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EX-32 - SECTION 906 CERTIFICATION OF THE CEO AND CFO - AMERICAN AXLE & MANUFACTURING HOLDINGS INCexhibit32-q12016.htm
EX-31.2 - SECTION 302 CERTIFICATION OF THE CFO - AMERICAN AXLE & MANUFACTURING HOLDINGS INCexhibit312-q12016.htm
EX-31.1 - SECTION 302 CERTIFICATION OF THE CEO - AMERICAN AXLE & MANUFACTURING HOLDINGS INCexhibit311-q12016.htm
                                                            

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549

FORM 10-Q

þ
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
 
For the quarterly period ended March 31, 2016
 
 
or
 
 
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
 
For the transition period from  _____________ to _____________
 
 
Commission File Number:  1-14303
_______________________________________________________________________________

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
(Exact Name of Registrant as Specified in Its Charter)

 
Delaware
 
38-3161171
 
 
(State or Other Jurisdiction of Incorporation or Organization)
 
(I.R.S. Employer Identification No.)
 
 
 
 
 
 
 
One Dauch Drive, Detroit, Michigan
 
48211-1198
 
 
(Address of Principal Executive Offices)
 
(Zip Code)
 
(313) 758-2000
(Registrant's Telephone Number, Including Area Code)
_______________________________________________________________________________
 
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes þ No o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes  þ No  o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definition of “accelerated filer,” “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer   þ         Accelerated filer  o           Non-accelerated filer   o                Smaller reporting company   o
                                                                                (Do not check if a smaller reporting company)
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

As of May 4, 2016, the latest practicable date, the number of shares of the registrant's Common Stock, par value $0.01 per share, outstanding was 76,496,803 shares.
 
Internet Website Access to Reports

The website for American Axle & Manufacturing Holdings, Inc. is www.aam.com.  Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13 or 15(d) of the Exchange Act are available free of charge through our website as soon as reasonably practicable after they are electronically filed with, or furnished to, the Securities and Exchange Commission (SEC).  The SEC also maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.




AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2016
TABLE OF CONTENTS 
 
 
 
 
Page Number
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




FORWARD-LOOKING STATEMENTS

In this Quarterly Report on Form 10-Q (Quarterly Report), we make statements concerning our expectations, beliefs, plans, objectives, goals, strategies, and future events or performance. Such statements are “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995 and relate to trends and events that may affect our future financial position and operating results. The terms such as “will,” “may,” “could,” “would,” “plan,” “believe,” “expect,” “anticipate,” “intend,” “project,” "target," and similar words or expressions, as well as statements in future tense, are intended to identify forward-looking statements.

Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time those statements are made and/or management’s good faith belief as of that time with respect to future events and are subject to risks and may differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to:

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;
our ability to successfully implement upgrades to our enterprise resource planning systems;
negative or unexpected tax consequences;
risks inherent in our international operations (including adverse changes in political stability, taxes and other law changes, potential disruptions of production and supply, and currency rate fluctuations);
our ability to consummate and integrate acquisitions and joint ventures;
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;
global economic conditions;
our ability to protect our intellectual property and successfully defend against assertions made against us;
our ability to attract and retain key associates;
availability of financing for working capital, capital expenditures, research and development (R&D) 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, R&D 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
other unanticipated events and conditions that may hinder our ability to compete.

It is not possible to foresee or identify all such factors and we make no commitment to update any forward-looking statement or to disclose any facts, events or circumstances after the date hereof that may affect the accuracy of any forward-looking statement.


1



PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 
 
Three Months Ended
 
March 31,
 
2016
 
2015
 
(in millions, except per share data)
 
 

 
 

Net sales
$
969.2

 
$
969.1

 
 
 
 
Cost of goods sold
795.2

 
816.3

 
 
 
 
Gross profit
174.0

 
152.8

 
 
 
 
Selling, general and administrative expenses
75.6

 
68.5

 
 
 
 
Operating income
98.4

 
84.3

 
 
 
 
Interest expense
(23.6
)
 
(25.1
)
 
 
 
 
Investment income
0.6

 
0.8

 
 
 
 
Other income, net
1.0

 
2.4

 
 
 
 
Income before income taxes
76.4

 
62.4

 
 
 
 
Income tax expense
15.3

 
9.2

 
 
 
 
Net income
$
61.1

 
$
53.2

 
 
 
 
Basic earnings per share
$
0.78

 
$
0.69

 
 
 
 
Diluted earnings per share
$
0.78

 
$
0.68

 
See accompanying notes to condensed consolidated financial statements.                   


2



AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)

 
Three Months Ended
 
March 31,
 
2016
 
2015
 
(in millions)
Net income
$
61.1

 
$
53.2

 
 
 
 
Other comprehensive income (loss)
 
 
 
Defined benefit plans, net of tax (a)
4.2

 
3.9

     Foreign currency translation adjustments
15.0

 
(31.5
)
     Changes in cash flow hedges
3.4

 
(0.5
)
Other comprehensive income (loss)
22.6

 
(28.1
)
 
 
 
 
Comprehensive income
$
83.7

 
$
25.1

 
 
 
 
(a)
Amounts are net of tax of $(2.3) million and $(2.0) million for the three months ended March 31, 2016 and 2015, respectively.

