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

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 2, 2017

METALDYNE PERFORMANCE GROUP INC.
(Exact name of registrant as specified in its charter)

 
					
Delaware	 	001-36774	 	47-1420222	
(State or other jurisdiction
of incorporation)	 	(Commission
File Number)	 	(IRS Employer
Identification Number)	

One Towne Square, Suite 550,
Southfield, MI	 	48076	
(Address of principal executive offices)	 	(Zip Code)	
Registrant’s telephone number, including area code: (248) 727-1800
N/A
(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
☒	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)	
 
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)	
 
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))	
 
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))	

 

Item 2.02	Results of Operations and Financial Condition.	
In connection with the transactions contemplated by that certain Agreement and Plan of Merger, dated as of November 3, 2016, by and among Metaldyne Performance Group Inc. (“ we ” or the “ Company ”), American Axle & Manufacturing Holdings, Inc. (“ American Axle ”) and Alpha SPV I, Inc. (“Merger Sub”), American Axle intends to commence an offering of its new senior unsecured notes as contemplated by and described in the related Registration Statement on Form S-4 (File No. 333-215161), as may be amended from time to time, filed by American Axle. The Company has made available to American Axle in connection with that proposed offering the Company’s audited consolidated financial statements as of December 31, 2016 and 2015, and for each of the years in the three year period ended December 31, 2016, and related financial statement schedule, which are attached hereto as Exhibit 99.1 and Exhibit 99.2, respectively.
 
Item 8.01	Other Events	
The disclosure set forth in Item 2.02 of this Current Report on Form 8-K is hereby incorporated by reference in its entirety into this Item 8.01.
Management’s Annual Report on Internal Control over Financial Reporting
The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the U.S. Securities Exchange Act of 1934, as amended (the “ Exchange Act ”). The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s internal control over financial reporting based on the framework in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, the Company’s management has concluded that, as of December 31, 2016, the Company’s internal control over financial reporting was effective.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Deloitte & Touche LLP, an independent registered public accounting firm, has audited the effectiveness of the Company’s internal control over financial reporting as of December 31, 2016 as stated in its report which is included in Exhibit 99.3 attached hereto.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits .

Exhibit
Number	  	Description of Exhibit	
		
99.1	  	Audited consolidated financial statements of Metaldyne Performance Group Inc. as of December 31, 2016 and 2015, and for each of the years in the three year period ended December 31, 2016 (including reports of independent registered public accounting firms)	
		
99.2	  	Financial Statement Schedule for each of the years in the three year period ended December 31, 2016, 2015, and 2014.	
		
99.3	  	Audit report of independent registered public accounting firm on internal control over financial reporting as of December 31, 2016	
		
99.4	  	Consent of Deloitte & Touche LLP, independent registered public accounting firm	
		
99.5	  	Consent of KPMG LLP, independent registered public accounting firm	
The information contained in Items 2.02 and 9.01 of this Current Report on Form 8-K shall be deemed “filed” for purposes of the Exchange Act.
Cautionary Note Regarding Forward-Looking Statements
This Current Form on 8-K and the Exhibits filed hereby contain certain “forward-looking statements” about the Company’s financial results and estimates and business prospects within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by words such as “expects,” “intends,” “anticipates,” “plans,” “projects,” “believes,” “seeks,” “targets,” “forecasts,” “estimates,” “will” or other words of similar meaning and include, but are not limited to, statements regarding the outlook for the Company’s

future business, prospects and financial performance; the industry outlook, our backlog and our 2016 financial guidance. Forward-looking statements are based on management’s current expectations and assumptions, which are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Actual outcomes and results may differ materially due to global political, economic, business, competitive, market, regulatory, and other factors and risks, among them being: volatility in the global economy impacting demand for new vehicles and our products; a decline in vehicle production levels, particularly with respect to platforms for which we are a significant supplier, or the financial distress of any of our major customers; cyclicality and seasonality in the light vehicle, industrial and commercial vehicle markets; our significant competition; our dependence on large-volume customers for current and future sales; a reduction in outsourcing by our customers, the loss or discontinuation of material production or programs, or a failure to secure sufficient alternative programs; our failure to offset continuing pressure from our customers to reduce our prices; our inability to realize all of the sales expected from awarded business or fully recover pre-production costs; our failure to increase production capacity or over-expanding our production in times of overcapacity; our reliance on key machinery and tooling to manufacture components for powertrain and safety-critical systems that cannot be easily replicated; program launch difficulties; a disruption in our supply or delivery chain which causes one or more of our customers to halt production; the damage to or termination of our relationships with key third-party suppliers; work stoppages or production limitations at one or more of our customer’s facilities; a catastrophic loss of one of our key manufacturing facilities; failure to protect our know-how and intellectual property; the disruption or harm to our business as a result of any acquisitions or joint ventures we make; a significant increase in the prices of raw materials and commodities we use; our failure to maintain our cost structure; the incurrence of significant costs if we close any of our manufacturing facilities; potential significant costs at our facility in Sandusky, Ohio; the incurrence of significant costs, liabilities, and obligations as a result of environmental requirements and other regulatory risks; extensive and growing governmental regulations; the incurrence of material costs related to legal proceedings; our inability to recruit and retain key personnel; any failure to maintain satisfactory labor relations; pension and other postretirement benefit obligations; risks related to our global operations; competitive threats posed by global operations and entering new markets; foreign exchange rate fluctuations; our substantial indebtedness; our inability, or the inability of our customers or our suppliers, to obtain and maintain sufficient debt financing, including working capital lines; our exposure to a number of different tax uncertainties; and the mix of profits and losses in various jurisdictions adversely affecting our tax rate.
For the reasons described above, we caution you against relying on any forward-looking statements, which should also be read in conjunction with the other cautionary statements that are included elsewhere in this Current Form on 8-K or the Exhibits filed hereby and in our other public filings, including under the heading “Risk Factors” in our filings that we make from time to time with the Securities and Exchange Commission. You should not consider any list of such factors to be an exhaustive statement of all the risks, uncertainties, or potentially inaccurate assumptions that could cause our current expectations or beliefs to change. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update or revise any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, except as otherwise may be required by law.
Additional Information and Where to Find It
This communication is not intended to and shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. This communication may be deemed to be solicitation material in connection with the proposed merger of the Company with Merger Sub, pursuant to which the Company would become a wholly-owned subsidiary of American Axle. In connection with the proposed merger, American Axle has filed with the U.S. Securities and Exchange Commission (the “ SEC ”) a registration statement on Form S-4 (File No. 333-215161) that includes a preliminary joint proxy statement of the Company and American Axle and also constitutes a preliminary prospectus of American Axle. The Company and American Axle may also file other documents with the SEC regarding the proposed merger. INVESTORS ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS THAT ARE FILED OR WILL BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS THERETO, CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER AND RELATED MATTERS. Investors and security holders may obtain free copies of the joint proxy statement/prospectus (when available) and other documents if and when filed with the SEC by American Axle and the Company through the

website maintained by the SEC at www.sec.gov . Copies of documents filed with the SEC by American Axle will be made available free of charge on American Axle’s investor relations website. Copies of documents filed with the SEC by the Company will be made available free of charge on the Company’s investor relations website.
Participants in the Solicitation
The Company and its directors and executive officers may be deemed to be participants in the solicitation of proxies from its stockholders in respect of the proposed merger. Information regarding the Company’s directors and executive officers is contained in the Company’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, are contained in the joint proxy statement/prospectus (or will be contained in any amendments or supplements thereto) and other relevant materials to be filed with the SEC when they become available.

SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	 	METALDYNE PERFORMANCE GROUP INC.	
		
By:	 	/s/ Thomas M. Dono, Jr.	
	 	Name:	 	Thomas M. Dono, Jr.	
	 	Title:	 	Executive Vice President, General Counsel & Secretary	
Date: March 2, 2017

METALDYNE PERFORMANCE GROUP INC.
Exhibit Index

Exhibit
Number	  	Description of Exhibit	
		
99.1	  	Audited consolidated financial statements of Metaldyne Performance Group Inc. as of December 31, 2016 and 2015, and for each of the years in the three year period ended December 31, 2016 (including reports of independent registered public accounting firms)	
		
99.2	  	Financial Statement Schedule for each of the years in the three year period ended December 31, 2016, 2015, and 2014.	
		
99.3	  	Audit report of independent registered public accounting firm on internal control over financial reporting as of December 31, 2016	
		
99.4	  	Consent of Deloitte & Touche LLP, independent registered public accounting firm	
		
99.5	  	Consent of KPMG LLP, independent registered public accounting firm	

Exhibit 99.1
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO FINANCIAL STATEMENTS

 	  	Page	 	
FINANCIAL STATEMENTS:	  				
		
CONSOLIDATED FINANCIAL STATEMENTS OF METALDYNE PERFORMANCE GROUP INC.	  				
		
Reports of Independent Registered Public Accounting Firms	  	 	2	 	
		
Balance Sheets as of December 31, 2016 and December 31, 2015	  	 	4	 	
		
Statements of Operations for the Years Ended December 31, 2016, 2015, and 2014	  	 	5	 	
		
Statements of Comprehensive Income for the Years Ended December 31, 2016, 2015, and 2014	  	 	6	 	
		
Statements of Stockholders’ Equity for the Years Ended December 31, 2016, 2015, and 2014	  	 	7	 	
		
Statements of Cash Flows for the Years Ended December 31, 2016, 2015, and 2014	  	 	8	 	
		
Notes to the Consolidated Financial Statements	  	 	9	 	

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Metaldyne Performance Group Inc.
Southfield, MI
We have audited the accompanying consolidated balance sheet of Metaldyne Performance Group Inc. and subsidiaries (the “Company”) as of December 31, 2016, and the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for the year ended December 31, 2016. Our audit also included the financial statement schedule listed in the Index at Item 9.01. These financial statements and the financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on the financial statements and financial statement schedule based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Metaldyne Performance Group Inc. and subsidiaries as of December 31, 2016, and the results of their operations and their cash flows for the year ended December 31, 2016, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2016, based on the criteria established in Internal Control — Integrated Framework (2013)  issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 2, 2017 expressed an unqualified opinion on the Company’s internal control over financial reporting.

/s/ Deloitte & Touche LLP	
	
Detroit, MI	
March 2, 2017	
 
2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors
Metaldyne Performance Group, Inc.
We have audited the accompanying consolidated balance sheet of Metaldyne Performance Group Inc. and subsidiaries as of December 31, 2015 and the related consolidated statements of operations, comprehensive income, stockholders’ equity (deficit) and cash flows for each of the years in the two-year period ended December 31, 2015. In connection with our audits of the consolidated financial statements, we also have audited financial statement schedule II: Valuation and Qualifying Accounts for each of the years in the two-year period ended December 31, 2015. These consolidated financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audits
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Metaldyne Performance Group, Inc. and subsidiaries as of December 31, 2015 and the results of their operations and their cash flows for each of the years in the two-year period ended December 31, 2015, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the related financial statement schedule for each of the years in the two-year period ended December 31, 2015, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
/s/ KPMG LLP
Detroit, Michigan
February 29, 2016, except for the effects of the retrospective application of ASU 2015-03, Interest – Imputation of Interest (Topic 835-30), as disclosed in Note 4, to which the date is March 2, 2017
 
3

METALDYNE PERFORMANCE GROUP INC.
CONSOLIDATED BALANCE SHEETS
(In millions, except per share data)

 	  	December 31,	 	
 	  	2016	 	 	2015	 	
Assets	  				 				
Current assets:	  				 				
Cash and cash equivalents	  	$	209.7	 	 	 	168.2	 	
Receivables, net:	  				 				
Trade	  	 	314.6	 	 	 	309.1	 	
Other	  	 	34.8	 	 	 	35.4	 	
	  	 	 	 	 	 	 	 	
Total receivables, net	  	 	349.4	 	 	 	344.5	 	
Inventories	  	 	168.4	 	 	 	186.8	 	
Prepaid expenses	  	 	11.5	 	 	 	15.0	 	
Other assets	  	 	52.7	 	 	 	21.5	 	
	  	 	 	 	 	 	 	 	
Total current assets	  	 	791.7	 	 	 	736.0	 	
Property and equipment, net	  	 	831.6	 	 	 	786.0	 	
Goodwill	  	 	907.7	 	 	 	907.7	 	
Amortizable intangible assets, net	  	 	639.1	 	 	 	708.9	 	
Deferred income taxes	  	 	7.4	 	 	 	1.7	 	
Other assets	  	 	13.0	 	 	 	17.3	 	
	  	 	 	 	 	 	 	 	
Total assets	  	$	3,190.5	 	 	 	3,157.6	 	
	  	 	 	 	 	 	 	 	
Liabilities and Stockholders’ Equity	  				 				
Current liabilities:	  				 				
Accounts payable	  	$	260.5	 	 	 	248.9	 	
Accrued compensation	  	 	49.6	 	 	 	55.2	 	
Accrued liabilities	  	 	77.1	 	 	 	66.8	 	
Short-term debt	  	 	1.0	 	 	 	0.7	 	
Current maturities, long-term debt and capital lease obligations	  	 	13.2	 	 	 	14.5	 	
	  	 	 	 	 	 	 	 	
Total current liabilities	  	 	401.4	 	 	 	386.1	 	
Long-term debt, less current maturities	  	 	1,809.2	 	 	 	1,827.1	 	
Capital lease obligations, less current maturities	  	 	22.7	 	 	 	22.5	 	
Deferred income taxes	  	 	223.7	 	 	 	231.3	 	
Other long-term liabilities	  	 	54.3	 	 	 	51.6	 	
	  	 	 	 	 	 	 	 	
Total liabilities	  	 	2,511.3	 	 	 	2,518.6	 	
	  	 	 	 	 	 	 	 	
Stockholders’ equity:	  				 				
Common Stock: par value of $0.001 per share, 400 authorized, and 67.6 and 67.9 issued and outstanding, respectively	  	 	0.1	 	 	 	0.1	 	
Common stock held in treasury, at cost: 1.9 and zero shares, respectively	  	 	(29.5	) 	 	 	—  	 	
Paid-in capital	  	 	880.7	 	 	 	856.2	 	
Accumulated deficit	  	 	(92.0	) 	 	 	(162.9	) 	
Accumulated other comprehensive loss	  	 	(83.5	) 	 	 	(57.3	) 	
	  	 	 	 	 	 	 	 	
Total equity attributable to stockholders	  	 	675.8	 	 	 	636.1	 	
Noncontrolling interest	  	 	3.4	 	 	 	2.9	 	
	  	 	 	 	 	 	 	 	
Total stockholders’ equity	  	 	679.2	 	 	 	639.0	 	
	  	 	 	 	 	 	 	 	
Total liabilities and stockholders’ equity	  	$	3,190.5	 	 	 	3,157.6	 	
	  	 	 	 	 	 	 	 	
See accompanying notes to consolidated financial statements.
 
4

METALDYNE PERFORMANCE GROUP INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share amounts)

 	  	Year Ended
December 31,
2016	 	 	Year Ended
December 31,
2015	 	 	Year Ended
December 31,
2014	 	
Net sales	  	$	2,790.7	 	 	 	3,047.3	 	 	 	2,717.0	 	
Cost of sales	  	 	2,321.5	 	 	 	2,531.3	 	 	 	2,294.1	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Gross profit	  	 	469.2	 	 	 	516.0	 	 	 	422.9	 	
Selling, general and administrative expenses	  	 	242.3	 	 	 	249.6	 	 	 	194.6	 	
Acquisition costs	  	 	—  	 	 	 	—  	 	 	 	13.0	 	
Goodwill impairment	  	 	—  	 	 	 	—  	 	 	 	11.8	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Operating profit	  	 	226.9	 	 	 	266.4	 	 	 	203.5	 	
Interest expense, net	  	 	103.5	 	 	 	107.5	 	 	 	99.9	 	
Loss on debt extinguishment	  	 	—  	 	 	 	0.4	 	 	 	60.7	 	
Other, net	  	 	(11.9	) 	 	 	(15.4	) 	 	 	(11.3	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Other expense, net	  	 	91.6	 	 	 	92.5	 	 	 	149.3	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Income before tax	  	 	135.3	 	 	 	173.9	 	 	 	54.2	 	
Income tax expense (benefit)	  	 	38.4	 	 	 	48.1	 	 	 	(19.1	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net income	  	 	96.9	 	 	 	125.8	 	 	 	73.3	 	
Income attributable to noncontrolling interest	  	 	0.6	 	 	 	0.4	 	 	 	0.4	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net income attributable to stockholders	  	$	96.3	 	 	 	125.4	 	 	 	72.9	 	

Basic weighted average shares outstanding	  	 	67.5	 	 	 	67.3	 	 	 	67.1	 	
Diluted weighted average shares outstanding	  	 	69.3	 	 	 	69.7	 	 	 	68.5	 	
				
Net income per share attributable to stockholders	  				 				 				
Basic	  	$	1.43	 	 	 	1.86	 	 	 	1.09	 	
Diluted	  	 	1.39	 	 	 	1.80	 	 	 	1.06	 	
See accompanying notes to consolidated financial statements.
 
5

METALDYNE PERFORMANCE GROUP INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)

 	  	Year Ended
December 31,
2016	 	 	Year Ended
December 31,
2015	 	 	Year Ended
December 31,
2014	 	
Net income	  	$	96.9	 	 	 	125.8	 	 	 	73.3	 	
Other comprehensive loss, net of tax:	  				 				 				
Foreign currency translation	  	 	(21.7	) 	 	 	(24.3	) 	 	 	(23.9	) 	
Net actuarial gain (loss) on defined benefit plans (net of tax of $1.4, $(0.5), and $1.6, respectively)	  	 	(4.8	) 	 	 	1.8	 	 	 	(8.0	) 	
Losses on defined benefit plans recognized in net income	  	 	0.2	 	 	 	0.4	 	 	 	—  	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Other comprehensive loss, net of tax	  	 	(26.3	) 	 	 	(22.1	) 	 	 	(31.9	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Comprehensive income	  	 	70.6	 	 	 	103.7	 	 	 	41.4	 	
Less comprehensive income attributable to noncontrolling interest	  	 	0.5	 	 	 	0.4	 	 	 	0.4	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Comprehensive income attributable to stockholders	  	$	70.1	 	 	 	103.3	 	 	 	41.0	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
See accompanying notes to consolidated financial statements.
 
6

METALDYNE PERFORMANCE GROUP INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In millions)

 	  	Common
stock	 	  	Common
stock
held in
treasury	 	 	Paid-in
capital	 	 	Accumulated
Deficit	 	 	Accumulated
other
comprehensive
loss	 	 	Noncontrolling
interest	 	 	Total
stockholders’
equity	 	
Balance, December 31, 2013	  	$	0.1	 	  	 	—  	 	 	 	557.5	 	 	 	(231.4	) 	 	 	(3.3	) 	 	 	2.1	 	 	 	325.0	 	
Recognition of the Grede Transaction	  				  				 	 	258.6	 	 				 				 				 	 	258.6	 	
Pre-combination issuance of Grede membership interests	  				  				 	 	1.9	 	 				 				 				 	 	1.9	 	
Dividends	  				  				 				 	 	(111.3	) 	 				 				 	 	(111.3	) 	
Other	  				  				 	 	(2.4	) 	 				 				 				 	 	(2.4	) 	
Stock-based compensation expense	  				  				 	 	17.3	 	 				 				 				 	 	17.3	 	
Offering related costs	  				  				 	 	(5.6	) 	 				 				 				 	 	(5.6	) 	
Net income	  				  				 				 	 	72.9	 	 				 	 	0.4	 	 	 	73.3	 	
Other comprehensive loss	  				  				 				 				 	 	(31.9	) 	 				 	 	(31.9	) 	
	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance, December 31, 2014	  	$	0.1	 	  	 	—  	 	 	 	827.3	 	 	 	(269.8	) 	 	 	(35.2	) 	 	 	2.5	 	 	 	524.9	 	
Dividends	  				  				 				 	 	(18.5	) 	 				 				 	 	(18.5	) 	
Stock-based compensation expense	  				  				 	 	27.7	 	 				 				 				 	 	27.7	 	
Cash settlement of equity awards	  				  				 	 	(3.6	) 	 				 				 				 	 	(3.6	) 	
Issuance of common stock	  				  				 	 	3.0	 	 				 				 				 	 	3.0	 	
Excess tax benefit on stock-based compensation	  				  				 	 	1.9	 	 				 				 				 	 	1.9	 	
Offering related costs	  				  				 	 	(0.1	) 	 				 				 				 	 	(0.1	) 	
Net income	  				  				 				 	 	125.4	 	 				 	 	0.4	 	 	 	125.8	 	
Other comprehensive loss	  				  				 				 				 	 	(22.1	) 	 				 	 	(22.1	) 	
	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance, December 31, 2015	  	$	0.1	 	  	 	—  	 	 	 	856.2	 	 	 	(162.9	) 	 	 	(57.3	) 	 	 	2.9	 	 	 	639.0	 	
Dividends	  				  				 				 	 	(25.4	) 	 				 				 	 	(25.4	) 	
Stock-based compensation expense	  				  				 	 	17.5	 	 				 				 				 	 	17.5	 	
Cash settlement of equity awards	  				  				 	 	(4.9	) 	 				 				 				 	 	(4.9	) 	
Issuance of common stock	  				  				 	 	9.3	 	 				 				 				 	 	9.3	 	
Purchase of treasury stock	  				  	 	(29.5	) 	 				 				 				 				 	 	(29.5	) 	
Excess tax benefit on stock-based compensation	  				  				 	 	2.6	 	 				 				 				 	 	2.6	 	
Net income	  				  				 				 	 	96.3	 	 				 	 	0.6	 	 	 	96.9	 	
Other comprehensive loss	  				  				 				 				 	 	(26.2	) 	 	 	(0.1	) 	 	 	(26.3	) 	
	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance, December 31, 2016	  	$	0.1	 	  	 	(29.5	) 	 	 	880.7	 	 	 	(92.0	) 	 	 	(83.5	) 	 	 	3.4	 	 	 	679.2	 	
	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
See accompanying notes to consolidated financial statements.
 
