EX-99.1 2 ss26311_ex9901.htm PRESENTATION

     Delivering POWER
    Deutsche Bank Global AUTO Industry Conference
    January 11, 2017

     Forward Looking Statements

    Some of the information presented in this document and
    discussions that follow, including, without limitation,
    statements with respect to the proposed acquisition of
    Metaldyne Performance Group, Inc ("MPG") and the anticipated
    consequences and benefits of the acquisition, the targeted
    close date for the acquisition, product development, market
    trends, price, expected growth and earnings, cash flow
    generation, costs and cost synergies, portfolio
    diversification, economic trends, outlook and all other
    information relating to matters that are not historical
    facts may constitute forward-looking statements within the
    meaning of the Private Securities Litigation Reform Act of
    1995. There can be no assurance that actual results will not
    differ materially. Factors that could cause actual results
    to differ materially include, without limitation: the
    receipt and timing of necessary regulatory approvals; the
    ability to finance the acquisition; the ability to
    successfully operate and integrate MPG's operations and
    realize estimated synergies; reduced purchases of our
    products by General Motors Company (GM), FCA US LLC (FCA),
    or other customers; reduced demand for our customers'
    products (particularly light trucks and sport utility
    vehicles (SUVs) produced by GM and FCA); our ability to
    develop and produce new products that reflect market demand;
    lower-than-anticipated market acceptance of new or existing
    products; our ability to respond to changes in technology,
    increased competition or pricing pressures; our ability to
    attract new customers and programs for new products; our
    ability to achieve the level of cost reductions required to
    sustain global cost competitiveness; supply shortages or
    price increases in raw materials, utilities or other
    operating supplies for us or our customers as a result of
    natural disasters or otherwise; liabilities arising from
    warranty claims, product recall or field actions, product
    liability and legal proceedings to which we are or may
    become a party, or the impact of product recall or field
    actions on our customers; our ability or our customers' and
    suppliers' ability to successfully launch new product
    programs on a timely basis; our ability to realize the
    expected revenues from our new and incremental business
    backlog; risks inherent in our international operations
    (including adverse changes in political stability, taxes and
    other law changes, potential disruptions of production and
    supply, tariff and trade restrictions and currency rate
    fluctuations, including those resulting from the United
    Kingdom's vote to exit the European Union and the change in
    the presidential administration in the United States);
    negative or unexpected tax consequences; our ability to
    consummate and integrate acquisitions and joint ventures;
    global economic conditions; our ability to maintain
    satisfactory labor relations and avoid work stoppages; our
    suppliers', our customers' and their suppliers' ability to
    maintain satisfactory labor relations and avoid work
    stoppages; price volatility in, or reduced availability of,
    fuel; our ability to protect our intellectual property and
    successfully defend against assertions made against us; our
    ability to successfully maintain the security of, and
    integrate MPG's, information technology networks and
    systems; our ability to attract and retain key associates;
    availability of financing for working capital, capital
    expenditures, research and development (RandD) or other
    general corporate purposes including acquisitions, as well
    as our ability to comply with financial covenants; our
    customers' and suppliers' availability of financing for
    working capital, capital expenditures, RandD or other
    general corporate purposes; changes in liabilities arising
    from pension and other postretirement benefit obligations;
    risks of noncompliance with environmental laws and
    regulations or risks of environmental issues that could
    result in unforeseen costs at our facilities; adverse
    changes in laws,
    government regulations or market conditions affecting our
    products or our customers' products (such as the Corporate
    Average Fuel Economy (CAFE) regulations); our ability or our
    customers' and suppliers' ability to comply with the
    Dodd-Frank Act and other regulatory requirements and the
    potential costs of such compliance; and the other factors
    detailed from time to time in the reports we file with the
    Securities and Exchange Commission ("SEC"), including those
    described under "Risk Factors" in our Annual Report on Form
    10-K and our Quarterly Reports on Form 10-Q. These
    forward-looking statements speak only as of the date of this
    communication. We expressly disclaim any obligation or
    undertaking to disseminate any updates or revisions to any
    forward-looking statement contained herein to reflect any
    change in our expectations with regard thereto or any change
    in events, conditions or circumstances on which any such
    statement is based. Information with respect to MPG,
    including non-GAAP information is taken or derived from
    MPG's public filings and management estimates and we take no
    responsibility for the accuracy or completeness of such
    information. It should be noted that this presentation
    contains certain financial measures, including Adjusted
    EBITDA and Adjusted free cash flow, that are not required
    by, or presented in accordance with, accounting principles
    generally accepted in the United States, or GAAP. These
    measures are presented here to provide additional useful
    measurements to review our operations, provide transparency
    to investors and enable period-to-period comparability of
    financial performance. A description of non-GAAP financial
    measures that we use to evaluate our operations and
    financial performance, and reconciliation of these non-GAAP
    financial measures to the most directly comparable financial
    measures calculated and reported in accordance with GAAP,
    can be found starting on slide 33 under "Reconciliation of
    Non-GAAP Measures".

