
15.	SUPPLEMENTAL GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

Holdings has no significant assets other than its 100% ownership in AAM, Inc. and Metaldyne Performance Group, Inc. (MPG Inc.), and no direct subsidiaries other than AAM, Inc. and MPG Inc. The 7.75% Notes, 6.625% Notes, 6.50% Notes, 6.25% Notes (due 2025), 6.25% Notes (due 2021) 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. and, as of May 17, 2017, MPG Inc, and substantially all domestic subsidiaries of MPG Inc.

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
2017
Net sales
External	$	—	$	260.3		$	560.6	$	936.9		$	—		$	1,757.8
Intercompany	—		1.9			101.9		7.9			(111.7		)	—
Total net sales	—		262.2			662.5		944.8			(111.7		)	1,757.8
Cost of goods sold	—		245.4			580.6		727.1			(111.7		)	1,441.4
Gross profit	—		16.8			81.9		217.7			—			316.4
Selling, general and administrative expenses	—		65.8			21.0		18.8			—			105.6
Amortization of intangible assets	—		1.5			22.7		0.6			—			24.8
Restructuring and acquisition-related costs	—		50.1			—		1.6			—			51.7
Operating income (loss)	—		(100.6		)	38.2		196.7			—			134.3
Non-operating income (expense), net	—		(61.6		)	7.0		(11.0		)	—			(65.6		)
Income (loss) before income taxes	—		(162.2		)	45.2		185.7			—			68.7
Income tax expense (benefit)	—		(30.4		)	15.8		17.0			—			2.4
Earnings from equity in subsidiaries	66.2		81.3			8.2		—			(155.7		)	—
Net income (loss) before royalties	66.2		(50.5		)	37.6		168.7			(155.7		)	66.3
Royalties	—		89.2			1.3		(90.5		)	—			—
Net income after royalties	66.2		38.7			38.9		78.2			(155.7		)	66.3
Net income attributable to noncontrolling interests	—		—			—		(0.1		)	—			(0.1		)
Net income attributable to AAM	$	66.2	$	38.7		$	38.9	$	78.1		$	(155.7	)	$	66.2
Other comprehensive income, net of tax	30.4		11.3			21.6		17.1			(50.0		)	30.4
Comprehensive income attributable to AAM	$	96.6	$	50.0		$	60.5	$	95.2		$	(205.7	)	$	96.6




	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	—			69.0			—			9.7			—			78.7
Amortization of intangible assets	—			1.2			—			—			—			1.2
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
Net income attributable to noncontrolling interests	—			—			—			—			—			—
Net income attributable to AAM	$	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 attributable to AAM	$	66.6		$	66.6		$	20.7		$	61.2		$	(148.5	)	$	66.6



Condensed Consolidating Statements of Income
Six Months Ended June 30,
(in millions)
	Holdings		AAM Inc.			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Elims			Consolidated
2017
Net sales
External	$	—	$	556.9		$	610.8	$	1,640.0		$	—		$	2,807.7
Intercompany	—		2.2			134.7		12.9			(149.8		)	—
Total net sales	—		559.1			745.5		1,652.9			(149.8		)	2,807.7
Cost of goods sold	—		522.6			641.7		1,266.1			(149.8		)	2,280.6
Gross profit	—		36.5			103.8		386.8			—			527.1
Selling, general and administrative expenses	—		138.2			21.0		27.6			—			186.8
Amortization of intangible assets	—		2.8			22.7		0.9			—			26.4
Restructuring and acquisition-related costs	—		65.4			—		2.3						67.7
Operating income (loss)	—		(169.9		)	60.1		356.0			—			246.2
Non-operating income (expense), net	—		(87.9		)	9.4		(13.1		)	—			(91.6		)
Income (loss) before income taxes	—		(257.8		)	69.5		342.9			—			154.6
Income tax expense (benefit)	—		(33.2		)	24.2		18.9			—			9.9
Earnings from equity in subsidiaries	144.6		173.0			15.9		—			(333.5		)	—
Net income (loss) before royalties	144.6		(51.6		)	61.2		324.0			(333.5		)	144.7
Royalties	—		168.7			1.3		(170.0		)	—			—
Net income after royalties	144.6		117.1			62.5		154.0			(333.5		)	144.7
Net income attributable to noncontrolling interests	—		—			—		(0.1		)	—			(0.1		)
Net income attributable to AAM	$	144.6	$	117.1		$	62.5	$	153.9		$	(333.5	)	$	144.6
Other comprehensive income, net of tax	57.5		38.6			32.1		43.5			(114.2		)	57.5
Comprehensive income attributable to AAM	$	202.1	$	155.7		$	94.6	$	197.4		$	(447.7	)	$	202.1




