables	—		153.7		127.5		59.9		(341.1		)	$	—
Other current liabilities	—		117.4		5.4		102.3		—			225.1
Total current liabilities	—		435.5		180.2		463.9		(341.1		)	738.5
Intercompany notes and accounts payable	323.4		3.9		—		220.7		(548.0		)	—
Long-term debt	—		1,485.9		5.0		34.6		—			1,525.5
Investment in subsidiaries obligation	—		—		34.4		—		(34.4		)	—
Other long-term liabilities	—		677.0		0.6		114.7		—			792.3
Total liabilities	323.4		2,602.3		220.2		833.9		(923.5		)	3,056.3
Total stockholders’ equity	169.3		492.7		504.5		860.2		(1,857.4		)	169.3
Total liabilities and stockholders’ equity	$	492.7	$	3,095.0	$	724.7	$	1,694.1	$	(2,780.9	)	$	3,225.6




	Holdings		AAM Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Elims			Consolidated
December 31, 2013
Assets
Current assets
Cash and cash equivalents	$	—	$	36.9		$	—		$	117.1	$	—		$	154.0
Accounts receivable, net	—		102.7			25.6			330.2		—			458.5
Inventories, net	—		62.4			34.2			165.2		—			261.8
Other current assets	—		43.8			3.2			76.5		—			123.5
Total current assets	—		245.8			63.0			689.0		—			997.8
Property, plant and equipment, net	—		239.8			83.0			735.7		—			1,058.5
Goodwill	—		—			147.8			8.6		—			156.4
Other assets and deferred charges	—		671.7			44.8			99.8		—			816.3
Investment in subsidiaries	360.5		1,233.2			—			—		(1,593.7		)	—
Total assets	$	360.5	$	2,390.5		$	338.6		$	1,533.1	$	(1,593.7	)	$	3,029.0
Liabilities and stockholders’ equity
Current liabilities
Accounts payable	$	—	$	106.2		$	44.5		$	295.1	$	—		$	445.8
Other current liabilities	—		120.4			4.1			96.8		—			221.3
Total current liabilities	—		226.6			48.6			391.9		—			667.1
Intercompany payable (receivable)	326.9		(390.1		)	(219.5		)	282.7		—			—
Long-term debt	—		1,500.0			5.3			53.8		—			1,559.1
Investment in subsidiaries obligation	—		—			15.2			—		(15.2		)	—
Other long-term liabilities	—		693.5			0.5			75.2		—			769.2
Total liabilities	326.9		2,030.0			(149.9		)	803.6		(15.2		)	2,995.4
Total stockholders’ equity	33.6		360.5			488.5			729.5		(1,578.5		)	33.6
Total liabilities and stockholders’ equity	$	360.5	$	2,390.5		$	338.6		$	1,533.1	$	(1,593.7	)	$	3,029.0



Condensed Consolidating Statements of Cash Flows
Nine Months Ended September 30,
(in millions)
	Holdings			AAM Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Elims			Consolidated
2014
Net cash provided by (used in) operating activities	$	(0.1	)	$	32.6		$	33.1		$	166.0		$	—		$	231.6
Investing activities
Purchases of property, plant and equipment	—			(32.7		)	(13.7		)	(109.8		)	—			(156.2		)
Proceeds from sale of property, plant and equipment	—			7.8			0.2			0.5			—			8.5
Intercompany activity	—			—			(19.3		)	—			19.3			—
Net cash used in investing activities	—			(24.9		)	(32.8		)	(109.3		)	19.3			(147.7		)
Financing activities
Net debt activity	—			(5.9		)	(0.3		)	(10.5		)	—			(16.7		)
Debt issuance costs	—			(0.3		)	—			—			—			(0.3		)
Employee stock option exercises	—			1.2			—			—			—			1.2
Purchase of treasury stock	(0.3		)	—			—			—			—			(0.3		)
Intercompany activity	0.4			(0.4		)	—			19.3			(19.3		)	—
Net cash provided by (used in) financing activities	0.1			(5.4		)	(0.3		)	8.8			(19.3		)	(16.1		)
Effect of exchange rate changes on cash	—			—			—			(2.8		)	—			(2.8		)
Net increase in cash and cash equivalents	—			2.3			—			62.7			—			65.0
Cash and cash equivalents at beginning of period	—			36.9			—			117.1			—			154.0
Cash and cash equivalents at end of period	$	—		$	39.2		$	—		$	179.8		$	—		$	219.0




	Holdings			AAM Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Elims		Consolidated
2013
Net cash provided by (used in) operating activities	$	—		$	(52.6	)	$	67.7		$	87.2		$	—	$	102.3
Investing activities
Purchases of property, plant and equipment	—			(43.6		)	(7.0		)	(127.6		)	—		(178.2		)
Proceeds from sale of property, plant and equipment	—			4.9			0.5			0.4			—		5.8
Proceeds from sale -leaseback of equipment	—			23.5			—			—			—		23.5
Net cash used in investing activities	—			(15.2		)	(6.5		)	(127.2		)	—		(148.9		)
Financing activities
Net debt activity	—			97.0			(0.2		)	19.0			—		115.8
Intercompany activity	0.4			(2.6		)	(61.0		)	63.2			—		—
Debt issuance costs	—			(12.9		)	—			—			—		(12.9		)
Employee stock option exercises	—			0.8			—			—			—		0.8
Purchase of treasury stock	(0.4		)	—			—			—			—		(0.4		)
Net cash provided by (used in) financing activities	—			82.3			(61.2		)	82.2			—		103.3
Effect of exchange rate changes on cash	—			—			—			(0.5		)	—		(0.5		)
Net increase in cash and cash equivalents	—			14.5			—			41.7			—		56.2
Cash and cash equivalents at beginning of period	—			10.6			—			51.8			—		62.4
Cash and cash equivalents at end of period	$	—		$	25.1		$	—		$	93.5		$	—	$	118.6