7

METALDYNE PERFORMANCE GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)

 	  	Year Ended
December 31,
2016	 	 	Year Ended
December 31,
2015	 	 	Year Ended
December 31,
2014	 	
Cash flows from operating activities:	  				 				 				
Net income	  	$	96.9	 	 	 	125.8	 	 	 	73.3	 	
Adjustments to reconcile net income to cash provided by operating activities:	  				 				 				
Depreciation and amortization	  	 	221.3	 	 	 	229.8	 	 	 	210.8	 	
Debt fee amortization	  	 	3.4	 	 	 	3.2	 	 	 	6.3	 	
Loss on debt extinguishment	  	 	—  	 	 	 	0.4	 	 	 	60.7	 	
Goodwill impairment	  	 	—  	 	 	 	—  	 	 	 	11.8	 	
Loss on fixed asset dispositions	  	 	5.3	 	 	 	2.8	 	 	 	2.1	 	
Deferred income taxes	  	 	(12.5	) 	 	 	(14.8	) 	 	 	(88.4	) 	
Recognition of deferred revenue	  	 	—  	 	 	 	(0.8	) 	 	 	(0.9	) 	
Noncash interest expense	  	 	1.1	 	 	 	1.1	 	 	 	0.9	 	
Stock-based compensation expense	  	 	17.5	 	 	 	27.7	 	 	 	17.3	 	
Foreign currency adjustment	  	 	(10.2	) 	 	 	(11.2	) 	 	 	(12.7	) 	
Other	  	 	1.7	 	 	 	6.3	 	 	 	3.8	 	
Changes in assets and liabilities:	  				 				 				
Receivables, net	  	 	(2.7	) 	 	 	(5.8	) 	 	 	20.2	 	
Inventories	  	 	17.0	 	 	 	12.0	 	 	 	(15.6	) 	
Prepaid expenses and other assets	  	 	(27.1	) 	 	 	(10.3	) 	 	 	(1.0	) 	
Accounts payable, accrued liabilities and accrued compensation	  	 	7.1	 	 	 	(28.5	) 	 	 	22.6	 	
Long-term assets and liabilities, other	  	 	(0.2	) 	 	 	(7.7	) 	 	 	(5.8	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net cash provided by operating activities	  	 	318.6	 	 	 	330.0	 	 	 	305.4	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Cash flows from investing activities:	  				 				 				
Capital expenditures	  	 	(194.5	) 	 	 	(226.3	) 	 	 	(156.4	) 	
Proceeds from sale of fixed assets	  	 	0.5	 	 	 	4.0	 	 	 	1.4	 	
Capitalized patent costs	  	 	(0.2	) 	 	 	(0.4	) 	 	 	(0.2	) 	
Acquisition of business, net of cash acquired	  	 	(14.0	) 	 	 	—  	 	 	 	(829.7	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net cash used for investing activities	  	 	(208.2	) 	 	 	(222.7	) 	 	 	(984.9	) 	
Cash flows from financing activities:	  				 				 				
Cash dividends	  	 	(25.1	) 	 	 	(18.2	) 	 	 	(111.3	) 	
Other stock activity	  	 	—  	 	 	 	—  	 	 	 	(2.4	) 	
Purchases of treasury stock	  	 	(29.5	) 	 	 	—  	 	 	 	—  	 	
Proceeds from stock issuance	  	 	9.3	 	 	 	3.0	 	 	 	260.5	 	
Excess tax benefit on stock-based compensation	  	 	2.6	 	 	 	1.9	 	 	 	—  	 	
Cash settlement of equity awards	  	 	(4.9	) 	 	 	(3.6	) 	 	 	—  	 	
Borrowings of short-term debt	  	 	—  	 	 	 	14.3	 	 	 	388.8	 	
Repayments of short-term debt	  	 	—  	 	 	 	(14.6	) 	 	 	(407.4	) 	
Proceeds of long-term debt	  	 	—  	 	 	 	1,326.6	 	 	 	2,658.3	 	
Principal payments of long-term debt	  	 	(13.2	) 	 	 	(1,391.8	) 	 	 	(1,952.0	) 	
Payment of debt issue costs	  	 	—  	 	 	 	(0.1	) 	 	 	(45.4	) 	
Proceeds of other debt	  	 	1.1	 	 	 	1.4	 	 	 	0.9	 	
Principal payments of other debt	  	 	(2.5	) 	 	 	(5.0	) 	 	 	(7.7	) 	
Payment of offering related costs	  	 	—  	 	 	 	(0.1	) 	 	 	(5.6	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net cash provided by (used for) financing activities	  	 	(62.2	) 	 	 	(86.2	) 	 	 	776.7	 	
Effect of exchange rates	  	 	(6.7	) 	 	 	(9.4	) 	 	 	(8.9	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Net increase in cash and cash equivalents	  	$	41.5	 	 	 	11.7	 	 	 	88.3	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Cash and cash equivalents:	  				 				 				
Cash and cash equivalents, beginning of year	  	$	168.2	 	 	 	156.5	 	 	 	68.2	 	
Net increase in cash and cash equivalents	  	 	41.5	 	 	 	11.7	 	 	 	88.3	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Cash and cash equivalents, end of year	  	$	209.7	 	 	 	168.2	 	 	 	156.5	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Supplementary cash flow information:	  				 				 				
Cash paid for income taxes, net	  	$	59.4	 	 	 	67.6	 	 	 	63.9	 	
Cash paid for interest	  	 	99.4	 	 	 	102.6	 	 	 	74.6	 	
Noncash transactions:	  				 				 				
Capital expenditures in accounts payables	  	 	31.8	 	 	 	29.5	 	 	 	36.2	 	
Dividends on restricted stock awards, not yet paid	  	 	0.6	 	 	 	0.3	 	 	 	—  	 	
See accompanying notes to consolidated financial statements.
 
8

METALDYNE PERFORMANCE GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Description of the Business
Metaldyne Performance Group Inc. is a leading provider of components for use in engine, transmission and driveline (“Powertrain”) and chassis, suspension, steering and brake component (“Safety-Critical”) Platforms for the global light, commercial and industrial vehicle markets. We produce these components using complex metal-forming manufacturing technologies and processes for a global customer base of vehicle original equipment manufacturers (“OEMs”) and tier I suppliers (“Tier I suppliers”). Our components help OEMs meet fuel economy, performance and safety standards. Our metal-forming manufacturing technologies and processes include aluminum casting (“Aluminum Die Casting”), cold, warm or hot forging (“Forging”), iron casting (“Iron Casting”), and powder metal forming (“Powder Metal Forming”), as well as value-added precision machining and assembly (“Advanced Machining and Assembly”). These technologies and processes are used to create a wide range of customized Powertrain and Safety-Critical components that address requirements for power density (increased component strength to weight ratio), power generation, power / torque transfer, strength and Noise, Vibration and Harshness (“NVH”). Metaldyne Performance Group Inc. is organized and operated as three operating segments: the HHI segment, the Metaldyne segment and the Grede segment.
(2) Basis of Presentation and Consolidation
Basis of Presentation
Metaldyne Performance Group Inc. was formed through the reorganization of ASP HHI Holdings, Inc. (together with its subsidiaries, “HHI”), ASP MD Holdings, Inc. (together with its subsidiaries, “Metaldyne”) and ASP Grede Intermediate Holdings LLC (together with its subsidiaries, “Grede”) on August 4, 2014 (the “Combination”). The Combination occurred through mergers with three separate wholly owned merger subsidiaries of Metaldyne Performance Group Inc. (“MPG,” the “Company,” “we,” “our” and “us” and similar terms refer to Metaldyne Performance Group Inc. and all of its subsidiaries, including HHI, Metaldyne and Grede). In connection with the Combination, 13.4 million shares of MPG common stock were issued in exchange for the outstanding shares of HHI, Metaldyne and Grede. On November 18, 2014, the outstanding shares of MPG common stock were split at a 5-to-1 ratio (the “Stock Split”). After the Stock Split, 67.1 million shares were outstanding. The number of authorized shares was increased to 400.0 million.
Consolidation
The Combination has been accounted for as a reorganization of entities under common control in a manner similar to a pooling of interests, that is, the bases of accounting of HHI, Metaldyne and Grede were carried over to MPG. These financial statements reflect the retrospective application of the MPG capital structure and the Stock Split for all periods presented.
All intercompany balances and transactions have been eliminated in consolidation.
(3) Significant Accounting Policies
The financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“U.S. GAAP”) as defined by the Financial Accounting Standards Board (“FASB”) within the FASB Accounting Standards Codification.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported therein. Use of significant estimates and judgments are inherent in the accounting for acquisitions, stock-based compensation, income taxes and employee benefit plans, as well as in the testing of goodwill and long-lived assets for potential impairment. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may be based upon amounts that differ from these estimates.
 
9

Revenue Recognition
Revenue is recognized when there is evidence of a sale, delivery has occurred or services have been rendered, the sales price is fixed or determinable and the collectability of receivables is reasonably assured. The Company has ongoing adjustments to its pricing arrangements with customers based on the related content and cost of its products. These adjustments are accrued as products are shipped to customers. Such pricing accruals are adjusted periodically and as they are settled with the customers. The Company has agreements allowing the pass-through of changes in the prices of raw materials referred to as material surcharges. Material surcharges are recognized as revenue when an agreement is reached, delivery of the goods has occurred and the amount of the material surcharge is determinable.
Cash and Cash Equivalents
All highly liquid investments with an initial maturity of three months or less are considered to be cash and cash equivalents. A cash pooling strategy is in place with certain foreign operations. Checks issued but not presented to banks may result in book overdraft balances for accounting purposes and such book overdrafts are classified within accounts payable and the change as a component of operating cash flows.
Receivables
Accounts receivable are stated at amounts estimated by management to be the net realizable value. An allowance for doubtful accounts is recorded when it is probable that amounts will not be collected based on specific identification of customer circumstances, age of the receivable and other pertinent information. Account balances are charged against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. Valuation allowances for doubtful accounts, pricing accruals and anticipated customer deductions and returns are recorded based upon current information.
Agreements are in place with international factoring companies to sell customer accounts receivable from locations in France, Germany, the Czech Republic, and the United Kingdom (“U.K.”) on a nonrecourse basis. The Company collects payment and remits such collections to the factoring companies for a portion of the sold receivables. The Company has no continuing involvement with all sold receivables. A commission is paid to the factoring company plus interest calculated from the date the receivables are sold to either the customer’s due date or a specified number of days thereafter or until the receivable is deemed uncollectible.
Inventories
Inventories are stated at the lower of cost or market value. Cost is determined using the first-in, first-out method and includes the cost of materials, direct labor and the applicable share of manufacturing overhead. To the extent management determines it is holding excess or obsolete inventory, the inventory is written down to its net realizable value.
Pre-production Costs on Long-term Supply Arrangements
Pre-production engineering, research and development costs related to products made for customers under long-term supply agreements are expensed as incurred. Pre-production tooling costs related to products made for customers under long-term supply agreements are expensed when reimbursement is not contractually guaranteed by the customer or where the customer has not provided a noncancelable right to use the tooling.
Long-lived assets
Long-lived assets other than goodwill are evaluated for impairment if adverse events or changes in circumstances indicate it is more likely than not that the assets are impaired. For each asset group affected by such impairment indicators, the recoverability of the carrying value of that asset group is determined by comparing the forecasted undiscounted cash flows related to that asset group to the asset group’s carrying value.
 
10

Property and equipment, net: Property and equipment additions, including significant improvements, are recorded at cost, less accumulated depreciation. Upon retirement or disposal of property and equipment, the cost and accumulated depreciation are removed from the accounts and any gain or loss is included in cost of sales. Repair and maintenance costs are charged to expense as incurred.
Depreciation is provided for using the straight-line method over the estimated useful lives of the related assets. Assets held under capital lease are included in property and equipment, net and the depreciation of these assets is included in accumulated depreciation. Capital lease assets are depreciated over the lesser of the lease term or their useful lives.
Amortizable intangible assets, net: The useful lives of intangible assets are determined based on consideration of multiple factors including the Company’s expected use of the assets, the expected useful life of related assets and other external factors that may limit the useful life. Amortization is provided for using the straight-line method over the estimated useful lives for intangible assets with definite useful lives.
Goodwill Impairment Testing
Goodwill is evaluated for impairment annually or more often if a triggering event occurs between annual tests. The annual tests are performed in the fourth quarter.
For each reporting unit to which goodwill has been assigned, the evaluation for impairment entails a quantitative analysis of the fair value of the reporting unit compared to the carrying value of the reporting unit. The Company may opt to perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount prior to performing the quantitative assessment.
Foreign Currency Translation
The financial statements of foreign subsidiaries are translated to U.S. dollars at end-of-period exchange rates for assets and liabilities and an average monthly exchange rate for revenues and expenses. Translation adjustments are recorded as a component of accumulated other comprehensive loss within equity. Transaction gains and losses arising from fluctuations in foreign currency exchange rates on transactions denominated in currencies other than a subsidiary’s functional currency are recognized in other expense, net .
Stock-based Compensation
Stock-based compensation is measured based on the grant-date fair value of the award, and is recognized as expense over the requisite service period. To measure compensation cost of stock options, we determined fair value using a Black-Scholes pricing model. To measure compensation cost of restricted stock awards, we use the market value of the Company’s common stock as of the grant date.
Employee Benefit Plans
Annual net periodic benefit expense and benefit liabilities under defined benefit pension plans and statutory retirement benefits are determined on an actuarial basis. Assumptions used in the actuarial calculations have a significant impact on plan obligations and expense. Pensions and other postretirement employee benefit costs and related liabilities and assets are dependent upon assumptions used in calculating such amounts. These assumptions include discount rates, expected returns on plan assets, health care cost trends, compensation and other factors. Each year end, actual experience is compared to the more significant assumptions used and the assumptions are adjusted, if warranted. Discount rates are based upon an expected benefit payments duration analysis and the equivalent average yield rate for high quality fixed income investments. Certain pension benefits are funded through investments held with trustees and the expected long-term rate of return on fund assets is based on actual historical returns modified for known changes in the market and any expected change in investment policy. Actual results that differ from the assumptions used are accumulated and amortized over future periods and, accordingly, generally affect recognized expense in future periods.
 
11

Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The effect of income tax positions are recognized only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. Interest and penalties related to unrecognized tax benefits are recorded in income tax expense.
Noncontrolling Interests
The accumulated amount of noncontrolling interests is classified in the consolidated balance sheets as a component of total stockholders’ equity and noncontrolling interests are reflected in the consolidated statements of comprehensive income and stockholders’ equity.
Fair Value Measurements
The fair values of assets and liabilities disclosed are categorized based on a fair value hierarchy giving the highest priority to the quoted prices in active markets for identical assets and liabilities and lowest priority to unobservable inputs. The various levels of the fair value hierarchy are described as follows:

Level 1	  	Financial assets and liabilities whose values are based on quoted market prices for identical assets and liabilities in an active market that the Company has the ability to access.	
		
Level 2	  	Financial assets and liabilities whose values are based on quoted prices in markets that are not active or model inputs that are observable for substantially the full term of the asset or liability.	
		
Level 3	  	Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement.	
(4) Recently Issued Accounting Standards
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606). This guidance will supersede most current revenue recognition guidance, including industry-specific guidance. The underlying principle is that an entity will recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services. The guidance provides a five-step analysis of transactions to determine when and how revenue is recognized. Other major provisions include capitalization of certain contract costs, consideration of time value of money in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. The guidance also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. The guidance, as agreed to by the FASB, is effective for the interim and annual periods beginning on or after December 15, 2017. Early adoption is permitted on January 1, 2017. The guidance permits the use of either a retrospective or cumulative effect transition method. We have not yet selected a transition method and are currently evaluating the impact of the guidance on the consolidated financial statements.
In April 2015, the FASB issued ASU 2015-03, Interest—Imputation of Interest (Topic 835-30). This guidance requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a
 
12

direct deduction from the carrying amount of that debt liability. This guidance is effective for fiscal years and interim periods beginning after December 15, 2015, and requires retrospective application. We adopted this guidance as of April 3, 2016, using retrospective application. Upon adoption of this guidance, the debt and total assets presented on our consolidated balance sheet were reduced by net debt issuance costs, which totaled $19.6 million as of December 31, 2015.
In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes (Subtopic 740-10). ASU 2015-17 simplifies the presentation of deferred income taxes by eliminating the requirement for companies to present deferred tax liabilities and assets as current and non-current on the Consolidated Balance Sheets. Instead, companies will be required to classify all deferred tax assets and liabilities as non-current. This guidance is effective for annual and interim periods beginning after December 15, 2016 and early adoption is permitted. We elected to early adopt ASU 2015-17 prospectively, on December 31, 2015. The adoption of ASU 2015-17 did not have a material impact on our consolidated financial position, and had no impact on our results of operations or cash flows. No prior periods were retrospectively adjusted.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The primary focus of the standard addresses the accounting of lessees. It requires all lessees to recognize a right-of-use asset and a lease liability for virtually all leases (other than leases that meet the definition of a short-term lease) on the balance sheet. The recognition, measurement and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from previous GAAP. Operating leases will result in straight-line expense while finance leases will result in depreciation expense recorded on the right-of-use asset and interest expense recorded on the lease liability. Quantitative and qualitative disclosures are required to provide insight into the extent of revenue and expense recognized and expected to be recognized from leasing arrangements. This guidance becomes effective January 1, 2019. Early adoption is permitted. We are currently evaluating the impact this guidance will have on our consolidated financial statements.
In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (Topic 718). This guidance updates several aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. Specific changes include that all excess tax benefits and tax deficiencies (including tax benefits of dividends on share-based payment awards) should be recognized as income tax expense or benefit in the income statement. The tax effects of exercised or vested awards should be treated as discrete items in the reporting period in which they occur. An entity would also recognize excess tax benefits regardless of whether the benefit reduces taxes payable in the current period. Excess tax benefits would be classified along with other income tax cash flows as an operating activity in the consolidated statement of cash flows. Also, an entity can make an accounting policy election to either estimate the number of awards that are expected to vest (current GAAP) or account for forfeitures when they occur. This ASU also amends guidance for the calculation of earnings per share under the treasury stock method by removing excess tax benefits as an assumed proceed from the exercise of options. This guidance is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted in any interim or annual period. We did not early adopt this guidance and are currently evaluating the impact on the consolidated financial statements.
(5) Acquisitions
Brillion Transaction
On September 2, 2016, the Grede segment acquired 100% of the equity of Brillion Iron Works, Inc. (“Brillion”) from its parent company Accuride Corporation (NYSE: ACW). Brillion was a reportable segment for Accuride Corporation and consists of a foundry located in Brillion, Wisconsin, (the “Brillion Facility”) which supplies castings to the industrial machinery, construction, agricultural equipment and oil and gas markets, including flywheels, pump housings, valve body housings, small engine components, and other industrial components.
The purchase price for the acquisition was $14.0 million of cash consideration. Under the acquisition method of accounting, all assets acquired and liabilities assumed were recorded in the consolidated financial statements at estimated fair value. The allocation of purchase price paid resulted in receivables of $8.1 million, inventory of $3.8 million, property, plant, and equipment of $15.9 million, assumed liabilities of $12.8 million, and a gain on bargain purchase of $1.0 million. The $1.0 million gain on bargain purchase is recorded within other, net on the consolidated statement of operations for the year ended December 31, 2016.
 