    2

    Other Information

    Important Information for Stockholders and Investors
    This presentation is provided for informational purposes
    only and is neither an offer to purchase nor a solicitation
    of an offer to sell shares of AAM or MPG. In connection with
    the proposed acquisition of MPG, AAM has filed with the SEC
    a Registration Statement on Form S-4 (the "Registration
    Statement"), which includes the preliminary joint proxy
    statement/prospectus of AAM and MPG and which also
    constitutes a preliminary prospectus of AAM. The information
    in the preliminary joint proxy statement/prospectus is not
    complete and may be changed. The definitive joint proxy
    statement/prospectus will be mailed to stockholders of AAM
    and MPG after the Registration Statement is declared
    effective by the SEC. Investors are urged to read the
    Registration Statement and joint proxy statement/prospectus
    (including any amendments or supplements thereto) and other
    documents filed by AAM and MPG with the SEC in connection
    with the proposed acquisition, as these documents contain
    (or will contain) important information. Those documents, as
    well as AAM's and MPG's other public filings with the SEC,
    may be obtained without charge at the SEC's website at
    www.sec.gov. Investors may also obtain a free copy of the
    Registration Statement and joint proxy statement/prospectus
    and the filings with the SEC that are incorporated by
    reference in the Registration Statement and joint proxy
    statement/prospectus by directing a request to AAM at
    www.aam.com. Participants in Solicitation

    AAM, MPG and their respective directors, executive officers
    and other members of their management and employees may be
    deemed to be participants in a solicitation of proxies from
    their respective stockholders in connection with the
    proposed transaction. Information regarding AAM's directors
    and executive officers is available in AAM's proxy statement
    for its 2016 annual meeting of stockholders, which was filed
    with the SEC on March 24, 2016. Information regarding MPG's
    directors and executive officers is available in MPG's proxy
    statement for its 2016 annual meeting of stockholders, which
    was filed with the SEC on April 11, 2016. Other information
    regarding the participants in the proxy solicitation and a
    description of their direct and indirect interests, by
    security holdings or otherwise, is contained in the
    Registration Statement and joint proxy statement/prospectus
    (or will be contained in any amendments or supplements
    thereto) and other relevant materials filed with the SEC.
    These documents can be obtained free of charge from the
    sources indicated above.

    Agenda

    2016 AAM Highlights
    2017 AAM Targets
    AAM's 2017 - 2019 New Business Backlog
    Technology Leadership
    Acquisition of MPG
    Agenda
    4

    2016 AAM Highlights
    AAM Financial Records
    Improved Net Leverage
    Net Sales = $3.95B
    Adjusted EBITDA* Over $600M
    Strong Cash Flow Generation
    Net Debt* /Adj. EBITDA = 1.5x
    EW BUSINESS AWARDS for 2016
    SUCCESSFUL LAUNCHES IN 2016

    * For definitions of terms, please see the attached
    appendix. 5

    2016 AAM Financial Estimates

    2016 Estimates
    Net Sales
    = $3.95B
    Adjusted EBITDA* margin
    = 15.5% - 15.75%
    Adjusted Free Cash Flow*
    = $190M - $200M

    Record sales and profit in 2016
    Adjusted free cash flow includes the impact of = $30 million
    of payments related to Mexican transfer pricing matters and
    a $20 million customer collection related to an upcoming
    capacity increase requirement.

