Supplemental Guarantor Condensed Consolidating Financial Statements

6 Months Ended

Jun. 30, 2019

Supplemental Guarantor Condensed Consolidating Financial Statements [Abstract]

Supplemental Guarantor Disclosure [Text Block]

16. 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 6.625% Notes, 6.50% Notes, 6.25% Notes (due 2026), and 6.25% Notes (due 2025) 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 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
2019
Net sales
External	$	—		$	223.9		$	516.9		$	963.5		$	—		$	1,704.3
Intercompany	—			0.3			74.1			10.1			(84.5		)	—
Total net sales	—			224.2			591.0			973.6			(84.5		)	1,704.3
Cost of goods sold	—			226.6			532.3			781.6			(84.5		)	1,456.0
Gross profit (loss)	—			(2.4		)	58.7			192.0			—			248.3
Selling, general and administrative expenses	—			70.5			7.6			13.2			—			91.3
Amortization of intangible assets	—			1.4			22.6			0.9			—			24.9
Restructuring and acquisition-related costs	—			4.6			4.7			2.9			—			12.2
Operating income (loss)	—			(78.9		)	23.8			175.0			—			119.9
Non-operating income (expense), net	—			(62.5		)	1.8			(0.5		)	—			(61.2		)
Income (loss) before income taxes	—			(141.4		)	25.6			174.5			—			58.7
Income tax expense (benefit)	—			1.4			(0.2		)	4.8			—			6.0
Earnings from equity in subsidiaries	52.5			57.3			32.9			—			(142.7		)	—
Net income (loss) before royalties	52.5			(85.5		)	58.7			169.7			(142.7		)	52.7
Royalties	—			84.8			0.7			(85.5		)	—			—
Net income (loss) after royalties	52.5			(0.7		)	59.4			84.2			(142.7		)	52.7
Net income attributable to noncontrolling interests	—			—			—			(0.2		)	—			(0.2		)
Net income (loss) attributable to AAM	$	52.5		$	(0.7	)	$	59.4		$	84.0		$	(142.7	)	$	52.5
Other comprehensive income (loss), net of tax	(9.8		)	(14.8		)	5.6			8.7			0.5			(9.8		)
Comprehensive income (loss) attributable to AAM	$	42.7		$	(15.5	)	$	65.0		$	92.7		$	(142.2	)	$	42.7

	Holdings			AAM Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Elims			Consolidated
2018
Net sales
External	$	—		$	302.8		$	572.6		$	1,025.5		$	—		$	1,900.9
Intercompany	—			2.3			78.0			10.8			(91.1		)	—
Total net sales	—			305.1			650.6			1,036.3			(91.1		)	1,900.9
Cost of goods sold	—			305.7			542.3			812.6			(91.1		)	1,569.5
Gross profit (loss)	—			(0.6		)	108.3			223.7			—			331.4
Selling, general and administrative expenses	—			60.2			19.9			14.9			—			95.0
Amortization of intangible assets	—			1.4			22.5			0.9			—			24.8
Restructuring and acquisition-related costs	—			9.8			26.8			0.2			—			36.8
Gain on sale of business	—			—			(15.5		)	—			—			(15.5		)
Operating income (loss)	—			(72.0		)	54.6			207.7			—			190.3
Non-operating income (expense), net	—			(63.3		)	3.2			23.1			—			(37.0		)
Income (loss) before income taxes	—			(135.3		)	57.8			230.8			—			153.3
Income tax expense (benefit)	—			8.0			0.1			(6.1		)	—			2.0
Earnings from equity in subsidiaries	151.1			106.3			67.3			—			(324.7		)	—
Net income (loss) before royalties	151.1			(37.0		)	125.0			236.9			(324.7		)	151.3
Royalties	—			85.0			0.9			(85.9		)	—			—
Net income after royalties	151.1			48.0			125.9			151.0			(324.7		)	151.3
Net income attributable to noncontrolling interests	—			—			—			(0.2		)	—			(0.2		)
Net income attributable to AAM	$	151.1		$	48.0		$	125.9		$	150.8		$	(324.7	)	$	151.1
Other comprehensive loss, net of tax	(76.7		)	(29.2		)	(75.3		)	(81.0		)	185.5			(76.7		)
Comprehensive income attributable to AAM	$	74.4		$	18.8		$	50.6		$	69.8		$	(139.2	)	$	74.4