13

On September 12, 2016, the Company announced its plan to close the Brillion Facility and to consolidate substantially all of Brillion’s business into Grede’s existing locations. As of December 31, 2016, the Brillion Facility had ceased operations.
Grede Transaction
On June 2, 2014 (the “Acquisition Date”), a subsidiary of American Securities, ASP Grede Intermediate Holdings LLC (together with its subsidiaries, “Grede”), purchased 97.1% of the membership interests in Grede Holdings LLC (the “Grede Transaction”). Management and outside investors purchased the remaining membership interests. Upon completion of the Combination, 100% of Grede was owned by the Company.
Purchase Accounting
The Grede Transaction was a cash purchase and was accounted for under the acquisition method. The accounting for the acquisition has been pushed-down to the financial statements of the Company. All assets acquired and liabilities assumed were recorded in the consolidated financial statements at estimated fair value.
The purchase price for the acquisition, net of cash and cash equivalents, was $829.7 million. The acquisition was funded by cash from capital contributions ($251.1 million from affiliates of American Securities, $6.5 million from certain members of the Grede management team and $1.0 million from outside investors) and the issuance of term loan debt.
The Grede Transaction was recorded, as revised for updated valuation information, in the accounts of the Company as follows:

 	  	June 2,
2014	 	
 	  	(In millions)	 	
Fair value of consideration	  	$	829.7	 	
Assets acquired:	  				
Receivables	  	 	120.2	 	
Inventories	  	 	40.1	 	
Prepaid expenses and other current assets	  	 	11.4	 	
Property and equipment	  	 	208.5	 	
Amortizable intangible assets	  	 	369.1	 	
Other assets	  	 	9.1	 	
	  	 	 	 	
Total assets acquired	  	 	758.4	 	
Liabilities assumed:	  				
Accounts payable	  	 	94.7	 	
Accrued liabilities	  	 	25.7	 	
Deferred tax liabilities	  	 	47.5	 	
Short-term debt	  	 	1.7	 	
Other long-term liabilities	  	 	20.7	 	
	  	 	 	 	
Total liabilities assumed	  	 	190.3	 	
	  	 	 	 	
Net identifiable assets acquired, net of cash and cash equivalents	  	 	568.1	 	
	  	 	 	 	
Goodwill	  	$	261.6	 	
	  	 	 	 	
The valuation method used to estimate the fair value of assets acquired and liabilities assumed entailed a cost approach, a market approach, an income approach or a combination of those approaches based on the nature of the asset or liability being valued. The estimated value of property and equipment was determined using a cost
 
14

approach, relying on estimated replacement costs. Within amortizable intangible assets, customer relationships and platforms were valued using an income approach, relying on estimated multi-period excess earnings attributable to the relationship or platform.
Goodwill recognized was primarily attributable to potential operational synergies related to overhead cost reductions and the assembled workforce. None of the goodwill recognized is expected to be deductible for tax purposes.
Additional details of the assets recognized were as follows:

 	  	June 2,
2014	 	
 	  	(In millions)	 	
Inventories	  				
Raw materials	  	$	11.9	 	
Work in process	  	 	12.6	 	
Finished goods	  	 	15.6	 	
	  	 	 	 	
Total inventories	  	$	40.1	 	

									
 	  	June 2,
2014	 	  	Estimated
Useful Lives	 	
 	  	(In millions)	 	  	(In years)	 	
Property and equipment	  				  				
Land	  	$	12.2	 	  	 	—  	 	
Buildings	  	 	31.8	 	  	 	5 – 29	 	
Machinery and equipment	  	 	148.8	 	  	 	1 – 20	 	
Assets not yet placed in service	  	 	15.7	 	  	 	—  	 	
	  	 	 	 	  				
Total property and equipment	  	$	208.5	 	  				

 	  	June 2,
2014	 	  	Amortization
Period	 	
 	  	(In millions)	 	  	(In years)	 	
Amortizable intangible assets	  				  				
Customer relationships and platforms	  	$	338.7	 	  	 	10	 	
Other: trade names	  	 	30.4	 	  	 	15	 	
	  	 	 	 	  				
Total amortizable intangible assets	  	$	369.1	 	  				
	  	 	 	 	  				
The estimated fair value of inventories was $4.4 million higher than the carrying value at the time of the acquisition. The entire amount of this step-up in value was expensed in cost of sales during 2014 based on an analysis of Grede’s inventory turns.
Grede has estimated a remaining useful life of 10 years for the customer relationships and platforms due to the strong and longstanding relationships with our customers, which include many of the leading global OEMs and Tier 1 Suppliers. Grede has estimated a remaining useful life of 15 years for the trade names based on the nature of the industry, the length of time it has been in business and the relative strength of the name in the marketplace.
Included within other long-term liabilities are obligations for noncontributory defined benefit plans maintained by Grede for certain employees covered by collective bargaining agreements. The obligations for these plans were measured as of the acquisition date.
 
15

The funded status as of the Acquisition Date was as follows:

 	  	June 2,
2014	 	
 	  	(In millions)	 	
Projected benefit obligation	  	$	33.9	 	
Fair value of plan assets	  	 	27.6	 	
	  	 	 	 	
Funded Status	  	$	(6.3	) 	
	  	 	 	 	
A weighted average discount rate of 4.04% was used to determine the projected benefit obligation. The rate of compensation increase is not applicable due to the fact that the plans’ benefits are based on credited years of service. The plans’ assets are composed primarily of pooled separate accounts in which the underlying securities are primarily publicly traded domestic equities and government debt securities. The amount of Grede revenues and earnings included in the consolidated statements of operations subsequent to the Grede Transaction was as follows:

 	  	2016	 	  	2015	 	  	2014	 	
 	  	(In millions)	 	
Revenues: Net sales	  	$	787.3	 	  	 	906.8	 	  	 	572.1	 	
Earnings: Income (loss) before tax	  	 	17.9	 	  	 	43.3	 	  	 	(19.2	) 	
Grede Transaction-related expenses incurred in 2014 were $13.0 million, which were recorded within acquisition costs , of which $8.3 million was paid to related parties.
Supplemental Pro Forma Information (Unaudited)
The following table presents the revenues and earnings of MPG on a pro forma basis as if the Grede Transaction had occurred on January 1, 2013:

 	  	Pro Forma	 	
 	  	2014	 	  	2013	 	
 	  	(In millions)	 	
Revenues: Net sales	  	$	3,144.0	 	  	 	3,052.9	 	
Earnings: Income before tax	  	 	93.3	 	  	 	103.4	 	
These results do not purport to be indicative of the results of operations which actually would have resulted had the Grede Transaction occurred on January 1, 2013, or of the future results of operations of the Company.
(6) Receivables
Receivables as of December 31 were stated net of the following allowances:

 	  	2016	 	  	2015	 	
 	  	(In millions)	 	
Doubtful accounts	  	$	1.7	 	  	 	1.5	 	
Pricing accruals and anticipated customer deductions	  	 	5.1	 	  	 	8.1	 	
Returns	  	 	2.3	 	  	 	1.9	 	
	  	 	 	 	  	 	 	 	
	  	$	9.1	 	  	 	11.5	 	

16

Receivables available for sale and sold under agreements with international factoring companies as of December 31 were as follows:

 	  	2016	 	  	2015	 	
 	  	(In millions)	 	
Available for sale	  	$	44.3	 	  	 	47.3	 	
Sold	  	 	36.5	 	  	 	37.7	 	
(7) Inventories
Inventories as of December 31 were as follows:

 	  	2016	 	  	2015	 	
 	  	(In millions)	 	
Raw materials	  	$	50.7	 	  	 	57.3	 	
Work in process	  	 	62.5	 	  	 	66.3	 	
Finished goods	  	 	55.2	 	  	 	63.2	 	
	  	 	 	 	  	 	 	 	
Total inventories	  	$	168.4	 	  	 	186.8	 	
	  	 	 	 	  	 	 	 	
(8) Property and Equipment
The carrying amount, accumulated depreciation and useful lives of property and equipment as of December 31 were as follows:

 	  	Estimated
Useful Lives	 	  	2016	 	  	2015	 	
 	  	 	 	  	(In millions)	 	
Land and land improvements	  	 	1 - 30	 	  	$	28.5	 	  	 	26.8	 	
Buildings and improvements	  	 	1 - 30	 	  	 	127.7	 	  	 	103.7	 	
Machinery and equipment	  	 	1 - 20	 	  	 	1,084.8	 	  	 	930.1	 	
Assets not yet placed in service	  				  	 	144.6	 	  	 	145.0	 	
	  				  	 	 	 	  	 	 	 	
	  				  	 	1,385.6	 	  	 	1,205.6	 	
Accumulated depreciation	  				  	 	(554.0	) 	  	 	(419.6	) 	
	  				  	 	 	 	  	 	 	 	
Property and equipment, net	  				  	$	831.6	 	  	 	786.0	 	
	  				  	 	 	 	  	 	 	 	
Property and equipment are depreciated on a straight-line basis. Depreciation expense was $151.4 million for 2016 $159.4 million for 2015, and $155.0 million for 2014.
Included in property and equipment are gross carrying values for assets under capital lease of $2.7 million and $13.8 mllion as of December 31, 2016 and 2015, respectively; related accumulated depreciation was $0.6 million and $9.0 million as of December 31, 2016 and 2015, respectively.
In June 2015, the Company announced plans to close its Berlin, Wisconsin facility included within the Grede segment. In conjunction with this announcement, the Company recorded a $4.0 million asset impairment charge within cost of sales to reduce the carrying value of Berlin’s assets to their estimated fair value based on level 3 valuation inputs. The closure, which is primarily a result of the industrial market slowdown, was completed in fiscal 2015.
In May 2016, the Company announced plans to close its Bessemer, Alabama facility included within the Grede segment. The closure, which is primarily due to declines in heavy truck and industrial equipment markets, was completed in fiscal 2016. In conjunction with this announcement, the Company recorded a $2.3 million asset impairment charge within cost of sales to reduce the carrying value of Bessemer’s assets to their estimated fair value based on level 3 valuation inputs.
 
17

(9) Goodwill
The carrying values of goodwill by segment throughout fiscal years ended December 31, 2016 and 2015 were as follows:

 	  	HHI
Segment	 	  	Metaldyne
Segment	 	  	Grede
Segment	 	  	Total	 	
 	  	(In millions)	 	
Balance December 31, 2013	  	$	309.4	 	  	 	348.5	 	  	 	—  	 	  	 	657.9	 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Goodwill resulting from Grede Transaction	  	 	—  	 	  	 	—  	 	  	 	261.6	 	  	 	261.6	 	
Impairment	  	 	(11.8	) 	  	 	—  	 	  	 	—  	 	  	 	(11.8	) 	
Balance December 31, 2014	  	 	297.6	 	  	 	348.5	 	  	 	261.6	 	  	 	907.7	 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Balance December 31, 2015	  	 	297.6	 	  	 	348.5	 	  	 	261.6	 	  	 	907.7	 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Balance December 31, 2016	  	$	297.6	 	  	 	348.5	 	  	 	261.6	 	  	 	907.7	 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
In conjunction with our 2014 annual impairment test, the Company concluded that the goodwill assigned to a reportable unit within the HHI segment (the “Unit”) was no longer recoverable. The Unit manufactures wheel bearings for a large OEM customer at our facility in Sandusky, Ohio (the “Sandusky facility”). In our assessment of the recoverability of the Unit’s goodwill, the Company estimated the fair value of the Unit using an income method based on discounted cash flows, which resulted in a fair value below the carrying value. Key factors impacting a lower fair value included the scheduled attrition of programs for the OEM customer and the expiration of labor subsidies in September 2015. An impairment loss of $11.8 million was recognized in the fourth quarter of 2014, representing the full amount of goodwill assigned to the Unit.
(10) Amortizable Intangible Assets
The carrying amount and accumulated amortization of intangible assets as of December 31 were as follows:

 	  	2016	 	
 	  	Gross
Carrying
Amount	 	  	Accumulated
Amortization	 	  	Net
Carrying
Amount	 	
 	  	(In millions)	 	
Customer relationships and platforms	  	$	745.2	 	  	 	(197.5	) 	  	 	547.7	 	
Other	  	 	126.9	 	  	 	(35.5	) 	  	 	91.4	 	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total	  	$	872.1	 	  	 	(233.0	) 	  	 	639.1	 	

 	  	2015	 	
 	  	Gross
Carrying
Amount	 	  	Accumulated
Amortization	 	  	Net
Carrying
Amount	 	
 	  	(In millions)	 	
Customer relationships and platforms	  	$	745.2	 	  	 	(137.0	) 	  	 	608.2	 	
Other	  	 	126.7	 	  	 	(26.0	) 	  	 	100.7	 	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total	  	$	871.9	 	  	 	(163.0	) 	  	 	708.9	 	
	  	 	 	 	  	 	 	 	  	 	 	 	
Amortization expense was $69.9 million for 2016, $69.9 million for 2015, and $54.8 million for 2014. As of December 31, 2016, the weighted-average amortization period of customer relationships and platforms was 12 years. Other intangible assets primarily consist of patented and unpatented technology, and trade names and trademarks, which have weighted-average amortization periods of 13 and 15 years, respectively.
Estimated amortization expense for the next five years is $69.9 million for 2017, $68.4 million for 2018 and 2019, $68.3 million for 2020, and $68.2 for 2021.
 
18

(11) Debt
The carrying value of debt as of December 31 was as follows:

 	  	2016	 	  	2015	 	
 	  	(In millions)	 	
Short-term debt:	  				  				
Revolving lines of credit	  	$	—  	 	  	 	—  	 	
Other short-term debt	  	 	1.0	 	  	 	0.7	 	
	  	 	 	 	  	 	 	 	
Total short-term debt	  	$	1.0	 	  	 	0.7	 	
	  	 	 	 	  	 	 	 	
Long-term debt:	  				  				
Term loans	  				  				
USD Term Loan	  	 	1,011.5	 	  	 	1,022.2	 	
Euro Term Loan	  	 	233.3	 	  	 	244.1	 	
Registered Notes	  	 	600.0	 	  	 	600.0	 	
Other long-term debt (various interest rates)	  	 	—  	 	  	 	0.4	 	
	  	 	 	 	  	 	 	 	
Total	  	 	1,844.8	 	  	 	1,866.7	 	
Current maturities	  	 	(13.1	) 	  	 	(13.3	) 	
Unamortized debt issuance costs	  	 	(16.9	) 	  	 	(19.6	) 	
Unamortized discount on term loans	  	 	(5.6	) 	  	 	(6.7	) 	
	  	 	 	 	  	 	 	 	
Total long-term debt	  	$	1,809.2	 	  	 	1,827.1	 	
	  	 	 	 	  	 	 	 	
Credit Facilities
In October 2014, MPG Holdco I Inc., the Company’s wholly owned subsidiary (“Holdco”) entered into a senior secured credit facility (the “Senior Credit Facilities”) consisting of a $1,350.0 million term loan (“Term Loan Facility”), maturing in 2021, and a $250.0 million revolving credit facility (“Revolving Credit Facility”), maturing in 2019.
Interest on the Term Loan Facility accrued at a rate equal to the London Interbank Offered Rate (“LIBOR”) rate (bearing a LIBOR floor of 1.00%) plus an applicable margin of 3.25% or a base rate that is the higher of the Federal Funds Rate (plus 0.50%), the U.S. prime rate as published in The Wall Street Journal, or LIBOR (plus 1.00%), plus an applicable margin of 2.25%, at Holdco’s option. Prior to the Company’s initial public offering on December 12, 2014, the applicable margin was 3.50% for LIBOR rate loans and 2.50% for base rate loans. The interest rate in effect as of December 31, 2014 was 4.25%. The Term Loan Facility was payable in quarterly installments of $3.375 million beginning in March 2015.
On May 8, 2015, the Company amended its Senior Credit Facilities to reduce the applicable interest rate on the Term Loan Facility and to refinance the outstanding balance of the Term Loan Facility with new term loans (the “Refinanced Term Loan Facility”). The Refinanced Term Loan consists of a $1,072.6 million U.S. Dollar denominated term loan (the “USD Term Loan”) and a €225.0 million Euro denominated term loan (the “Euro Term Loan”). The USD Term Loan was issued at par and accrues interest at LIBOR, bearing a 1.00% floor, plus an applicable margin of 2.75%. The Euro Term Loan was issued at an original issuance discount of 0.50%, or $1.3 million, and accrues interest at the Euro Interbank Offer Rate (“EURIBOR”), bearing a 1.00% floor, plus an applicable margin of 2.75%. At December 31, 2016, the effective interest rate on both the USD Term Loan and Euro Term Loan was 3.75%. Principal repayments on the USD Term Loan and Euro Term Loan are payable in quarterly installments equal to 0.25% of the original loan balances. All other terms of the amended Senior Credit Facilities remain substantially unchanged. In connection with amending the Senior Credit Facilities, the Company paid fees to third parties totaling $1.8 million, of which $1.6 million was expensed.
During 2015, the Company made $10.0 million in voluntary prepayments on the previous Term Loan Facility and $45.0 million in voluntary prepayments on the Refinanced Term Loan Facility.
Interest on the Revolving Credit Facility is accrued at a rate equal to the LIBOR rate plus an applicable margin of 3.25% or a base rate that is the higher of the Federal Funds Rate (plus 0.50%), the U.S. prime rate as
 
19

published in The Wall Street Journal, or LIBOR (plus 1.00%), plus an applicable margin of 2.25%, at Holdco’s option. The applicable margin is based on a leverage ratio grid. As of December 31, 2016, zero was outstanding under the Revolving Credit Facility and $236.8 million was available after giving effect to outstanding letters of credit.
Holdco pays fees with respect to the Revolving Credit Facility, including (i) an unused commitment fee of 0.50% or 0.375% based on a leverage ratio, (ii) fixed fees with respect to letters of credit of 3.25% per annum on the stated amount of each letter of credit outstanding during each month and (iii) customary administrative fees.
The agreement governing the Senior Credit Facilities contains certain covenants that, among other things, require MPG Holdco to maintain a leverage ratio once revolver borrowings and letters of credit exceed 35% of aggregate revolving credit commitments as defined under the terms of the Senior Credit Facilities and to comply with customary affirmative and negative covenants. In addition to scheduled maturities, the Refinanced Term Loan Facility is subject to customary mandatory prepayments, including an excess cash flow sweep based on leverage ratio step downs and a mandatory prepayment for certain asset sales. The Company is required to prepay a portion of the Term Loan Facility in an amount equal to a percentage of the preceding fiscal year’s excess cash flow, as defined, with such percentage based on our leverage ratio, as defined. No mandatory prepayments are due as of December 31, 2016.
The agreements governing the Senior Credit Facilities and the Registered Notes restrict the payment of dividends except (i) to pay reasonable estimated amount of taxes as long as not prohibited by applicable laws, (ii) to pay legal, accounting, and reporting expenses, (iii) to pay general administrative costs and expenses, and reasonable directors fees, and expenses; (iv) to repurchase stock owned by employees, (v) for management or similar fees, (vi) to pay franchise or similar taxes to maintain corporate existence, (vii) permitted tax distributions, and (viii) to pay dividends up to $30.0 million or 6% of the net cash proceeds from an underwritten public offering of our common stock.
The Senior Credit Facilities are guaranteed by MPG and certain of its direct and indirect existing and future domestic subsidiaries and are secured on a first priority basis by all or substantially all of our assets, the assets of Holdco and each guarantor’s assets, including a pledge of capital stock of our U.S. subsidiaries that hold domestic assets and a portion of the capital stock of the first tier foreign subsidiaries of MPG and each guarantor. The Registered Notes are guaranteed by MPG and certain of its direct and indirect existing and future domestic subsidiaries. The Registered Notes are pari passu in right of payment with the Senior Credit Facilities, but are effectively subordinated to the Senior Credit Facilities to the extent of the value of the assets securing such indebtedness.
Registered Notes
In October 2014, Holdco issued $600.0 million of senior notes (“Senior Notes”). The Senior Notes mature in 2022, and bear interest at a rate of 7.375%, payable semi-annually on April 15 and October 15 per the terms of the indenture governing the Senior Notes. In May, 2015, the Company launched an offer to exchange notes registered with the SEC (the “Registered Notes”) for its existing Senior Notes that were not registered with the SEC. The Registered Notes have substantially identical terms as the Senior Notes. The exchange offer was made pursuant to a prospectus included in a Registration Statement on Form S-4 filed with the SEC on May 1, 2015, and declared effected by the SEC on May 8, 2015. The exchange offer was completed on June 8, 2015, and all outstanding original Senior Notes were tendered and exchanged for Registered Notes.
The indenture governing the Senior Notes contains certain covenants, including a covenant that restricts the payment of dividends except (i) to pay reasonable estimated amount of taxes as long as not prohibited by applicable laws, (ii) to pay legal, accounting, and reporting expenses, (iii) to pay general and administrative costs and expenses, and reasonable directors fees, and expenses, (iv) to repurchase stock owned by employees, (v) for management or similar fees, (vi) to pay franchise or similar taxes to maintain corporate existence and (vii) to pay dividends up to $30.0 million or 6% of the net cash proceeds from an underwritten public offering of our common stock.
 
