form10-q.htm
UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-Q
þ
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QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For
the quarterly period ended September 30, 2008
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or
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o
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For
the transition period from _____________ to _____________
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Commission
File Number: 1-14303
_______________________________________________________________________________
AMERICAN
AXLE & MANUFACTURING HOLDINGS, INC.
(Exact
Name of Registrant as Specified in Its Charter)
Delaware
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36-3161171
|
(State
or Other Jurisdiction of Incorporation or Organization)
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(I.R.S.
Employer Identification No.)
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One
Dauch Drive, Detroit, Michigan
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48211-1198
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(Address
of Principal Executive Offices)
|
(Zip
Code)
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(313)
758-2000
(Registrant's
Telephone Number, Including Area Code)
_______________________________________________________________________________
Indicate
by check mark whether the registrant: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes þ No o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See definition of “accelerated filer,” “large accelerated
filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check
one):
Large
accelerated filer o
Accelerated filer þ
Non-accelerated filer o Smaller
reporting company o
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes o No þ
As of
November 5, 2008, the latest practicable date, the number of shares of the
registrant's Common Stock, par value $0.01 per share, outstanding was 54,305,082
shares.
Internet
Website Access to Reports
The
website for American Axle & Manufacturing Holdings, Inc. is www.aam.com. Our annual
reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form
8-K and amendments to those reports filed or furnished pursuant to Section 13 or
15(d) of the Exchange Act are available free of charge through our website as
soon as reasonably practicable after they are electronically filed with, or
furnished to, the Securities and Exchange Commission. The Securities
and Exchange Commission also maintains a website at www.sec.gov that
contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the SEC.
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER
30, 2008
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Page
Number
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1
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Part
I
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2
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Item
1
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2
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2
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3
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4
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5
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Item
2
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24
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Item
3
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33
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Item
4
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33
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Part
II
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34
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Item
1A
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34
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Item
2
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34
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Item
6
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34
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35
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36
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In this
Quarterly Report on Form 10-Q, we make statements concerning our expectations,
beliefs, plans, objectives, goals, strategies, and future events or
performance. Such statements are “forward-looking” statements within
the meaning of the Private Securities Litigation Reform Act of 1995 and relate
to trends and events that may affect our future financial position and operating
results. The terms such as “will,” “may,” “could,” “would,” “plan,”
“believe,” “expect,” “anticipate,” “intend,” “project,” and similar words of
expressions, as well as statements in future tense, are intended to identify
forward-looking statements.
Forward-looking
statements should not be read as a guarantee of future performance or results,
and will not necessarily be accurate indications of the times at, or by, which
such performance or results will be achieved. Forward-looking
statements are based on information available at the time those statements are
made and/or management’s good faith belief as of that time with respect to
future events and are subject to risks and differ materially from those
expressed in or suggested by the forward-looking
statements. Important factors that could cause such differences
include, but are not limited to:
·
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global
economic conditions; |
·
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reduced
purchases of our products by General Motors Corporation (GM), Chrysler LLC
(Chrysler) or other customers;
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·
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reduced
demand for our customers’ products (particularly light trucks and SUVs
produced by GM and Chrysler);
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·
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availability
of financing for working capital, capital expenditures, R&D or other
general corporate purposes, including our ability to comply with financial
covenants;
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·
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our
customers' and suppliers' availability of financing for working capital,
capital expenditures, R&D or other general corporate
purposes; |
·
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our
ability to achieve cost reductions through ongoing restructuring
actions;
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·
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additional
restructuring actions that may
occur;
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·
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our
ability to achieve the level of cost reductions required to sustain global
cost competitiveness;
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·
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our
ability to maintain satisfactory labor relations and avoid future work
stoppages;
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·
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our
suppliers’ ability to maintain satisfactory labor relations and avoid work
stoppages;
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·
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our
customers’ and their suppliers’ ability to maintain satisfactory labor
relations and avoid work stoppages;
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·
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our
ability to improve our U.S. labor cost
structure;
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·
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our
ability to consummate and integrate
acquisitions;
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·
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supply
shortages or price increases in raw materials, utilities or other
operating supplies;
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·
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our
ability or our customers’ and suppliers’ ability to successfully launch
new product programs on a timely
basis;
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·
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our
ability to realize the expected revenues from our new and incremental
business backlog;
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·
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our
ability to attract new customers and programs for new
products;
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·
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our
ability to develop and produce new products that reflect market
demand;
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·
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lower-than-anticipated
market acceptance of new or existing
products;
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·
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our
ability to respond to changes in technology, increased competition or
pricing pressures;
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·
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continued
or increased high prices for or reduced availability of
fuel;
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·
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adverse
changes in laws, government regulations or market conditions affecting our
products or our customers’ products (such as the Corporate Average Fuel
Economy regulations);
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·
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adverse
changes in the economic conditions or political stability of our principal
markets (particularly North America, Europe, South America and
Asia);
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·
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liabilities
arising from warranty claims, product liability and legal proceedings to
which we are or may become a party;
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·
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changes
in liabilities arising from pension and other postretirement benefit
obligations;
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·
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risks
of noncompliance with environmental regulations or risks of environmental
issues that could result in unforeseen costs at our
facilities;
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·
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our
ability to attract and retain key
associates;
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·
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other
unanticipated events and conditions that may hinder our ability to
compete.
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It is not
possible to foresee or identify all such factors and we make no commitment to
update any forward-looking statement or to disclose any facts, events or
circumstances after the date hereof that may affect the accuracy of any
forward-looking statement.
Item
1. Financial Statements
AMERICAN
AXLE & MANUFACTURING HOLDINGS, INC.
(Unaudited)
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Three
months ended
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Nine
months ended
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September
30,
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September
30,
|
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2008
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2007
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2008
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2007
|
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(in
millions, except per share data)
|
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Net
sales
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|
$ |
528.1 |
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|
$ |
774.3 |
|
|
$ |
1,606.2 |
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$ |
2,493.0 |
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Cost
of goods sold |
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906.5
|
|
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|
693.1 |
|
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|
2,499.8 |
|
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|
2,212.8 |
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|
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Gross
profit (loss) |
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(378.4 |
) |
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|
81.2 |
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(893.6 |
) |
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280.2 |
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Selling,
general and administrative expenses |
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43.0 |
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52.0 |
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137.3 |
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155.1 |
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Operating
income (loss) |
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|
(421.4 |
) |
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|
29.2 |
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(1,030.9 |
) |
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125.1 |
|
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Interest
expense |
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|
(18.0 |
) |
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|
(14.6 |
) |
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(48.4 |
) |
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|
(46.8 |
) |
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Investment
income (loss) |
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(3.7 |
) |
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3.1 |
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0.5 |
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6.0 |
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Other
income (expense), net
|
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(1.4 |
) |
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(1.2 |
) |
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0.2 |
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(5.4 |
) |
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Income
(loss) before income taxes
|
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|
(444.5 |
) |
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16.5 |
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(1,078.6 |
) |
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78.9 |
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Income
tax expense (benefit)
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(3.4 |
) |
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3.0 |
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33.8 |
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15.1 |
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Minority
interest
|
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|
0.2 |
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- |
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|
0.2 |
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- |
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Net
income (loss)
|
|
$ |
(440.9 |
) |
|
$ |
13.5 |
|
|
$ |
(1,112.2 |
) |
|
$ |
63.8 |
|
|
|
|
|
|
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Basic
earnings (loss) per share
|
|
$ |
(8.54 |
) |
|
$ |
0.27 |
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$ |
(21.55 |
) |
|
$ |
1.26 |
|
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Diluted
earnings (loss) per share
|
|
$ |
(8.54 |
) |
|
$ |
0.25 |
|
|
$ |
(21.55 |
) |
|
$ |
1.21 |
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Dividends
declared per share
|
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$ |
0.02 |
|
|
$ |
0.15 |
|
|
$ |
0.32 |
|
|
$ |
0.45 |
|
See
accompanying notes to condensed consolidated financial
statements.