Condensed Consolidating Statements of Income
Six Months Ended June 30,
(in millions)
	Holdings			AAM Inc.			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Elims			Consolidated
2019
Net sales
External	$	—		$	506.1		$	1,055.3	$	1,862.1		$	—		$	3,423.5
Intercompany	—			1.0			142.8		20.7			(164.5		)	—
Total net sales	—			507.1			1,198.1		1,882.8			(164.5		)	3,423.5
Cost of goods sold	—			499.9			1,082.6		1,535.0			(164.5		)	2,953.0
Gross profit	—			7.2			115.5		347.8			—			470.5
Selling, general and administrative expenses	—			140.0			15.6		26.4			—			182.0
Amortization of intangible assets	—			2.9			45.2		1.8			—			49.9
Restructuring and acquisition-related costs	—			10.9			8.2		5.2			—			24.3
Operating income (loss)	—			(146.6		)	46.5		314.4			—			214.3
Non-operating income (expense), net	—			(121.3		)	4.7		(0.3		)	—			(116.9		)
Income (loss) before income taxes	—			(267.9		)	51.2		314.1			—			97.4
Income tax expense (benefit)	—			(14.7		)	0.1		17.6			—			3.0
Earnings from equity in subsidiaries	94.1			81.4			67.1		—			(242.6		)	—
Net income (loss) before royalties	94.1			(171.8		)	118.2		296.5			(242.6		)	94.4
Royalties	—			154.6			1.5		(156.1		)	—			—
Net income (loss) after royalties	94.1			(17.2		)	119.7		140.4			(242.6		)	94.4
Net income attributable to noncontrolling interests	—			—			—		(0.3		)	—			(0.3		)
Net income (loss) attributable to AAM	$	94.1		$	(17.2	)	$	119.7	$	140.1		$	(242.6	)	$	94.1
Other comprehensive income (loss), net of tax	(14.1		)	(13.8		)	3.3		6.9			3.6			(14.1		)
Comprehensive income (loss) attributable to AAM	$	80.0		$	(31.0	)	$	123.0	$	147.0		$	(239.0	)	$	80.0

	Holdings			AAM Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Elims			Consolidated
2018
Net sales
External	$	—		$	604.3		$	1,154.9		$	2,000.1		$	—		$	3,759.3
Intercompany	—			3.3			156.0			20.3			(179.6		)	—
Total net sales	—			607.6			1,310.9			2,020.4			(179.6		)	3,759.3
Cost of goods sold	—			583.9			1,119.1			$	1,588.2		(179.6		)	3,111.6
Gross profit	—			23.7			191.8			432.2			—			647.7
Selling, general and administrative expenses	—			120.0			41.8			30.5			—			192.3
Amortization of intangible assets	—			2.9			45.1			1.7			—			49.7
Restructuring and acquisition-related costs	—			26.1			27.9			1.1			—			55.1
Gain on sale of business	—			—			(15.5		)	—			—			(15.5		)
Operating income (loss)	—			(125.3		)	92.5			398.9			—			366.1
Non-operating income (expense), net	—			(133.8		)	8.2			20.2			—			(105.4		)
Income (loss) before income taxes	—			(259.1		)	100.7			419.1			—			260.7
Income tax expense	—			9.1			0.5			10.3			—			19.9
Earnings from equity in subsidiaries	240.5			173.5			107.8			—			(521.8		)	—
Net income (loss) before royalties	240.5			(94.7		)	208.0			408.8			(521.8		)	240.8
Royalties	—			169.2			1.9			(171.1		)	—			—
Net income after royalties	240.5			74.5			209.9			237.7			(521.8		)	240.8
Net income attributable to noncontrolling interests	—			—			—			(0.3		)	—			(0.3		)
Net income attributable to AAM	$	240.5		$	74.5		$	209.9		$	237.4		$	(521.8	)	$	240.5
Other comprehensive loss, net of tax	(22.4		)	(3.6		)	(40.2		)	(37.3		)	81.1			(22.4		)
Comprehensive income attributable to AAM	$	218.1		$	70.9		$	169.7		$	200.1		$	(440.7	)	$	218.1