20

Scheduled Maturities of Long-term Debt
As of December 31, 2016, the Company’s scheduled principal payments of long-term debt for the five succeeding years were $13.1 million for 2017, $13.1 million for 2018, $13.1 million for 2019, $13.1 million for 2020 and $1,192.4 million for 2021, and $600.0 million thereafter. The scheduled principal payments are exclusive of potential required prepayments.
(12) Lease Commitments
The Company leases certain property and equipment under capital and operating lease arrangements that expire at various dates through 2036. Most of the operating leases provide the option, after the initial lease term, either to purchase the property or renew its lease at the then fair value.
Future minimum lease payments by the Company under capital and operating leases that have initial or remaining noncancelable terms in excess of one year as of December 31, 2016 are as follows:

 	  	Capital
Leases	 	  	Operating
Leases	 	
 	  	(In millions)	 	
Company minimum lease payments:	  				  				
2017	  	$	3.9	 	  	 	11.3	 	
2018	  	 	4.0	 	  	 	9.6	 	
2019	  	 	4.1	 	  	 	7.6	 	
2020	  	 	4.2	 	  	 	6.9	 	
2021	  	 	4.3	 	  	 	5.5	 	
Thereafter	  	 	58.3	 	  	 	26.7	 	
	  	 	 	 	  	 	 	 	
Total minimum payments	  	 	78.8	 	  	$	67.6	 	
	  				  	 	 	 	
Amount representing interest	  	 	(56.0	) 	  				
	  	 	 	 	  				
Obligations under capital leases	  	 	22.8	 	  				
Obligations due within one year	  	 	(0.1	) 	  				
	  	 	 	 	  				
Long-term obligations under capital leases	  	$	22.7	 	  				
	  	 	 	 	  				
Rental expense for operating leases was $14.5 million for 2016, $12.9 million for 2015, and $12.4 million for 2014.
(13) Equity, Dividends and Change in Accumulated Other Comprehensive Loss
Equity
On August 4, 2014, in connection with the Combination, the issued and outstanding shares of HHI, Metaldyne and Grede were converted to shares of MPG. The number of MPG shares issued upon conversion was determined based on the relative fair value of each entity to the overall fair value of MPG at the time of the Combination. Upon completion of the Combination, 13.4 million shares of MPG common stock were issued and outstanding.
On November 18, 2014, MPG common stock was split at a 5-to-1 ratio, with each stockholder receiving four additional shares for each share held. Upon completion of the Stock Split, 67.1 million shares were outstanding. The number of authorized shares was increased to 400 million.
The Combination and the Stock Split have been retrospectively applied to the Successor Period financial statements.
On December 12, 2014, American Securities sold 10,000,000 shares of the Company’s common stock under an IPO, for which no proceeds were received by the Company. The Company recognized costs directly attributable to the IPO of $5.6 million within paid-in capital . On January 15, 2015, the underwriters of the IPO exercised their option to purchase additional shares of our common stock from American Securities. After selling these additional shares, American Securities owned 78.5% of our common stock.
 
21

Dividends
In 2016 and 2015, the Company declared the following cash dividends on its common stock, totaling $25.4 million and $18.5 million, respectively.

Date Declared	  	Date Paid	  	Dividend
Per Share	 	
November 2, 2016	  	December 9, 2016	  	 	$0.0925	 	
August 3, 2016	  	September 20, 2016	  	 	0.0925	 	
May 4, 2016	  	June 21, 2016	  	 	0.0925	 	
February 24, 2016	  	April 26, 2016	  	 	0.0900	 	
October 28, 2015	  	December 3, 2015	  	 	0.0900	 	
July 29, 2015	  	August 31, 2015	  	 	0.0900	 	
March 10, 2015	  	May 26, 2015	  	 	0.0900	 	
As of December 31, 2016, the Company had accrued dividends of $0.6 million on unvested Restricted Shares, which are to be paid upon vesting.
In 2014, prior to the Combination, HHI paid dividends to its stockholders totaling $111.3 million, which was primarily funded by an incremental term loan.
Share Repurchases
On February 24, 2016, our board of directors authorized a share repurchase program (the “Share Repurchase Program”). The Share Repurchase Program, as amended on August 3, 2016, authorized the Company to purchase shares of its common stock for an aggregate repurchase price not to exceed $35.0 million. Subject to applicable rules and regulations, shares could be repurchased through open market purchases, privately negotiated transactions, or otherwise. On November 3, 2016, the Company suspended the Share Repurchase Program due to the pending merger with American Axle & Manufacturing Holdings, Inc. As of December 31, 2016, cumulative shares repurchased totaled 1,898,261 shares at an average purchase price per share of $15.56. The repurchased shares are presented as common stock held in treasury, at cost, on the consolidated balance sheets.
Changes in Accumulated Other Comprehensive Loss Attributable to Stockholders, Net of Tax

 	  	Foreign
Currency
Items	 	 	Defined
Benefit
Items	 	 	Total	 	 	Total
Attributable to
Noncontrolling
Interest	 	 	Total
Attributable
to
Stockholders	 	
 	  	(In millions)	 	
Balance, December 31, 2013	  	$	(3.8	) 	 	 	0.4	 	 	 	(3.4	) 	 	 	(0.1	) 	 	 	(3.3	) 	
Other comprehensive income before reclassifications	  	 	(23.9	) 	 	 	(8.2	) 	 	 	(32.1	) 	 	 	—  	 	 	 	(32.1	) 	
Reclassifications	  	 	—  	 	 	 	0.2	 	 	 	0.2	 	 	 	—  	 	 	 	0.2	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance, December 31, 2014	  	 	(27.7	) 	 	 	(7.6	) 	 	 	(35.3	) 	 	 	(0.1	) 	 	 	(35.2	) 	
Other comprehensive income before reclassifications	  	 	(24.3	) 	 	 	1.8	 	 	 	(22.5	) 	 	 	—  	 	 	 	(22.5	) 	
Reclassifications	  	 	—  	 	 	 	0.4	 	 	 	0.4	 	 	 	—  	 	 	 	0.4	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance, December 31, 2015	  	 	(52.0	) 	 	 	(5.4	) 	 	 	(57.4	) 	 	 	(0.1	) 	 	 	(57.3	) 	
Other comprehensive income before reclassifications	  	 	(21.7	) 	 	 	(4.8	) 	 	 	(26.5	) 	 	 	(0.1	) 	 	 	(26.4	) 	
Reclassifications	  	 	—  	 	 	 	0.2	 	 	 	0.2	 	 	 	—  	 	 	 	0.2	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance, December 31, 2016	  	$	(73.7	) 	 	 	(10.0	) 	 	 	(83.7	) 	 	 	(0.2	) 	 	 	(83.5	) 	

22

(14) Net Income Per Share Attributable to Stockholders (“EPS”)
The Company’s basic and diluted EPS were calculated as follows:

 	  	2016	 	  	2015	 	  	2014	 	
 	  	(In millions, except per share data)	 	
Weighted-average shares outstanding	  				  				  				
Basic	  	 	67.5	 	  	 	67.3	 	  	 	67.1	 	
Equivalent shares for outstanding stock-based compensation awards	  	 	1.8	 	  	 	2.4	 	  	 	1.4	 	
	  	 	 	 	  	 	 	 	  	 	 	 	
Diluted	  	 	69.3	 	  	 	69.7	 	  	 	68.5	 	
	  	 	 	 	  	 	 	 	  	 	 	 	
Net income attributable to stockholders	  	$	96.3	 	  	 	125.4	 	  	 	72.9	 	
EPS	  				  				  				
Basic	  	$	1.43	 	  	 	1.86	 	  	 	1.09	 	
Diluted	  	 	1.39	 	  	 	1.80	 	  	 	1.06	 	
For 2014, the weighted average shares outstanding were retrospectively adjusted to reflect MPG common stock outstanding upon completion of the Combination and the Stock Split; the equivalent shares for outstanding stock-based compensation awards were retrospectively adjusted to reflect the conversion of those awards into options to purchase shares of Common Stock of MPG and the Stock Split.
The number of equivalent shares excluded from the calculation as they were anti-dilutive was 0.1 million for 2016, de minimis for 2015, and 0.8 million for 2014.
(15) Other, net

 	  	2016	 	  	2015	 	  	2014	 	
 	  	(In millions)	 	
Foreign currency (gains) losses	  	$	(15.3	) 	  	 	(18.3	) 	  	 	(15.7	) 	
Accounts receivable factoring commission	  	 	0.8	 	  	 	0.8	 	  	 	1.0	 	
Debt transaction expenses	  	 	—  	 	  	 	1.7	 	  	 	3.0	 	
Other	  	 	2.6	 	  	 	0.4	 	  	 	0.4	 	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total other, net	  	$	(11.9	) 	  	 	(15.4	) 	  	 	(11.3	) 	
	  	 	 	 	  	 	 	 	  	 	 	 	
(16) Stock-based Compensation
In August 2014, the Board of Directors of MPG approved an equity incentive plan (the “MPG Plan”) for officers, key employees and non-employees. The MPG Plan permits the grant of equity awards to purchase up to 5.9 million shares of MPG common stock. All awards granted on or after August 4, 2014 were issued under the MPG Plan.
Restricted Shares
The Company has granted restricted stock awards and restricted stock unit awards to certain employees and nonemployee directors (collectively the “Restricted Shares”).
 
23

The following table summarizes the terms of the Restricted Shares:

Vesting Terms	  	Number of
Shares	 	  	Grant-date
Fair Value	 	
 	  	(In thousands)	 	  	 	 	
1/3 rd per year on grant-date anniversary	  	 	433	 	  	$	15.81	 	
1/3 rd per year on grant-date anniversary	  	 	22	 	  	 	15.95	 	
1/3 rd per year on grant-date anniversary	  	 	445	 	  	 	15.08	 	
1/3 rd per year on grant-date anniversary	  	 	465	 	  	 	20.02	 	
1/3 rd per year on grant-date anniversary	  	 	305	 	  	 	18.90	 	
1/4 th on the 1 st grant-date anniversary and 3/4 th on the 2 nd grant-date anniversary	  	 	567	 	  	 	15.00	 	
1/3 rd per year on grant-date anniversary	  	 	280	 	  	 	15.00	 	
	  	 	 	 	  				
	  	 	2,517	 	  				
	  	 	 	 	  				
The Restricted Shares are being expensed based on their grant-date fair values on a straight-line basis over the requisite service period for the entire award. The grant-date fair values were determined using the fair value of the Company’s common stock as of the grant date.
Changes in the number of Restricted Shares outstanding for the years ended December 31, 2016 and 2015 were as follows:

 	  	Number of
Shares	 	  	Weighted
Average
Grant-date
Fair Value	 	  	Fair Value
of Shares
Vested	 	
 	  	(In
thousands)	 	  	 	 	  	(In millions)	 	
Balance, December 31, 2014	  	 	847	 	  	$	15.00	 	  				
Granted	  	 	770	 	  	 	19.58	 	  				
Vested	  	 	(424	) 	  	 	16.20	 	  	$	7.8	 	
Forfeited	  	 	(28	) 	  	 	16.30	 	  				
	  	 	 	 	  				  				
Balance, December 31, 2015	  	 	1,165	 	  	 	17.47	 	  				
Granted	  	 	900	 	  	 	15.45	 	  				
Vested	  	 	(571	) 	  	 	16.65	 	  	$	10.9	 	
Forfeited	  	 	(24	) 	  	 	16.42	 	  				
	  	 	 	 	  				  				
Balance, December 31, 2016	  	 	1,470	 	  	$	16.56	 	  				

24

Options
The Company has granted options to certain employees to purchase shares of its common stock with the following terms:

Vesting Terms	  	Number of
Options	 	  	Weighted
Average
Exercise
Price	 	  	Contractual
Terms	 	
 	  	(In
thousands)	 	  	 	 	  	(In years)	 	
1/3 rd per year on grant-date anniversary	  	 	389	 	  	$	15.81	 	  	 	10	 	
1/3 rd per year on grant-date anniversary	  	 	352	 	  	$	15.08	 	  	 	10	 	
1/3 rd per year on grant-date anniversary	  	 	438	 	  	$	18.90	 	  	 	10	 	
100% upon grant	  	 	635	 	  	 	20.00	 	  	 	10	 	
1/3 rd per year on grant-date anniversary	  	 	560	 	  	 	20.00	 	  	 	10	 	
1/5 th upon grant and 1/5 th on December 6 th of following 4 years	  	 	357	 	  	 	20.00	 	  	 	10	 	
1/5 th per year on the anniversary of the original grant date	  	 	4,405	 	  	 	6.32	 	  	 	10	 	
100% on the seventh anniversary of the original grant date	  	 	485	 	  	 	18.66	 	  	 	10	 	
	  	 	 	 	  				  				
	  	 	7,621	 	  				  				
	  	 	 	 	  				  				
All options are being expensed on their grant-date fair values on a straight-line basis over the requisite service period for the entire award. The grant-date fair values of the options were determined using a Black-Scholes valuation model based on the following weighted average assumptions:

 	  	Original Grant Year	 	
 	  	2016	 	 	2015	 	 	2014	 	
Grant-date fair value (per share)	  	$	5.59	 	 	 	9.03	 	 	 	12.66	 	
Exercise price	  	$	15.46	 	 	 	18.90	 	 	 	18.66	 	
Expected term	  	 	6 years	 	 	 	6 years	 	 	 	7 years	 	
Risk-free rate	  	 	1.4	% 	 	 	1.8	% 	 	 	2.0	% 	
Expected volatility	  	 	47.0	% 	 	 	60.0	% 	 	 	65.0	% 	
Expected dividend yield	  	 	2.3	% 	 	 	1.9	% 	 	 	0.0	% 	
The risk-free rate was determined based on U.S. Treasury yield curves of securities matching the expected term of the awards or a blend of securities with similar terms. The expected term was determined using the simplified method as the Company did not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term. Expected volatility was estimated based on historical volatility of comparable companies within our industry. The expected dividend yield was determined based on the expected annual dividend amount divided by the common stock price as of the grant date.
 
25

Options Outstanding
Changes in the number of Options outstanding for the years ended December 31, 2016 and 2015 were as follows:

 	  	Number of
Options	 	  	Weighted
Average
Exercise
Price	 	  	Weighted
Average
Remaining
Contractual
Term	 	  	Aggregate
Intrinsic
Value	 	
 	  	(In
thousands)	 	  	 	 	  	(In years)	 	  	(In millions)	 	
Balance, December 31, 2014	  	 	6,442	 	  	$	10.54	 	  	 	8.5	 	  	$	49.2	 	
	  	 	 	 	  	 	 	 	  				  				
Options exercisable, December 31, 2014	  	 	1,938	 	  	$	10.60	 	  	 	8.2	 	  	$	15.2	 	
Granted	  	 	438	 	  	 	18.90	 	  				  				
Exercised	  	 	(566	) 	  	 	5.50	 	  				  	 	8.6	 	
Forfeited	  	 	(45	) 	  	 	10.12	 	  				  				
	  	 	 	 	  	 	 	 	  				  				
Balance, December 31, 2015	  	 	6,269	 	  	$	11.58	 	  	 	7.6	 	  	$	45.5	 	
	  	 	 	 	  	 	 	 	  				  				
Options exercisable, December 31, 2015	  	 	3,400	 	  	$	10.82	 	  	 	7.4	 	  	$	27.6	 	
Granted	  	 	741	 	  	 	15.46	 	  				  				
Exercised	  	 	(1,333	) 	  	 	6.97	 	  				  	 	14.3	 	
Forfeited	  	 	(87	) 	  	 	14.58	 	  				  				
	  	 	 	 	  	 	 	 	  				  				
Balance, December 31, 2016	  	 	5,590	 	  	$	13.15	 	  	 	6.9	 	  	$	54.8	 	
	  	 	 	 	  	 	 	 	  				  				
Options exercisable, December 31, 2016	  	 	2,998	 	  	$	12.46	 	  	 	6.2	 	  	$	31.5	 	
Proceeds and tax benefit realized from the exercise of stock options during the years ended December 31, 2016, 2015 and 2014 were as follows:

 	  	2016	 	  	2015	 	  	2014	 	
 	  	(In millions)	 	
Proceeds from the exercise of stock options - gross	  	$	9.3	 	  	 	3.0	 	  	 	—  	 	
Tax benefit	  	 	4.6	 	  	 	2.7	 	  	 	—  	 	
Stock-based Compensation Expense

 	  	2016	 	  	2015	 	  	2014	 	
 	  	(In millions)	 	
Restricted shares	  	$	10.2	 	  	 	11.9	 	  	 	0.3	 	
Options	  	 	7.3	 	  	 	15.8	 	  	 	17.0	 	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total	  	$	17.5	 	  	 	27.7	 	  	 	17.3	 	
	  	 	 	 	  	 	 	 	  	 	 	 	
Tax benefit	  	$	6.5	 	  	 	10.3	 	  	 	5.4	 	
Compensation expense associated with the outstanding stock-based awards was recognized within selling, general and administrative expenses . Total unrecognized compensation cost related to non-vested awards as of December 31, 2016 was approximately $31.0 million, which is expected to be recognized ratably over the remaining vesting terms.
In 2015, the Company modified 297,378 restricted shares and 1,387,087 options in connection with employee separation agreements. In accordance with these agreements, all non-vested awards vested immediately at the date of separation. In addition, the terms of the options were modified from the original term to exercise of 30 days after separation to a term of three or five years based on the respective separation agreement. The modification, which affected five participants, resulted in additional compensation expense related to restricted shares and options of approximately $4.1 million and $7.6 million, respectively, for the year ended December 31, 2015.
In August 2014, in conjunction with the Combination, all outstanding stock-based compensation awards were converted (the “Conversion”) to options to acquire MPG common stock. The Conversion was accounted for as
 
26

a modification resulting from an equity restructuring. The terms of the original awards were modified to eliminate and replace performance-based vesting with time-based vesting over the remaining vesting periods as set forth in the original option agreements. The modification, which affected fifty-nine option holders, resulted in no incremental compensation cost to the Company. The number of options issued upon conversion and the exercise price of those options were determined based on the relative fair values of the underlying stock of HHI, Metaldyne, or Grede to the overall fair value of MPG common stock at the time of the Combination. Prior to the Combination and Conversion, Grede had issued 970,395 equity awards in 2014, HHI and Metaldyne had issued 39,885 and 1,991,305 equity awards in 2013, respectively, and, as of the beginning of 2013, HHI had 1,888,450 equity awards issued and outstanding.
(17) Income Taxes

 	  	2016	 	  	2015	 	  	2014	 	
 	  	(In millions)	 	
Income (loss) before income taxes:	  				  				  				
Domestic	  	$	53.5	 	  	 	97.8	 	  	 	(8.8	) 	
Foreign	  	 	81.8	 	  	 	76.1	 	  	 	63.0	 	
	  	 	 	 	  	 	 	 	  	 	 	 	