	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	—		135.5			—			17.7			—			153.2
Amortization of intangible assets	—		2.2			—			0.1			—			2.3
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
Net income attributable to noncontrolling interests	—		—			—			—			—			—
Net income attributable to AAM	$	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 attributable to AAM	$	150.3	$	150.3		$	51.7		$	149.0		$	(351.0	)	$	150.3



Condensed Consolidating Balance Sheets
(in millions)
	Holdings		AAM Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Elims/Reclassifications			Consolidated
June 30, 2017
Assets
Current assets
Cash and cash equivalents	$	—	$	159.5	$	0.1	$	331.0	$	—		$	490.6
Accounts receivable, net	—		155.8		325.5		644.8		—			1,126.1
Intercompany receivables	—		3,979.8		342.2		8.7		(4,330.7		)	—
Inventories, net	—		34.5		145.9		204.1		—			384.5
Prepaid expenses and other	—		26.8		19.1		97.0		—			142.9
Total current assets	—		4,356.4		832.8		1,285.6		(4,330.7		)	2,144.1
Property, plant and equipment, net	—		222.3		786.0		1,201.0		—			2,209.3
Goodwill	—		—		1,204.7		406.1		—			1,610.8
Intangible assets, net	—		22.2		1,221.9		37.0		—			1,281.1
Intercompany notes and accounts receivable	231.8		—		275.8		—		(507.6		)	—
Other assets and deferred charges	—		689.5		131.8		187.5		(364.3		)	644.5
Investment in subsidiaries	1,065.3		1,797.3		331.7		—		(3,194.3		)	—
Total assets	$	1,297.1	$	7,087.7	$	4,784.7	$	3,117.2	$	(8,396.9	)	$	7,889.8
Liabilities and Stockholders’ Equity
Current liabilities
Current portion of long-term debt	$	—	$	—	$	0.1	$	5.1	$	—		$	5.2
Accounts payable	—		142.6		239.7		458.3		—			840.6
Intercompany payables	—		661.7		3,446.0		223.0		(4,330.7		)	—
Accrued expenses and other	—		150.7		73.5		157.2		—			381.4
Total current liabilities	—		955.0		3,759.3		843.6		(4,330.7		)	1,227.2
Intercompany notes and accounts payable	—		265.7		—		241.9		(507.6		)	—
Long-term debt, net	—		4,098.5		4.8		70.3		—			4,173.6
Other long-term liabilities	—		753.1		629.4		173.7		(364.3		)	1,191.9
Total liabilities	—		6,072.3		4,393.5		1,329.5		(5,202.6		)	6,592.7
Total AAM Stockholders’ equity	1,293.4		1,015.4		391.2		1,784.0		(3,190.6		)	1,293.4
Noncontrolling interests in subsidiaries	3.7		—		—		3.7		(3.7		)	3.7
Total stockholders’ equity	1,297.1		1,015.4		391.2		1,787.7		(3,194.3		)	1,297.1
Total liabilities and stockholders’ equity	$	1,297.1	$	7,087.7	$	4,784.7	$	3,117.2	$	(8,396.9	)	$	7,889.8