    * For definitions of terms, please see the attached
    appendix. Adjusted EBITDA and Adjusted Free Cash Flow
    exclude the impact of special charges and expenses for
    restructuring and acquisition related activities.

    6

    2017 AAM Financial Targets

    2017 Targets
     US SAAR
    = 17.5M units
     Net Sales
    = $4.1B - $4.2B
     Adjusted EBITDA* Margin
    = 15.5% - 16.0%
     Adjusted Free Cash Flow*
    = $175M - $200M
     Capital Expenditures
    = 6.5% - 7% of sales

    Adjusted EBITDA margin and Adjusted free cash flow targets
    include the expected benefits from restructuring actions and
    exclude the impact of special charges and expenses for
    restructuring and acquisition related activities.

    Increased capital expenditures in 2017 will support our new
    and incremental business backlog, including a capacity
    increase program, as well as future replacement program
    launches.

    * For definitions of terms, please see the attached
    appendix. Adjusted EBITDA and Adjusted Free Cash Flow
    exclude the impact of special charges and expenses for
    restructuring and acquisition related activities.

    7

    AAM's New and Incremental Business Backlog

    $875 MILLION: 2017-2019

    Presented on a gross basis as of January 11, 2017
    Backlog by Vehicle Segment
    [CATEGORY NAME]
    [VALUE]
    [CATEGORY NAME]
    [VALUE]
    [CATEGORY NAME]
    [VALUE]
    [CATEGORY NAME]
    [VALUE]

    Backlog by Global Market
    [CATEGORY NAME]
    24%
    [CATEGORY NAME]
    [VALUE]
    [CATEGORY NAME]
    [VALUE]
    [CATEGORY NAME]
    [VALUE]
    Approximately 60% relates to Non-GM business
    8

    Backlog and Impact of GM's Sourcing Decision
    $375
    $250
    ($175)
    $250
    ($275)
    $425
    2017
    2018
    2019
    2017-2019
    Dollars in Millions
    AAM's gross new business backlog
    Estimated sales impact to AAM of GM's Next-Gen full-size
    truck sourcing
    New business backlog, net of GM sourcing impact, for
    2017 - 2019
    New business awards exceed the impact of GM's sourcing
    decision through the backlog period Note: The estimated
    timing impact of GM's sourcing decision does not contemplate
    any potential future capacity increases or program
    extensions; the chart above does not include an additional
    estimated sales impact in 2020.

    9

    US SAAR and NA Production Assumptions

    17.5
    17.4
    17.6
    18.0
    2017E
    17.5
    17.6
    18.0
    18.1
    2018E
    17.5
    17.5
    18.4
    19.0
    2019E

    AAM US SAAR Projections
    I.H.S. US SAAR
    I.H.S NA LV Productions
    Q4 PwC Autofacts NA LV Production

    AAM assumes US SAAR to be approximately 17.5 million units
    over the next three years I.H.S / PwC Autofacts estimate an
    increase in North American production due to growing exports
    AAM also assumes a moderate recovery in the commercial
    vehicle and industrial markets during this time period.

    IHS forecast as of January 6, 2017
    10

    North America Light Vehicle Production Mix

    2010
    57%
    43%
    2015
    60%
    40%
    2020
    64%
    36%
    Trucks/SUV/CUV/Vans
    Passenger Car

    Continued strength in pickup trucks/SUVs and increasing
    demand for crossover vehicles is favorable for AAM

    IHS Forecasts as of January 6, 2017
    11

    TECHNOLOGY LEADERSHIP

    12

    Technology Leadership

    GREEN and EFFICIENT
    LIGHTWEIGHT AND EFFICIENT
    QUANTUM(TM) lightweight axles and drive units
    New component manufacturing processes
    Advanced materials
    Lube flow improvements
    Power density

    SAFETY and PERFORMANCE
    AWD TECHNOLOGIES
    EcoTrac(R) disconnecting AWD system
    e-AAMTM electric driveline solutions

    DRIVESHAFTS
    SylentTM driveshaft technologies and NVH system integration
    Tunable crash features

    CONNECTIVITY and ELECTRIFICATION
    MECHATRONICS and VEHICLE CONTROLS
    Hybrid and full electric drivelines
    Actuators and sensors
    Electronic LSD front- drive axles
    Integrated wheel torque distribution controls
    Fully integrated vehicle controls