	  	$	135.3	 	  	 	173.9	 	  	 	54.2	 	
	  	 	 	 	  	 	 	 	  	 	 	 	
Provision (benefit) for income taxes:	  				  				  				
Currently payable:	  				  				  				
Federal	  	$	21.9	 	  	 	31.7	 	  	 	43.8	 	
Foreign	  	 	27.5	 	  	 	23.6	 	  	 	18.8	 	
State and local	  	 	2.9	 	  	 	8.4	 	  	 	7.0	 	
	  	 	 	 	  	 	 	 	  	 	 	 	
	  	 	52.3	 	  	 	63.7	 	  	 	69.6	 	
	  	 	 	 	  	 	 	 	  	 	 	 	
Deferred:	  				  				  				
Federal	  	 	(9.3	) 	  	 	(14.3	) 	  	 	(81.5	) 	
Foreign	  	 	(4.5	) 	  	 	4.0	 	  	 	(0.4	) 	
State and local	  	 	(0.1	) 	  	 	(5.3	) 	  	 	(6.8	) 	
	  	 	 	 	  	 	 	 	  	 	 	 	
	  	 	(13.9	) 	  	 	(15.6	) 	  	 	(88.7	) 	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total income tax expense (benefit)	  	$	38.4	 	  	 	48.1	 	  	 	(19.1	) 	

27

The components of deferred taxes as of December 31 were as follows:

 	  	2016	 	  	2015	 	
 	  	(In millions)	 	
Deferred tax assets:	  				  				
Inventories	  	$	4.3	 	  	 	4.6	 	
Property and equipment	  	 	3.1	 	  	 	3.0	 	
Accrued liabilities and other long-term liabilities	  	 	14.1	 	  	 	13.0	 	
Net operating losses	  	 	17.9	 	  	 	12.9	 	
Capitalized transactions costs	  	 	7.0	 	  	 	5.5	 	
Defined benefit pension plans	  	 	11.9	 	  	 	6.6	 	
Stock-based compensation	  	 	14.2	 	  	 	14.2	 	
Other	  	 	6.0	 	  	 	11.2	 	
	  	 	 	 	  	 	 	 	
	  	 	78.5	 	  	 	71.0	 	
Valuation allowance	  	 	(15.3	) 	  	 	(11.8	) 	
	  	 	 	 	  	 	 	 	
	  	 	63.2	 	  	 	59.2	 	
Deferred tax liabilities:	  				  				
Property and equipment	  	 	90.1	 	  	 	91.2	 	
Intangible assets	  	 	169.6	 	  	 	181.7	 	
Investments in foreign subsidiaries	  	 	3.9	 	  	 	2.2	 	
Debt issuance costs	  	 	2.0	 	  	 	5.0	 	
Other	  	 	13.9	 	  	 	8.7	 	
	  	 	 	 	  	 	 	 	
	  	 	279.5	 	  	 	288.8	 	
	  	 	 	 	  	 	 	 	
Net deferred tax liability	  	$	216.3	 	  	 	229.6	 	

28

The balance sheet presentation of net deferred tax liability follows:

 	  	2016	 	  	2015	 	
 	  	(In millions)	 	
Assets:	  				  				
Deferred income taxes	  	$	7.4	 	  	 	1.7	 	
Liabilities:	  				  				
Deferred income taxes	  	 	223.7	 	  	 	231.3	 	
	  	 	 	 	  	 	 	 	
Net deferred tax liability	  	$	216.3	 	  	 	229.6	 	
	  	 	 	 	  	 	 	 	
The following is a reconciliation of tax computed at the U.S. federal statutory rate to the provision for income taxes allocated to income from continuing operations:

 	  	2016	 	 	2015	 	 	2014	 	
 	  	(In millions)	 	
U.S. federal statutory rate	  	 	35	% 	 	 	35	% 	 	 	35	% 	
Tax at U.S. federal statutory rate	  	$	47.3	 	 	 	60.9	 	 	 	19.0	 	
Lower effective foreign tax rate	  	 	(7.7	) 	 	 	(6.9	) 	 	 	(6.1	) 	
Change in valuation allowance	  	 	3.6	 	 	 	2.4	 	 	 	4.8	 	
Nondeductible transaction/other expenses	  	 	3.1	 	 	 	1.7	 	 	 	3.6	 	
Non-taxable income	  	 	(2.8	) 	 	 	(2.6	) 	 	 	(2.9	) 	
Foreign tax credit - net	  	 	(2.6	) 	 	 	—  	 	 	 	—  	 	
Tax holidays, credits and incentives	  	 	(2.5	) 	 	 	(1.4	) 	 	 	(4.7	) 	
Domestic production activities deduction	  	 	(2.3	) 	 	 	(3.6	) 	 	 	(2.3	) 	
Changes in unrecognized tax benefits	  	 	(1.9	) 	 	 	0.6	 	 	 	(2.2	) 	
Deferred tax on outside basis of foreign shares	  	 	1.8	 	 	 	(3.0	) 	 	 	(31.6	) 	
State and local taxes, net of federal tax benefit	  	 	1.1	 	 	 	4.3	 	 	 	(1.4	) 	
Changes in prior-year estimates	  	 	0.4	 	 	 	(4.2	) 	 	 	2.6	 	
Other, net	  	 	0.9	 	 	 	(0.1	) 	 	 	(2.2	) 	
Goodwill impairment	  	 	—  	 	 	 	—  	 	 	 	4.3	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Income tax expense (benefit)	  	$	38.4	 	 	 	48.1	 	 	 	(19.1	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
As of December 31, 2016, the Company has not made a provision for U.S. or additional foreign withholding taxes on approximately $265 million of the excess of the amount for financial reporting over the tax basis of investments in foreign subsidiaries that is indefinitely reinvested. Such amounts could become taxable upon the sale or liquidation of these foreign subsidiaries or upon dividend repatriation. If a U.S. deferred tax liability were to be recorded on those basis differentials, the estimated tax liability would approximate $24.8 million. For those wholly owned foreign subsidiaries where basis differentials are not indefinitely reinvested, the Company provides deferred income taxes on the basis differentials. As of December 31, 2016 and 2015, this deferred income tax liability totaled $3.9 million and $2.2 million, respectively.
The Protecting Americans from Tax Hikes Act of 2015 extended the “look-through” rule under subpart F of the U.S. Internal Revenue Code through 2019. The “look-through rule” provides an exception to the U.S. taxation of certain income generated by foreign subsidiaries. As a result of this change in law, the Company recorded a $3.2 million income tax benefit in 2015, to derecognize a portion of the deferred tax liabilities previously recorded.
In the fourth quarter of 2014, MPG made the assertion that the earnings of certain foreign subsidiaries within the Metaldyne segment are indefinitely reinvested. This determination resulted from the Refinancing in October 2014 and the IPO in December 2014, which added significant flexibility to the Company’s capital structure. The assertion is also supported by the operational and investing needs of the Company’s foreign locations. As a result of this change, the Company recorded a $31.6 million deferred tax benefit for the year ended December 31, 2014 to derecognize a portion of the deferred tax liabilities previously recorded.
 
29

As of December 31, 2016 and 2015, certain foreign subsidiaries have NOL carryforward balances totaling $57.6 million and $40.2 million, respectively. Of the December 31, 2016 balance, foreign NOL carryforwards totaling $5.4 million will expire in various years ranging from 2018 through 2025, while the remaining balance of $52.3 million has no expiration date.
The Company continues to maintain a valuation allowance related to its net deferred tax assets in multiple jurisdictions. As of December 31, 2016 and 2015, the Company had valuation allowances of $15.3 million and $11.8 million, respectively, primarily related to tax loss and credit carryforwards.
For its U.S. federal income tax provision, the Company has recorded a research and experimentation tax credit of $2.4 million and $1.3 million for the year ended December 31, 2016 and 2015, respectively.
A reconciliation of the total amounts of unrecognized tax benefits for the years ended December 31 follows:

 	  	2016	 	  	2015	 	  	2014	 	
 	  	(In millions)	 	
Beginning balance	  	$	7.2	 	  	 	7.4	 	  	 	9.6	 	
Additions to tax positions related to the current period	  	 	0.5	 	  	 	0.3	 	  	 	0.3	 	
Additions to tax positions related to the prior period	  	 	0.2	 	  	 	0.4	 	  	 	0.3	 	
Reductions in tax positions resulting from settlements with taxing authorities	  	 	(3.5	) 	  	 	—  	 	  	 	(1.3	) 	
Reductions in tax positions resulting from a lapse of the statute of limitations	  	 	(0.1	) 	  	 	—  	 	  	 	(0.2	) 	
Other	  	 	(0.2	) 	  	 	(0.9	) 	  	 	(1.3	) 	
	  	 	 	 	  	 	 	 	  	 	 	 	
Ending balance	  	$	4.1	 	  	 	7.2	 	  	 	7.4	 	
	  	 	 	 	  	 	 	 	  	 	 	 	
The reserve for unrecognized tax benefits totaled $4.1 million and $4.5 million as of December 31, 2016 and 2015, respectively. This reserve primarily consists of foreign tax contingencies related to ongoing tax audits. Additionally, as of December 31, 2015, deferred tax assets related to net operating losses were reduced by $2.7 million. The deferred tax assets were re-established during the year ended December 31, 2016 due to a favorable resolution of an audit issue for one of the Company’s foreign subsidiaries. All of the Company’s unrecognized tax benefits would, if recognized, reduce its effective tax rate. In connection with the Metaldyne Transaction, the former owner’s stockholders have indemnified Metaldyne for certain pre-closing taxes. An indemnification asset of $4.7 million and $7.6 million related to the foreign tax contingencies, including interest and penalties, is recorded in receivables, net as of December 31, 2016 and 2015, respectively.
The Company recognizes both interest and penalties accrued with respect to an underpayment of income taxes as income tax expense. Related to the unrecognized tax benefits noted above, the amount of interest and penalty expense was $0.1 million, $0.2 million, and $0.2 million for the years ended December 31, 2016, 2015, and 2014, respectively. The accrued liability for penalties and interest as of December 31, 2016, 2015 and 2014 was $1.4 million, $1.3 million and $1.1 million, respectively.
The Company has open tax years from 2004 to 2016 with varying taxing jurisdictions where taxes remain subject to examination including, but not limited to, the United States of America, Spain, France, Germany, and India. All necessary adjustments for the anticipated outcomes of ongoing examinations have been properly addressed or accrued. As of December 31, 2016 and 2015, since existing examinations remain pending, it is not possible to reasonably estimate the expected change to the total amount of unrecognized tax benefits over the next twelve months.
 
30

(18) Employee Benefit Plans
The Company sponsors employee benefit plans for certain of its employees.
Defined Benefit Pension Plans
The Company sponsors defined benefit pension plans, including certain unfunded supplemental retirement plans, covering certain active and retired employees for its operations in the U.S., U.K., Germany, Mexico, France and Korea (the “Defined Benefit Pension Plans”).
The straight-line method is used to amortize prior service amounts and unrecognized net actuarial (gains) losses.
Changes in projected benefit obligations and plan assets for the years ended December 31 were as follows:

 	  	2016	 	  	2015	 	
 	  	U.S.	 	  	Non-U.S.	 	  	U.S.	 	  	Non-U.S.	 	
 	  	(In millions)	 	
Accumulated benefit obligation at the end of the year	  	$	32.1	 	  	 	52.9	 	  	 	32.8	 	  	 	49.6	 	
Change in projected benefit obligation:	  				  				  				  				
Beginning projected benefit obligation	  	$	32.8	 	  	 	52.1	 	  	 	36.6	 	  	 	56.8	 	
Service cost	  	 	—  	 	  	 	1.2	 	  	 	—  	 	  	 	1.2	 	
Interest cost	  	 	1.3	 	  	 	1.7	 	  	 	1.3	 	  	 	1.7	 	
Actuarial (gain) loss	  	 	0.3	 	  	 	8.3	 	  	 	(1.3	) 	  	 	(2.9	) 	
Benefits paid	  	 	(1.4	) 	  	 	(1.7	) 	  	 	(1.2	) 	  	 	(2.0	) 	
Effect of settlements	  	 	(0.9	) 	  	 	—  	 	  	 	(2.6	) 	  	 	—  	 	
Other adjustments	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	1.7	 	
Exchange rate changes	  	 	—  	 	  	 	(6.5	) 	  	 	—  	 	  	 	(4.4	) 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Ending projected benefit obligation	  	 	32.1	 	  	 	55.1	 	  	 	32.8	 	  	 	52.1	 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Change in plan assets:	  				  				  				  				
Beginning fair value of plan assets	  	$	23.9	 	  	 	27.6	 	  	 	27.3	 	  	 	29.2	 	
Actual return on plan assets	  	 	1.1	 	  	 	3.4	 	  	 	(0.3	) 	  	 	0.1	 	
Employer contributions	  	 	—  	 	  	 	1.5	 	  	 	0.7	 	  	 	1.8	 	
Benefits paid	  	 	(1.4	) 	  	 	(1.7	) 	  	 	(1.2	) 	  	 	(2.0	) 	
Effect of settlements	  	 	(0.9	) 	  	 	—  	 	  	 	(2.6	) 	  	 	—  	 	
Exchange rate changes	  	 	—  	 	  	 	(4.6	) 	  	 	—  	 	  	 	(1.5	) 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Ending fair value of plan assets	  	$	22.7	 	  	 	26.2	 	  	 	23.9	 	  	 	27.6	 	

31

Amounts recognized on the consolidated balance sheets as of December 31 were as follows:

 	  	2016	 	  	2015	 	
 	  	U.S.	 	  	Non-U.S.	 	  	U.S.	 	  	Non-U.S.	 	
 	  	(In millions)	 	
Amounts recognized in liabilities:	  				  				  				  				
Current liabilities	  	$	—  	 	  	 	(0.4	) 	  	 	—  	 	  	 	(0.4	) 	
Noncurrent liabilities	  	 	(9.4	) 	  	 	(28.6	) 	  	 	(8.9	) 	  	 	(24.2	) 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Funded status	  	 	(9.4	) 	  	 	(29.0	) 	  	 	(8.9	) 	  	 	(24.6	) 	
Amounts recognized in accumulated other comprehensive income:	  				  				  				  				
Net actuarial loss	  	 	4.2	 	  	 	9.7	 	  	 	3.7	 	  	 	4.0	 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total recognized on the consolidated balance sheets	  	$	(5.2	) 	  	 	(19.3	) 	  	 	(5.2	) 	  	 	(20.6	) 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
The current portion of the above retirement benefit liabilities is recognized in accrued liabilities and the noncurrent portion is recognized in other long-term liabilities .
Changes in accumulated other comprehensive income for the years ended December 31 were as follows:

 	  	2016	 	  	2015	 	
 	  	U.S.	 	  	Non-U.S.	 	  	U.S.	 	  	Non-U.S.	 	
 	  	(In millions)	 	
Beginning accumulated other comprehensive income	  	$	3.7	 	  	 	4.0	 	  	 	3.5	 	  	 	5.7	 	
Current period (gain) loss	  	 	0.5	 	  	 	6.5	 	  	 	0.2	 	  	 	(1.1	) 	
Exchange rate changes	  	 	—  	 	  	 	(0.8	) 	  	 	—  	 	  	 	(0.6	) 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Ending accumulated other comprehensive income	  	$	4.2	 	  	 	9.7	 	  	 	3.7	 	  	 	4.0	 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
The amounts in accumulated other comprehensive income that are expected to be recognized as components of net periodic benefit cost in 2017 are de minimis for the U.S. plans and $0.3 million for the non-U.S. plans.
Weighted average assumptions used to determine the benefit obligations as of December 31 were as follows:

  	  	2016	 	 	2015	 	
 	  	U.S.	 	 	Non-U.S.	 	 	U.S.	 	 	Non-U.S.	 	
Discount rate	  	 	3.94	% 	 	 	2.53	% 	 	 	4.10	% 	 	 	3.46	% 	
Rate of compensation increase	  	 	Not applicable	 	 	 	4.47	 	 	 	Not applicable	 	 	 	4.65	 	
Weighted average assumptions used to determine net periodic benefit cost for the periods ended of December 31 were as follows:

 	  	2016	 	 	2015	 	 	2014	 	
 	  	U.S.	 	 	Non-U.S.	 	 	U.S.	 	 	Non-U.S.	 	 	U.S.	 	 	Non-U.S.	 	
Discount rate	  	 	4.10	% 	 	 	3.46	% 	 	 	3.77	% 	 	 	3.22	% 	 	 	4.04	% 	 	 	4.26	% 	
Expected long-term return of plan assets	  	 	7.25	 	 	 	6.34	 	 	 	7.25	 	 	 	6.80	 	 	 	7.25	 	 	 	6.77	 	
Rate of compensation increase	  	 	Not applicable	 	 	 	4.65	 	 	 	Not applicable	 	 	 	4.46	 	 	 	Not applicable	 	 	 	4.80	 	
 
32

The discount rate used was determined based upon available yields for high quality corporate and government bonds of the plan countries, utilizing similar durations/terms and currencies of the plan liabilities. The non-U.S. country specific rates are weighted by projected benefit obligation to arrive at a single weighted average rate.
The expected long-term rate of return for the plans’ total assets is based on the expected return of each of the below asset categories, weighted based on the target allocation for each class. Equity securities and growth assets are expected to return 6% to 8% over the long-term, while debt securities and liability matching assets are expected to return between 2% and 4%.
The rate of compensation increase for the U.S. plans is not applicable as the plans’ benefits are based upon credited years of service.
Net periodic benefit cost for the periods ended of December 31 was as follows:

 	  	2016	 	 	2015	 	 	2014	 	
 	  	U.S.	 	 	Non-U.S.	 	 	U.S.	 	 	Non-U.S.	 	 	U.S.	 	 	Non-U.S.	 	
 	  	(In millions)	 	
Service cost	  	$	—  	 	 	 	1.2	 	 	 	—  	 	 	 	1.2	 	 	 	0.1	 	 	 	1.2	 	
Interest cost	  	 	1.3	 	 	 	1.7	 	 	 	1.3	 	 	 	1.7	 	 	 	0.8	 	 	 	2.1	 	
Expected return on plan assets	  	 	(1.4	) 	 	 	(1.6	) 	 	 	(1.6	) 	 	 	(1.9	) 	 	 	(1.0	) 	 	 	(1.8	) 	
Amortization of net actuarial gain (loss)	  	 	0.1	 	 	 	—  	 	 	 	—  	 	 	 	0.1	 	 	 	—  	 	 	 	—  	 	
Effect of settlement	  	 	0.1	 	 	 	—  	 	 	 	0.4	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net periodic benefit cost	  	$	0.1	 	 	 	1.3	 	 	 	0.1	 	 	 	1.1	 	 	 	(0.1	) 	 	 	1.5	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
The weighted average asset allocations as of December 31 were as follows:

 	  	2016	 	 	2015	 	
 	  	U.S.	 	 	Non-U.S.	 	 	U.S.	 	 	Non-U.S.	 	
Asset category:	  				 				 				 				
Equity securities	  	 	52	% 	 	 	75	% 	 	 	51	% 	 	 	77	% 	
Fixed income securities	  	 	40	 	 	 	22	 	 	 	39	 	 	 	16	 	
Real estate	  	 	8	 	 	 	—  	 	 	 	10	 	 	 	—  	 	
Cash	  	 	—  	 	 	 	2	 	 	 	—  	 	 	 	4	 	
Other	  	 	—  	 	 	 	1	 	 	 	—  	 	 	 	3	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total	  	 	100	% 	 	 	100	% 	 	 	100	% 	 	 	100	% 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Certain policies are established to provide for growth of capital with a moderate level of volatility by investing assets per the target allocations. The plans’ asset allocation percentages at December 31, 2016 and 2015 approximated the target asset allocation ranges. The targeted asset allocations and the investment policies are reviewed periodically to determine if the policies should be changed.
 