See accompanying notes to condensed consolidated financial statements.                   

3



AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

 
 
March 31, 2016
 
December 31, 2015
 
 
(Unaudited)
 
 
Assets
 
(in millions)
Current assets
 
 
Cash and cash equivalents
 
$
262.0

 
$
282.5

Accounts receivable, net
 
643.9

 
539.1

Inventories, net
 
229.7

 
230.5

Prepaid expenses and other
 
79.4

 
72.1

Total current assets
 
1,215.0

 
1,124.2

 
 
 

 
 

Property, plant and equipment, net
 
1,063.5

 
1,046.2

Deferred income taxes
 
364.2

 
373.6

Goodwill
 
154.7

 
154.4

GM postretirement cost sharing asset
 
239.0

 
243.2

Other assets and deferred charges
 
269.4

 
261.1

Total assets
 
$
3,305.8

 
$
3,202.7

 
 
 

 
 

Liabilities and Stockholders’ Equity
 
 

 
 

Current liabilities
 
 

 
 

Current portion of long-term debt
 
$
3.4

 
$
3.3

Accounts payable
 
483.4

 
412.7

Accrued compensation and benefits
 
101.5

 
128.0

Deferred revenue
 
23.9

 
22.9

Accrued expenses and other
 
105.6

 
132.3

Total current liabilities
 
717.8

 
699.2

 
 
 

 
 

Long-term debt, net
 
1,382.1

 
1,375.7

Deferred revenue
 
60.8

 
65.7

Postretirement benefits and other long-term liabilities
 
758.2

 
760.6

Total liabilities
 
2,918.9

 
2,901.2

 
 
 

 
 

Stockholders' equity
 
 

 
 

Common stock, par value $0.01 per share
 
0.9

 
0.8

Paid-in capital
 
644.0

 
638.9

Retained earnings
 
265.3

 
204.2

Treasury stock at cost, 6.4 million shares as of March 31, 2016 and 6.2 million shares as of December 31, 2015
 
(189.4
)
 
(185.9
)
Accumulated other comprehensive loss
 
 
 
 
Defined benefit plans, net of tax
 
(219.7
)
 
(223.9
)
Foreign currency translation adjustments
 
(104.2
)
 
(119.2
)
Unrecognized loss on cash flow hedges
 
(10.0
)
 
(13.4
)
Total stockholders’ equity
 
386.9

 
301.5

Total liabilities and stockholders' equity
 
$
3,305.8

 
$
3,202.7

 
See accompanying notes to condensed consolidated financial statements. 

4



AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
 
Three Months Ended
 
 
March 31,
 
 
2016
 
2015
 
 
(in millions)
Operating activities
 
 
 
 
Net income
 
$
61.1

 
$
53.2

Adjustments to reconcile net income to net cash provided by operating activities
 
 
 
 
Depreciation and amortization
 
49.8

 
50.0

Deferred income taxes
 
7.4

 
3.9

Stock-based compensation
 
5.2

 
3.6

Pensions and other postretirement benefits, net of contributions
 
(1.8
)
 
(0.7
)
Loss on disposal of property, plant and equipment, net
 
0.6

 

Changes in operating assets and liabilities
 
 
 
 
Accounts receivable
 
(102.8
)
 
(140.6
)
Inventories
 
2.5

 
7.2

Accounts payable and accrued expenses
 
48.4

 
52.5

Deferred revenue
 
(4.2
)
 
(4.5
)
Other assets and liabilities
 
(40.0
)
 
(18.2
)
Net cash provided by operating activities
 
26.2

 
6.4

 
 
 

 
 

Investing activities
 
 

 
 

Purchases of property, plant and equipment
 
(50.6
)
 
(43.6
)
Proceeds from sale of property, plant and equipment
 
0.6

 
0.1

Net cash used in investing activities
 
(50.0
)
 
(43.5
)
 
 
 

 
 

Financing activities
 
 

 
 

Payments of long-term debt and capital lease obligations
 
(1.6
)
 
(2.2
)
Proceeds from issuance of long-term debt
 
6.2

 
1.0

Purchase of treasury stock
 
(3.5
)
 
(0.3
)
Employee stock option exercises
 

 
0.4

Net cash provided by (used in) financing activities
 
1.1

 
(1.1
)
 
 
 

 
 

Effect of exchange rate changes on cash
 
2.2

 
(5.3
)
 
 
 

 
 

Net decrease in cash and cash equivalents
 
(20.5
)
 
(43.5
)
 
 
 

 
 

Cash and cash equivalents at beginning of period
 
282.5

 
249.2

 
 
 

 
 

Cash and cash equivalents at end of period
 
$
262.0

 
$
205.7

 
 
 

 
 

Supplemental cash flow information
 
 

 
 

     Interest paid
 
$
17.8

 
$
19.3

     Income taxes paid, net of refunds
 
$
31.6

 
$
5.5

 
See accompanying notes to condensed consolidated financial statements.

