
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, on a joint and several basis, 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 June 30,
(in millions)
	Holdings			AAM Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Elims			Consolidated
2016
Net sales
External	$	—		$	308.4		$	56.7		$	660.3		$	—		$	1,025.4
Intercompany	—			2.8			63.3			4.1			(70.2		)	—
Total net sales	—			311.2			120.0			664.4			(70.2		)	1,025.4
Cost of goods sold	—			291.8			96.9			515.5			(70.2		)	834.0
Gross profit	—			19.4			23.1			148.9			—			191.4
Selling, general and administrative expenses	—			70.2			—			9.7			—			79.9
Operating income (loss)	—			(50.8		)	23.1			139.2			—			111.5
Non-operating income (expense), net	—			(23.5		)	2.5			1.2			—			(19.8		)
Income (loss) before income taxes	—			(74.3		)	25.6			140.4			—			91.7
Income tax expense	—			13.2			0.1			7.4			—			20.7
Earnings (loss) from equity in subsidiaries	71.0			86.3			(11.3		)	—			(146.0		)	—
Net income (loss) before royalties	71.0			(1.2		)	14.2			133.0			(146.0		)	71.0
Royalties	—			72.2			—			(72.2		)	—			—
Net income after royalties	71.0			71.0			14.2			60.8			(146.0		)	71.0
Other comprehensive income (loss), net of tax	(4.4		)	(4.4		)	6.5			0.4			(2.5		)	(4.4		)
Comprehensive income	$	66.6		$	66.6		$	20.7		$	61.2		$	(148.5	)	$	66.6




	Holdings		AAM Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Elims			Consolidated
2015
Net sales
External	$	—	$	298.7		$	56.7		$	648.6		$	—		$	1,004.0
Intercompany	—		2.4			65.9			5.3			(73.6		)	—
Total net sales	—		301.1			122.6			653.9			(73.6		)	1,004.0
Cost of goods sold	—		292.7			99.7			520.7			(73.6		)	839.5
Gross profit	—		8.4			22.9			133.2			—			164.5
Selling, general and administrative expenses	—		60.1			—			10.5			—			70.6
Operating income (loss)	—		(51.7		)	22.9			122.7			—			93.9
Non-operating income (expense), net	—		(25.3		)	2.8			0.1			—			(22.4		)
Income (loss) before income taxes	—		(77.0		)	25.7			122.8			—			71.5
Income tax expense	—		7.5			0.1			5.3			—			12.9
Earnings (loss) from equity in subsidiaries	58.6		81.6			(3.4		)	—			(136.8		)	—
Net income (loss) before royalties	58.6		(2.9		)	22.2			117.5			(136.8		)	58.6
Royalties	—		61.5			—			(61.5		)	—			—
Net income after royalties	58.6		58.6			22.2			56.0			(136.8		)	58.6
Other comprehensive income (loss), net of tax	2.7		2.7			(0.2		)	(0.3		)	(2.2		)	2.7
Comprehensive income	$	61.3	$	61.3		$	22.0		$	55.7		$	(139.0	)	$	61.3



Condensed Consolidating Statements of Income
Six Months Ended June 30,
(in millions)
	Holdings		AAM Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Elims			Consolidated
2016
Net sales
External	$	—	$	591.6		$	111.5		$	1,291.5		$	—		$	1,994.6
Intercompany	—		4.4			123.0			7.8			(135.2		)	—
Total net sales	—		596.0			234.5			1,299.3			(135.2		)	1,994.6
Cost of goods sold	—		568.1			189.4			1,006.9			(135.2		)	1,629.2
Gross profit	—		27.9			45.1			292.4			—			365.4
Selling, general and administrative expenses	—		137.7			—			17.8			—			155.5
Operating income (loss)	—		(109.8		)	45.1			274.6			—			209.9
Non-operating income (expense), net	—		(47.8		)	5.5			0.5			—			(41.8		)
Income (loss) before income taxes	—		(157.6		)	50.6			275.1			—			168.1
Income tax expense	—		21.0			0.2			14.8			—			36.0
Earnings (loss) from equity in subsidiaries	132.1		179.2			(20.9		)	—			(290.4		)	—
Net income before royalties	132.1		0.6			29.5			260.3			(290.4		)	132.1
Royalties	—		131.5			—			(131.5		)	—			—
Net income after royalties	132.1		132.1			29.5			128.8			(290.4		)	132.1
Other comprehensive income, net of tax	18.2		18.2			22.2			20.2			(60.6		)	18.2
Comprehensive income	$	150.3	$	150.3		$	51.7		$	149.0		$	(351.0	)	$	150.3