Condensed Consolidating Balance Sheets
(in millions)
	Holdings		AAM Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Elims			Consolidated
June 30, 2019
Assets
Current assets
Cash and cash equivalents	$	—	$	71.2	$	0.1	$	177.5	$	—		$	248.8
Accounts receivable, net	—		116.2		313.3		708.5		—			1,138.0
Intercompany receivables	—		4,574.2		4,316.7		171.3		(9,062.2		)	—
Inventories, net	—		45.9		169.6		244.4		—			459.9
Prepaid expenses and other	—		32.9		5.1		92.0		—			130.0
Total current assets	—		4,840.4		4,804.8		1,393.7		(9,062.2		)	1,976.7
Property, plant and equipment, net	—		291.4		741.6		1,511.4		—			2,544.4
Goodwill	—		—		719.0		421.9		—			1,140.9
Intangible assets, net	—		16.5		1,016.4		30.2		—			1,063.1
Intercompany notes and accounts receivable	—		1,324.2		179.9		—		(1,504.1		)	—
Other assets and deferred charges	—		331.3		184.3		307.2		—			822.8
Investment in subsidiaries	2,884.0		2,330.9		1,798.5		—		(7,013.4		)	—
Total assets	$	2,884.0	$	9,134.7	$	9,444.5	$	3,664.4	$	(17,579.7	)	$	7,547.9
Liabilities and Stockholders’ Equity
Current liabilities
Current portion of long-term debt	$	—	$	6.4	$	3.0	$	16.6	$	—		$	26.0
Accounts payable	—		115.4		252.7		485.3		—			853.4
Intercompany payables	—		3,587.9		5,468.4		5.9		(9,062.2		)	—
Accrued expenses and other	—		146.1		43.5		198.1		—			387.7
Total current liabilities	—		3,855.8		5,767.6		705.9		(9,062.2		)	1,267.1
Intercompany notes and accounts payable	1,311.8		28.4		—		163.9		(1,504.1		)	—
Long-term debt, net	—		3,571.1		—		103.1		—			3,674.2
Other long-term liabilities	—		502.4		312.5		219.5		—			1,034.4
Total liabilities	1,311.8		7,957.7		6,080.1		1,192.4		(10,566.3		)	5,975.7
Total AAM Stockholders’ equity	1,569.5		1,177.0		3,364.4		2,469.3		(7,010.7		)	1,569.5
Noncontrolling interests in subsidiaries	2.7		—		—		2.7		(2.7		)	2.7
Total stockholders’ equity	1,572.2		1,177.0		3,364.4		2,472.0		(7,013.4		)	1,572.2
Total liabilities and stockholders’ equity	$	2,884.0	$	9,134.7	$	9,444.5	$	3,664.4	$	(17,579.7	)	$	7,547.9

 

	Holdings		AAM Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Elims			Consolidated
December 31, 2018
Assets
Current assets
Cash and cash equivalents	$	—	$	36.7	$	0.2	$	439.5	$	—		$	476.4
Accounts receivable, net	—		122.7		287.7		556.1		—			966.5
Intercompany receivables	—		3,337.2		2,356.3		93.5		(5,787.0		)	—
Inventories, net	—		42.5		157.7		259.5		—			459.7
Prepaid expenses and other	—		34.4		6.0		86.8		—			127.2
Total current assets	—		3,573.5		2,807.9		1,435.4		(5,787.0		)	2,029.8
Property, plant and equipment, net	—		275.8		758.6		1,480.0		—			2,514.4
Goodwill	—		—		719.0		422.8		—			1,141.8
Intangible assets, net	—		18.6		1,059.6		32.9		—			1,111.1
Intercompany notes and accounts receivable	—		1,316.8		144.5		—		(1,461.3		)	—
Other assets and deferred charges	—		319.8		126.4		267.4		—			713.6
Investment in subsidiaries	2,790.5		2,241.5		1,748.7		—		(6,780.7		)	—
Total assets	$	2,790.5	$	7,746.0	$	7,364.7	$	3,638.5	$	(14,029.0	)	$	7,510.7
Liabilities and Stockholders’ Equity
Current liabilities
Current portion of long-term debt	$	—	$	100.0	$	—	$	21.6	$	—		$	121.6
Accounts payable	—		94.2		246.5		499.5		—			840.2
Intercompany payables	—		2,050.0		3,615.7		121.3		(5,787.0		)	—
Accrued expenses and other	—		169.0		35.8		190.2		—			395.0
Total current liabilities	—		2,413.2		3,898.0		832.6		(5,787.0		)	1,356.8
Intercompany notes and accounts payable	1,304.2		12.5		—		144.6		(1,461.3		)	—
Long-term debt, net	—		3,578.3		3.0		105.5		—			3,686.8
Other long-term liabilities	—		508.9		271.7		200.2		—			980.8
Total liabilities	1,304.2		6,512.9		4,172.7		1,282.9		(7,248.3		)	6,024.4
Total AAM Stockholders’ equity	1,483.9		1,233.1		3,192.0		2,353.2		(6,778.3		)	1,483.9
Noncontrolling interests in subsidiaries	2.4		—		—		2.4		(2.4		)	2.4
Total stockholders’ equity	1,486.3		1,233.1		3,192.0		2,355.6		(6,780.7		)	1,486.3
Total liabilities and stockholders’ equity	$	2,790.5	$	7,746.0	$	7,364.7	$	3,638.5	$	(14,029.0	)	$	7,510.7