5



AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2016
(Unaudited)

1.
ORGANIZATION AND BASIS OF PRESENTATION

Organization American Axle & Manufacturing Holdings, Inc. (Holdings) and its subsidiaries (collectively, we, our, us or AAM) is a Tier I supplier to the automotive industry. We manufacture, engineer, design and validate driveline and drivetrain systems and related components and chassis modules for light trucks, sport utility vehicles (SUVs), passenger cars, crossover vehicles and commercial vehicles. Driveline and drivetrain systems include components that transfer power from the transmission and deliver it to the drive wheels. Our driveline, drivetrain and related products include axles, chassis modules, driveshafts, power transfer units, transfer cases, chassis and steering components, driveheads, transmission parts, electric drive systems and metal-formed products. In addition to locations in the United States (U.S.) (Michigan, Ohio and Indiana), we also have offices or facilities in Brazil, China, Germany, India, Japan, Luxembourg, Mexico, Poland, Scotland, South Korea, Sweden and Thailand.

Basis of Presentation We have prepared the accompanying interim condensed consolidated financial statements in accordance with the instructions to Form 10-Q under the Securities Exchange Act of 1934.  These condensed consolidated financial statements are unaudited but include all normal recurring adjustments, which we consider necessary for a fair presentation of the information set forth herein.  Results of operations for the periods presented are not necessarily indicative of the results for the full fiscal year.

The balance sheet at December 31, 2015 presented herein has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (GAAP) for complete consolidated financial statements.
 
In order to prepare the accompanying interim condensed consolidated financial statements, we are required to make estimates and assumptions that affect the reported amounts and disclosures in our interim condensed consolidated financial statements.  Actual results could differ from those estimates.

For further information, refer to the audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2015.

Effect of New Accounting Standards On March 31, 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-09 - Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The update is intended to simplify the current guidance for stock-based compensation for a range of issues including: the timing of income statement impact for tax benefits or deficiencies in excess of compensation cost, the classification of tax-related cash flows resulting from share based payments, the allowable threshold for tax withholding without resulting in liability award classification, and a policy election for estimating forfeiture rates or recognizing forfeitures as they occur. This guidance becomes effective for AAM at the beginning of our 2017 fiscal year and requires a retrospective, modified-retrospective, or prospective transition method depending on the applicable section of this ASU guidance. We are currently assessing the impact that this standard will have on our condensed consolidated financial statements.

On February 25, 2016, the FASB issued ASU 2016-02 - Leases (Topic 842), which supersedes the existing lease accounting guidance and establishes new criteria for recognizing lease assets and liabilities. The most significant impact of the update, to AAM, is that a lessee will be required to recognize a "right-of-use" asset and lease liability for operating lease agreements that were not previously included on the balance sheet under the existing lease guidance. A lessee will be permitted to make a policy election, excluding recognition of the right-of-use asset and associated liability for lease terms of 12 months or less. Expense recognition in the statement of income along with cash flow statement classification for both financing (capital) and operating leases under the new standard will not be significantly changed from existing lease guidance. Accounting for leases as a lessor under the new guidance remains also largely unchanged. This guidance becomes effective for AAM at the beginning of our 2019 fiscal year and requires transition under a modified retrospective method. We are currently assessing the impact that this standard will have on our condensed consolidated financial statements.


6

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


On May 1, 2015, the FASB issued ASU 2015-07 - Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent), which changes the disclosure requirements for investments in certain entities that calculate net asset value (NAV) per share. Under current accounting standards entities are permitted to estimate the fair value of certain investments using the investment's NAV as a practical expedient. The current disclosure guidance also permits entities to disclose the investment at NAV in the fair value hierarchy table as either Level 2 or Level 3, based upon certain criteria. The measurement basis utilizing NAV is different than the measurement criteria of all other investments which utilize inputs to calculate fair value. Due to this inconsistency, the FASB issued this ASU which prohibits entities from categorizing investments measured at NAV within the fair value hierarchy. AAM adopted this policy on January 1, 2016. Other than the change in presentation, the adoption of this new guidance will not have an impact on our condensed consolidated financial statements.

In 2014, the FASB issued ASU 2014-09 - Revenue from Contracts with Customers (Topic 606), which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The guidance is based on the principle that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to fulfill a contract. Entities have the option of using either a full retrospective or a modified retrospective approach for the adoption of the new standard. On March 17, 2016, the FASB issued ASU 2016-08 - Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross Versus Net), to further clarify the new standard's guidance on identifying gross versus net reporting in the context of a contract. Based on the clarification, an entity should analyze the principal versus agent relationship for each specified good or service within a contract. On April 14, 2016, the FASB issued ASU 2016-10 - Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, which better articulates the principle for determining whether promised goods or services are separately identifiable in the context of the contract. The guidance also excludes from an entity's performance obligation analysis, the requirement to assess certain promised contract goods and services deemed immaterial in the context of the contract. On August 12, 2015, the FASB issued ASU 2015-14 - Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, to formally defer the initial standard's effective date by one-year, making this guidance effective for AAM at the beginning of our 2018 fiscal year. We are currently assessing the impact that this standard will have on our condensed consolidated financial statements.