	Holdings			AAM Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Elims			Consolidated
2015
Net sales
External	$	—		$	573.6		$	113.9		$	1,285.6		$	—		$	1,973.1
Intercompany	—			5.5			130.3			9.9			(145.7		)	—
Total net sales	—			579.1			244.2			1,295.5			(145.7		)	1,973.1
Cost of goods sold	—			563.6			200.3			1,037.6			(145.7		)	1,655.8
Gross profit	—			15.5			43.9			257.9			—			317.3
Selling, general and administrative expenses	—			119.6			—			19.5			—			139.1
Operating income (loss)	—			(104.1		)	43.9			238.4			—			178.2
Non-operating income (expense), net	—			(50.7		)	5.1			1.3			—			(44.3		)
Income (loss) before income taxes	—			(154.8		)	49.0			239.7			—			133.9
Income tax expense (benefit)	—			12.0			(0.3		)	10.4			—			22.1
Earnings (loss) from equity in subsidiaries	111.8			156.5			(9.4		)	—			(258.9		)	—
Net income (loss) before royalties	111.8			(10.3		)	39.9			229.3			(258.9		)	111.8
Royalties	—			122.1			—			(122.1		)	—			—
Net income after royalties	111.8			111.8			39.9			107.2			(258.9		)	111.8
Other comprehensive loss, net of tax	(25.4		)	(25.4		)	(27.2		)	(29.0		)	81.6			(25.4		)
Comprehensive income	$	86.4		$	86.4		$	12.7		$	78.2		$	(177.3	)	$	86.4



Condensed Consolidating Balance Sheets
(in millions)
	Holdings		AAM Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Elims			Consolidated
June 30, 2016
Assets
Current assets
Cash and cash equivalents	$	—	$	169.1	$	—	$	219.3	$	—		$	388.4
Accounts receivable, net	—		159.2		28.2		454.3		—			641.7
Intercompany receivables	—		296.5		297.0		9.1		(602.6		)	—
Inventories, net	—		53.7		28.0		145.2		—			226.9
Prepaid expenses and other	—		24.1		0.4		52.9		—			77.4
Total current assets	—		702.6		353.6		880.8		(602.6		)	1,334.4
Property, plant and equipment, net	—		213.0		95.4		772.3		—			1,080.7
Goodwill	—		—		147.8		6.6		—			154.4
Intercompany notes and accounts receivable	—		346.9		248.7		—		(595.6		)	—
Other assets and deferred charges	—		653.8		42.1		167.3		—			863.2
Investment in subsidiaries	783.3		1,487.6		—		—		(2,270.9		)	—
Total assets	$	783.3	$	3,403.9	$	887.6	$	1,827.0	$	(3,469.1	)	$	3,432.7
Liabilities and Stockholders’ Equity
Current liabilities
Current portion of long-term debt	$	—	$	—	$	—	$	3.4	$	—		$	3.4
Accounts payable	—		146.6		43.5		313.7		—			503.8
Intercompany payables	—		293.9		160.3		148.4		(602.6		)	—
Accrued expenses and other	—		123.0		4.7		117.0		—			244.7
Total current liabilities	—		563.5		208.5		582.5		(602.6		)	751.9
Intercompany notes and accounts payable	325.9		—		26.1		243.6		(595.6		)	—
Long-term debt, net	—		1,337.8		4.3		61.2		—			1,403.3
Investment in subsidiaries obligation	—		—		105.9		—		(105.9		)	—
Other long-term liabilities	—		719.3		0.5		100.3		—			820.1
Total liabilities	325.9		2,620.6		345.3		987.6		(1,304.1		)	2,975.3
Total stockholders’ equity	457.4		783.3		542.3		839.4		(2,165.0		)	457.4
Total liabilities and stockholders’ equity	$	783.3	$	3,403.9	$	887.6	$	1,827.0	$	(3,469.1	)	$	3,432.7