33

Fair value measurements for plan assets as of December 31, 2016 were as follows:

 	  	Total	 	  	Level 1	 	  	Level 2	 	  	Level 3	 	
 	  	(In millions)	 	
Asset category:	  				  				  				  				
U.S. Plans	  				  				  				  				
Mutual funds:	  				  				  				  				
Equity securities	  	$	11.8	 	  	 	—  	 	  	 	11.8	 	  	 	—  	 	
Fixed income securities	  	 	9.1	 	  	 	—  	 	  	 	9.1	 	  	 	—  	 	
Real estate	  	 	1.8	 	  	 	—  	 	  	 	0.4	 	  	 	1.4	 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total	  	$	22.7	 	  	 	—  	 	  	 	21.3	 	  	 	1.4	 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Non-U.S. Plans	  				  				  				  				
Cash and cash equivalents	  	$	0.5	 	  	 	0.5	 	  	 	—  	 	  	 	—  	 	
Mutual funds (non-U.S.):	  				  				  				  				
Equity securities	  	 	18.5	 	  	 	—  	 	  	 	18.5	 	  	 	—  	 	
Fixed income securities	  	 	5.9	 	  	 	—  	 	  	 	5.9	 	  	 	—  	 	
Mixed asset mutual funds (equity/fixed income)	  	 	1.3	 	  	 	—  	 	  	 	1.3	 	  	 	—  	 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total	  	$	26.2	 	  	 	0.5	 	  	 	25.7	 	  	 	—  	 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Fair value measurements for plan assets as of December 31, 2015 were as follows:

 	  	Total	 	  	Level 1	 	  	Level 2	 	  	Level 3	 	
 	  	(In millions)	 	
Asset category:	  				  				  				  				
U.S. Plans	  				  				  				  				
Mutual funds:	  				  				  				  				
Equity securities	  	$	12.1	 	  	 	—  	 	  	 	12.1	 	  	 	—  	 	
Fixed income securities	  	 	9.3	 	  	 	—  	 	  	 	9.3	 	  	 	—  	 	
Real estate	  	 	2.5	 	  	 	—  	 	  	 	1.2	 	  	 	1.3	 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total	  	$	23.9	 	  	 	—  	 	  	 	22.6	 	  	 	1.3	 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Non-U.S. Plans	  				  				  				  				
Cash and cash equivalents	  	$	1.0	 	  	 	1.0	 	  				  	 	—  	 	
Mutual funds (non-U.S.):	  				  				  				  				
Equity securities	  	 	21.4	 	  	 	—  	 	  	 	21.4	 	  	 	—  	 	
Fixed income securities	  	 	4.3	 	  	 	—  	 	  	 	4.3	 	  	 	—  	 	
Mixed asset mutual funds (equity/fixed income)	  	 	0.9	 	  	 	—  	 	  	 	0.9	 	  	 	—  	 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total	  	$	27.6	 	  	 	1.0	 	  	 	26.6	 	  	 	—  	 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Level 1 assets include cash and cash equivalents and are valued at cost. Level 2 assets include investments in mutual funds and are valued using observable market inputs. Level 3 assets include investments in real estate and are valued using unobservable inputs that are significant to the overall fair value measurement.
The following table summarizes the changes in Level 3 assets:

 	  	(In millions)	 	
Balance as of December 31, 2015	  	$	1.3	 	
Return on plan assets	  	 	0.1	 	
Purchases	  	 	0.1	 	
Sales	  	 	(0.1	) 	
	  	 	 	 	
Balance as of December 31, 2016	  	$	1.4	 	

34

Contributions to the U.S. plans and the non-U.S. plans in 2017 are estimated to be $0.3 and $0.8 million, respectively. Contributions are expected to meet or exceed the minimum funding requirements of the relevant governmental authorities. Contributions may be made in excess of the minimum funding requirements in response to the plans’ investment performance, to achieve funding levels required by defined benefit plan arrangements or when deemed to be financially advantageous to do so based on their other cash requirements.
The following payments, which reflect expected future service, as appropriate, are expected to be paid by the plans:

 	  	U.S.	 	  	Non-U.S.	 	
 	  	(In millions)	 	
December 31:	  				  				
2017	  	$	1.8	 	  	 	1.5	 	
2018	  	 	1.5	 	  	 	1.6	 	
2019	  	 	1.5	 	  	 	1.6	 	
2020	  	 	1.6	 	  	 	1.7	 	
2021	  	 	1.7	 	  	 	1.9	 	
2022–2026	  	 	9.4	 	  	 	10.5	 	
Defined Contribution Plans
The Company sponsors a number of qualified defined contribution personal savings plans for U.S. hourly and salaried employees. These plans allow eligible employees to contribute a portion of their compensation into the plans and generally provide employer matching contributions. In addition to the employer match, for certain of the plans, a contribution is made for each participant based on a dollar amount per hour worked. Contributions were $6.4 million for 2016, $7.6 million for 2015, and $6.7 million for 2014 .
(19) Fair Value Measurements
The carrying value and fair value of the notes and term loans as of December 31 were as follows:

 	  	2016	 	
 	  	Outstanding
Principal	 	  	Unamortized
Debt Issuance
Costs	 	 	Unamortized
Discount	 	 	Carrying
Value	 	  	Fair
Value	 	
 	  	(In millions)	 	
Registered Notes	  	$	600.0	 	  	 	(9.2	) 	 	 	—  	 	 	 	590.8	 	  	 	625.5	 	
USD Term Loan	  	 	1,011.5	 	  	 	(7.6	) 	 	 	(4.7	) 	 	 	999.2	 	  	 	1,017.8	 	
Euro Term Loan	  	 	233.3	 	  	 	(0.1	) 	 	 	(0.9	) 	 	 	232.3	 	  	 	234.8	 	
		
 	  	2015	 	
 	  	Outstanding
Principal	 	  	Unamortized
Debt Issuance
Costs	 	 	Unamortized
Discount	 	 	Carrying
Value	 	  	Fair
Value	 	
 	  	(In millions)	 	
Registered Notes	  	$	600.0	 	  	 	(10.4	) 	 	 	—  	 	 	 	589.6	 	  	 	605.9	 	
USD Term Loan	  	 	1,022.2	 	  	 	(9.1	) 	 	 	(5.6	) 	 	 	1,007.5	 	  	 	1,000.5	 	
Euro Term Loan	  	 	244.1	 	  	 	(0.1	) 	 	 	(1.1	) 	 	 	242.9	 	  	 	243.2	 	
The fair values of the Registered Notes and term loans were estimated using quoted market prices. As the markets for this debt are not active, the debt is categorized as Level 2 within the fair value hierarchy.
The fair value of the Company’s other financial instruments, cash and cash equivalents, revolving lines of credit and other long-term debt, are estimated to equal their carrying values due to their short-term nature.
 
35

(20) Commitments and Contingencies
Various claims, lawsuits and administrative proceedings are pending or threatened against the Company or its subsidiaries, covering a wide range of matters that arise in the ordinary course of the Company’s business activities, primarily with respect to commercial, environmental and occupational and employment matters. Commercial disputes vary in nature and have historically been resolved by negotiations between the parties. Although the outcome of any of these matters cannot be predicted with certainty, the Company does not believe that any of these proceedings or matters in which the Company is currently involved will have a material adverse effect on the Company’s results of operations, financial position or cash flows.
In addition, the Company is conducting remedial actions at certain of its facilities. A reserve estimate for each environmental matter is established using standard engineering cost estimating techniques on an undiscounted basis. In determining such costs, consideration is given to the professional judgment of Company environmental engineers. The Company believes any liability that may result from the resolution of environmental matters for which sufficient information is available to support these cost estimates will not have a material adverse effect on the Company’s results of operations, financial position or cash flows. The Company cannot predict the effect of compliance with environmental laws and regulations with respect to unknown environmental matters on the Company’s results of operations, financial position or cash flows or the possible effect of compliance with environmental requirements imposed in the future.    
Definitive Merger Agreement
On November 3, 2016, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among the Company, American Axle & Manufacturing Holdings, Inc. (“American Axle”) and Alpha SPV I, Inc. (“Merger Sub”), a wholly owned subsidiary of American Axle, pursuant to which American Axle will acquire all of the outstanding equity of the Company.
In accordance with and subject to the terms and conditions of the Merger Agreement, Merger Sub will merge with and into the Company (the “Merger”), with the Company surviving the Merger and continuing as a wholly-owned subsidiary of American Axle. Upon consummation of the transactions contemplated by the Merger Agreement, each outstanding share of common stock, par value $0.001 per share, of the Company will automatically be converted into the right to receive (i) $13.50 per share in cash (without interest) and (ii) 0.5 shares of common stock, par value $0.01 per share, of American Axle.
The consummation of the Merger and the transactions contemplated by the Merger Agreement are subject to the satisfaction of customary closing conditions, including the receipt of Mexican antitrust approval, the approval of the Merger Agreement by the requisite vote of the Company’s stockholders and approval of the issuance of shares of common stock of American Axle to the Company’s stockholders in the Merger by the requisite vote of American Axle’s stockholders.
(21) Related Party Transactions
HHI, Metaldyne and Grede were parties to management services agreement with American Securities. Advisory and management fees and expenses totaling $14.7 million for 2014 were paid to American Securities under the agreements. These agreements were terminated upon completion of the initial public offering of the Company’s common stock on December 12, 2014. As of December 31, 2016 there were no amounts due to American Securities.
As of December 31, 2016, affiliates of American Securities held 76.0% of the outstanding common stock of the Company.
(22) Segment and Geographical Data
The Company is organized and operated as three operating segments: the HHI segment, the Metaldyne segment and the Grede segment.
 
36

The HHI segment manufactures highly-engineered metal-based products for the North American light vehicle market. These components are used in Powertrain and Safety-Critical applications, including transmission components, drive line components, wheel hubs, axle ring and pinion gears, sprockets, balance shaft gears, timing drive systems, VVT components, transfer case components and wheel bearings.
The Metaldyne segment manufactures highly-engineered metal-based Powertrain products for the global light vehicle markets. These components include connecting rods, VVT components, balance shaft systems, and crankshaft dampers, differential gears, pinions and assemblies, valve bodies, hollow and solid shafts, clutch modules and assembled end covers.
The Grede segment manufactures cast, machined and assembled components for the light, commercial and industrial (agriculture, construction, mining, rail, wind energy and oil field) vehicle and equipment end-markets. These components are used in Powertrain and Safety-Critical applications, including turbocharger housings, differential carriers and cases, scrolls and covers, brake calipers and housings, knuckles, control arms and axle components.
The Company evaluates the performance of its operating segments based on external sales and Adjusted EBITDA. Adjusted EBITDA is calculated as net income (loss) before tax adjusted to exclude depreciation and amortization expense, interest expense, net and other income and expenses that are either non-recurring or non-cash by nature, as well as management fees paid to American Securities (“sponsor management fees”). Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.
Segment information for 2016, 2015 and 2014 was as follows:

 	  	2016	 	  	December 31, 2016	 	
 	  	External
Sales	 	  	Intersegment
Sales	 	 	Adjusted
EBITDA	 	  	Capital
Expenditures	 	  	Depreciation/
Amortization	 	  	Total
Assets	 	
 	  	(In millions)	 	
HHI	  	$	834.9	 	  	 	8.1	 	 	 	161.2	 	  	 	55.9	 	  	 	77.0	 	  	$	850.8	 	
Metaldyne	  	 	1,168.5	 	  	 	1.3	 	 	 	220.5	 	  	 	100.2	 	  	 	74.6	 	  	 	1,286.2	 	
Grede	  	 	787.3	 	  	 	0.4	 	 	 	111.3	 	  	 	36.8	 	  	 	69.2	 	  	 	945.5	 	
Elimination and other	  	 	—  	 	  	 	(9.8	) 	 	 	—  	 	  	 	1.6	 	  	 	0.5	 	  	 	108.0	 	
	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total	  	$	2,790.7	 	  	 	—  	 	 	 	493.0	 	  	 	194.5	 	  	 	221.3	 	  	$	3,190.5	 	

																									
 	  	2015	 	  	December 31, 2015	 	
 	  	External
Sales	 	  	Intersegment
Sales	 	 	Adjusted
EBITDA	 	  	Capital
Expenditures	 	  	Depreciation/
Amortization	 	  	Total
Assets	 	
 	  	(In millions)	 	
HHI	  	$	984.8	 	  	 	8.9	 	 	 	199.8	 	  	 	69.9	 	  	 	79.1	 	  	$	905.5	 	
Metaldyne	  	 	1,155.7	 	  	 	1.2	 	 	 	205.7	 	  	 	85.4	 	  	 	78.2	 	  	 	1,243.8	 	
Grede	  	 	906.8	 	  	 	0.3	 	 	 	132.7	 	  	 	69.0	 	  	 	72.4	 	  	 	954.6	 	
Elimination and other	  	 	—  	 	  	 	(10.4	) 	 	 	—  	 	  	 	2.0	 	  	 	0.1	 	  	 	53.7	 	
	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total	  	$	3,047.3	 	  	 	—  	 	 	 	538.2	 	  	 	226.3	 	  	 	229.8	 	  	$	3,157.6	 	

																									
 	  	2014	 	  	December 31, 2014	 	
 	  	External
Sales	 	  	Intersegment
Sales	 	 	Adjusted
EBITDA	 	  	Capital
Expenditures	 	  	Depreciation/
Amortization	 	  	Total
Assets	 	
 	  	(In millions)	 	
HHI	  	$	968.5	 	  	 	9.0	 	 	 	193.5	 	  	 	61.6	 	  	 	76.9	 	  	$	944.1	 	
Metaldyne	  	 	1,176.4	 	  	 	1.2	 	 	 	202.3	 	  	 	70.5	 	  	 	92.4	 	  	 	1,216.4	 	
Grede	  	 	572.1	 	  	 	—  	 	 	 	82.8	 	  	 	24.3	 	  	 	41.5	 	  	 	982.0	 	
Elimination and other	  	 	—  	 	  	 	(10.2	) 	 	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	60.9	 	
	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total	  	$	2,717.0	 	  	 	—  	 	 	 	478.6	 	  	 	156.4	 	  	 	210.8	 	  	$	3,203.4	 	

37

Elimination and other above reflects the elimination of intercompany sales, payables and receivables and assets held by the parent company. Assets held by the parent company primarily consist of cash and cash equivalents, and deferred tax assets.
Reconciliation of Adjusted EBITDA to income before tax follows:

 	  	2016	 	  	2015	 	  	2014	 	
 	  	(In millions)	 	
Adjusted EBITDA	  	$	493.0	 	  	 	538.2	 	  	 	478.6	 	
Interest expense, net	  	 	(103.5	) 	  	 	(107.5	) 	  	 	(99.9	) 	
Depreciation and amortization	  	 	(221.3	) 	  	 	(229.8	) 	  	 	(210.8	) 	
Loss on debt extinguishment	  	 	—  	 	  	 	(0.4	) 	  	 	(60.7	) 	
Gain (loss) on foreign currency	  	 	14.6	 	  	 	20.2	 	  	 	15.7	 	
Loss on fixed assets	  	 	(5.3	) 	  	 	(2.8	) 	  	 	(2.1	) 	
Debt transaction expenses	  	 	—  	 	  	 	(1.7	) 	  	 	(3.0	) 	
Stock-based compensation	  	 	(17.5	) 	  	 	(27.7	) 	  	 	(17.3	) 	
Sponsor management fees	  	 	—  	 	  	 	—  	 	  	 	(5.1	) 	
Non-recurring acquisition and purchase accounting items	  	 	(8.2	) 	  	 	(3.0	) 	  	 	(23.0	) 	
Non-recurring operational items	  	 	(16.5	) 	  	 	(11.6	) 	  	 	(18.2	) 	
	  	 	 	 	  	 	 	 	  	 	 	 	
Income before tax	  	$	135.3	 	  	 	173.9	 	  	 	54.2	 	
	  	 	 	 	  	 	 	 	  	 	 	 	
The following table presents total assets, long-lived assets and net assets by geographic area, attributed to each subsidiary’s continent of domicile as of December 31, 2016 and 2015.

 	  	2016	 	  	2015	 	
 	  	Total
assets	 	  	Noncurrent
assets	 	  	Net
assets	 	  	Total
assets	 	  	Noncurrent
assets	 	  	Net
assets	 	
 	  	(In millions)	 	
United States of America	  	 	2,571.7	 	  	 	2,076.8	 	  	 	258.0	 	  	 	2,592.4	 	  	 	2,111.1	 	  	 	264.4	 	
Europe	  	 	313.5	 	  	 	171.6	 	  	 	213.1	 	  	 	304.9	 	  	 	173.4	 	  	 	211.2	 	
Other foreign	  	 	305.3	 	  	 	150.4	 	  	 	208.1	 	  	 	260.3	 	  	 	137.1	 	  	 	163.4	 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total foreign	  	 	618.8	 	  	 	322.0	 	  	 	421.2	 	  	 	565.2	 	  	 	310.5	 	  	 	374.6	 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total	  	 	3,190.5	 	  	 	2,398.8	 	  	 	679.2	 	  	 	3,157.6	 	  	 	2,421.6	 	  	 	639.0	 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
The following table presents the net sales by geographic area, attributed to each subsidiary’s continent of domicile:

 	  	2016	 	  	2015	 	  	2014	 	
 	  	(In millions)	 	
United States of America	  	$	2,082.2	 	  	 	2,349.7	 	  	 	2,035.9	 	
Europe	  	 	378.1	 	  	 	365.3	 	  	 	403.5	 	
Other foreign	  	 	330.4	 	  	 	332.3	 	  	 	277.6	 	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total foreign	  	 	708.5	 	  	 	697.6	 	  	 	681.1	 	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total	  	$	2,790.7	 	  	 	3,047.3	 	  	 	2,717.0	 	
	  	 	 	 	  	 	 	 	  	 	 	 	
During 2016, direct sales to two customers accounted for 25% and 21% of net sales, respectively.
 
38

(23) Summarized Quarterly Financial Information (Unaudited)

 	  	2016 Quarter Ended	 	
 	  	April 3	 	  	July 3	 	  	October 2	 	  	December 31	 	  	Full Year	 	
 	  	(In millions, except EPS amounts)	 	
Net sales	  	$	739.5	 	  	 	728.4	 	  	 	676.2	 	  	 	646.6	 	  	$	2,790.7	 	
Gross profit	  	 	136.5	 	  	 	130.3	 	  	 	106.4	 	  	 	96.0	 	  	 	469.2	 	
Net income attributable to stockholders	  	 	24.9	 	  	 	35.5	 	  	 	19.3	 	  	 	16.6	 	  	 	96.3	 	
Basic EPS	  	 	0.37	 	  	 	0.52	 	  	 	0.29	 	  	 	0.25	 	  	 	1.43	 	
Diluted EPS	  	 	0.36	 	  	 	0.51	 	  	 	0.28	 	  	 	0.24	 	  	 	1.39	 	
		
 	  	2015 Quarter Ended	 	
 	  	March 29	 	  	June 28	 	  	September 27	 	  	December 31	 	  	Full Year	 	
 	  	(In millions, except EPS amounts)	 	
Net sales	  	$	765.2	 	  	 	800.2	 	  	 	746.6	 	  	 	735.3	 	  	$	3,047.3	 	
Gross profit	  	 	128.5	 	  	 	142.1	 	  	 	126.2	 	  	 	119.2	 	  	 	516.0	 	
Net income attributable to stockholders	  	 	32.4	 	  	 	44.1	 	  	 	28.2	 	  	 	20.7	 	  	 	125.4	 	
Basic EPS	  	 	0.48	 	  	 	0.66	 	  	 	0.42	 	  	 	0.30	 	  	 	1.86	 	
Diluted EPS	  	 	0.47	 	  	 	0.64	 	  	 	0.41	 	  	 	0.29	 	  	 	1.80	 	
(24) Guarantor Condensed Consolidating Financial Information
The outstanding balances of the Senior Credit Facilities and Registered Notes, entered into and issued on October 20, 2014, are guaranteed by all of the Company’s existing and future domestic subsidiaries (“Guarantor Subsidiaries”). All of the Guarantor Subsidiaries are 100% owned by Metaldyne Performance Group Inc. (“Parent”) and Holdco (“Issuer”). The guarantee is full, unconditional, joint and several. The Company’s non-domestic subsidiaries have not guaranteed the Senior Credit Facilities or the Registered Notes (“Non-Guarantor Subsidiaries”).
The accompanying supplemental condensed, consolidating financial information is presented using the equity method of accounting for all periods presented. Under this method, investments in subsidiaries are recorded at cost and adjusted for the Company’s share in the subsidiaries’ cumulative results of operations, capital contributions and distributions and other changes in equity. Elimination entries relate primarily to the elimination of investments in subsidiaries and associated intercompany balances and transactions.
 