AMERICAN
AXLE & MANUFACTURING HOLDINGS, INC.
|
|
September
30,
|
|
|
December
31,
|
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|
2008
|
|
|
2007
|
|
|
|
(Unaudited)
|
|
|
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|
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|
(in
millions)
|
|
Assets
|
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$ |
454.2 |
|
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$ |
343.6 |
|
Short-term
investments
|
|
|
117.2 |
|
|
|
- |
|
Accounts
receivable, net
|
|
|
256.2 |
|
|
|
264.0 |
|
AAM
- GM Agreement receivable
|
|
|
60.0 |
|
|
|
- |
|
Inventories,
net
|
|
|
183.8 |
|
|
|
242.8 |
|
Prepaid
expenses and other
|
|
|
70.8 |
|
|
|
73.4 |
|
Deferred
income taxes
|
|
|
5.3 |
|
|
|
19.5 |
|
Total
current assets
|
|
|
1,147.5 |
|
|
|
943.3 |
|
|
|
|
|
|
|
|
|
|
Property,
plant and equipment, net
|
|
|
1,093.0 |
|
|
|
1,696.2 |
|
Deferred
income taxes
|
|
|
16.0 |
|
|
|
78.7 |
|
Goodwill
|
|
|
147.8 |
|
|
|
147.8 |
|
Other
assets and deferred charges
|
|
|
51.5 |
|
|
|
57.4 |
|
Total
assets
|
|
$ |
2,455.8 |
|
|
$ |
2,923.4 |
|
|
|
|
|
|
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|
Liabilities
and Stockholders’ Equity (Deficit)
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$ |
287.2 |
|
|
$ |
313.8 |
|
Accrued compensation and benefits
|
|
|
261.7 |
|
|
|
126.6 |
|
Deferred
revenue
|
|
|
66.7 |
|
|
|
10.2 |
|
Other
accrued expenses
|
|
|
45.9 |
|
|
|
61.0 |
|
Total
current liabilities
|
|
|
661.5 |
|
|
|
511.6 |
|
|
|
|
|
|
|
|
|
|
Long-term
debt
|
|
|
1,300.8 |
|
|
|
858.1 |
|
Deferred
income taxes
|
|
|
5.4 |
|
|
|
6.6 |
|
Deferred
revenue
|
|
|
195.8 |
|
|
|
66.0 |
|
Postretirement
benefits and other long-term liabilities
|
|
|
429.6 |
|
|
|
581.7 |
|
Total
liabilities
|
|
|
2,593.1 |
|
|
|
2,024.0 |
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity (deficit)
|
|
|
|
|
|
|
|
|
Common stock, par value $0.01 per share
|
|
|
0.6 |
|
|
|
0.6 |
|
Paid-in
capital
|
|
|
428.0 |
|
|
|
416.3 |
|
Retained
earnings (accumulated deficit)
|
|
|
(537.6 |
) |
|
|
591.9 |
|
Treasury stock at cost, 5.2 million shares as of 2008 and
2007
|
|
|
(173.9 |
) |
|
|
(173.8 |
) |
Accumulated other comprehensive income (loss), net of tax
|
|
|
|
|
|
|
|
|
Defined benefit plans
|
|
|
120.8 |
|
|
|
33.5 |
|
Foreign currency translation adjustments
|
|
|
27.5 |
|
|
|
34.2 |
|
Unrecognized loss on derivatives
|
|
|
(2.7 |
) |
|
|
(3.3 |
) |
Total
stockholders' equity (deficit)
|
|
|
(137.3 |
) |
|
|
899.4 |
|
Total
liabilities and stockholders' equity (deficit)
|
|
$ |
2,455.8 |
|
|
$ |
2,923.4 |
|
See
accompanying notes to condensed consolidated financial
statements
|
AMERICAN
AXLE & MANUFACTURING HOLDINGS, INC.
(Unaudited)
|
|
Nine
months ended
|
|
|
|
September
30,
|
|
|
|
2008
|
|
|
2007
|
|
|
|
(in
millions)
|
|
Operating
activities
|
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
$ |
(1,112.2 |
) |
|
$ |
63.8 |
|
Adjustments
to reconcile net income (loss) to net cash
|
|
|
|
|
|
|
|
|
provided
by operating activities
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
165.2 |
|
|
|
171.0 |
|
Asset impairments
|
|
|
541.3 |
|
|
|
- |
|
Deferred income taxes
|
|
|
22.7 |
|
|
|
1.9 |
|
Stock-based compensation
|
|
|
9.4 |
|
|
|
16.6 |
|
Pensions and other postretirement benefits, net of
contributions
|
|
|
25.6 |
|
|
|
42.1 |
|
Loss (gain) on retirement of property, plant and equipment
|
|
|
(1.1 |
) |
|
|
3.3 |
|
Debt refinancing and redemption costs
|
|
|
- |
|
|
|
5.5 |
|
Changes in operating assets and liabilities
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
7.5 |
|
|
|
8.4 |
|
Inventories
|
|
|
57.8 |
|
|
|
(49.6 |
) |
Accounts payable and accrued expenses
|
|
|
63.0 |
|
|
|
58.7 |
|
Deferred revenue: AAM - GM Agreement |
|
|
115.0 |
|
|
|
- |
|
Other assets and liabilities
|
|
|
8.5 |
|
|
|
9.9 |
|
Net
cash provided by (used in) operating activities
|
|
|
(97.3 |
) |
|
|
331.6 |
|
|
|
|
|
|
|
|
|
|
Investing
activities
|
|
|
|
|
|
|
|
|
Purchases
of property, plant and equipment
|
|
|
(102.8 |
) |
|
|
(132.9 |
) |
Reclassification
of cash equivalents to short-term investments
|
|
|
(117.2 |
) |
|
|
- |
|
Proceeds
from sale of property, plant and equipment
|
|
|
2.3 |
|
|
|
- |
|
Net
cash used in investing activities
|
|
|
(217.7 |
) |
|
|
(132.9 |
) |
|
|
|
|
|
|
|
|
|
Financing
activities
|
|
|
|
|
|
|
|
|
Net
borrowings (repayments) under revolving credit facilities
|
|
|
444.4 |
|
|
|
(132.8 |
) |
Payments
of long-term debt and capital lease obligations
|
|
|
(10.4 |
) |
|
|
(0.5 |
) |
Proceeds
from issuance of long-term debt
|
|
|
8.9 |
|
|
|
553.1 |
|
Debt
issuance costs
|
|
|
- |
|
|
|
(7.5 |
) |
Payment
of Term Loan due 2010
|
|
|
- |
|
|
|
(252.5 |
) |
Repurchase
of treasury stock
|
|
|
(0.1 |
) |
|
|
(1.9 |
) |
Employee
stock option exercises
|
|
|
0.7 |
|
|
|
12.5 |
|
Tax
benefit on stock option exercises
|
|
|
0.2 |
|
|
|
2.7 |
|
Dividends
paid
|
|
|
(17.3 |
) |
|
|
(23.8 |
) |
Net
cash provided by financing activities
|
|
|
426.4 |
|
|
|
149.3 |
|
|
|
|
|
|
|
|
|
|
Effect
of exchange rate changes on cash
|
|
|
(0.8 |
) |
|
|
0.6 |
|
|
|
|
|
|
|
|
|
|
Net
increase in cash and cash equivalents
|
|
|
110.6 |
|
|
|
348.6 |
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents at beginning of period
|
|
|
343.6 |
|
|
|
13.5 |
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents at end of period
|
|
$ |
454.2 |
|
|
$ |
362.1 |
|
|
|
|
|
|
|
|
|
|
Supplemental
cash flow information
|
|
|
|
|
|
|
|
|
Interest paid
|
|
$ |
56.9 |
|
|
$ |
51.4 |
|
Income taxes paid, net of refunds
|
|
$ |
3.1 |
|
|
$ |
17.4 |
|
See
accompanying notes to condensed consolidated financial statements.
AMERICAN
AXLE & MANUFACTURING HOLDINGS, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER
30, 2008
(Unaudited)
Organization American
Axle & Manufacturing Holdings, Inc. (Holdings) and its subsidiaries
(collectively, we, our, us or AAM) is a Tier I supplier to the automotive
industry. We manufacture, engineer, design and validate driveline and
drivetrain systems and related components and chassis modules for trucks, sport
utility vehicles (SUVs), passenger cars and crossover utility
vehicles. Driveline and drivetrain systems include components that
transfer power from the transmission and deliver it to the drive
wheels. Our driveline, drivetrain and related products include axles,
chassis modules, driveshafts, power transfer units, transfer cases, chassis and
steering components, driving heads, crankshafts, transmission parts and
metal-formed products. In addition to locations in the United States
(U.S.) (Michigan, New York, Ohio and Indiana), we have offices or facilities in
Brazil, China, England, Germany, India, Japan, Luxembourg, Mexico, Poland,
Scotland, South Korea and Thailand.
Basis of Presentation We have prepared the
accompanying interim condensed consolidated financial statements in accordance
with the instructions to Form 10-Q under the Securities Exchange Act of
1934. These condensed consolidated financial statements are unaudited
but include all normal recurring adjustments, which we consider necessary for a
fair presentation of the information set forth herein. Results of
operations for the periods presented are not necessarily indicative of the
results for the full fiscal year.
The
balance sheet at December 31, 2007 presented herein has been derived from the
audited consolidated financial statements at that date but does not include all
of the information and footnotes required by accounting principles generally
accepted in the United States of America (GAAP) for complete consolidated
financial statements.
In order
to prepare the accompanying interim condensed consolidated financial statements,
we are required to make estimates and assumptions that affect the reported
amounts and disclosures in our interim condensed consolidated financial
statements. Actual results could differ from those
estimates.