	Holdings		AAM Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Elims			Consolidated
December 31, 2015
Assets
Current assets
Cash and cash equivalents	$	—	$	52.0	$	—	$	230.5	$	—		$	282.5
Accounts receivable, net	—		127.2		19.7		392.2		—			539.1
Intercompany receivables	—		311.8		249.7		9.4		(570.9		)	—
Inventories, net	—		59.8		31.1		139.6		—			230.5
Prepaid expenses and other	—		30.4		0.5		41.2		—			72.1
Total current assets	—		581.2		301.0		812.9		(570.9		)	1,124.2
Property, plant and equipment, net	—		214.1		91.9		740.2		—			1,046.2
Goodwill	—		—		147.8		6.6		—			154.4
Intercompany notes and accounts receivable	—		393.5		252.2		—		(645.7		)	—
Other assets and deferred charges	—		683.6		41.4		152.9		—			877.9
Investment in subsidiaries	622.3		1,315.9		—		—		(1,938.2		)	—
Total assets	$	622.3	$	3,188.3	$	834.3	$	1,712.6	$	(3,154.8	)	$	3,202.7
Liabilities and Stockholders’ Equity
Current liabilities
Current portion of long-term debt	$	—	$	—	$	—	$	3.3	$	—		$	3.3
Accounts payable	—		103.0		35.8		273.9		—			412.7
Intercompany payables	—		248.7		154.9		167.3		(570.9		)	—
Accrued expenses and other	—		134.2		4.1		144.9		—			283.2
Total current liabilities	—		485.9		194.8		589.4		(570.9		)	699.2
Intercompany notes and accounts payable	320.8		10.3		—		314.6		(645.7		)	—
Long-term debt, net	—		1,336.5		4.5		34.7		—			1,375.7
Investment in subsidiaries obligation	—		—		111.7		—		(111.7		)	—
Other long-term liabilities	—		733.3		0.5		92.5		—			826.3
Total liabilities	320.8		2,566.0		311.5		1,031.2		(1,328.3		)	2,901.2
Total stockholders’ equity	301.5		622.3		522.8		681.4		(1,826.5		)	301.5
Total liabilities and stockholders’ equity	$	622.3	$	3,188.3	$	834.3	$	1,712.6	$	(3,154.8	)	$	3,202.7



Condensed Consolidating Statements of Cash Flows
Six Months Ended June 30,
(in millions)
	Holdings			AAM Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Elims			Consolidated
2016
Net cash provided by operating activities	$	—		$	140.2		$	11.6		$	31.7		$	—		$	183.5
Investing activities
Purchases of property, plant and equipment	—			(18.8		)	(9.6		)	(77.3		)	—			(105.7		)
Proceeds from sale of property, plant and equipment	—			—			0.2			0.4			—			0.6
Proceeds from government grants	—			—			—			2.8			—			2.8
Final distribution of Reserve Yield Plus Fund	—			1.0			—			—			—			1.0
Intercompany activity	—			—			(2.0		)	—			2.0			—
Net cash used in investing activities	—			(17.8		)	(11.4		)	(74.1		)	2.0			(101.3		)
Financing activities
Net debt activity	—			(0.4		)	(0.2		)	26.4			—			25.8
Employee stock option exercises	—			0.1			—			—			—			0.1
Purchase of treasury stock	(5.0		)	—			—			—			—			(5.0		)
Intercompany activity	5.0			(5.0		)	—			2.0			(2.0		)	—
Net cash provided by (used in) financing activities	—			(5.3		)	(0.2		)	28.4			(2.0		)	20.9
Effect of exchange rate changes on cash	—			—			—			2.8			—			2.8
Net increase (decrease) in cash and cash equivalents	—			117.1			—			(11.2		)	—			105.9
Cash and cash equivalents at beginning of period	—			52.0			—			230.5			—			282.5
Cash and cash equivalents at end of period	$	—		$	169.1		$	—		$	219.3		$	—		$	388.4




	Holdings			AAM Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Elims			Consolidated
2015
Net cash provided by operating activities	$	—		$	80.7		$	23.1		$	50.5		$	—		$	154.3
Investing activities
Purchases of property, plant and equipment	—			(17.5		)	(4.9		)	(69.0		)	—			(91.4		)
Proceeds from sale of property, plant and equipment	—			0.1			—			—			—			0.1
Intercompany activity	—			—			(18.0		)	—			18.0			—
Net cash used in investing activities	—			(17.4		)	(22.9		)	(69.0		)	18.0			(91.3		)
Financing activities
Net debt activity	—			(3.8		)	(0.2		)	(0.4		)	—			(4.4		)
Employee stock option exercises	—			0.4			—			—			—			0.4
Purchase of treasury stock	(2.7		)	—			—			—			—			(2.7		)
Intercompany activity	2.7			(2.7		)	—			18.0			(18.0		)	—
Net cash provided by (used in) financing activities	—			(6.1		)	(0.2		)	17.6			(18.0		)	(6.7		)
Effect of exchange rate changes on cash	—			—			—			(4.2		)	—			(4.2		)
Net increase (decrease) in cash and cash equivalents	—			57.2			—			(5.1		)	—			52.1
Cash and cash equivalents at beginning of period	—			69.7			—			179.5			—			249.2
Cash and cash equivalents at end of period	$	—		$	126.9		$	—		$	174.4		$	—		$	301.3