2.
INVENTORIES

We state our inventories at the lower of cost or market.  The cost of our inventories is determined using the FIFO method.  When we determine that our gross inventories exceed usage requirements, or if inventories become obsolete or otherwise not saleable, we record a provision for such loss as a component of our inventory accounts.

Inventories consist of the following: 
 
 
March 31, 2016
 
December 31, 2015
 
 
(in millions)
 
 
 
 
 
Raw materials and work-in-progress
 
$
228.1

 
$
228.7

Finished goods
 
30.5

 
31.1

Gross inventories
 
258.6

 
259.8

Inventory valuation reserves
 
(28.9
)
 
(29.3
)
Inventories, net
 
$
229.7

 
$
230.5

 

7

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


3.
LONG-TERM DEBT

Long-term debt consists of the following:
 
 
 
March 31, 2016
 
December 31, 2015
 
 
(in millions)
 
 
 
 
 
Revolving Credit Facility
 
$

 
$

7.75% Notes
 
200.0

 
200.0

6.625% Notes
 
550.0

 
550.0

6.25% Notes
 
400.0

 
400.0

5.125% Notes
 
200.0

 
200.0

Foreign credit facilities
 
43.9

 
38.0

Capital lease obligations
 
5.5

 
5.6

Total debt
 
1,399.4

 
1,393.6

    Less: Current portion of long-term debt
 
3.4

 
3.3

Long-term debt
 
1,396.0

 
1,390.3

    Less: Debt issuance costs
 
13.9

 
14.6

Long-term debt, net
 
$
1,382.1

 
$
1,375.7


Revolving Credit Facility As of March 31, 2016, the revolving credit facility provided up to $523.5 million of revolving bank financing commitments through September 13, 2018.  At March 31, 2016, we had $513.1 million available under the revolving credit facility.  This availability reflects a reduction of $10.4 million for standby letters of credit issued against the facility.

The revolving credit facility provides back-up liquidity for our foreign credit facilities.  We intend to use the availability of long-term financing under the revolving credit facility to refinance any current maturities related to such debt agreements that are not otherwise refinanced on a long-term basis in their local markets, except where otherwise reclassified to current portion of long-term debt on our Condensed Consolidated Balance Sheet.

We utilize local currency credit facilities to finance the operations of certain foreign subsidiaries.  At March 31, 2016, $43.9 million was outstanding under these facilities and an additional $75.6 million was available.

The weighted-average interest rate of our long-term debt outstanding was 6.5% at March 31, 2016 and December 31, 2015.  

8

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


4.
FAIR VALUE

The fair value accounting guidance defines fair value as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.”  The definition is based on an exit price rather than an entry price, regardless of whether the entity plans to hold or sell the asset.  This guidance also establishes a fair value hierarchy to prioritize inputs used in measuring fair value as follows:

Level 1:  Observable inputs such as quoted prices in active markets;
Level 2:  Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and
Level 3:  Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

Financial instruments   The estimated fair value of our financial assets and liabilities that are recognized at fair value on a recurring basis, using available market information and other observable data, are as follows:
 
 
 
March 31, 2016
 
December 31, 2015
 
 
 
 
Carrying Amount
 
Fair Value
 
Carrying Amount
 
Fair Value
 
Input
 
 
(in millions)
 
 
Balance Sheet Classification
 
 
 
 
 
 
 
 
 
 
Cash equivalents
 
$
63.2

 
$
63.2

 
$
61.7

 
$
61.7

 
Level 1
Currency forward contracts - Prepaid expenses and other current assets
 
 

 
 

 
 

 
 

 
 
Cash flow hedges
 
0.1

 
0.1

 

 

 
Level 2
Undesignated currency forward contracts
 
0.7

 
0.7

 
0.2

 
0.2

 
Level 2
Currency forward contracts - Other assets and deferred charges
 
 
 
 
 
 
 
 
 
 
     Cash flow hedges
 
1.7

 
1.7

 

 

 
Level 2
Currency forward contracts - Other accrued expenses
 
 
 
 
 
 
 
 
 
 
     Cash flow hedges
 
6.5

 
6.5

 
7.5

 
7.5

 
Level 2
     Undesignated currency forward contracts
 

 

 
1.9

 
1.9

 
Level 2
Currency forward contracts - Other long-term liabilities
 
 
 
 
 
 
 
 
 
 
     Cash flow hedges
 
5.3

 
5.3

 
5.9

 
5.9

 
Level 2

The carrying values of our cash, accounts receivable, accounts payable and accrued liabilities approximate their fair values due to the short-term maturities of these instruments.  The carrying values of our borrowings under the foreign credit facilities approximate their fair value due to the frequent resetting of the interest rates.  We estimated the fair value of the amounts outstanding on our debt using available market information and other observable data, to be as follows:
 