Certain amounts in the prior period’s financial statements have been
reclassified to conform to the current presentation.
For further information, refer to the audited consolidated financial statements
and notes included in our Annual Report on Form 10-K for the year ended December
31, 2007.
Short-term
Investments As
of September 30, 2008, we were invested in the Reserve U.S. Government Fund
(Government Fund), the Reserve International Liquidity Fund (International
Liquidity Fund) and the Reserve Yield Plus Fund (Yield Plus Fund) (collectively
the Reserve Funds). The Reserve Funds are a series of money-market
and other similar fund investments, which we have previously classified as
cash and cash equivalents on our Consolidated Balance Sheet because the funds
were readily convertible into known amounts of cash.
In
September of 2008, redemptions were temporarily suspended
from the Reserve Funds so that an orderly liquidation may be effected for
the protection of the Reserve Funds investors. While we expect to
receive substantially all of our current holdings in the Reserve Funds, we
cannot predict exactly when this will occur or the amount we will receive.
Accordingly, we have reclassified the fair value of these funds of $117.2
million from cash and cash equivalents to short-term investments on our
Condensed Consolidated Balance Sheet as of September 30, 2008.
Based on
the other-than-temporary decline in the net asset value of the International
Liquidity and Yield Plus Funds as of September 30, 2008, we recorded a loss of
$5.4 million in investment income (loss) on our Condensed Consolidated
Statement of Operations for the three and nine months ended September 30,
2008.
Change in Accounting
Principle On January 1, 2008, we changed the method for
costing our U.S. inventories from the last-in, first-out (LIFO) method to the
first-in, first-out (FIFO) method. As of December 31, 2007, the U.S.
inventories for which the LIFO method of costing inventory was applied
represented approximately 25% of total gross inventories. This change
enhances the matching of inventory
costs with revenues and better reflects the current cost of inventory on our
Condensed Consolidated Balance Sheet. Additionally, this change
conforms all of our worldwide inventories to a consistent inventory costing
method
and provides better comparability to our industry peers, most of which use the
FIFO method of costing for inventory. In accordance with Statement of
Financial Accounting Standards No. 154, “Accounting Changes and Error
Corrections,” the change in accounting principle has been retrospectively
applied to all prior periods presented herein.
We have
presented the effects of the change in accounting for inventory costing to the
Condensed Consolidated Balance Sheets as of September 30, 2008 and December 31,
2007, the Condensed Consolidated Statement of Operations for the three months
and nine months ended September 30, 2008 and September 30, 2007, and the
Condensed Consolidated Statement of Cash Flows for the nine months ended
September 30, 2008 and September 30, 2007. We have condensed the
comparative financial statements for financial statement line items that were
not affected by the change in accounting principle.
AMERICAN
AXLE & MANUFACTURING HOLDINGS, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Condensed
Consolidated Statement of Operations
Three
months ended September 30, 2007
(in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
As
originally reported
|
|
|
Adjustments
to change from LIFO to FIFO
|
|
|
As
adjusted and reported under FIFO
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
|
$ |
774.3 |
|
|
$ |
- |
|
|
$ |
774.3 |
|
Cost
of goods sold
|
|
|
693.6 |
|
|
|
(0.5 |
) |
|
|
693.1 |
|
Gross
profit
|
|
|
80.7 |
|
|
|
0.5 |
|
|
|
81.2 |
|
Selling
general and administrative expenses
|
|
|
52.0 |
|
|
|
- |
|
|
|
52.0 |
|
Operating
income
|
|
|
28.7 |
|
|
|
0.5 |
|
|
|
29.2 |
|
Other
expense, net
|
|
|
(12.7 |
) |
|
|
- |
|
|
|
(12.7 |
) |
Income
before income taxes
|
|
|
16.0 |
|
|
|
0.5 |
|
|
|
16.5 |
|
Income
tax expense
|
|
|
2.9 |
|
|
|
0.1 |
|
|
|
3.0 |
|
Net
income
|
|
|
13.1 |
|
|
|
0.4 |
|
|
|
13.5 |
|
Basic
earnings per share
|
|
$ |
0.26 |
|
|
$ |
0.01 |
|
|
$ |
0.27 |
|
Diluted
earnings per share
|
|
$ |
0.25 |
|
|
$ |
0.00 |
|
|
$ |
0.25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed
Consolidated Statement of Operations
Nine
months ended September 30, 2007
(in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
As
originally reported
|
|
|
Adjustments
to change from LIFO to FIFO
|
|
|
As
adjusted and reported under FIFO
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
|
$ |
2,493.0 |
|
|
$ |
- |
|
|
$ |
2,493.0 |
|
Cost
of goods sold
|
|
|
2,214.4 |
|
|
|
(1.6 |
) |
|
|
2,212.8 |
|
Gross
profit
|
|
|
278.6 |
|
|
|
1.6 |
|
|
|
280.2 |
|
Selling
general and administrative expenses
|
|
|
155.1 |
|
|
|
- |
|
|
|
155.1 |
|
Operating
income
|
|
|
123.5 |
|
|
|
1.6 |
|
|
|
125.1 |
|
Other
expense, net
|
|
|
(46.2 |
) |
|
|
- |
|
|
|
(46.2 |
) |
Income
before income taxes
|
|
|
77.3 |
|
|
|
1.6 |
|
|
|
78.9 |
|
Income
tax expense
|
|
|
14.8 |
|
|
|
0.3 |
|
|
|
15.1 |
|
Net
income
|
|
|
62.5 |
|
|
|
1.3 |
|
|
|
63.8 |
|
Basic
earnings per share
|
|
$ |
1.23 |
|
|
$ |
0.03 |
|
|
$ |
1.26 |
|
Diluted
earnings per share
|
|
$ |
1.19 |
|
|
$ |
0.02 |
|
|
$ |
1.21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AMERICAN
AXLE & MANUFACTURING HOLDINGS, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Condensed
Consolidated Balance Sheet
December
31, 2007
(in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
As
originally reported
|
|
|
Adjustments
to change from LIFO to FIFO
|
|
|
As
adjusted and reported under FIFO
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventories
|
|
$ |
229.0 |
|
|
$ |
13.8 |
|
|
$ |
242.8 |
|
Deferred
income taxes
|
|
|
24.6 |
|
|
|
(5.1 |
) |
|
|
19.5 |
|
Other
current assets
|
|
|
681.0 |
|
|
|
- |
|
|
|
681.0 |
|
Total
current assets
|
|
|
934.6 |
|
|
|
8.7 |
|
|
|
943.3 |
|
Other
assets
|
|
|
1,980.1 |
|
|
|
- |
|
|
|
1,980.1 |
|
Total
assets
|
|
$ |
2,914.7 |
|
|
$ |
8.7 |
|
|
$ |
2,923.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
and Stockholders’ Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
$ |
2,024.0 |
|
|
$ |
- |
|
|
$ |
2,024.0 |
|
Stockholders’
equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Retained
earnings
|
|
|
583.2 |
|
|
|
8.7 |
|
|
|
591.9 |
|
Other
stockholders’ equity
|
|
|
307.5 |
|
|
|
- |
|
|
|
307.5 |
|
Total
stockholders’ equity
|
|
|
890.7 |
|
|
|
8.7 |
|
|
|
899.4 |
|
Total
liabilities and stockholders’ equity
|
|
$ |
2,914.7 |
|
|
$ |
8.7 |
|
|
$ |
2,923.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed
Consolidated Statement of Cash Flows
Nine
months ended September 30, 2007
(in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
As
originally reported
|
|
|
Adjustments
to change from LIFO to FIFO
|
|
|
As
adjusted and reported under FIFO
|
|
Operating
Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$ |
62.5 |
|
|
$ |
1.3 |
|
|
$ |
63.8 |
|
Adjustments
to reconcile net income to net cash provided
by operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
income taxes
|
|
|
1.6 |
|
|
|
0.3 |
|
|
|
1.9 |
|
Changes
in operating assets and liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventories
|
|
|
(48.0 |
) |
|
|
(1.6 |
) |
|
|
(49.6 |
) |
Other
changes in operating assets and liabilities
|
|
|
77.0 |
|
|
|
- |
|
|
|
77.0 |
|
Other
adjustments
|
|
|
238.5 |
|
|
|
- |
|
|
|
238.5 |
|
Net
cash provided by operating activities
|
|
|
331.6 |
|
|
|
- |
|
|
|
331.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing
Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash used in investing activities
|
|
|
(132.9 |
) |
|
|
- |
|
|
|
(132.9 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing
Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash provided by financing activities
|
|
|
149.3 |
|
|
|
- |
|
|
|
149.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect
of exchange rate changes on cash