    Aligned with global automotive trends
    13

    Powertrain Projections

    Millions
    Global
    100
    80
    60
    40
    20
    0
    ICE 106M
    2015
    2016
    2017
    2018
    2019
    2020
    2021
    2022
    2023
    2024
    2025
    2026
    2027
    2028

    Millions
    North America
    15
    10
    5
    0
    ICE 18M
    2015
    2016
    2017
    2018
    2019
    2020
    2021
    2022
    2023
    2024
    2025
    2026
    2027
    2028

    Millions
    Greater China
    35
    30
    25
    20
    15
    10
    5
    0
    ICE 32M
    2015
    2016
    2017
    2018
    2019
    2020
    2021
    2022
    2023
    2024
    2025
    2026
    2027
    2028

    Millions
    Europe
    25
    20
    15
    10
    5
    0
    ICE 22M
    2015
    2016
    2017
    2018
    2019
    2020
    2021
    2022
    2023
    2024
    2025
    2026
    2027
    2028

    Electric
    Hybrid-Mild
    Hybrid-Full
    ICE

    For at least the next decade, the internal combustion engine
    (ICE) is expected to be the main source of power for
    vehicles

    IHS Production Forecasts as of January 6, 2017
    14

    EcoTrac(R) Disconnecting AWD Systems

    EcoTrac(R) - utilizes electronics and connectivity to
    improve Fuel Economy, Safety, and Performance

    KEY ATTRIBUTES
    Advanced mechatronics (motors, actuators and sensors)
    integrated within mechanical technology Disconnects at the
    power transfer unit (PTU), causing the driveshaft to stop
    spinning Automatically engages when it senses AWD traction
    requirement

    Benefits:
    Improved vehicle fuel economy without sacrifice in AWD
    functionality Improved vehicle handling and safety Our Gen
    II design, which begins production in 2018, will reduce the
    parasitic loss associated with traditional AWD system by up
    to 90%

    EcoTrac(R)  Disconnecting PTU
    15

    EcoTrac(R) Sales Growth

    54% CAGR from 2013 to 2019!
    $55M
    $265M
    =$475M
    =$700M
    2013
    2015
    2017
    2019

    Featured on three global programs by 2018
    16

    e-AAM(TM) Hybrid and Electric Drivelines

    e-AAM(TM)- AAM is well positioned to benefit from the global
    trend of electrification

    KEY ATTRIBUTES
    Power dense design allows for easy integration for multiple
    vehicle platforms Modular solutions for passenger cars /
    CUVs Torque vectoring provides maximum traction and ride
    control Benefits:

    Improves fuel efficiency up to 30% and reduces CO2 emissions
    Improved vehicle performance and drive quality Improved
    handling and stability

    An e-AAM program included in our new business backlog will
    launch in 2018

    17

    QUANTUM(TM) Technology

    QUANTUM(TM)- All-new, completely redesigned family of
    lightweight axles and drive units

    KEY ATTRIBUTES

    Industry first technology along with a revolutionary design
    Significant mass reduction (up to 35%) In combination,
    additional efficiency and weight reduction can deliver 1% to
    1.5% improved vehicle fuel economy

    Scalable across multiple applications-- without loss of
    performance or power Streamlined manufacturing process for
    key driveline components.

    QUANTUMTM Rear Axle
    18

    Delivering Power

    AAM'S ACQUISITION OF MPG
    (Metaldyne Performance Group)
    Increased Global Scale (light vertical) Expanded Product
    Portfolio (light vertical) Accelerated Diversification
    (light vertical) Enhanced Cash Flow Generation

    Compelling Strategic Acquisition

    Creates a Global leader in powertrain, drivetrain and
    driveline Diversified global customer base and end markets
    Complementary technologies focused on light-weighting, fuel
    efficiency, vehicle safety and performance solutions

    Stronger financial profile through greater size, scale and
    enhanced cash flow generation Powerful Industrial logic and
    significant synergies

    Driving growth and long-term value for all key stakeholders

    20

    Significantly Enhanced Scale and
       Profitability

    Scale
    (Net Sales $mm*)
    $3,903
    $3,047
    $6,854
    PRO
    FORMA
    Profit
    (Adj. EBITDA Margin*)
    14.6%
    17.3%
    16.0%
    PRO
    FORMA
    Cash Generation
    (Free Cash Flow $mm*)
    $189
    $108
    $297
    PRO
    FORMA