	Holdings		AAM Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Elims			Consolidated
December 31, 2016
Assets
Current assets
Cash and cash equivalents	$	—	$	84.3	$	1.6	$	395.3	$	—		$	481.2
Accounts receivable, net	—		126.7		21.9		411.4		—			560.0
Intercompany receivables	—		442.6		326.0		9.1		(777.7		)	—
Inventories, net	—		31.3		21.5		129.5		—			182.3
Prepaid expenses and other	—		29.4		0.5		45.9		—			75.8
Total current assets	—		714.3		371.5		991.2		(777.7		)	1,299.3
Property, plant and equipment, net	—		213.7		102.9		777.1		—			1,093.7
Goodwill	—		—		147.8		6.2		—			154.0
Intangible assets, net	—		22.8		—		5.7		—			28.5
Intercompany notes and accounts receivable	—		343.9		242.2		—		(586.1		)	—
Other assets and deferred charges	—		644.9		39.8		163.7		—			848.4
Investment in subsidiaries	827.6		1,544.4		—		—		(2,372.0		)	—
Total assets	$	827.6	$	3,484.0	$	904.2	$	1,943.9	$	(3,735.8	)	$	3,423.9
Liabilities and Stockholders’ Equity
Current liabilities
Current portion of long-term debt	$	—	$	—	$	—	$	3.3	$	—		$	3.3
Accounts payable	—		80.6		35.8		265.9		—			382.3
Intercompany payables	—		324.8		153.4		299.5		(777.7		)	—
Accrued expenses and other	—		142.2		4.3		119.4		—			265.9
Total current liabilities	—		547.6		193.5		688.1		(777.7		)	651.5
Intercompany notes and accounts payable	321.8		14.6		7.5		242.2		(586.1		)	—
Long-term debt, net	—		1,339.7		4.1		57.1		—			1,400.9
Investment in subsidiaries obligation	—		—		124.7		—		(124.7		)	—
Other long-term liabilities	—		754.5		0.6		110.6		—			865.7
Total liabilities	321.8		2,656.4		330.4		1,098.0		(1,488.5		)	2,918.1
Total stockholders’ equity	505.8		827.6		573.8		845.9		(2,247.3		)	505.8
Total liabilities and stockholders’ equity	$	827.6	$	3,484.0	$	904.2	$	1,943.9	$	(3,735.8	)	$	3,423.9



Condensed Consolidating Statements of Cash Flows
Six Months Ended June 30,
(in millions)
	Holdings			AAM Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Elims		Consolidated
2017
Net cash provided by (used in) operating activities	$	—		$	222.8		$	(25.2	)	$	15.6		$	—	$	213.2
Investing activities
Purchases of property, plant and equipment	—			(28.4		)	(39.2		)	(71.0		)	—		(138.6		)
Proceeds from sale of property, plant and equipment	—			0.3			0.1			1.1			—		1.5
Purchase buyouts of leased equipment	—			(8.4		)	—			—			—		(8.4		)
Proceeds from sale of business, net	—			7.5			(1.6		)	—			—		5.9
Acquisition of business, net of cash acquired	—			(953.5		)	64.6			(6.6		)	—		(895.5		)
Net cash provided by (used in) investing activities	—			(982.5		)	23.9			(76.5		)	—		(1,035.1		)
Financing activities
Net debt activity	—			931.4			(0.2		)	(10.8		)	—		920.4
Debt issuance costs	—			(90.5		)	—			—			—		(90.5		)
Employee stock option exercises	—			0.9			—			—			—		0.9
Purchase of treasury stock	(6.9		)	—			—			—			—		(6.9		)
Intercompany activity	6.9			(6.9		)	—			—			—		—
Net cash provided by (used in) financing activities	—			834.9			(0.2		)	(10.8		)	—		823.9
Effect of exchange rate changes on cash	—			—			—			7.4			—		7.4
Net increase (decrease) in cash and cash equivalents	—			75.2			(1.5		)	(64.3		)	—		9.4
Cash and cash equivalents at beginning of period	—			84.3			1.6			395.3			—		481.2
Cash and cash equivalents at end of period	$	—		$	159.5		$	0.1		$	331.0		$	—	$	490.6




	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