|
|
|
0.6 |
|
|
|
- |
|
|
|
0.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
increase in cash and cash equivalents
|
|
$ |
348.6 |
|
|
$ |
- |
|
|
$ |
348.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AMERICAN
AXLE & MANUFACTURING HOLDINGS, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Condensed
Consolidated Statement of Operations
Three
months ended September 30, 2008
(in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
As
calculated using LIFO for U.S. inventories
|
|
|
Difference
between LIFO and FIFO
|
|
|
As
reported using FIFO
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
|
$ |
528.1 |
|
|
$ |
- |
|
|
$ |
528.1 |
|
Cost
of goods sold
|
|
|
904.3 |
|
|
|
2.2 |
|
|
|
906.5 |
|
Gross
loss
|
|
|
(376.2 |
) |
|
|
(2.2 |
) |
|
|
(378.4 |
) |
Selling
general and administrative expenses
|
|
|
43.0 |
|
|
|
- |
|
|
|
43.0 |
|
Operating
loss
|
|
|
(419.2 |
) |
|
|
(2.2 |
) |
|
|
(421.4 |
) |
Other
expense, net
|
|
|
(23.1 |
) |
|
|
- |
|
|
|
(23.1 |
) |
Loss
before income taxes
|
|
|
(442.3 |
) |
|
|
(2.2 |
) |
|
|
(444.5 |
) |
Income
tax benefit
|
|
|
(3.4 |
) |
|
|
- |
|
|
|
(3.4 |
) |
Minority
interest
|
|
|
0.2 |
|
|
|
- |
|
|
|
0.2 |
|
Net
loss
|
|
|
(438.7 |
) |
|
|
(2.2 |
) |
|
|
(440.9 |
) |
Basic
loss per share
|
|
$ |
(8.50 |
) |
|
$ |
(0.04 |
) |
|
$ |
(8.54 |
) |
Diluted
loss per share
|
|
$ |
(8.50 |
) |
|
$ |
(0.04 |
) |
|
$ |
(8.54 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed
Consolidated Statement of Operations
Nine
months ended September 30, 2008
(in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
As
calculated using LIFO for U.S. inventories
|
|
|
Difference
between LIFO and FIFO
|
|
|
As
reported using FIFO
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
|
$ |
1,606.2 |
|
|
$ |
- |
|
|
$ |
1,606.2 |
|
Cost
of goods sold
|
|
|
2,498.1 |
|
|
|
1.7 |
|
|
|
2,499.8 |
|
Gross
loss
|
|
|
(891.9 |
) |
|
|
(1.7 |
) |
|
|
(893.6 |
) |
Selling
general and administrative expenses
|
|
|
137.3 |
|
|
|
- |
|
|
|
137.3 |
|
Operating
loss
|
|
|
(1,029.2 |
) |
|
|
(1.7 |
) |
|
|
(1,030.9 |
) |
Other
expense, net
|
|
|
(47.7 |
) |
|
|
- |
|
|
|
(47.7 |
) |
Loss
before income taxes
|
|
|
(1,076.9 |
) |
|
|
(1.7 |
) |
|
|
(1,078.6 |
) |
Income
tax expense
|
|
|
38.9 |
|
|
|
(5.1 |
) |
|
|
33.8 |
|
Minority
interest
|
|
|
0.2 |
|
|
|
- |
|
|
|
0.2 |
|
Net
loss
|
|
|
(1,115.6 |
) |
|
|
3.4 |
|
|
|
(1,112.2 |
) |
Basic
loss per share
|
|
$ |
(21.62 |
) |
|
$ |
0.07 |
|
|
$ |
(21.55 |
) |
Diluted
loss per share
|
|
$ |
(21.62 |
) |
|
$ |
0.07 |
|
|
$ |
(21.55 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
The Condensed
Consolidated Statements of Operations for the nine months ended September
30, 2008 as calculated using LIFO for U.S. inventories includes an adjustment to
income tax expense of $5.1 million for additional valuation allowances that
would have been recorded against our U.S. deferred tax assets. See Note 9
– Income Taxes for more detail on our valuation allowance.
AMERICAN
AXLE & MANUFACTURING HOLDINGS, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Condensed
Consolidated Balance Sheet
September
30, 2008
(in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
As
calculated using LIFO for U.S. inventories
|
|
|
Difference
between LIFO and FIFO
|
|
|
As
reported using FIFO
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventories
|
|
$ |
172.2 |
|
|
$ |
11.6 |
|
|
$ |
183.8 |
|
Other
current assets
|
|
|
963.7 |
|
|
|
- |
|
|
|
963.7 |
|
Total
current assets
|
|
|
1,135.9 |
|
|
|
11.6 |
|
|
|
1,147.5 |
|
Other
assets
|
|
|
1,308.3 |
|
|
|
- |
|
|
|
1,308.3 |
|
Total
assets
|
|
$ |
2,444.2 |
|
|
$ |
11.6 |
|
|
$ |
2,455.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
and Stockholders’ Equity (Deficit)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
$ |
2,593.1 |
|
|
$ |
- |
|
|
$ |
2,593.1 |
|
Stockholders’
equity (deficit)
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
deficit
|
|
|
(549.2 |
) |
|
|
11.6 |
|
|
|
(537.6 |
) |
Other
stockholders’ equity
|
|
|
400.3 |
|
|
|
- |
|
|
|
400.3 |
|
Total
stockholders’ equity (deficit)
|
|
|
(148.9 |
) |
|
|
11.6 |
|
|
|
(137.3 |
) |
Total
liabilities and stockholders’ equity (deficit)
|
|
$ |
2,444.2 |
|
|
$ |
11.6 |
|
|
$ |
2,455.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed
Consolidated Statement of Cash Flows
Nine
months ended September 30, 2008
(in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
As
calculated using LIFO for U.S. inventories
|
|
|
Difference
between LIFO and FIFO
|
|
|
As
reported using FIFO
|
|
Operating
Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$ |
(1,115.6 |
) |
|
$ |
3.4 |
|
|
$ |
(1,112.2 |
) |
Adjustments
to reconcile net income to net cash provided
by operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred income taxes
|
|
|
27.8 |
|
|
|
(5.1 |
) |
|
|
22.7 |
|
Changes in operating assets and liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventories
|
|
|
56.1 |
|
|
|
1.7 |
|
|
|
57.8 |
|
Other
changes in operating assets and liabilities
|
|
|
194.0 |
|
|
|
- |
|
|
|
194.0 |
|
Other
adjustments
|
|
|
740.4 |
|
|
|
- |
|
|
|
740.4 |
|
Net
cash used in operating activities
|
|
|
(97.3 |
) |
|
|
- |
|
|
|
(97.3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing
Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash used in investing activities
|
|
|
(217.7 |
) |
|
|
- |
|
|
|
(217.7 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing
Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash provided by financing activities
|
|
|
426.4 |
|
|
|
- |
|
|
|
426.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect
of exchange rate changes on cash
|
|
|
(0.8 |
) |
|
|
- |
|
|
|
(0.8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
increase in cash and cash equivalents
|
|
$ |
110.6 |
|
|
$ |
- |
|
|
$ |
110.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The application of this change in
accounting increased retained earnings by $8.7 million as of January 1,
2007.
AMERICAN
AXLE & MANUFACTURING HOLDINGS, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Effect of New Accounting Standards In September 2006, the FASB
issued Statement No. 157 (SFAS 157), “Fair Value
Measurements.” This statement clarifies the definition of fair
value and establishes a fair value hierarchy. SFAS 157, as originally
issued, was effective for us on January 1, 2008. In February 2008,
the FASB issued FASB Staff Position (FSP) FAS 157-b, which defers the effective
date of SFAS 157 for nonfinancial assets and nonfinancial liabilities, except
for items that are recognized or disclosed at fair value in an entity’s
financial statements on a recurring basis. The effective date for us
under this FSP is January 1, 2009. As allowed by FSP FAS 157-b, we
partially adopted SFAS 157 on January 1, 2008 and the impact of adoption was not
significant. We do not expect the impact of applying SFAS 157 to the
remaining assets and liabilities on January 1, 2009 to be material.
SFAS 157
defines fair value as “the price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction between market participants at
the measurement date.” The definition is based on an exit price
rather than an entry price, regardless of whether the entity plans to hold or
sell the asset. SFAS 157 also establishes a fair value hierarchy
to prioritize inputs used in measuring fair value as follows:
·
|
Level 1: Observable
inputs such as quoted prices in active
markets;
|
·
|
Level 2: Inputs,
other than quoted prices in active markets, that are observable either
directly or
indirectly; and
|
·
|
Level 3: Unobservable
inputs in which there is little or no market data, which require the
reporting entity to develop its own
assumptions.
|
On a recurring basis, we measure our
derivatives at fair value, which was a net liability of $4.5 million as of
September 30, 2008. In addition, as of September 30, 2008, we
recorded our short-term investments at a fair value of $117.2
million. The fair value of these derivatives and short-term
investments were determined using Level 2 inputs, as described
above.