 
 
March 31, 2016
 
December 31, 2015
 
 
 
 
Carrying  Amount
 
Fair Value
 
Carrying  Amount
 
Fair Value
 
 
Input
 
 
(in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
Revolving Credit Facility
 
$

 
$

 
$

 
$

 
Level 2
7.75% Notes
 
200.0

 
218.0

 
200.0

 
218.5

 
Level 2
6.625% Notes
 
550.0

 
569.3

 
550.0

 
574.8

 
Level 2
6.25% Notes
 
400.0

 
412.0

 
400.0

 
415.0

 
Level 2
5.125% Notes
 
200.0

 
201.5

 
200.0

 
202.0

 
Level 2
 

9

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


5.
DERIVATIVES

Our business and financial results are affected by fluctuations in world financial markets, including interest rates and currency exchange rates.  Our hedging policy has been developed to manage these risks to an acceptable level based on management’s judgment of the appropriate trade-off between risk, opportunity and cost.  We do not hold financial instruments for trading or speculative purposes.

Currency forward contracts  From time to time, we use foreign currency forward contracts to reduce the effects of fluctuations in exchange rates, primarily relating to the Mexican Peso, Euro, Pound Sterling, Thai Baht, Swedish Krona, Chinese Yuan and Polish Zloty.  As of March 31, 2016, we have currency forward contracts outstanding with a notional amount of $215.1 million that hedge our exposure to changes in foreign currency exchange rates for certain payroll expenses through March 2019 and certain direct and indirect inventory and other working capital items through December 2016.  

The following table summarizes the reclassification of pre-tax derivative losses into net income from accumulated other comprehensive income (loss) for those derivative instruments designated as hedging instruments under Accounting Standards Codification 815 - Derivatives and Hedging (ASC 815):
 
 
 
 
Loss Reclassified During
 
Loss Expected to
 
 
Location of Loss
 
Three Months Ended
 
be Reclassified
 
 
  Reclassified into
 
March 31,
 
During the
 
 
  Net Income
 
2016
 
2015
 
Next 12 Months
 
 
 
 
(in millions)
 
 
 
 
 
 
 
 
 
Currency forward contracts
 
Cost of Goods Sold
 
$
(2.0
)
 
$
(1.5
)
 
$
(6.4
)
 

See Note 10 - Reclassifications Out of Accumulated Other Comprehensive Income (Loss) for amounts recognized in other comprehensive income (loss) during the three months ended March 31, 2016 and March 31, 2015.

The following table summarizes the amount and location of losses recognized in the Condensed Consolidated Statements of Income for those derivative instruments not designated as hedging instruments under ASC 815:

 
 
 
 
Loss Recognized During
 
 
Location of Loss
 
Three Months Ended
 
 
 Recognized in
 
March 31,
 
 
  Net Income
 
2016
 
2015
 
 
 
 
(in millions)
 
 
 
 
 
 
 
Currency forward contracts
 
Cost of Goods Sold
 
$
(0.5
)
 
$
(1.0
)
Currency forward contracts
 
Other Income, Net
 
(0.7
)
 




10

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


6.
EMPLOYEE BENEFIT PLANS

The components of net periodic benefit cost (credit) are as follows:

 
 
Pension Benefits
 
 
Three Months Ended
 
 
March 31,
 
 
2016
 
2015
 
 
(in millions)
 
 
 
 
 
Service cost
 
$
0.7

 
$
0.8

Interest cost
 
7.3

 
7.2

Expected asset return
 
(10.7
)
 
(10.6
)
Amortized loss
 
1.4

 
1.7

Net periodic benefit credit
 
$
(1.3
)
 
$
(0.9
)
 
 
 
 
 
Other Postretirement Benefits
 
 
Three Months Ended
 
 
March 31,
 
 
2016
 
2015
 
 
(in millions)
 
 
 

 
 

Service cost
 
$
0.1

 
$
0.1

Interest cost
 
3.5

 
3.8

Amortized loss
 
0.1

 
0.2

Amortized prior service credit
 
(0.7
)
 
(0.7
)
Net periodic benefit cost
 
$
3.0

 
$
3.4


The noncurrent liabilities associated with our pension and other postretirement benefit plans are classified as postretirement benefits and other long-term liabilities on our Condensed Consolidated Balance Sheets. As of March 31, 2016 and December 31, 2015, we have a noncurrent pension liability of $103.4 million and $103.1 million, respectively. As of March 31, 2016 and December 31, 2015, we have a noncurrent other postretirement benefits liability of $545.7 million and $559.0 million, respectively.

Due to the availability of our prefunding balances (previous contributions in excess of prior required pension contributions) for our U.S. pension plans and our contributions made in 2015 for our U.K. pension plan, we are not required to make any cash payments to our pension trusts in 2016. We expect our cash payments for other postretirement benefit obligations in 2016, net of GM cost sharing, to be approximately $16 million.