    Significant increase in total served market
    Content on 90% of light vehicles produced in North America
    and on all of the top 10 North American platforms Including
    successful execution of our cost reduction synergy plan -
    potential to generate over $400 million in annual free cash
    flow

    Greater capital resources creates long-term value for
    stakeholders

    *Based on 2015 Actuals - Pro forma sales are reduced by
    $96 million for the elimination of 2015 MPG sales to
    AAM; for definitions of terms, please see the attached
    appendix

    21

    Comprehensive Solutions from Engine to
       Driveline

    Rear and front axles
    Rear drive modules
    Power transfer units
    Driveshafts
    Transfer cases
    Electric drive units
    Ring / pinion gears
    Axle / transmission shafts
    Differential gears
    Transmission gears
    Axle carriers
    Differential cases
    Control arms
    Turbo charger housings
    Brackets
    Suspension components
    Transmission modules
    Differential assemblies
    Aluminum valve bodies
    Vibration control systems
    Connecting rods
    VVT products

    The integration of our product portfolios and technologies
    provides exciting opportunities to increase
    content-per-vehicle

    22

    Expanded Product Portfolio

    Additional powertrain, forging and casting products build on
    AAM's legacy driveline strength Expands AAM's reach into
    commercial vehicle and industrial equipment markets AAM's
    reliance on GM's full-size truck and SUV segment is
    significantly reduced

    AAM 2015 External Sales by Product
    Forged Products
    5%
    Engines and Transmissions
    8%
    Axles and Driveshafts - Other
    38%
    Axles and Driveshafts - K2XX
    49%

    Pro forma 2015 External Sales by Product
    Axles and Driveshafts - K2XX
    28%
    Axles and Driveshafts - Other
    21%
    Forged Products
    18%
    Castings
    13%
    Engines and Transmissions
    20%

    23

    Accelerated Customer Diversification

    AAM 2015 Sales by Customer
    GM
    66%
    Ford
    1%
    FCA
    20%
    Other Global Top 15 OEM's
    5%
    Other
    8%

    Pro forma 2015 Sales by Customer
    GM
    41%
    Ford
    8%
    FCA
    15%
    Other Global Top 15 OEM's
    7%
    Other
    29%

    Pro forma 2020E Sales by Customer
    GM
    32%
    Ford
    16%
    FCA
    14%
    Other Global Top 15 OEM's
    12%
    Other
    26%

    24

    Integration Management Office (IMO)

    Steering Committee
    David C. Dauch - AAM Chairman and CEO
    George Thanopoulos - MPG CEO
    Mike Simonte - AAM President
    Doug Grimm - MPG President and COO

    IMO Leadership
    Tim Bowes - AAM Senior Vice President, Strategy and Business
    Development Paul Suber - MPG Vice President, Business
    Development and Manufacturing Excellence

    Master Planning
    Baseline and Value Capture
    Organization, Culture and Talent
    Communications

    Successful Integration
    Similar in Culture and Core Competencies
    Achievable Integration and Synergy Attainment Plan
    Complementary Products, Customer Relationships and
    Geographic Footprint Experienced and Skilled Implementation
    Team

    25

    Anticipated Synergies

    Sources of Cost Savings
    Targeted Annual Profit Impact
    Overhead
    Optimize operating structure
    Elimination of redundant public company costs
    = $45 - $50 million
    Purchasing
    Combine global purchasing to leverage larger scale
    Direct and indirect material opportunities
    Insourcing initiatives
    = $45 - $50 million
    Other Cost Savings
    Manufacturing initiatives
    Plant loading optimization / facility rationalization
    = $10 - $20 million
    Total Targeted Annual Improvement
    = $100 - $120 million

    Timing and Cost to Achieve

    Targeting 70% of expected annual run rate savings by the end
    of the first full year and 100% in the second full year

    We estimate the costs required to achieve our synergy plan
    are approximately equal to one year of savings