As allowed by FSP FAS 157-2, we did not
apply SFAS 157 to fair value measurements of certain assets and liabilities
included in property, plant and equipment, net, accrued compensation and
benefits, other accrued expenses, and postretirement benefits and other
long-term liabilities on our Condensed Consolidated Balance Sheets.
In February 2007, the FASB issued
Statement No. 159 (SFAS 159), “The Fair Value Option for Financial
Assets and Financial Liabilities.” This statement permits entities to
measure many financial instruments and certain other items at fair value that
are not currently required to be measured at fair value. SFAS 159 was
effective for us on January 1, 2008 and we did not elect to measure any
additional assets or liabilities at fair value.
In
December 2007, the FASB issued Statement No. 160 (SFAS 160), “Noncontrolling Interests in
Consolidated Financial Statements — An Amendment of ARB
No. 51.” SFAS 160
establishes new accounting and reporting standards for the noncontrolling
interest in a subsidiary. SFAS 160 is effective for us on
January 1, 2009. We are currently assessing the impact of adopting
this statement.
In
December 2007, the FASB issued Statement No. 141 (Revised) (SFAS
141R), “Business
Combinations.” This statement replaces FASB Statement No. 141 and
establishes principles and requirements for how the acquirer:
a.
Recognizes and measures in its financial statements the identifiable assets
acquired, the liabilities assumed, and any noncontrolling interest in the
acquiree
b.
Recognizes and measures the goodwill acquired in the business combination or a
gain from a bargain purchase
c.
Determines what information to disclose to enable users of the financial
statements to evaluate the nature and financial effects of the business
combination.
SFAS 141R is effective for us prospectively for any acquisitions made on or
after January 1, 2009.
In March
2008, the FASB issued Statement No. 161, “Disclosures about Derivative
Instruments and Hedging Activities - an amendment of FASB Statement No.
133.” This statement requires qualitative disclosures about
objectives and strategies for using derivatives, quantitative disclosures about
fair value amounts of and gains and losses on derivative instruments and
disclosures about credit-risk-related contingent features in derivative
agreements. SFAS 161 is effective for us prospectively on January 1,
2009.
In June
2008, the FASB issued FSP No. EITF 03-6-1, “Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating
Securities.” This staff position notes that unvested
share-based payment awards that contain nonforfeitable rights to dividends or
dividend equivalents are participating securities and shall be included in the
computation of EPS pursuant to the two-class method. FSP No. EITF
03-6-1 is effective for us retrospectively on January 1, 2009 and we are
currently assessing the impact of this FSP.
AMERICAN
AXLE & MANUFACTURING HOLDINGS, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
On February 25, 2008, the four-year
master labor agreement between AAM and the International United Automobile,
Aerospace and Agricultural Implement Workers of America (UAW) that covered
approximately 3,650 associates at our original five facilities in Michigan and
New York expired. The International UAW called a strike at these
facilities upon expiration of this agreement. On May 23, 2008, the
International UAW ratified new labor agreements with AAM. The new
labor agreements establish a new wage and benefit package for eligible current
and newly hired UAW represented associates at these locations.
As part of these new agreements, we
paid a lump-sum ratification bonus to each eligible associate at these locations
in the second quarter of 2008. During the second quarter of 2008 we
expensed and paid $19.1 million for these signing bonuses.
In
addition, as part of the new labor agreements, we offered the Special Separation
Program (SSP) to all hourly associates represented by the International UAW at
the original U.S. locations. This voluntary separation program
offered a range of retirement or buyout incentives to eligible
associates. In the second quarter, we also announced the closing of
our Buffalo Gear, Axle & Linkage facility (Buffalo) and Tonawanda and
Detroit forging facilities within the next six to twelve
months. The costs recorded in the three and nine months ended
September 30, 2008 for the SSP and related plant closures are discussed in more
detail in Note 3 – Restructuring Actions.
The new labor agreements also have a significant impact on our pension and other
postretirement employee benefit (OPEB) obligations, including the freezing,
reducing or eliminating of current and future benefits for certain
associates. See Note 7 – Employee Benefit Plans for more detail on
the impact of the new agreements on our pension and OPEB liabilities, expense
and accumulated other comprehensive income.
An involuntary Buydown Program (BDP)
was initiated for approximately 1,525 associates that did not elect to
participate in the SSP and continued employment with AAM. Under the
BDP, we will make three annual lump-sum payments to associates in connection
with, among other things, a base wage decrease. The total buydown
payments are expected to average approximately $91,000 per associate
and will not exceed $105,000 per associate. In the third quarter of
2008, we paid $50.8 million for the first lump-sum buydown payment.
We recorded expense of $51.9 million in
the three and nine months ended September 30, 2008 for the estimated amount of
total BDP payments related to permanently idled associates throughout the new
labor agreements. This represents management’s best estimate of the
portion of the total BDP payment that will not result in a future benefit to the
Company.
We recorded $5.8 million of expense in the three and nine months ended September
30, 2008 for the amortization of the BDP payments that are expected to provide a
benefit to the Company through the end of the new labor
agreements. In addition, the lower base wage rate went into effect
for all associates participating in the BDP on July 28, 2008.
As of September 30, 2008, we recorded
$27.7 million in prepaid expenses and other on our Condensed Consolidated
Balance Sheet for BDP payments made in the third quarter of 2008 that we
estimate will provide a benefit to the Company in the future. We also
recorded a liability of $17.3 million in accrued compensation and benefits and a
liability of $17.3 million in postretirement and other long-term liabilities on
our Condensed Consolidated Balance Sheet for the estimated amount of future BDP
payments to be paid to permanently idled associates throughout the new labor
agreements.
In the second quarter of 2008, we
expensed $18.0 million relating to supplemental unemployment benefits (SUB) to
be payable to current UAW represented associates during the new labor agreements
that expire in February 2012. The new labor agreements between AAM
and the International UAW contain a SUB provision, pursuant to which we are
required to pay eligible idled workers certain benefits. Under the
new agreements, our obligation for SUB payments is limited to $18.0
million. Once this limit is reached, the SUB program will be
terminated. As
of September 30, 2008, it was probable and estimable that we will pay the full
amount during the contract period. From the beginning of the new
labor agreements through September 30, 2008, we paid $5.9 million of SUB, and
our remaining liability was $12.1 million as of September 30, 2008.
AMERICAN
AXLE & MANUFACTURING HOLDINGS, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
In the
first nine months of 2008, we have incurred restructuring charges related to the
SSP, asset impairments, plant closure agreements and other ongoing restructuring
actions. In addition, we continue to make payments related to charges
incurred in 2007 and 2006.
A summary
of the restructuring related activity for the nine months ended September 30,
2008 is shown below (in millions):
|
|
One-time
|
|
|
|
|
|
Indirect
|
|
|
|
|
|
Contract
|
|
|
Redeployment
|
|
|
|
|
|
|
Termination
|
|
|
Asset
|
|
|
Inventory
|
|
|
Environmental
|
|
|
Related
|
|
|
of
|
|
|
|
|
|
|
Benefits
|
|
|
Impairments
|
|
|
Obsolescence
|
|
|
Obligations
|
|
|
Costs
|
|
|
Assets
|
|
|
Total
|
|
Accrual
as of December 31, 2007
|
|
$ |
20.3 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
2.2 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
22.5 |
|
Charges
|
|
|
231.2 |
|
|
|
541.3 |
|
|
|
39.8 |
|
|
|
1.0 |
|
|
|
9.7 |
|
|
|
12.9 |
|
|
|
835.9 |
|
Cash
utilization
|
|
|
(104.9 |
) |
|
|
- |
|
|
|
- |
|
|
|
(0.2 |
) |
|
|
(2.1 |
) |
|
|
(12.9 |
) |
|
|
(120.1 |
) |
Non-cash
utilization
|
|
|
- |
|
|
|
(541.3 |
) |
|
|
(39.8 |
) |
|
|
- |
|
|
|
(0.8 |
) |
|
|
- |
|
|
|
(581.9 |
) |
Accrual
adjustments
|
|
|
(7.5 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1.0 |
) |
|
|
- |
|
|
|
(8.5 |
) |
Accrual
as of September 30, 2008
|
|
$ |
139.1 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
3.0 |
|
|
$ |
5.8 |
|
|
$ |
- |
|
|
$ |
147.9 |
|
One-time
Termination Benefits We offered the SSP to
all UAW represented associates at the original U.S. locations in the second
quarter of 2008. Under this voluntary separation program, we offered
retirement and buyout incentives to approximately 3,650 eligible hourly
associates. Approximately 2,125 associates elected to participate in
this program. We recorded expense of $215.7 million in the nine
months ended September 30, 2008 for the postemployment benefits related to this
program, $99.6 million of which was recorded in the third quarter of
2008. The amount expensed in the third quarter of 2008 represents
associates that elected to participate in this program subsequent to June 30,
2008. We paid $91.0 million in the nine months ended September 30,
2008 related to this program.