11

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


7.
PRODUCT WARRANTIES

We record a liability for estimated warranty obligations at the dates our products are sold. These estimates are established using sales volumes and internal and external warranty data where there is no payment history and historical information about the average cost of warranty claims for customers with prior claims. We estimate our costs based on the contractual arrangements with our customers, existing customer warranty terms and internal and external warranty data, which includes a determination of our warranty claims and actions taken to improve product quality and minimize warranty claims. We continuously evaluate these estimates and our customers' administration of their warranty programs. We closely monitor actual warranty claim data and adjust the liability, as necessary, on a quarterly basis.

The following table provides a reconciliation of changes in the product warranty liability:

 
 
Three Months Ended
 
 
March 31,
 
 
2016
 
2015
 
 
(in millions)
 
 
 
 
 
Beginning balance
 
$
36.6

 
$
12.4

     Accruals
 
3.9

 
4.5

Payments
 
(0.5
)
 
(0.2
)
     Adjustment to prior period accruals
 
(3.1
)
 
1.4

     Foreign currency translation
 
0.1

 
(0.2
)
Ending balance
 
$
37.0

 
$
17.9



8.
INCOME TAXES

 We are required to adjust our effective tax rate each quarter to estimate our annual effective tax rate. We must also record the tax impact of certain discrete, unusual or infrequently occurring items, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, in the interim period in which they occur. In addition, jurisdictions with a projected loss for the year or a year-to-date loss where no tax benefit can be recognized are excluded from the estimated annual effective tax rate. The impact of such an exclusion could result in a higher or lower effective tax rate during a particular quarter, based upon the mix and timing of actual earnings versus annual projections.

Income tax expense was $15.3 million in the three months ended March 31, 2016 as compared to $9.2 million in the three months ended March 31, 2015.  Our effective income tax rate was 20.0% in the first quarter of 2016 as compared to 14.8% in the first quarter of 2015. Our effective tax rate for the three months ended March 31, 2016 is higher than our effective tax rate for the three months ended March 31, 2015 primarily as a result of an increase in the proportionate share of income attributable to higher tax rate jurisdictions. Our income tax expense and effective tax rate for the three months ended March 31, 2016 and March 31, 2015 primarily reflect favorable foreign tax rates, along with our inability to realize a tax benefit for current foreign losses.
    
Based on the status of audits outside the U.S., and the protocol of finalizing audits by the relevant tax authorities, it is not possible to estimate the impact of changes, if any, to previously recorded uncertain tax positions. As of March 31, 2016 and December 31, 2015, we have recorded a liability for unrecognized income tax benefits and related interest and penalties of $27.8 million and $48.5 million, respectively. In January 2016, we completed negotiations with the Mexican tax authorities to settle transfer pricing audits. Including these settlements, we made payments of $26.1 million in the first quarter of 2016 to the Mexican tax authorities related to transfer pricing matters and we expect our total transfer pricing related payments in 2016 to be in the range of $30 to $40 million.
 
Although it is difficult to estimate with certainty the amount of our tax liabilities for the years that remain subject to audit, we do not expect the settlements will be materially different from what we have recorded in unrecognized tax benefits. We will continue to monitor the progress and conclusions of future audits and will adjust our estimated liability as necessary.


12

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


9.
EARNINGS PER SHARE (EPS)

We present earnings per share (EPS) using the two-class method. This method allocates undistributed earnings between common shares and non-vested share based payment awards that entitle the holder to nonforfeitable dividend rights. Our participating securities include non-vested restricted stock units.

The following table sets forth the computation of our basic and diluted EPS available to shareholders of common stock (excluding participating securities):

 
 
Three Months Ended
 
 
March 31,
 
 
2016
 
2015
 
 
(in millions, except per share data)
Numerator
 
 
 
 
Net income
 
$
61.1

 
$
53.2

    Less: Net income attributable to participating securities
 
(1.4
)
 
(1.2
)
Net income attributable to common shareholders - Basic
 
$
59.7

 
$
52.0

Undistributed earnings reallocated to common shareholders under two step dilutive method
 

 

Net income attributable to common shareholders - Dilutive
 
$
59.7

 
$
52.0

 
 
 
 
 
Denominators
 
 

 
 

Basic common shares outstanding -
 
 

 
 

   Weighted-average shares outstanding
 
77.9

 
77.5

        Less: Participating securities
 
(1.7
)
 
(1.7
)
    Weighted-average common shares outstanding
 
76.2

 
75.8

 
 
 
 
 
Effect of dilutive securities -
 
 

 
 

   Dilutive stock-based compensation
 
0.3

 
0.3

 
 


 


Diluted shares outstanding -
 
 

 
 

   Adjusted weighted-average shares after assumed conversions
 
76.5

 
76.1

 
 
 

 
 

Basic EPS
 
$
0.78

 
$
0.69

 
 
 

 
 

Diluted EPS
 
$
0.78

 
$
0.68

 
Certain exercisable stock options were excluded from the computations of diluted EPS because the exercise price of these options was greater than the average period market prices. The number of stock options outstanding, which were not included in the calculation of diluted EPS, was 0.2 million at both March 31, 2016 and March 31, 2015. The exercise price related to the excluded exercisable stock options was $26.02 at both March 31, 2016 and March 31, 2015.


