Condensed Consolidating Financial Statements

3 Months Ended

Mar. 31, 2018

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Condensed Consolidating Financial Statements

CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

Aleris Corporation, the direct parent of Aleris International, and certain of its subsidiaries (collectively, the “Guarantor Subsidiaries”) are guarantors of the indebtedness under the 7 ⁷/8% Senior Notes. Aleris Corporation and each of the Guarantor Subsidiaries have fully and unconditionally guaranteed (subject, in the case of the Guarantor Subsidiaries, to customary release provisions as described below), on a joint and several basis, to pay principal and interest related to the 7 ⁷/8% Senior Notes and Aleris International and each of the Guarantor Subsidiaries are directly or indirectly 100% owned subsidiaries of Aleris Corporation. For purposes of complying with the reporting requirements of Aleris International and the Guarantor Subsidiaries, presented below are condensed consolidating financial statements of Aleris Corporation, Aleris International, the Guarantor Subsidiaries, and those other subsidiaries of Aleris Corporation that are not guaranteeing the indebtedness under the 7 ⁷/8% Senior Notes (the “Non-Guarantor Subsidiaries”). Aleris Corporation and the Guarantor Subsidiaries are also guarantors under the 9½% Senior Secured Notes. The condensed consolidating balance sheets are presented as of March 31, 2018 and December 31, 2017. The condensed consolidating statements of comprehensive income (loss) are presented for the three months endedMarch 31, 2018 and 2017. The condensed consolidating statements of cash flows are presented for the three months endedMarch 31, 2018 and 2017.

The guarantee of a Guarantor Subsidiary will be automatically and unconditionally released and discharged in the event of:

▪ any sale of the Guarantor Subsidiary or of all or substantially all of its assets;

▪ a Guarantor Subsidiary being designated as an “unrestricted subsidiary” in accordance with the indentures governing the applicable Senior Notes;

▪ the release or discharge of a Guarantor Subsidiary from its guarantee under the 2015 ABL Facility or other indebtedness that resulted in the obligation of the Guarantor Subsidiary under the indentures governing the applicable Senior Notes; and

▪ the requirements for legal defeasance or covenant defeasance or discharge of the indentures governing the applicable Senior Notes having been satisfied.

Upon the completion of the sale of the recycling and specification alloys business on February 27, 2015, the guarantees of 7 ⁷/8% Senior Notes of the Guarantor Subsidiaries that were sold were automatically and unconditionally released.

	As of March 31, 2018
	Aleris Corporation (Parent)		Aleris International, Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
ASSETS
Current Assets
Cash and cash equivalents	$	—	$	34.7	$	—	$	46.4	$	(2.0	)	$	79.1
Accounts receivable, net	—		0.1		147.2		216.9		—			364.2
Inventories	—		—		335.1		340.6		—			675.7
Prepaid expenses and other current assets	—		5.6		27.7		47.3		—			80.6
Intercompany receivables	—		223.5		85.8		0.9		(310.2		)	—
Total Current Assets	—		263.9		595.8		652.1		(312.2		)	1,199.6
Property, plant and equipment, net	—		—		891.2		579.3		—			1,470.5
Intangible assets, net	—		—		18.2		15.9		—			34.1
Deferred income taxes	—		—		—		69.5		—			69.5
Other long-term assets	—		3.2		8.4		43.5		—			55.1
Investments in subsidiaries	124.7		1,521.4		3.1		—		(1,649.2		)	—
Total Assets	$	124.7	$	1,788.5	$	1,516.7	$	1,360.3	$	(1,961.4	)	$	2,828.8
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable	$	—	$	4.0	$	169.8	$	169.8	$	(2.0	)	$	341.6
Accrued liabilities	—		66.0		65.1		68.8		—			199.9
Current portion of long-term debt	—		—		0.9		9.4		—			10.3
Intercompany payables	3.8		71.3		204.5		30.6		(310.2		)	—
Total Current Liabilities	3.8		141.3		440.3		278.6		(312.2		)	551.8
Long-term debt	—		1,522.2		0.8		296.1		—			1,819.1
Deferred revenue	—		—		74.0		—					74.0
Deferred income taxes	—		—		0.5		5.6					6.1
Accrued pension benefits	—		—		45.0		128.5					173.5
Accrued postretirement benefits	—		—		33.8		—					33.8
Other long-term liabilities	—		0.3		17.2		32.1					49.6
Total Long-Term Liabilities	—		1,522.5		171.3		462.3		—			2,156.1
Total equity	120.9		124.7		905.1		619.4		(1,649.2		)	120.9
Total Liabilities and Equity	$	124.7	$	1,788.5	$	1,516.7	$	1,360.3	$	(1,961.4	)	$	2,828.8