39

Condensed Consolidating Balance Sheet
December 31, 2016
(In millions)

 	  	Parent	 	  	Issuer	 	  	Guarantor	 	  	Non-
Guarantor	 	  	Eliminations	 	 	Consolidated	 	
Assets	  				  				  				  				  				 				
Current assets:	  				  				  				  				  				 				
Cash and cash equivalents	  	$	—  	 	  	 	83.8	 	  	 	0.9	 	  	 	125.0	 	  	 	—  	 	 	 	209.7	 	
Receivables, net:	  				  				  				  				  				 				
Trade	  	 	—  	 	  	 	—  	 	  	 	231.5	 	  	 	83.6	 	  	 	(0.5	) 	 	 	314.6	 	
Other	  	 	—  	 	  	 	—  	 	  	 	92.7	 	  	 	20.6	 	  	 	(78.5	) 	 	 	34.8	 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Total receivables, net	  	 	—  	 	  	 	—  	 	  	 	324.2	 	  	 	104.2	 	  	 	(79.0	) 	 	 	349.4	 	
Inventories	  	 	—  	 	  	 	—  	 	  	 	118.1	 	  	 	50.3	 	  	 	—  	 	 	 	168.4	 	
Prepaid expenses	  	 	—  	 	  	 	1.7	 	  	 	7.8	 	  	 	2.0	 	  	 	—  	 	 	 	11.5	 	
Other assets	  	 	20.8	 	  	 	—  	 	  	 	15.3	 	  	 	16.6	 	  	 	—  	 	 	 	52.7	 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Total current assets	  	 	20.8	 	  	 	85.5	 	  	 	466.3	 	  	 	298.1	 	  	 	(79.0	) 	 	 	791.7	 	
Property and equipment, net	  	 	—  	 	  	 	3.1	 	  	 	567.2	 	  	 	261.3	 	  	 	—  	 	 	 	831.6	 	
Goodwill	  	 	—  	 	  	 	—  	 	  	 	673.2	 	  	 	234.5	 	  	 	—  	 	 	 	907.7	 	
Amortizable intangible assets, net	  	 	—  	 	  	 	—  	 	  	 	506.8	 	  	 	132.3	 	  	 	—  	 	 	 	639.1	 	
Deferred income taxes	  	 	14.2	 	  	 	—  	 	  	 	—  	 	  	 	7.4	 	  	 	(14.2	) 	 	 	7.4	 	
Other assets	  	 	—  	 	  	 	2.0	 	  	 	10.3	 	  	 	0.7	 	  	 	—  	 	 	 	13.0	 	
Intercompany receivables	  	 	93.4	 	  	 	1,618.2	 	  	 	—  	 	  	 	8.3	 	  	 	(1,719.9	) 	 	 	—  	 	
Investment in subsidiaries	  	 	685.6	 	  	 	826.9	 	  	 	696.7	 	  	 	—  	 	  	 	(2,209.2	) 	 	 	—  	 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Total assets	  	$	814.0	 	  	 	2,535.7	 	  	 	2,920.5	 	  	 	942.6	 	  	 	(4,022.3	) 	 	 	3,190.5	 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Liabilities and Stockholders’ Equity	  				  				  				  				  				 				
Current liabilities:	  				  				  				  				  				 				
Accounts payable	  	$	—  	 	  	 	1.2	 	  	 	169.4	 	  	 	127.8	 	  	 	(37.9	) 	 	 	260.5	 	
Accrued compensation	  	 	—  	 	  	 	3.2	 	  	 	34.3	 	  	 	12.1	 	  	 	—  	 	 	 	49.6	 	
Accrued liabilities	  	 	0.8	 	  	 	20.7	 	  	 	32.1	 	  	 	63.5	 	  	 	(40.0	) 	 	 	77.1	 	
Short-term debt	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	2.1	 	  	 	(1.1	) 	 	 	1.0	 	
Current maturities, long-term debt and capital lease obligations	  	 	—  	 	  	 	13.1	 	  	 	—  	 	  	 	0.1	 	  	 	—  	 	 	 	13.2	 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Total current liabilities	  	 	0.8	 	  	 	38.2	 	  	 	235.8	 	  	 	205.6	 	  	 	(79.0	) 	 	 	401.4	 	
Long-term debt, less current maturities	  	 	—  	 	  	 	1,809.2	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	 	 	1,809.2	 	
Capital lease obligations	  	 	—  	 	  	 	—  	 	  	 	22.7	 	  	 	—  	 	  	 	—  	 	 	 	22.7	 	
Deferred income taxes	  	 	—  	 	  	 	2.0	 	  	 	228.2	 	  	 	7.7	 	  	 	(14.2	) 	 	 	223.7	 	
Other long-term liabilities	  	 	—  	 	  	 	0.7	 	  	 	24.4	 	  	 	29.2	 	  	 	—  	 	 	 	54.3	 	
Intercompany payables	  	 	137.4	 	  	 	—  	 	  	 	1,582.5	 	  	 	—  	 	  	 	(1,719.9	) 	 	 	—  	 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Total liabilities	  	 	138.2	 	  	 	1,850.1	 	  	 	2,093.6	 	  	 	242.5	 	  	 	(1,813.1	) 	 	 	2,511.3	 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Stockholders’ equity:	  				  				  				  				  				 				
Total equity attributable to stockholders	  	 	675.8	 	  	 	685.6	 	  	 	826.9	 	  	 	696.7	 	  	 	(2,209.2	) 	 	 	675.8	 	
Noncontrolling interest	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	3.4	 	  	 	—  	 	 	 	3.4	 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Total stockholders’ equity	  	 	675.8	 	  	 	685.6	 	  	 	826.9	 	  	 	700.1	 	  	 	(2,209.2	) 	 	 	679.2	 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Total liabilities and stockholders’ equity	  	$	814.0	 	  	 	2,535.7	 	  	 	2,920.5	 	  	 	942.6	 	  	 	(4,022.3	) 	 	 	3,190.5	 	

40

Condensed Consolidating Balance Sheet
December 31, 2015
(In millions)

 	  	Parent	 	  	Issuer	 	  	Guarantor	 	  	Non-
Guarantor	 	  	Eliminations	 	 	Consolidated	 	
Assets	  				  				  				  				  				 				
Current assets:	  				  				  				  				  				 				
Cash and cash equivalents	  	$	—  	 	  	 	50.5	 	  	 	10.8	 	  	 	106.9	 	  	 	—  	 	 	 	168.2	 	
Receivables, net:	  				  				  				  				  				 				
Trade	  	 	—  	 	  	 	—  	 	  	 	242.4	 	  	 	67.7	 	  	 	(1.0	) 	 	 	309.1	 	
Other	  	 	0.1	 	  	 	—  	 	  	 	70.9	 	  	 	19.8	 	  	 	(55.4	) 	 	 	35.4	 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Total receivables, net	  	 	0.1	 	  	 	—  	 	  	 	313.3	 	  	 	87.5	 	  	 	(56.4	) 	 	 	344.5	 	
Inventories	  	 	—  	 	  	 	—  	 	  	 	139.1	 	  	 	47.7	 	  	 	—  	 	 	 	186.8	 	
Prepaid expenses	  	 	—  	 	  	 	3.2	 	  	 	7.4	 	  	 	4.4	 	  	 	—  	 	 	 	15.0	 	
Other assets	  	 	5.3	 	  	 	—  	 	  	 	8.6	 	  	 	7.6	 	  	 	—  	 	 	 	21.5	 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Total current assets	  	 	5.4	 	  	 	53.7	 	  	 	479.2	 	  	 	254.1	 	  	 	(56.4	) 	 	 	736.0	 	
Property and equipment, net	  	 	—  	 	  	 	2.0	 	  	 	546.3	 	  	 	237.7	 	  	 	—  	 	 	 	786.0	 	
Goodwill	  	 	—  	 	  	 	—  	 	  	 	673.2	 	  	 	234.5	 	  	 	—  	 	 	 	907.7	 	
Amortizable intangible assets, net	  	 	—  	 	  	 	—  	 	  	 	561.7	 	  	 	147.2	 	  	 	—  	 	 	 	708.9	 	
Deferred income taxes	  	 	14.2	 	  	 	—  	 	  	 	—  	 	  	 	1.7	 	  	 	(14.2	) 	 	 	1.7	 	
Other assets	  	 	—  	 	  	 	2.8	 	  	 	14.2	 	  	 	0.3	 	  	 	—  	 	 	 	17.3	 	
Intercompany receivables	  	 	56.2	 	  	 	1,734.6	 	  	 	—  	 	  	 	5.0	 	  	 	(1,795.8	) 	 	 	—  	 	
Investment in subsidiaries	  	 	619.0	 	  	 	695.9	 	  	 	673.8	 	  	 	—  	 	  	 	(1,988.7	) 	 	 	—  	 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Total assets	  	$	694.8	 	  	 	2,489.0	 	  	 	2,948.4	 	  	 	880.5	 	  	 	(3,855.1	) 	 	 	3,157.6	 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Liabilities and Stockholders’ Equity	  				  				  				  				  				 				
Current liabilities:	  				  				  				  				  				 				
Accounts payable	  	$	—  	 	  	 	1.0	 	  	 	165.7	 	  	 	105.0	 	  	 	(22.8	) 	 	 	248.9	 	
Accrued compensation	  	 	—  	 	  	 	4.4	 	  	 	38.5	 	  	 	12.3	 	  	 	—  	 	 	 	55.2	 	
Accrued liabilities	  	 	0.5	 	  	 	19.1	 	  	 	27.2	 	  	 	53.6	 	  	 	(33.6	) 	 	 	66.8	 	
Short-term debt	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	0.7	 	  	 	—  	 	 	 	0.7	 	
Current maturities, long-term debt and capital lease obligations	  	 	—  	 	  	 	13.2	 	  	 	1.1	 	  	 	0.2	 	  	 	—  	 	 	 	14.5	 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Total current liabilities	  	 	0.5	 	  	 	37.7	 	  	 	232.5	 	  	 	171.8	 	  	 	(56.4	) 	 	 	386.1	 	
Long-term debt, less current maturities	  	 	—  	 	  	 	1,826.9	 	  	 	—  	 	  	 	0.2	 	  	 	—  	 	 	 	1,827.1	 	
Capital lease obligations	  	 	—  	 	  	 	—  	 	  	 	22.5	 	  	 	—  	 	  	 	—  	 	 	 	22.5	 	
Deferred income taxes	  	 	—  	 	  	 	5.0	 	  	 	233.4	 	  	 	7.1	 	  	 	(14.2	) 	 	 	231.3	 	
Other long-term liabilities	  	 	—  	 	  	 	0.4	 	  	 	26.5	 	  	 	24.7	 	  	 	—  	 	 	 	51.6	 	
Intercompany payables	  	 	58.2	 	  	 	—  	 	  	 	1,737.6	 	  	 	—  	 	  	 	(1,795.8	) 	 	 	—  	 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Total liabilities	  	 	58.7	 	  	 	1,870.0	 	  	 	2,252.5	 	  	 	203.8	 	  	 	(1,866.4	) 	 	 	2,518.6	 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Stockholders’ equity:	  				  				  				  				  				 				
Total equity attributable to stockholders	  	 	636.1	 	  	 	619.0	 	  	 	695.9	 	  	 	673.8	 	  	 	(1,988.7	) 	 	 	636.1	 	
Noncontrolling interest	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	2.9	 	  	 	—  	 	 	 	2.9	 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Total stockholders’ equity	  	 	636.1	 	  	 	619.0	 	  	 	695.9	 	  	 	676.7	 	  	 	(1,988.7	) 	 	 	639.0	 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Total liabilities and stockholders’ equity	  	$	694.8	 	  	 	2,489.0	 	  	 	2,948.4	 	  	 	880.5	 	  	 	(3,855.1	) 	 	 	3,157.6	 	

41

Condensed Consolidating Statements of Operations
(In millions)

For the Year Ended December 31, 2016	  	Parent	 	 	Issuer	 	 	Guarantor	 	 	Non-
Guarantor	 	  	Eliminations	 	 	Consolidated	 	
Net sales	  	$	—  	 	 	 	—  	 	 	 	2,182.5	 	 	 	752.4	 	  	 	(144.2	) 	 	 	2,790.7	 	
Cost of sales	  	 	—  	 	 	 	—  	 	 	 	1,838.6	 	 	 	627.1	 	  	 	(144.2	) 	 	 	2,321.5	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Gross profit	  	 	—  	 	 	 	—  	 	 	 	343.9	 	 	 	125.3	 	  	 	—  	 	 	 	469.2	 	
Selling, general and administrative expenses	  	 	—  	 	 	 	—  	 	 	 	197.5	 	 	 	44.8	 	  	 	—  	 	 	 	242.3	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Operating profit	  	 	—  	 	 	 	—  	 	 	 	146.4	 	 	 	80.5	 	  	 	—  	 	 	 	226.9	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Interest expense, net	  	 	—  	 	 	 	98.7	 	 	 	(3.6	) 	 	 	8.4	 	  	 	—  	 	 	 	103.5	 	
Other, net	  	 	(4.3	) 	 	 	(8.3	) 	 	 	(4.3	) 	 	 	5.0	 	  	 	—  	 	 	 	(11.9	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Other expense, net	  	 	(4.3	) 	 	 	90.4	 	 	 	(7.9	) 	 	 	13.4	 	  	 	—  	 	 	 	91.6	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Income (loss) before tax	  	 	4.3	 	 	 	(90.4	) 	 	 	154.3	 	 	 	67.1	 	  	 	—  	 	 	 	135.3	 	
Income tax expense (benefit)	  	 	1.1	 	 	 	(26.1	) 	 	 	44.5	 	 	 	18.9	 	  	 	—  	 	 	 	38.4	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Income (loss) before from equity in subsidiaries	  	 	3.2	 	 	 	(64.3	) 	 	 	109.8	 	 	 	48.2	 	  	 	—  	 	 	 	96.9	 	
Earnings from equity in subsidiaries	  	 	93.1	 	 	 	157.4	 	 	 	47.6	 	 	 	—  	 	  	 	(298.1	) 	 	 	—  	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Net income	  	 	96.3	 	 	 	93.1	 	 	 	157.4	 	 	 	48.2	 	  	 	(298.1	) 	 	 	96.9	 	
Income attributable to noncontrolling interest	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	0.6	 	  	 	—  	 	 	 	0.6	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Net income attributable to stockholders	  	$	96.3	 	 	 	93.1	 	 	 	157.4	 	 	 	47.6	 	  	 	(298.1	) 	 	 	96.3	 	

For the Year Ended December 31, 2015	  	Parent	 	 	Issuer	 	 	Guarantor	 	 	Non-
Guarantor	 	  	Eliminations	 	 	Consolidated	 	
Net sales	  	$	—  	 	 	 	—  	 	 	 	2,432.3	 	 	 	739.7	 	  	 	(124.7	) 	 	 	3,047.3	 	
Cost of sales	  	 	—  	 	 	 	—  	 	 	 	2,034.4	 	 	 	621.6	 	  	 	(124.7	) 	 	 	2,531.3	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Gross profit	  	 	—  	 	 	 	—  	 	 	 	397.9	 	 	 	118.1	 	  	 	—  	 	 	 	516.0	 	
Selling, general and administrative expenses	  	 	—  	 	 	 	—  	 	 	 	205.5	 	 	 	44.1	 	  	 	—  	 	 	 	249.6	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Operating profit	  	 	—  	 	 	 	—  	 	 	 	192.4	 	 	 	74.0	 	  	 	—  	 	 	 	266.4	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Interest expense, net	  	 	—  	 	 	 	102.2	 	 	 	(4.2	) 	 	 	9.5	 	  	 	—  	 	 	 	107.5	 	
Loss on debt extinguishment	  	 	—  	 	 	 	0.4	 	 	 	—  	 	 	 	—  	 	  	 	—  	 	 	 	0.4	 	
Other, net	  	 	—  	 	 	 	(8.2	) 	 	 	(10.6	) 	 	 	3.4	 	  	 	—  	 	 	 	(15.4	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Other expense, net	  	 	—  	 	 	 	94.4	 	 	 	(14.8	) 	 	 	12.9	 	  	 	—  	 	 	 	92.5	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Income (loss) before tax	  	 	—  	 	 	 	(94.4	) 	 	 	207.2	 	 	 	61.1	 	  	 	—  	 	 	 	173.9	 	
Income tax expense (benefit)	  	 	—  	 	 	 	(30.9	) 	 	 	56.2	 	 	 	22.8	 	  	 	—  	 	 	 	48.1	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Income (loss) before from equity in subsidiaries	  	 	—  	 	 	 	(63.5	) 	 	 	151.0	 	 	 	38.3	 	  	 	—  	 	 	 	125.8	 	
Earnings from equity in subsidiaries	  	 	125.4	 	 	 	188.9	 	 	 	37.9	 	 	 	—  	 	  	 	(352.2	) 	 	 	—  	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Net income	  	 	125.4	 	 	 	125.4	 	 	 	188.9	 	 	 	38.3	 	  	 	(352.2	) 	 	 	125.8	 	
Income attributable to noncontrolling interest	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	0.4	 	  	 	—  	 	 	 	0.4	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Net income attributable to stockholders	  	$	125.4	 	 	 	125.4	 	 	 	188.9	 	 	 	37.9	 	  	 	(352.2	) 	 	 	125.4	 	

42

Condensed Consolidating Statements of Operations
(In millions)

For the Year Ended December 31, 2014	  	Parent	 	  	Issuer	 	 	Guarantor	 	 	Non-
Guarantor	 	  	Eliminations	 	 	Consolidated	 	
Net sales	  	$	—  	 	  	 	—  	 	 	 	2,109.6	 	 	 	723.7	 	  	 	(116.3	) 	 	 	2,717.0	 	
Cost of sales	  	 	—  	 	  	 	—  	 	 	 	1,793.4	 	 	 	617.0	 	  	 	(116.3	) 	 	 	2,294.1	 	
	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Gross profit	  	 	—  	 	  	 	—  	 	 	 	316.2	 	 	 	106.7	 	  	 	—  	 	 	 	422.9	 	
Selling, general and administrative expenses	  	 	—  	 	  	 	—  	 	 	 	157.2	 	 	 	37.4	 	  	 	—  	 	 	 	194.6	 	
Goodwill impairment	  	 	—  	 	  	 	—  	 	 	 	11.8	 	 	 	—  	 	  	 	—  	 	 	 	11.8	 	
Acquisition costs	  	 	—  	 	  	 	—  	 	 	 	13.0	 	 	 	—  	 	  	 	—  	 	 	 	13.0	 	
	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Operating profit	  	 	—  	 	  	 	—  	 	 	 	134.2	 	 	 	69.3	 	  	 	—  	 	 	 	203.5	 	
	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Interest expense, net	  	 	—  	 	  	 	22.3	 	 	 	67.4	 	 	 	10.2	 	  	 	—  	 	 	 	99.9	 	
Loss on debt extinguishment	  	 	—  	 	  	 	—  	 	 	 	60.7	 	 	 	—  	 	  	 	—  	 	 	 	60.7	 	
Other, net	  	 	—  	 	  	 	—  	 	 	 	(16.3	) 	 	 	5.0	 	  	 	—  	 	 	 	(11.3	) 	
	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Other expense, net	  	 	—  	 	  	 	22.3	 	 	 	111.8	 	 	 	15.2	 	  	 	—  	 	 	 	149.3	 	
	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Income (loss) before tax	  	 	—  	 	  	 	(22.3	) 	 	 	22.4	 	 	 	54.1	 	  	 	—  	 	 	 	54.2	 	
Income tax expense (benefit)	  	 	—  	 	  	 	(8.8	) 	 	 	(26.8	) 	 	 	16.5	 	  	 	—  	 	 	 	(19.1	) 	
	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Income (loss) before from equity in subsidiaries	  	 	—  	 	  	 	(13.5	) 	 	 	49.2	 	 	 	37.6	 	  	 	—  	 	 	 	73.3	 	
Earnings from equity in subsidiaries	  	 	72.9	 	  	 	86.4	 	 	 	37.2	 	 	 	—  	 	  	 	(196.5	) 	 	 	—  	 	
	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Net income	  	 	72.9	 	  	 	72.9	 	 	 	86.4	 	 	 	37.6	 	  	 	(196.5	) 	 	 	73.3	 	
Income attributable to noncontrolling interest	  	 	—  	 	  	 	—  	 	 	 	—  	 	 	 	0.4	 	  	 	—  	 	 	 	0.4	 	
	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Net income attributable to stockholders	  	 	72.9	 	  	 	72.9	 	 	 	86.4	 	 	 	37.2	 	  	 	(196.5	) 	 	 	72.9	 	