We
recorded expense of $4.2 million in the second quarter of 2008 for the estimated
postemployment costs for associates represented by the International Association
of Machinists (IAM) at our Tonawanda forging facility.
In the
second quarter of 2008, we approved a plan to reduce our salaried workforce by
approximately 350 associates in the U.S. As part of this plan, we
offered a voluntary salaried retirement incentive program (SRIP) to eligible
salaried associates in the U.S. We recorded expense of $8.7 million
for the acceptances of the SRIP and the estimated postemployment benefits
related to the Layoff Severance Program (LSP) for the nine months ended
September 30, 2008. We paid $0.3 million in the nine months ended
September 30, 2008 related to this program.
In the
second quarter of 2008, we approved and communicated a plan to provide future
transition payments to certain associates who will remain active through the
operation of facilities under plant closure agreements. We recorded
expense of $0.6 million and $1.0 million for the proportional amount of expense
for service related to these future payments for the three and nine months ended
September 30, 2008, respectively.
In the
third quarter of 2008, we recorded a charge of $1.6 million related to
postemployment benefits payable to associates in our European
operations.
In the
nine months ended September 30, 2008, we made payments of $13.6 million for
hourly and salary attrition programs initiated in 2007 and 2006.
We
recorded $7.5 million in accrual adjustments related to one-time termination
benefits in the nine months ended September 30, 2008, of which $7.3 million were
recorded in the third quarter of 2008. These adjustments primarily
relate to the reclassification of certain termination benefits from the
restructuring accrual to the pension liability for associates who will be
paid under our pension plans. This adjustment also reflects
changes in previous estimates in order to record our best estimate of
our remaining one-time termination benefit payments as of September 30,
2008.
AMERICAN
AXLE & MANUFACTURING HOLDINGS, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Asset Impairments
In
the second quarter of 2008, we identified the following impairment
indicators:
|
a
significant decline in current and projected market demand and future
customer production schedules for the major North American light truck
programs we currently support and
|
·
|
changes
in the extent to which assets at our original U.S. locations will be used
as a result of management’s long-term plant loading decisions made
subsequent to the new labor agreements with the International
UAW.
|
We
recorded asset impairment charges of $294.8 million in the second quarter of
2008 associated with the permanent idling of certain assets and an impairment
analysis of certain assets that were “held for use” as of June 30,
2008.
In the third
quarter of 2008, we identified these additional impairment
indicators:
·
|
the
general decline in consumer spending as a result of the deteriorating
global economic conditions and uncertain credit markets, which further
negatively affected our projected future production
requirements;
|
·
|
the
announcement of accelerated customer production capacity reductions
for programs that we support; and
|
· |
future
sourcing and product planning decisions that were announced and
communicated by some of our customers in the third quarter of
2008, which adversely affected our Colfor Manufacturing
subsidiary. |
We recorded asset impairment charges of
$246.5 million and $541.3 million in the three and nine months ended September
30, 2008, respectively, associated with the permanent idling of certain assets
and an impairment analysis of certain assets that were “held for use” as of
September 30, 2008. Recoverability of each “held for use” asset group
affected by these impairment indicators was determined by comparing the
forecasted undiscounted cash flows of the operations to which the assets relate
to their carrying amount. When the carrying amount of an asset group
exceeded the undiscounted cash flows and was therefore nonrecoverable, the
assets in this group were written down to their estimated fair
value. We estimated fair value based on a discounted cash flow
analysis. We also reduced the remaining useful lives of certain “held
for use” assets as part of this analysis.
Indirect
Inventory Obsolescence As a result of the reduction in the
projected usage of machinery and equipment due to the impairment indicators
discussed above, certain machine repair parts and other materials classified as
indirect inventory were determined to be obsolete. We recorded a charge of $9.4
million and $39.8 million for the three and nine months ended September 30,
2008, respectively, related to the write down of the net book value of these
assets to their estimated net realizable value at September 30,
2008.
Environmental
Obligations As a result of the announced plant closures, the
methods and timing of certain environmental liabilities related to these
facilities became reasonably estimable. Based on management’s best
estimate of the costs, methods and timing of the settlement of these
obligations, we recorded a charge of $0.2 million and $1.0 million in the three
and nine months ended September 30, 2008, respectively.
Contract Related Costs Contract related costs recorded in the
second quarter of 2008 of $9.7 million primarily include the fair value of
future payments related to leased assets that were idled in the second quarter
of 2008 and cancellation costs for long-term purchase commitments related
to certain facilities under our plant closure agreements. In the
third quarter of 2008, we reached a settlement on certain of these cancellation
costs and reduced the accrual by $1.0 million based on this
agreement.
Redeployment of
Assets We incurred $7.6 million and $12.9 million of charges related to
the redeployment of assets to support capacity utilization initiatives in the
three and nine months ended September 30, 2008, respectively.
We
expect a majority of the remaining restructuring accrual to be paid in the
fourth quarter of 2008 and the remainder to be paid through 2012.
We state
our inventories at the lower of cost or market. In the first quarter
of 2008, we changed the method of accounting for our U.S. inventories from the
LIFO method to the FIFO method as discussed in Note 1 – Organization and Basis
of Presentation. The cost of worldwide inventories is determined
using the FIFO method. We classify indirect inventories, which
include perishable tooling, machine repair parts and other materials consumed in
the manufacturing process but not incorporated into our finished products, as
raw materials. When we determine that our gross inventories exceed
usage requirements, or if inventories become obsolete or otherwise not saleable,
we record a provision for such loss as a component of our inventory
accounts.
Inventories
consist of the following:
|
|
September
30,
|
|
|
December
31,
|
|
|
|
2008
|
|
|
2007
|
|
|
|
(in
millions)
|
|
|
|
|
|
|
|
|
|
|
Raw
materials and work-in-progress
|
|
$ |
231.1 |
|
|
$ |
230.5 |
|
Finished
goods
|
|
|
32.0 |
|
|
|
52.6 |
|
Gross
inventories
|
|
|
263.1 |
|
|
|
283.1 |
|
Other
inventory valuation reserves
|
|
|
(79.3 |
) |
|
|
(40.3 |
) |
Inventories,
net
|
|
$ |
183.8 |
|
|
$ |
242.8 |
|
AMERICAN
AXLE & MANUFACTURING HOLDINGS, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Long-term
debt consists of the following:
|
|
September
30,
|
|
|
December
31,
|
|
|
|
2008
|
|
|
2007
|
|
|
|
(in
millions)
|
|
|
|
|
|
|
|
|
|
|
Revolving
Credit Facility
|
|
$ |
450.0 |
|
|
$ |
- |
|
7.875%
Notes
|
|
|
300.0 |
|
|
|
300.0 |
|
5.25%
Notes, net of discount
|
|
|
249.8 |
|
|
|
249.8 |
|
2.00%
Convertible Notes
|
|
|
0.4 |
|
|
|
2.7 |
|
Term
Loan due 2012
|
|
|
250.0 |
|
|
|
250.0 |
|
Foreign
credit facilities
|
|
|
42.4 |
|
|
|
46.7 |
|
Capital
lease obligations
|
|
|
8.2 |
|
|
|
8.9 |
|
Long-term
debt
|
|
$ |
1,300.8 |
|
|
$ |
858.1 |
|
The
Revolving Credit Facility, as of September 30, 2008, provided up to $600.0
million of revolving bank financing commitments through April 2010 and bears
interest at rates based on LIBOR or an alternate base rate, plus an applicable
margin. At September 30, 2008, we had $105.2 million available under
the Revolving Credit Facility. This availability reflected a
reduction of $44.8 million for standby letters of credit issued against the
facility.
On
November 7, 2008, we amended our existing Revolving Credit Facility. See
Note 13 - Subsequent Event for more information on
this amendment.
The
Revolving Credit Facility provides back-up liquidity for our foreign credit
facilities. We intend to use the availability of long-term financing
under the Revolving Credit Facility to refinance any current maturities related
to such debt agreements that are not otherwise refinanced on a long-term basis
in their respective markets. Accordingly, we classified $27.5 million
of current maturities as long-term debt.
We
utilize local currency credit facilities to finance the operations of certain
foreign subsidiaries. At September 30, 2008, $42.4 million was
outstanding under these facilities and an additional $95.3 million was
available.
The
weighted-average interest rate of our long-term debt outstanding at September
30, 2008 was 6.8% and 7.8% as of December 31, 2007.
In the
second quarter of 2008, we entered into an agreement with GM in connection with
the resolution of the strike called by the International UAW (AAM – GM
Agreement). Pursuant to this agreement, GM agreed to provide us with
$175.0 million of cash payments through April 2009. As of September
30, 2008, we received $115.0 million and have recorded a receivable for
$60.0 million for the remaining payment, which is disclosed as AAM – GM
Agreement receivable on our Condensed Consolidated Balance Sheet.