	As of December 31, 2017
	Aleris Corporation (Parent)		Aleris International, Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
ASSETS
Current Assets
Cash and cash equivalents	$	—	$	40.3	$	—	$	64.2	$	(2.1	)	$	102.4
Accounts receivable, net	—		0.2		83.0		162.5		—			245.7
Inventories	—		—		286.6		344.6		—			631.2
Prepaid expenses and other current assets	—		3.4		10.0		22.7		—			36.1
Intercompany receivables	—		134.6		46.0		32.4		(213.0		)	—
Total Current Assets	—		178.5		425.6		626.4		(215.1		)	1,015.4
Property, plant and equipment, net	—		—		903.7		567.2		—			1,470.9
Intangible assets, net	—		—		18.8		15.9		—			34.7
Deferred income taxes	—		—		—		70.7		—			70.7
Other long-term assets	—		3.4		8.0		41.3		—			52.7
Investments in subsidiaries	96.3		1,514.4		4.5		—		(1,615.2		)	—
Total Assets	$	96.3	$	1,696.3	$	1,360.6	$	1,321.5	$	(1,830.3	)	$	2,644.4
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable	$	—	$	4.3	$	140.7	$	156.3	$	(2.1	)	$	299.2
Accrued liabilities	—		43.9		75.8		77.7		—			197.4
Current portion of long-term debt	—		—		1.0		8.1		—			9.1
Intercompany payables	3.6		54.8		137.8		16.8		(213.0		)	—
Total Current Liabilities	3.6		103.0		355.3		258.9		(215.1		)	505.7
Long-term debt	—		1,497.0		1.0		273.4		—			1,771.4
Deferred revenue	—		—		17.0		—		—			17.0
Deferred income taxes	—		—		0.2		3.8		—			4.0
Accrued pension benefits	—		—		45.2		125.0		—			170.2
Accrued postretirement benefits	—		—		34.3		—		—			34.3
Other long-term liabilities	—		—		17.2		31.9		—			49.1
Total Long-Term Liabilities	—		1,497.0		114.9		434.1		—			2,046.0
Total equity	92.7		96.3		890.4		628.5		(1,615.2		)	92.7
Total Liabilities and Equity	$	96.3	$	1,696.3	$	1,360.6	$	1,321.5	$	(1,830.3	)	$	2,644.4

	For the three months ended March 31, 2018
	Aleris Corporation (Parent)			Aleris International, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenues	$	—		$	—		$	414.6		$	396.7		$	(9.0	)	$	802.3
Cost of sales	—			—			390.4			358.4			(9.0		)	739.8
Gross profit	—			—			24.2			38.3			—			62.5
Selling, general and administrative expenses	—			9.0			17.4			24.2			—			50.6
Restructuring charges	—			—			0.7			0.2						0.9
Gains on derivative financial instruments	—			—			(22.8		)	(11.1		)	—			(33.9		)
Other operating expense, net	—			—			0.7			—			—			0.7
Operating (loss) income	—			(9.0		)	28.2			25.0			—			44.2
Interest expense, net	—			—			26.3			7.5			—			33.8
Other (income) expense, net	—			(3.7		)	2.7			1.4			—			0.4
Equity in net earnings of affiliates	(4.6		)	(9.9		)	(0.7		)	—			15.2			—
Income (loss) before income taxes	4.6			4.6			(0.1		)	16.1			(15.2		)	10.0
Provision for income taxes	—			—			0.2			5.2			—			5.4
Net income (loss)	$	4.6		$	4.6		$	(0.3	)	$	10.9		$	(15.2	)	$	4.6
Comprehensive income	$	25.1		$	25.1		$	1.1		$	30.1		$	(56.3	)	$	25.1

	For the three months ended March 31, 2017
	Aleris Corporation (Parent)			Aleris International, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminations			Consolidated
Revenues	$	—		$	—		$	349.4		$	332.1	$	(7.3	)	$	674.2
Cost of sales	—			—			324.9			271.0		(7.3		)	588.6
Gross profit	—			—			24.5			61.1		—			85.6
Selling, general and administrative expenses	—			0.1			32.4			20.4		—			52.9
Restructuring charges	—			—			0.3			0.1		—			0.4
Losses on derivative financial instruments	—			—			20.0			8.2		—			28.2
Other operating expense, net	—			—			1.0			—		—			1.0
Operating (loss) income	—			(0.1		)	(29.2		)	32.4		—			3.1
Interest expense, net	—			—			20.7			6.4		—			27.1
Other (income) expense, net	—			(0.3		)	(1.5		)	2.3		—			0.5
Equity in net loss (earnings) of affiliates	35.2			35.3			(0.2		)	—		(70.3		)	—
(Loss) income before income taxes	(35.2		)	(35.1		)	(48.2		)	23.7		70.3			(24.5		)
Provision for (benefit from) income taxes	—			0.1			(0.1		)	10.7		—			10.7
Net (loss) income	$	(35.2	)	$	(35.2	)	$	(48.1	)	$	13.0	$	70.3		$	(35.2	)
Comprehensive (loss) income	$	(25.6	)	$	(25.6	)	$	(47.6	)	$	22.2	$	51.0		$	(25.6	)