    26

    Combined Pro Forma Financial Targets

    Pro Forma Targets 2017 - 2019
    Sales CAGR*
    Targeting a range of 3% to 5% during the period 2017 - 2019
     including the impact of launching over $1 billion of gross
    new and incremental business backlog
    Adj. EBITDA* margin
    Targeting a range of 17% to 18% of sales by 2018 including
    the achievement of $100 to $120 million in cost reduction
    synergies Adj. Free Cash Flow* Targeting a range of 5% to 7%
    of sales through 2019 Capital Expenditures

    (Cap Ex)
    Targeting (almost equal) 8% of sales in 2017, reducing to
    6% of sales by 2019

    *For definitions of terms, please see the attached appendix

    27

    Expected Pro Forma EBITDA vs. Cash
       Payments

    Targeting Adjusted EBITDA well above projected cash
    requirements

    Variable cost structure allows for flexibility during
    periods of lower volumes

    Positioned to be cash breakeven in a 25% - 30% downturn
    scenario

    Revenue Growth and Synergy Realization
    Adjusted EBITDA*
    2016E
    2017E
    2018E
    2019E
    Targeting 17% to 18% Adj. EBITDA Margin Adj. EBITDA in
    Excess of Cap Ex, Interest, and Tax Payments Estimated Cap
    Ex, Interest and Tax Payments *For definitions of terms,
    please see the attached appendix

    28

    Pro Forma Debt Paydown

    Pro Forma Net Debt* and Net Leverage Ratio*(1)
    Liquidity(3)
    Debt Maturities(4)

    Net Debt and Leverage Ratio
    3.5x
    3.0x
    2.5x
    2.0x
    At Close
    2017E
    2018E
    2019E
    = $1B
    > $1B
    > $1B
    > $1B
    Minimal
    Minimal
    Minimal
    5.125% $200mm Note Due 2/15/19
    7.750% $200mm Note Due 11/15/19
    Minimal in 2020
    Note: Future performance reflects company estimates; (1)
    We expect to close in the first half of 2017 - this chart
    assumes 3/31/17 close; (2) Reflects 2016E Adjusted EBITDA,
    excluding synergies, pro forma for the acquisition of
    Brillion by MPG; (3) Reflects combined revolver availability
    and cash balance; (4) AAM expects minimal amortization and
    foreign debt payments *For definitions of terms, please see
    the attached appendix

    29

    Enhanced Credit Profile

    Increased size and scale
    Customer and product diversification
    Enhanced geographic footprint
    Served market and content per vehicle expansion
    Strong profit and free cash flow margins
    Identifiable cost synergies of (almost equal)$100 -
    120 million
    Extended debt maturity profile
    Strong liquidity position

    Stronger Financial Profile and Enhanced Cash Flow Generation

    30

    Powerful Industrial Logic

    Cap-ex Avoidance /
    Capacity Optimization
    Logistical and Value Stream Efficiencies
    Cross-selling
    Opportunities
    Engineering and Manufacturing Collaborations
    Margin Capture through Vertical Integration
    Productivity and Cost Reductions
    Balanced Tax Strategies
    Working Capital Improvements
    Numerous value creation opportunities beyond synergies

    31

    APPENDIX

    32

    Reconciliation of Non-GAAP Measures

    In addition to the results reported in accordance with
    accounting principles generally accepted in the United
    States of America (GAAP) included within this presentation,
    we have provided certain information, which includes
    non-GAAP financial measures. Such information is reconciled
    to its closest GAAP measure in accordance with Securities
    and Exchange Commission rules and is included in the
    following slides.

    Certain of the forward-looking financial measures included
    in this presentation are provided on a non-GAAP basis. A
    reconciliation of 2017 non-GAAP targets and pro forma
    forward-looking financial measures to the most directly
    comparable financial measures calculated and presented in
    accordance with GAAP is not practical given the difficulty
    of projecting event driven transactional and other non-core
    operating items in any future period. The magnitude of these
    items, however, may be significant.