The AAM –
GM Agreement also amended the Asset Purchase Agreement, dated February 18, 1994,
between GM and AAM. The amendment provides that we shall have no
liability to GM for postretirement healthcare and life insurance coverage
provided to UAW represented transition associates with earned credited service
from AAM that have or will retire under plans operated by GM. The
value of this liability was estimated at $38.7 million. See Footnote
7 – Employee Benefits Plans for more detail on the settlement of this
liability.
In the
second quarter of 2008, we recorded $213.7 million of deferred revenue related
to the AAM – GM Agreement. As of September 30, 2008, our deferred
revenue related to the AAM – GM Agreement is $194.7 million, $57.0 million of
which is classified as current and $137.7 million of which is recorded as
noncurrent on our Condensed Consolidated Balance Sheet. We will
continue to amortize this deferred revenue into revenue on a straight-line basis
over a 45 month period beginning on June 1, 2008. This amortization
period is consistent with the period that GM will benefit from the payments
provided to us under the AAM – GM Agreement. We recorded revenue of
$14.2 million and $19.0 million for the three and nine months ended September
30, 2008, respectively, related to this agreement.
AMERICAN
AXLE & MANUFACTURING HOLDINGS, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
7.
|
EMPLOYEE
BENEFIT PLANS
|
The components of net periodic benefit
cost consist of the following:
|
|
Pension
Benefits
|
|
|
|
Three
months ended
|
|
|
Nine
months ended
|
|
|
|
September
30,
|
|
|
September
30,
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
(in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
cost
|
|
$ |
2.8 |
|
|
$ |
5.4 |
|
|
$ |
10.9 |
|
|
$ |
16.1 |
|
Interest
cost
|
|
|
9.5 |
|
|
|
8.6 |
|
|
|
28.4 |
|
|
|
25.9 |
|
Expected
asset return
|
|
|
(9.7 |
) |
|
|
(9.5 |
) |
|
|
(30.1 |
) |
|
|
(28.5 |
) |
Amortized
loss
|
|
|
0.1 |
|
|
|
0.4 |
|
|
|
0.6 |
|
|
|
1.1 |
|
Amortized
prior service cost
|
|
|
- |
|
|
|
0.6 |
|
|
|
0.8 |
|
|
|
1.8 |
|
Curtailment
|
|
|
(5.0 |
) |
|
|
- |
|
|
|
1.0 |
|
|
|
- |
|
Special
and contractual termination benefits
|
|
|
26.3 |
|
|
|
0.3 |
|
|
|
53.4 |
|
|
|
0.7 |
|
Net
periodic benefit cost
|
|
$ |
24.0 |
|
|
$ |
5.8 |
|
|
$ |
65.0 |
|
|
$ |
17.1 |
|
|
|
Other
Postretirement Benefits
|
|
|
|
Three
months ended
|
|
|
Nine
months ended
|
|
|
|
September
30,
|
|
|
September
30,
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
(in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
cost
|
|
$ |
0.9 |
|
|
$ |
6.5 |
|
|
$ |
8.9 |
|
|
$ |
19.4 |
|
Interest
cost
|
|
|
4.6 |
|
|
|
7.0 |
|
|
|
18.4 |
|
|
|
21.0 |
|
Amortized
prior service credit
|
|
|
(2.8 |
) |
|
|
(0.8 |
) |
|
|
(5.2 |
) |
|
|
(2.3 |
) |
Settlement
|
|
|
- |
|
|
|
- |
|
|
|
(9.4 |
) |
|
|
- |
|
Curtailment
|
|
|
(34.9 |
) |
|
|
- |
|
|
|
(51.0 |
) |
|
|
- |
|
Special
and contractual termination benefits
|
|
|
1.1 |
|
|
|
0.4 |
|
|
|
10.9 |
|
|
|
0.4 |
|
Net
periodic benefit cost (credit)
|
|
$ |
(31.1 |
) |
|
$ |
13.1 |
|
|
$ |
(27.4 |
) |
|
$ |
38.5 |
|
In the nine months ended September 30, 2008, we completed multiple valuations of
the assets and liabilities of our U.S. pension and other postretirement benefit
(OPEB) plans. This was required due to plan amendments, attrition
programs and plant closure agreements, which resulted from the new labor
agreements ratified with UAW represented associates at our original U.S.
locations on May 23, 2008, as well as salaried workforce
reductions. We recorded adjustments associated with the completion of
these valuations. The components of these adjustments are discussed
below.
Certain changes in the new labor
agreements reduced the postretirement benefit obligation attributed to employee
services already rendered. These changes are classified as
negative plan amendments and reduced postretirement benefits and other long-term
liabilities on our Condensed Consolidated Balance Sheet by $96.8
million. In addition, we reduced postretirement benefits and other
long-term liabilities by $40.4 million for changes in actuarial assumptions
since the January 1, 2008 valuation of our U.S. pension and OPEB
plans. These adjustments were recorded to accumulated other
comprehensive income (AOCI) and will be amortized over future
periods.
AMERICAN
AXLE & MANUFACTURING HOLDINGS, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
We also reduced postretirement benefits and other long-term liabilities and
recorded a net gain of $39.9 million and $50.0 million to cost of sales for the
curtailment of certain pension and OPEB in the three and nine months ended
September 30, 2008, respectively. This resulted primarily from the
reduction in the expected future pension and OPEB related to those hourly
associates who have accepted the SSP and terminated employment from
AAM. In addition, we reduced postretirement benefits and other
long-term liabilities and recorded an estimated curtailment gain to AOCI of
$32.8 million related to the expected curtailment of OPEB for associates who are
part of the hourly and salary workforce reductions but have not yet terminated
employment. The remaining portion of the total curtailment gain will
be recognized as these remaining associates terminate employment.
In addition, we increased
postretirement benefits and other long-term liabilities and recorded expense of
$27.4 million and $64.3 million for special and contractual termination
benefits in the three and nine months ended September 30, 2008, respectively.
This charge includes lump-sum SSP benefits to be paid under our pension
plans, contractual pension and OPEB to be provided to certain eligible
associates at the facilities operating under our plant closure agreements and
future postretirement benefits to be provided to certain eligible associates who
have accepted the SSP. This charge also includes special and
contractual pension and OPEB benefits related to certain eligible IAM associates
at our forging facilities and lump-sum SRIP benefits to be paid under our
pension plans.
The special and contractual termination benefits consist of the following (in
millions):
|
|
Three
months ended
|
|
Nine
months ended
|
|
|
September
30, 2008
|
|
September
30, 2008
|
SSP
|
|
$ |
24.1
|
|
$ |
58.7 |
IAM
related |
|
|
1.0
|
|
|
2.9 |
SRIP |
|
|
2.3 |
|
|
2.7 |
As part of the AAM – GM Agreement, we will no longer have a liability to GM for
postretirement healthcare and life insurance coverage provided to UAW
represented transition associates with earned credited service from AAM who
retire under the plans administered by GM. In the second quarter of
2008, we recorded a reduction of our OPEB liability of $38.7 million to reflect
the settlement of this portion of the liability. We will record this
transaction as deferred revenue and amortize it over future
periods. See Note 6 – Deferred Revenue for more detail on this
agreement with GM. The forgiveness of this obligation has been
accounted for as a settlement. Accordingly, the related amount of
unamortized gain previously recorded to AOCI has been recorded as a credit of
$9.4 million to cost of sales in the nine months ended September 30,
2008.
In the first quarter of 2008, we
recorded an adjustment related to the completion of our valuation for pension
and OPEB assets and obligations as of January 1, 2008. This
adjustment resulted in a decrease in postretirement benefits and other long-term
liabilities of $11.8 million, an increase in AOCI of $7.4 million and a decrease
in deferred income taxes of $4.4 million.
We adopted the measurement date
provisions of FASB Statement No. 158, “Employers Accounting for Defined
Benefit Pension and Other Postretirement Plans,” as of January 1, 2007,
which requires companies to measure a plan’s assets and obligations that
determine its funded status as of the end of the fiscal year. As a
result of this adoption, we recorded a net transition adjustment of $12.0
million to the opening retained earnings balance related to the net periodic
benefit cost for the period between September 30, 2006 and January 1,
2007.
Our regulatory pension funding
requirements in 2008 are less than $5 million. We expect our cash
outlay for other postretirement benefit obligations in 2008 to be between $5
million and $10 million.