	For the three months ended March 31, 2018
	Aleris Corporation (Parent)			Aleris International, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net cash provided (used) by operating activities	$	0.1		$	(2.9	)	$	6.9		$	2.5		$	(41.5	)	$	(34.9	)
Investing activities
Payments for property, plant and equipment	—			—			(17.8		)	(12.3		)	—			(30.1		)
Disbursements of intercompany loans	—			—			—			(25.0		)	25.0			—
Repayments from intercompany loans	—			—			—			39.5			(39.5		)	—
Equity contributions in subsidiaries	—			(13.2		)	—			—			13.2			—
Return of investment in subsidiaries	—			—			0.1			—			(0.1		)	—
Other	—			—			(0.3		)	0.1			—			(0.2		)
Net cash (used) provided by investing activities	—			(13.2		)	(18.0		)	2.3			(1.4		)	(30.3		)
Financing activities
Proceeds from the revolving credit facilities	—			80.0			—			53.9			—			133.9
Payments on the revolving credit facilities	—			(55.0		)	—			(35.0		)	—			(90.0		)
Payments on other long-term debt	—			—			(0.3		)	(3.5		)	—			(3.8		)
Proceeds from intercompany loans	—			25.0			—			—			(25.0		)	—
Repayments on intercompany loans	—			(39.5		)	—			—			39.5			—
Proceeds from intercompany equity contributions	—			—			13.2			—			(13.2		)	—
Dividends paid	—			—			(2.0		)	(39.6		)	41.6			—
Other	(0.1		)	—			0.2			(0.1		)	—			—
Net cash (used) provided by financing activities	(0.1		)	10.5			11.1			(24.3		)	42.9			40.1
Effect of exchange rate differences on cash, cash equivalents and restricted cash	—			—			—			1.9			—			1.9
Net (decrease) increase in cash, cash equivalents and restricted cash	—			(5.6		)	—			(17.6		)	—			(23.2		)
Cash, cash equivalents and restricted cash at beginning of period	—			40.3			—			69.7			(2.0		)	108.0
Cash, cash equivalents and restricted cash at end of period	$	—		$	34.7		$	—		$	52.1		$	(2.0	)	$	84.8
Cash and cash equivalents	$	—		$	34.7		$	—		$	46.4		$	(2.0	)	$	79.1
Restricted cash (included in “Other current assets”)	—			—			—			5.7			—			5.7
Cash, cash equivalents and restricted cash	$	—		$	34.7		$	—		$	52.1		$	(2.0	)	$	84.8

	For the three months ended March 31, 2017
	Aleris Corporation (Parent)			Aleris International, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net cash provided (used) by operating activities	$	1.1		$	303.5		$	(355.6	)	$	11.8		$	0.6		$	(38.6	)
Investing activities
Payments for property, plant and equipment	—			—			(52.7		)	(9.9		)	—			(62.6		)
Equity contributions in subsidiaries	—			(406.6		)	—			—			406.6			—
Return of investments in subsidiaries	—			8.3			5.8			—			(14.1		)	—
Other	—			—			(0.4		)	—			—			(0.4		)
Net cash provided (used) by investing activities	—			(398.3		)	(47.3		)	(9.9		)	392.5			(63.0		)
Financing activities
Proceeds from revolving credit facilities	—			55.0			—			104.5			—			159.5
Payments on revolving credit facilities	—			(185.0		)	—			(109.5		)	—			(294.5		)
Proceeds from senior secured notes, net of discount	—			263.8			—			—			—			263.8
Payments on other long-term debt	—			—			(0.1		)	(2.2		)	—			(2.3		)
Debt issuance costs				(1.8		)	—			—			—			(1.8		)
Proceeds from intercompany equity contributions	—			—			402.6			4.0			(406.6		)	—
Dividends paid	—			—			—			(14.4		)	14.4			—
Other	(1.1		)	—			0.4			(0.5		)	—			(1.2		)
Net cash (used) provided by financing activities	(1.1		)	132.0			402.9			(18.1		)	(392.2		)	123.5
Effect of exchange rate differences on cash, cash equivalents and restricted cash	—			—			—			0.6			—			0.6
Net decrease in cash, cash equivalents and restricted cash	—			37.2			—			(15.6		)	0.9			22.5
Cash, cash equivalents and restricted cash at beginning of period	—			5.5			—			53.3			(3.2		)	55.6
Cash, cash equivalents and restricted cash at end of period	$	—		$	42.7		$	—		$	37.7		$	(2.3	)	$	78.1
Cash and cash equivalents	$	—		$	42.7		$	—		$	34.2		$	(2.3	)	74.6
Restricted cash (included in “Other current assets”)	—			—			—			3.5			—			3.5
Cash, cash equivalents and restricted cash	$	—		$	42.7		$	—		$	37.7		$	(2.3	)	$	78.1