    33

    Reconciliation of Non-GAAP Measures

    Full Year 2016 Estimates
    Adjusted EBITDA Margin
    Low End High End
    ($ in millions, except  percentages)
    Net income
    $232 $240
    Income tax expense
    60 62

    Interest  expense
    93 93

    Depreciation and amortization
    202  202
    Full year 2016 estimated EBITDA
    $587  $597
    Special charges and expenses for restructuring and
    acquisition related activities

    25 25

    Full year 2016 estimated Adjusted EBITDA
    $612  $622
    Full year 2016 estimated sales
    $3,950  $3,950
    Ful l year 2016 estimated Adjusted EBITDA margin
    15.50 %  15.75 %
    Adjusted Free Cash Flow
    Low End   High End
    ($ in millions)
    Net cash provided by operating activities
    $405   $410
    Less: Purchases of property, plant and equipment, net of
    proceeds from sale of property, plant and equipment and
    government grants

    (225)   (220)
    Full year 2016 estimated free cash flow
    $180   $190
    Add back: Cash payments for restructuring and acquisition
    related activities

    10 10

    Full year 2016 estimated Adjusted free cash flow
    $190   $200

    The foregoing forward-looking information is based on
    estimates, including those for special charges, expenses and
    payments related to restructuring and acquisition related
    activities and other possible adjustments to EBITDA and free
    cash flow. There can be no assurance that actual results
    will not differ materially from those presented above.

    34

    Reconciliation of Non-GAAP Measures

    2015 Full Year Earnings before Interest, Income Taxes,
    Depreciation and Amortization (EBITDA) and Adjusted
    EBITDA Reconciliation Schedule
    ($ in millions)
    AAM  MPG  COMBINED
    Net income attributable to shareholders, as reported
    $235.6  $125.3  $360.9
    Interest expense
    99.2  107.5  206.7
    Income tax expense
    37.1  48.1  85.2
    Depreciation and amortization
    198.4  229.8  428.2
    EBITDA, as defined
    $570.3  $510.7  $1,081.0
    Add: Special charges and non-recurring items
    0.8  16.7  17.5
    Adjusted EBITDA
    $571.1  $527.4  $1,098.5
    as % of net sales
    14.6 %  17.3 %  16.0 %

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    Reconciliation of Non-GAAP Measures

    2015 Full Year Free Cash Flow
    ($ in millions)
    AAM  MPG  COMBINED
    Net cash provided by operating activities
    $377.6  $330.0  707.6
    Less: Purchases of property, plant and equipment,
    net of proceeds from sale of property, plant and
    equipment and from government grants
    (188.1)   (222.3)  (410.4)
    Free cash flow
    $189.5  $107.7  $297.2

    36

    Reconciliation of Non-GAAP Measures

    We define EBITDA to be earnings before interest expense,
    income taxes, depreciation and amortization. Adjusted EBITDA
    excludes the impact of special charges and expenses for
    restructuring and acquisition related activities. We believe
    EBITDA and Adjusted EBITDA are meaningful measures of
    performance as they are commonly utilized by management and
    investors to analyze operating performance and entity
    valuation. Our management, the investment community and
    banking institutions routinely use EBITDA and Adjusted
    EBITDA, together with other measures, to measure our
    operating performance relative to other Tier 1 automotive
    suppliers. EBITDA and Adjusted EBITDA should not be
    construed as income from operations, net income or cash flow
    from operating activities as determined under GAAP. Other
    companies may calculate EBITDA and Adjusted EBITDA
    differently. We define free cash flow to be net cash
    provided by operating activities less capital expenditures
    net of proceeds from the sale of property, plant and
    equipment and government grants. Adjusted free cash flow
    excludes the impact of cash payments for restructuring and
    acquisition related activities. We believe free cash flow
    and Adjusted free cash flow are meaningful measures as it is
    commonly utilized by management and investors to assess our
    ability to generate cash flow from business operations to
    repay debt and return capital to our stockholders. Free cash
    flow is also a key metric used in our calculation of
    incentive compensation. Other companies may calculate free
    cash flow and adjusted free cash flow differently. We define
    net debt to be total debt, net less cash and cash
    equivalents. We define net leverage ratio to be net debt
    divided by Adjusted EBITDA. We believe that net leverage
    ratio is a meaningful measure of financial condition as it
    is commonly used by management, investors and creditors to
    assess capital structure risk. Other companies may calculate
    net leverage ratio differently. We define US SAAR as the
    seasonally adjusted annual rate of light vehicle sales in
    the United States We define CAGR to be the compound annual
    growth rate of sales.

    37