Condensed Consolidating Statements of Cash Flows
Six Months Ended June 30,
(in millions)
	Holdings			AAM Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Elims		Consolidated
2019
Net cash provided by (used in) operating activities	$	—		$	186.8		$	65.2		$	(115.1	)	$	—	$	136.9
Investing activities
Purchases of property, plant and equipment	—			(32.8		)	(60.4		)	(144.3		)	—		(237.5		)
Proceeds from sale of property, plant and equipment	—			—			1.7			—			—		1.7
Investment in joint ventures	—			—			—			(2.2		)	—		(2.2		)
Intercompany activity	—			—			(6.4		)	6.4			—		—
Net cash used in investing activities	—			(32.8		)	(65.1		)	(140.1		)	—		(238.0		)
Financing activities
Net debt activity	—			(112.0		)	(0.2		)	(8.0		)	—		(120.2		)
Purchase of treasury stock	(7.5		)	—			—			—			—		(7.5		)
Intercompany activity	7.5			(7.5		)	—			—			—		—
Net cash used in financing activities	—			(119.5		)	(0.2		)	(8.0		)	—		(127.7		)
Effect of exchange rate changes on cash	—			—			—			1.2			—		1.2
Net increase (decrease) in cash, cash equivalents and restricted cash	—			34.5			(0.1		)	(262.0		)	—		(227.6		)
Cash, cash equivalents and restricted cash at beginning of period	—			36.7			2.7			439.5			—		478.9
Cash, cash equivalents and restricted cash at end of period	$	—		$	71.2		$	2.6		$	177.5		$	—	$	251.3

	Holdings			AAM Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Elims		Consolidated
2018
Net cash provided by operating activities	$	—		$	152.3		$	8.6		$	128.5		$	—	$	289.4
Investing activities
Purchases of property, plant and equipment	—			(40.3		)	(74.5		)	(158.2		)	—		(273.0		)
Proceeds from sale of property, plant and equipment	—			—			0.5			0.4			—		0.9
Purchase buyouts of leased equipment	—			—			(0.5		)	—			—		(0.5		)
Proceeds from sale of business, net	—			—			42.7			4.4			—		47.1
Acquisition of business, net of cash acquired	—			—			—			(1.3		)	—		(1.3		)
Net cash used in investing activities	—			(40.3		)	(31.8		)	(154.7		)	—		(226.8		)
Financing activities
Net debt activity	—			(111.2		)	(0.4		)	44.8			—		(66.8		)
Debt issuance costs	—			(6.8		)	—			—			—		(6.8		)
Purchase of treasury stock	(3.6		)	—			—			—			—		(3.6		)
Purchase of noncontrolling interest	—			—			(2.2		)	—			—		(2.2		)
Intercompany activity	3.6			(3.6		)	28.5			(28.5		)	—		—
Net cash provided by (used in) financing activities	—			(121.6		)	25.9			16.3			—		(79.4		)
Effect of exchange rate changes on cash	—			—			—			(4.3		)	—		(4.3		)
Net increase (decrease) in cash, cash equivalents and restricted cash	—			(9.6		)	2.7			(14.2		)	—		(21.1		)
Cash, cash equivalents and restricted cash at beginning of period	—			91.9			0.1			284.8			—		376.8
Cash, cash equivalents and restricted cash at end of period	$	—		$	82.3		$	2.8		$	270.6		$	—	$	355.7