13

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


10.
RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Reclassification adjustments and other activity impacting accumulated other comprehensive income (loss) during the three months ended March 31, 2016 and March 31, 2015 are as follows (in millions):

 
Defined Benefit Plans
 
Foreign Currency Translation Adjustments
 
Unrecognized Loss on Cash Flow Hedges
 
Total
Balance at December 31, 2015
$
(223.9
)
 
$
(119.2
)
 
$
(13.4
)
 
$
(356.5
)
 
 
 
 
 
 
 
 
Other comprehensive income before reclassifications
5.7

 
15.0

 
1.4

 
22.1

 
 
 
 
 
 
 
 
Income tax effect of other comprehensive income before reclassifications
(2.0
)
 

 

 
(2.0
)
 
 
 
 
 
 
 
 
Amounts reclassified from accumulated other comprehensive loss
0.8

(a)

 
2.0

(b)
2.8

 
 
 
 
 
 
 
 
Income tax benefit reclassified into net income
(0.3
)
 

 

 
(0.3
)
 
 
 
 
 
 
 
 
Net current period other comprehensive income
4.2

 
15.0

 
3.4

 
22.6

 
 
 
 
 
 
 
 
Balance at March 31, 2016
$
(219.7
)
 
$
(104.2
)
 
$
(10.0
)
 
$
(333.9
)


 
Defined Benefit Plans
 
Foreign Currency Translation Adjustments
 
Unrecognized Loss on Cash Flow Hedges
 
Total
Balance at December 31, 2014
$
(240.6
)
 
$
(48.9
)
 
$
(7.4
)
 
$
(296.9
)
 
 
 
 
 
 
 
 
Other comprehensive income (loss) before reclassifications
4.7

 
(31.5
)
 
(2.0
)
 
(28.8
)
 
 
 
 
 
 
 
 
Income tax effect of other comprehensive income (loss) before reclassifications
(1.6
)
 

 

 
(1.6
)
 
 
 
 
 
 
 
 
Amounts reclassified from accumulated other comprehensive loss
1.2

(a)

 
1.5

(b)
2.7

 
 
 
 
 
 
 
 
Income tax benefit reclassified into net income
(0.4
)
 

 

 
(0.4
)
 
 
 
 
 
 
 
 
Net current period other comprehensive income (loss)
3.9

 
(31.5
)
 
(0.5
)
 
(28.1
)
 
 
 
 
 
 
 
 
Balance at March 31, 2015
$
(236.7
)
 
$
(80.4
)
 
$
(7.9
)
 
$
(325.0
)

(a)
The amount reclassified from AOCI included $1.1 million in cost of goods sold (COGS) and $(0.3) million in selling, general & administrative expenses (SG&A) for the three months ended March 31, 2016 and $1.4 million in COGS and $(0.2) million in SG&A for the three months ended March 31, 2015.
 
 
(b)
The amounts reclassified from AOCI are included in COGS.


14

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


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 March 31,
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Holdings
 
AAM Inc.
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Elims
 
Consolidated
2016
 
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
 
 
 
 
 
 
 
 
 
 
 
External
 
$

 
$
283.2

 
$
54.8

 
$
631.2

 
$

 
$
969.2

Intercompany
 

 
1.6

 
59.7

 
3.7

 
(65.0
)
 

Total net sales
 

 
284.8

 
114.5

 
634.9

 
(65.0
)
 
969.2

Cost of goods sold
 

 
276.3

 
92.5

 
491.4

 
(65.0
)
 
795.2

Gross profit
 

 
8.5

 
22.0

 
143.5

 

 
174.0

Selling, general and administrative expenses
 

 
67.5

 

 
8.1

 

 
75.6

Operating income (loss)
 

 
(59.0
)
 
22.0

 
135.4

 

 
98.4

Non-operating income (expense), net
 

 
(24.3
)
 
3.0

 
(0.7
)
 

 
(22.0
)
Income (loss) before income taxes
 

 
(83.3
)
 
25.0

 
134.7

 

 
76.4

Income tax expense
 

 
7.8

 
0.1

 
7.4

 

 
15.3

Earnings (loss) from equity in subsidiaries
 
61.1

 
92.9

 
(9.6
)
 

 
(144.4
)
 

Net income before royalties
 
61.1

 
1.8

 
15.3

 
127.3

 
(144.4
)
 
61.1

Royalties
 

 
59.3

 

 
(59.3
)
 

 

Net income after royalties
 
61.1

 
61.1

 
15.3

 
68.0

 
(144.4
)
 
61.1

Other comprehensive income, net of tax
 
22.6

 
22.6

 
15.7

 
19.8

 
(58.1
)
 
22.6

Comprehensive income
 
$
83.7

 
$
83.7

 
$
31.0

 
$
87.8

 
$
(202.5
)
 
$
83.7


15

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Holdings
 
AAM Inc.
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Elims
 
Consolidated
2015
 
 

 
 