43

Condensed Consolidating Statements of Comprehensive Income
(In millions)

 	  	Parent	 	 	Issuer	 	 	Guarantor	 	 	Non-
Guarantor	 	 	Eliminations	 	 	Consolidated	 	
For the year ended December 31, 2016	  				 				 				 				 				 				
Net income	  	$	96.3	 	 	 	93.1	 	 	 	157.4	 	 	 	48.2	 	 	 	(298.1	) 	 	 	96.9	 	
Other comprehensive loss, net of tax:	  				 				 				 				 				 				
Foreign currency translation	  	 	(21.7	) 	 	 	(22.0	) 	 	 	(22.0	) 	 	 	(20.3	) 	 	 	64.3	 	 	 	(21.7	) 	
Net actuarial gain on defined benefit plans	  	 	(4.8	) 	 	 	(4.8	) 	 	 	(4.8	) 	 	 	(4.3	) 	 	 	13.9	 	 	 	(4.8	) 	
Losses on defined benefit plans recognized in net income	  	 	0.2	 	 	 	0.2	 	 	 	0.2	 	 	 	—  	 	 	 	(0.4	) 	 	 	0.2	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Other comprehensive loss, net of tax	  	 	(26.3	) 	 	 	(26.6	) 	 	 	(26.6	) 	 	 	(24.6	) 	 	 	77.8	 	 	 	(26.3	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Comprehensive income	  	 	70.0	 	 	 	66.5	 	 	 	130.8	 	 	 	23.6	 	 	 	(220.3	) 	 	 	70.6	 	
Less comprehensive income attributable to noncontrolling interest	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	0.5	 	 	 	—  	 	 	 	0.5	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Comprehensive income attributable to stockholders	  	$	70.0	 	 	 	66.5	 	 	 	130.8	 	 	 	23.1	 	 	 	(220.3	) 	 	 	70.1	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
For the year ended December 31, 2015	  				 				 				 				 				 				
Net income	  	$	125.4	 	 	 	125.4	 	 	 	188.9	 	 	 	38.3	 	 	 	(352.2	) 	 	 	125.8	 	
Other comprehensive loss, net of tax:	  				 				 				 				 				 				
Foreign currency translation	  	 	(24.3	) 	 	 	(25.0	) 	 	 	(25.0	) 	 	 	(21.8	) 	 	 	71.8	 	 	 	(24.3	) 	
Net actuarial gain on defined benefit plans	  	 	1.8	 	 	 	1.8	 	 	 	1.8	 	 	 	1.1	 	 	 	(4.7	) 	 	 	1.8	 	
Losses on defined benefit plans recognized in net income	  	 	0.4	 	 	 	0.4	 	 	 	0.4	 	 	 	—  	 	 	 	(0.8	) 	 	 	0.4	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Other comprehensive loss, net of tax	  	 	(22.1	) 	 	 	(22.8	) 	 	 	(22.8	) 	 	 	(20.7	) 	 	 	66.3	 	 	 	(22.1	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Comprehensive income	  	 	103.3	 	 	 	102.6	 	 	 	166.1	 	 	 	17.6	 	 	 	(285.9	) 	 	 	103.7	 	
Less comprehensive income attributable to noncontrolling interest	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	0.4	 	 	 	—  	 	 	 	0.4	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Comprehensive income attributable to stockholders	  	$	103.3	 	 	 	102.6	 	 	 	166.1	 	 	 	17.2	 	 	 	(285.9	) 	 	 	103.3	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
For the year ended December 31, 2014	  				 				 				 				 				 				
Net income	  	$	72.9	 	 	 	72.9	 	 	 	86.4	 	 	 	37.6	 	 	 	(196.5	) 	 	 	73.3	 	
Other comprehensive loss, net of tax:	  				 				 				 				 				 				
Foreign currency translation	  	 	(23.9	) 	 	 	(23.5	) 	 	 	(23.5	) 	 	 	(22.2	) 	 	 	69.2	 	 	 	(23.9	) 	
Net actuarial loss on defined benefit plans	  	 	(8.0	) 	 	 	(8.0	) 	 	 	(8.0	) 	 	 	(4.7	) 	 	 	20.7	 	 	 	(8.0	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Other comprehensive loss, net of tax	  	 	(31.9	) 	 	 	(31.5	) 	 	 	(31.5	) 	 	 	(26.9	) 	 	 	89.9	 	 	 	(31.9	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Comprehensive income	  	 	41.0	 	 	 	41.4	 	 	 	54.9	 	 	 	10.7	 	 	 	(106.6	) 	 	 	41.4	 	
Less comprehensive income attributable to noncontrolling interest	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	0.4	 	 	 	—  	 	 	 	0.4	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Comprehensive income attributable to stockholders	  	 	41.0	 	 	 	41.4	 	 	 	54.9	 	 	 	10.3	 	 	 	(106.6	) 	 	 	41.0	 	

44

Condensed Consolidating Statements of Cash Flows
(In millions)

 	  	Parent	 	 	Issuer	 	 	Guarantor	 	 	Non-
Guarantor	 	 	Eliminations	 	 	Consolidated	 	
For the year ended December 31, 2016	  				 				 				 				 				 				
Cash flows from operating activities:	  				 				 				 				 				 				
Net cash provided by (used for) operating activities	  	$	5.6	 	 	 	(68.4	) 	 	 	295.1	 	 	 	86.3	 	 	 	—  	 	 	 	318.6	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cash flows from investing activities:	  				 				 				 				 				 				
Capital expenditures	  	 	—  	 	 	 	(1.6	) 	 	 	(134.5	) 	 	 	(58.4	) 	 	 	—  	 	 	 	(194.5	) 	
Proceeds from sale of fixed assets	  	 	—  	 	 	 	—  	 	 	 	0.1	 	 	 	0.4	 	 	 	—  	 	 	 	0.5	 	
Capitalized patent costs	  	 	—  	 	 	 	—  	 	 	 	(0.2	) 	 	 	—  	 	 	 	—  	 	 	 	(0.2	) 	
Acquisition of business, net of cash acquired	  	 	—  	 	 	 	—  	 	 	 	(14.0	) 	 	 	—  	 	 	 	—  	 	 	 	(14.0	) 	
Intercompany activity	  	 	42.0	 	 	 	116.5	 	 	 	—  	 	 	 	—  	 	 	 	(158.5	) 	 	 	—  	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net cash provided by (used for) investing activities	  	 	42.0	 	 	 	114.9	 	 	 	(148.6	) 	 	 	(58.0	) 	 	 	(158.5	) 	 	 	(208.2	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cash flows from financing activities:	  				 				 				 				 				 				
Dividends	  	 	(25.1	) 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(25.1	) 	
Stock-based compensation activity, net	  	 	7.0	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	7.0	 	
Purchases of treasury stock	  	 	(29.5	) 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(29.5	) 	
Payments on long-term debt	  	 	—  	 	 	 	(13.2	) 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(13.2	) 	
Other debt, net	  	 	—  	 	 	 	—  	 	 	 	(1.3	) 	 	 	(0.1	) 	 	 	—  	 	 	 	(1.4	) 	
Intercompany activity	  	 	—  	 	 	 	—  	 	 	 	(155.1	) 	 	 	(3.4	) 	 	 	158.5	 	 	 	—  	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net cash provided by (used for) financing activities	  	 	(47.6	) 	 	 	(13.2	) 	 	 	(156.4	) 	 	 	(3.5	) 	 	 	158.5	 	 	 	(62.2	) 	
Effect of exchange rates	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(6.7	) 	 	 	—  	 	 	 	(6.7	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net increase (decrease) in cash and cash equivalents	  	$	—  	 	 	 	33.3	 	 	 	(9.9	) 	 	 	18.1	 	 	 	—  	 	 	 	41.5	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cash and cash equivalents:	  				 				 				 				 				 				
Cash and cash equivalents, beginning of year	  	 	—  	 	 	 	50.5	 	 	 	10.8	 	 	 	106.9	 	 	 	—  	 	 	 	168.2	 	
Net increase (decrease) in cash and cash equivalents	  	 	—  	 	 	 	33.3	 	 	 	(9.9	) 	 	 	18.1	 	 	 	—  	 	 	 	41.5	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cash and cash equivalents, end of year	  	$	—  	 	 	 	83.8	 	 	 	0.9	 	 	 	125.0	 	 	 	—  	 	 	 	209.7	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
For the year ended December 31, 2015	  				 				 				 				 				 				
Cash flows from operating activities:	  				 				 				 				 				 				
Net cash provided by (used for) operating activities	  	$	8.6	 	 	 	(58.6	) 	 	 	319.5	 	 	 	60.5	 	 	 	—  	 	 	 	330.0	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cash flows from investing activities:	  				 				 				 				 				 				
Capital expenditures	  	 	—  	 	 	 	(2.0	) 	 	 	(171.7	) 	 	 	(52.6	) 	 	 	—  	 	 	 	(226.3	) 	
Proceeds from sale of fixed assets	  	 	—  	 	 	 	—  	 	 	 	3.8	 	 	 	0.2	 	 	 	—  	 	 	 	4.0	 	
Capitalized patent costs	  	 	—  	 	 	 	—  	 	 	 	(0.4	) 	 	 	—  	 	 	 	—  	 	 	 	(0.4	) 	
Intercompany activity	  	 	8.3	 	 	 	134.2	 	 	 	—  	 	 	 	—  	 	 	 	(142.5	) 	 	 	—  	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net cash provided by (used for) investing activities	  	 	8.3	 	 	 	132.2	 	 	 	(168.3	) 	 	 	(52.4	) 	 	 	(142.5	) 	 	 	(222.7	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cash flows from financing activities:	  				 				 				 				 				 				
Dividends	  	 	(18.2	) 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(18.2	) 	
Stock-based compensation activity, net	  	 	1.4	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	1.4	 	
Borrowings of revolving lines of credit	  	 	—  	 	 	 	14.3	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	14.3	 	
Repayments of revolving lines of credit	  	 	—  	 	 	 	(14.3	) 	 	 	(0.3	) 	 	 	—  	 	 	 	—  	 	 	 	(14.6	) 	
Proceeds from long-term debt	  	 	—  	 	 	 	1,326.6	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	1,326.6	 	
Payments on long-term debt	  	 	—  	 	 	 	(1,391.6	) 	 	 	(0.2	) 	 	 	—  	 	 	 	—  	 	 	 	(1,391.8	) 	
Other debt, net	  	 	—  	 	 	 	—  	 	 	 	(3.0	) 	 	 	(0.7	) 	 	 	—  	 	 	 	(3.7	) 	
Payment of debt issue costs	  	 	—  	 	 	 	(0.1	) 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(0.1	) 	
Payment of offering related costs	  	 	(0.1	) 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(0.1	) 	
Intercompany activity	  	 	—  	 	 	 	(10.2	) 	 	 	(140.2	) 	 	 	7.9	 	 	 	142.5	 	 	 	—  	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net cash provided by (used for) financing activities	  	 	(16.9	) 	 	 	(75.3	) 	 	 	(143.7	) 	 	 	7.2	 	 	 	142.5	 	 	 	(86.2	) 	
Effect of exchange rates	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(9.4	) 	 	 	—  	 	 	 	(9.4	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net increase (decrease) in cash and cash equivalents	  	$	—  	 	 	 	(1.7	) 	 	 	7.5	 	 	 	5.9	 	 	 	—  	 	 	 	11.7	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cash and cash equivalents:	  				 				 				 				 				 				
Cash and cash equivalents, beginning of year	  	$	—  	 	 	 	52.2	 	 	 	3.3	 	 	 	101.0	 	 	 	—  	 	 	 	156.5	 	
Net increase (decrease) in cash and cash equivalents	  	 	—  	 	 	 	(1.7	) 	 	 	7.5	 	 	 	5.9	 	 	 	—  	 	 	 	11.7	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cash and cash equivalents, end of year	  	$	—  	 	 	 	50.5	 	 	 	10.8	 	 	 	106.9	 	 	 	—  	 	 	 	168.2	 	

45

Condensed Consolidating Statements of Cash Flows (Continued)
(In millions)

 	  	Parent	 	 	Issuer	 	 	Guarantor	 	 	Non-
Guarantor	 	 	Eliminations	 	 	Consolidated	 	
For the year ended December 31, 2014	  				 				 				 				 				 				
Cash flows from operating activities:	  				 				 				 				 				 				
Net cash provided by (used for) operating activities	  	$	12.0	 	 	 	2.7	 	 	 	205.5	 	 	 	85.2	 	 	 	—  	 	 	 	305.4	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cash flows from investing activities:	  				 				 				 				 				 				
Capital expenditures	  	 	—  	 	 	 	—  	 	 	 	(116.8	) 	 	 	(39.6	) 	 	 	—  	 	 	 	(156.4	) 	
Proceeds from sale of fixed assets	  	 	—  	 	 	 	—  	 	 	 	0.5	 	 	 	0.9	 	 	 	—  	 	 	 	1.4	 	
Capitalized patent costs	  	 	—  	 	 	 	—  	 	 	 	(0.2	) 	 	 	—  	 	 	 	—  	 	 	 	(0.2	) 	
Grede Transaction, net of cash acquired	  	 	—  	 	 	 	—  	 	 	 	(812.6	) 	 	 	(17.1	) 	 	 	—  	 	 	 	(829.7	) 	
Intercompany activity	  	 	(6.4	) 	 	 	(1,858.6	) 	 	 	—  	 	 	 	—  	 	 	 	1,865.0	 	 	 	—  	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net cash used for investing activities	  	 	(6.4	) 	 	 	(1,858.6	) 	 	 	(929.1	) 	 	 	(55.8	) 	 	 	1,865.0	 	 	 	(984.9	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cash flows from financing activities:	  				 				 				 				 				 				
Cash dividends	  	 	—  	 	 	 	—  	 	 	 	(111.3	) 	 	 	—  	 	 	 	—  	 	 	 	(111.3	) 	
Other stock activity	  	 	—  	 	 	 	—  	 	 	 	(2.4	) 	 	 	—  	 	 	 	—  	 	 	 	(2.4	) 	
Proceeds from stock issuance	  	 	—  	 	 	 	—  	 	 	 	244.8	 	 	 	15.7	 	 	 	—  	 	 	 	260.5	 	
Borrowings of short-term debt	  	 	—  	 	 	 	—  	 	 	 	388.8	 	 	 	—  	 	 	 	—  	 	 	 	388.8	 	
Repayments of short-term debt	  	 	—  	 	 	 	—  	 	 	 	(405.1	) 	 	 	(2.3	) 	 	 	—  	 	 	 	(407.4	) 	
Proceeds of long-term debt	  	 	—  	 	 	 	1,943.3	 	 	 	715.0	 	 	 	—  	 	 	 	—  	 	 	 	2,658.3	 	
Principal payments of long-term debt	  	 	—  	 	 	 	(10.0	) 	 	 	(1,942.0	) 	 	 	—  	 	 	 	—  	 	 	 	(1,952.0	) 	
Intercompany activity	  	 	—  	 	 	 	—  	 	 	 	1,865.0	 	 	 	—  	 	 	 	(1,865.0	) 	 	 	—  	 	
Payment of debt issue costs	  	 	—  	 	 	 	(25.2	) 	 	 	(20.2	) 	 	 	—  	 	 	 	—  	 	 	 	(45.4	) 	
Other debt, net	  	 	—  	 	 	 	—  	 	 	 	(6.4	) 	 	 	(0.4	) 	 	 	—  	 	 	 	(6.8	) 	
Payment of offering related costs	  	 	(5.6	) 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(5.6	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net cash provided by (used for) financing activities	  	 	(5.6	) 	 	 	1,908.1	 	 	 	726.2	 	 	 	13.0	 	 	 	(1,865.0	) 	 	 	776.7	 	
Effect of exchange rates	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(8.9	) 	 	 	—  	 	 	 	(8.9	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net increase in cash and cash equivalents	  	$	—  	 	 	 	52.2	 	 	 	2.6	 	 	 	33.5	 	 	 	—  	 	 	 	88.3	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cash and cash equivalents:	  				 				 				 				 				 				
Cash and cash equivalents, beginning of year	  	$	—  	 	 	 	—  	 	 	 	0.7	 	 	 	67.5	 	 	 	—  	 	 	 	68.2	 	
Net increase in cash and cash equivalents	  	 	—  	 	 	 	52.2	 	 	 	2.6	 	 	 	33.5	 	 	 	—  	 	 	 	88.3	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cash and cash equivalents, end of year	  	$	—  	 	 	 	52.2	 	 	 	3.3	 	 	 	101.0	 	 	 	—  	 	 	 	156.5	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
(25) Subsequent Events
On February 24, 2017, our board of directors declared a dividend of $0.0925 per share, payable March 24, 2017 to stockholders of record as of March 10, 2017.
 
46

Exhibit 99.2
Financial Statement Schedule
Valuation and Qualifying Accounts

 	  	Balance at
beginning
of period	 	  	Charged to
costs and
expenses	 	  	Charged to
other
accounts (1)	 	 	Deductions	 	 	Balance
at end
of period	 	
 	  	 	 	  	 	 	  	(In millions)	 	 	 	 	 	 	 	
Allowances on Accounts Receivable	  				  				  				 				 				
Year ended December 31, 2016	  	$	11.5	 	  	 	11.3	 	  	 	1.0	 	 	 	(14.7	) 	 	 	9.1	 	
Year ended December 31, 2015	  	 	8.0	 	  	 	20.8	 	  	 	(0.1	) 	 	 	(17.2	) 	 	 	11.5	 	
Year ended December 31, 2014	  	 	9.0	 	  	 	5.1	 	  	 	2.0	 	 	 	(8.1	) 	 	 	8.0	 	
Valuation allowance for deferred tax assets	  				  				  				 				 				
Year ended December 31, 2016	  	$	11.8	 	  	 	3.5	 	  	 	(0.1	) 	 	 	—  	 	 	 	15.2	 	
Year ended December 31, 2015	  	 	11.9	 	  	 	2.5	 	  	 	(1.5	) 	 	 	(1.1	) 	 	 	11.8	 	
Year ended December 31, 2014	  	 	7.1	 	  	 	4.7	 	  	 	(0.1	) 	 	 	0.2	 	 	 	11.9	 	

(1)	Includes purchase accounting adjustment to record accounts at fair value.	

Exhibit 99.3
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Metaldyne Performance Group Inc.
Southfield, MI
We have audited the internal control over financial reporting of Metaldyne Performance Group Inc. and subsidiaries (the “Company”) as of December 31, 2016, based on criteria established in Internal Control  — Integrated Framework (2013)  issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting . Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2016, based on the criteria established in Internal Control  — Integrated Framework (2013)  issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and the financial statement schedule as of and for the year ended December 31, 2016 of the Company and our report dated March 2, 2017 expressed an unqualified opinion on those financial statements and the financial statement schedule.

/s/ Deloitte & Touche LLP	
	
Detroit, MI	
March 2, 2017	
 
- 2 -

Exhibit 99.4
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement No. 333-200871 on Form S-8 and Registration Statement No. 333-209036 on Form S-3 of our reports dated March 2, 2017 relating to the consolidated financial statements and financial statement schedule of Metaldyne Performance Group Inc. and subsidiaries, and the effectiveness of the Metaldyne Performance Group Inc. and subsidiaries’ internal control over financial reporting, appearing in this Current Report on Form 8-K of Metaldyne Performance Group Inc. dated March 2, 2017.

/s/ Deloitte & Touche LLP	
	
Detroit, MI	
March 2, 2017	

Exhibit 99.5
Consent of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
Metaldyne Performance Group Inc.:
We consent to the incorporation by reference in the registration statement (No. 333-209036) on Form S-3 and in the registration statement (No. 333-200871) on Form S-8 of Metaldyne Performance Group Inc. of our report dated February 29, 2016, except for the effects of the retrospective application of ASU 2015-03, Interest – Imputation of Interest (Topic 835-30), as disclosed in Note 4, to which the date is March 2, 2017, with respect to the consolidated balance sheet of Metaldyne Performance Group Inc. as of December 31, 2015, and the related consolidated statements of operations, comprehensive income, stockholders’ equity (deficit), and cash flows for each of the years in the two-year period ended December 31, 2015, and the related financial statement schedule for each of the years in the two-year period ended December 31, 2015, which report appears in the Form 8-K of Metaldyne Performance Group Inc. dated March 2, 2017.
/s/ KPMG LLP
Detroit, Michigan
March 2, 2017