 
 

 
 

 
 

 
 

Net sales
 
 

 
 

 
 

 
 

 
 

 
 

External
 
$

 
$
274.9

 
$
57.2

 
$
637.0

 
$

 
$
969.1

Intercompany
 

 
3.1

 
64.4

 
4.6

 
(72.1
)
 

Total net sales
 

 
278.0

 
121.6

 
641.6

 
(72.1
)
 
969.1

Cost of goods sold
 

 
270.9

 
100.7

 
516.8

 
(72.1
)
 
816.3

Gross profit
 

 
7.1

 
20.9

 
124.8

 

 
152.8

Selling, general and administrative expenses
 

 
59.5

 

 
9.0

 

 
68.5

Operating income (loss)
 

 
(52.4
)
 
20.9

 
115.8

 

 
84.3

Non-operating income (expense), net
 

 
(25.4
)
 
2.3

 
1.2

 

 
(21.9
)
Income (loss) before income taxes
 

 
(77.8
)
 
23.2

 
117.0

 

 
62.4

Income tax expense (benefit)
 

 
4.5

 
(0.4
)
 
5.1

 

 
9.2

Earnings (loss) from equity in subsidiaries
 
53.2

 
74.9

 
(6.0
)
 

 
(122.1
)
 

Net income (loss) before royalties
 
53.2

 
(7.4
)
 
17.6

 
111.9

 
(122.1
)
 
53.2

Royalties
 

 
60.6

 

 
(60.6
)
 

 

Net income after royalties
 
53.2

 
53.2

 
17.6

 
51.3

 
(122.1
)
 
53.2

Other comprehensive loss, net of tax
 
(28.1
)
 
(28.1
)
 
(27.0
)
 
(28.7
)
 
83.8

 
(28.1
)
Comprehensive income (loss)
 
$
25.1

 
$
25.1

 
$
(9.4
)
 
$
22.6

 
$
(38.3
)
 
$
25.1


16

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 
Condensed Consolidating Balance Sheets
 
 
 
 
 
 
 
 
 
 
(in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Holdings
 
AAM Inc.
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Elims
 
Consolidated
March 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
 
Current assets
 
 
 
 
 
 
 
 
 
 
 
 
    Cash and cash equivalents
 
$

 
$
107.2

 
$

 
$
154.8

 
$

 
$
262.0

    Accounts receivable, net
 

 
157.5

 
29.4

 
457.0

 

 
643.9

    Intercompany receivables
 

 
255.2

 
267.8

 
8.6

 
(531.6
)
 

    Inventories, net
 

 
60.0

 
31.1

 
138.6

 

 
229.7

    Prepaid expenses and other
 

 
28.1

 
0.5

 
50.8

 

 
79.4

Total current assets
 

 
608.0

 
328.8

 
809.8

 
(531.6
)
 
1,215.0

Property, plant and equipment, net
 

 
213.8

 
93.0

 
756.7

 

 
1,063.5

Goodwill
 

 

 
147.8

 
6.9

 

 
154.7

Intercompany notes and accounts receivable
 

 
377.3

 
252.0

 

 
(629.3
)
 

Other assets and deferred charges
 

 
669.1

 
42.5

 
161.0

 

 
872.6

Investment in subsidiaries
 
711.2

 
1,419.4

 

 

 
(2,130.6
)
 

Total assets
 
$
711.2

 
$
3,287.6

 
$
864.1

 
$
1,734.4

 
$
(3,291.5
)
 
$
3,305.8

Liabilities and Stockholders’ Equity
 
 

 
 

 
 

 
 

 
 

 
 

Current liabilities
 
 

 
 

 
 

 
 

 
 

 
 

Current portion of long-term debt
 
$

 
$

 
$

 
$
3.4

 
$

 
$
3.4

Accounts payable
 

 
139.8

 
42.8

 
300.8

 

 
483.4

Intercompany payables
 

 
263.3

 
155.8

 
112.5

 
(531.6
)
 

Accrued expenses and other
 

 
111.8

 
4.6

 
114.6

 

 
231.0

Total current liabilities
 

 
514.9

 
203.2

 
531.3

 
(531.6
)
 
717.8

Intercompany notes and accounts payable
 
324.3

 
2.5

 
9.4

 
293.1

 
(629.3
)
 

Long-term debt, net
 

 
1,337.2

 
4.4

 
40.5

 

 
1,382.1

Investment in subsidiaries obligation
 

 

 
111.6

 

 
(111.6
)
 

Other long-term liabilities
 

 
721.8

 
0.6

 
96.6

 

 
819.0

Total liabilities
 
324.3

 
2,576.4

 
329.2

 
961.5

 
(1,272.5
)
 
2,918.9

Total stockholders’ equity
 
386.9

 
711.2

 
534.9

 
772.9

 
(2,019.0
)
 
386.9

Total liabilities and stockholders’ equity
 
$
711.2

 
$
3,287.6

 
$
864.1

 
$
1,734.4

 
$
(3,291.5
)
 
$
3,305.8


17

AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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