AMERICAN
AXLE & MANUFACTURING HOLDINGS, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
The following table provides a reconciliation of changes in the product warranty
liability as of September 30, 2008 (in millions):
Beginning
balance as of January 1, 2008 |
|
$ |
6.8 |
|
Accruals |
|
|
0.4 |
|
Settlements |
|
|
(0.4 |
) |
Adjustment to prior period accruals |
|
|
(0.5 |
) |
Currency translation adjustment |
|
|
(0.1 |
) |
Ending balance
as of September 30, 2008 |
|
$ |
6.2 |
|
We estimate whether
recoverability of our deferred tax assets is “more likely than not,” based on
forecasts of taxable income in the related tax jurisdictions. In this
estimate, we use historical results, projected future operating results based
upon approved business plans, eligible carry forward periods, tax planning
opportunities and other relevant considerations. We review the
likelihood that we will be able to realize the benefit of our deferred tax
assets on a quarterly basis or whenever events indicate that a review is
required.
In the
second quarter of 2008, several events occurred that led us to significantly
revise the near-term projected future operating results of our U.S.
operations. These events included:
·
|
a
significant decline in current and projected market demand and future
customer production schedules for the major North American light truck
programs we currently support;
|
·
|
management’s
long-term plant loading decisions made subsequent to the new labor
agreements with the International UAW;
and
|
·
|
the
impact of significant charges resulting from our restructuring actions in
the second quarter of 2008.
|
We
reviewed the likelihood that we would be able to realize the benefit of our U.S.
deferred tax assets as of June 30, 2008, based on the revised near-term
projected future operating results of our U.S. operations. We
concluded that it is no longer “more likely than not” that we will realize our
net deferred tax assets in the U.S. and recorded a charge to income tax expense
in the second quarter of 2008 of $54.4 million to establish a full valuation
allowance against these assets. We recorded an additional valuation
allowance of $366.7 million as of September 30, 2008 to offset the deferred tax
benefits resulting from U.S. losses incurred in the second and third quarters of
2008.
If, in
the future, we generate taxable income in the U.S. on a sustained basis, our
current estimate of the recoverability of our deferred tax assets could change
and result in the future reversal of some or all of the valuation
allowance.
Income
tax expense (benefit) was a benefit of $3.4 million in the third quarter of 2008
and an expense of $33.8 million in the first nine months of 2008 as compared to
expense of $3.0 million in the third quarter of 2007 and $15.1 million in the
first nine months of 2007. Our effective income tax rate was 0.8% in
the third quarter of 2008 and negative 3.1% in the first nine months of 2008 as
compared to 18.2% in the third quarter of 2007 and 19.1% in the first nine
months of 2007. Our income tax expense (benefit) and effective tax
rate for the three and nine months ended September 30, 2008 reflects the effect
of the valuation allowance that was recorded in the second quarter of 2008 and
the ongoing impact of this allowance in third quarter of 2008.
A
reconciliation of the beginning and ending amounts of unrecognized tax benefits
is as follows (in millions):
Balance
at January 1, 2008
|
|
$ |
33.0 |
|
Increase in prior year tax positions
|
|
|
8.2 |
|
Decrease in prior year tax positions
|
|
|
(7.3 |
) |
Increase
in current year tax positions
|
|
|
2.6 |
|
Settlement
|
|
|
(1.2 |
) |
Balance
at September 30, 2008
|
|
$ |
35.3 |
|
AMERICAN
AXLE & MANUFACTURING HOLDINGS, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
10. STOCK-BASED
COMPENSATION
In the
third quarter of 2008, we recorded $1.0 million of expense for the accelerated
vesting of restricted stock as a result of our salaried workforce
reductions.
On June
25, 2008, we granted approximately 0.3 million stock options under our 1999
Stock Incentive Plan. These options will be expensed over the vesting
period, which is approximately three years.
We
estimated the fair value of our employee stock options on the date of grant
using the Black-Scholes option-pricing model with the following
assumptions:
|
|
2008
|
|
|
2007
|
|
Expected
volatility
|
|
|
46.10
|
% |
|
|
44.26
|
% |
Risk-free
interest rate
|
|
|
3.78
|
% |
|
|
4.46
|
% |
Dividend
yield
|
|
|
6.20
|
% |
|
|
2.30
|
% |
Expected
life of options
|
|
8
years
|
|
|
8
years
|
|
Weighted-average
grant-date fair value
|
|
$ |
2.67 |
|
|
$ |
11.13 |
|
On June
25, 2008, we granted 0.2 million shares of restricted stock with a grant-date
fair value of $10.08. The unearned compensation related to this grant
will be expensed over the vesting period of approximately three
years.
On March
14, 2008, we granted 0.7 million shares of restricted stock with a grant-date
fair value of $21.37. The unearned compensation related to this grant
will be expensed over the vesting period of three years.
In the
first quarter of 2008, we made cash payments of $2.0 million related to vested
restricted stock units.
11. COMPREHENSIVE
INCOME (LOSS)
Comprehensive
income (loss) consists of the following:
|
|
Three
months ended
|
|
|
Nine
months ended
|
|
|
|
September
30,
|
|
|
September
30,
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
(in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
$ |
(440.9 |
) |
|
$ |
13.5 |
|
|
$ |
(1,112.2 |
) |
|
$ |
63.8 |
|
Defined
benefit plans, net of tax
|
|
|
6.2 |
|
|
|
0.2 |
|
|
|
87.3 |
|
|
|
(9.6 |
) |
Foreign
currency translation adjustments, net
of tax
|
|
|
(20.2 |
) |
|
|
5.8 |
|
|
|
(6.7 |
) |
|
|
16.2 |
|
Gain
(loss) on derivatives, net
of tax
|
|
|
(0.9 |
) |
|
|
(1.5 |
) |
|
|
0.6 |
|
|
|
(0.7 |
) |
Comprehensive
income (loss)
|
|
$ |
(455.8 |
) |
|
$ |
18.0 |
|
|
$ |
(1,031.0 |
) |
|
$ |
69.7 |
|
AMERICAN
AXLE & MANUFACTURING HOLDINGS, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
12. EARNINGS
(LOSS) PER SHARE (EPS)
The
following table sets forth the computation of our basic and diluted
EPS:
|
|
Three
months ended
|
|
|
Nine
months ended
|
|
|
|
September
30,
|
|
|
September
30,
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
|
|
(in
millions, except per share data)
|
|
Numerator
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
$ |
(440.9 |
) |
|
$ |
13.5 |
|
|
$ |
(1,112.2 |
) |
|
$ |
63.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
shares outstanding -
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding
|
|
|
51.6 |
|
|
|
51.3 |
|
|
|
51.6 |
|
|
|
51.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect
of dilutive securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dilutive
stock-based compensation
|
|
|
- |
|
|
|
1.7 |
|
|
|
- |
|
|
|
1.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
shares outstanding -
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
weighted-average shares after assumed conversions
|
|
|
51.6 |
|
|
|
53.0 |
|
|
|
51.6 |
|
|
|
52.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
EPS
|
|
$ |
(8.54 |
) |
|
$ |
0.27 |
|
|
$ |
(21.55 |
) |
|
$ |
1.26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
EPS
|
|
$ |
(8.54 |
) |
|
$ |
0.25 |
|
|
$ |
(21.55 |
) |
|
$ |
1.21 |
|
Basic and
diluted loss per share for the three and nine months ended September 30, 2008
are the same because the effect of 0.5 million and 1.2 million potentially
dilutive shares would have been antidilutive for the three and nine months ended
September 30, 2008, respectively.
Certain
exercisable stock options were excluded in the computations of diluted EPS
because the exercise price of these options was greater than the average period
market prices. The number of stock options outstanding, which were
not included in the calculation of diluted EPS, was 5.2 million at September 30,
2008 and 1.9 million at September 30, 2007. The ranges of exercise
prices related to the excluded exercisable stock options were $15.00 - $40.83 at
September 30, 2008 and $26.02 - $40.83 at September 30, 2007.
13. SUBSEQUENT
EVENT
On November 7, 2008, we amended our existing Revolving Credit Facility to extend
certain of the revolving credit commitments thereunder from April 2010 to
December 2011, among other things. After giving effect to a 25%
commitment reduction for lenders consenting to the amendment, the amended
Revolving Credit Facility will provide up to $476.9 million of revolving bank
financing commitments through April 2010 and $369.4 million of such revolving
bank financing commitments through December 2011.
Under the amended Revolving Credit Facility, we will be required to comply with
revised financial covenants related to secured indebtedness leverage and
interest coverage. The amended Revolving Credit Facility imposes
limitations on our ability to make certain investments, declare or pay dividends
or distributions on capital stock, redeem or repurchase capital stock and
certain debt obligations, incur liens, incur indebtedness, or merge, make
acquisitions or sell assets. Borrowings under
the amended Revolving Credit Facility will continue to bear interest
at rates based on LIBOR or an alternate base rate, plus an applicable
margin. The applicable margin for a LIBOR based loan for lenders
who have consented to the amendment is currently 500 basis points. The
applicable margin did not change for lenders who have not consented. All
borrowings under the amended Revolving Credit Facility are subject to a
collateral coverage test.
The amended Revolving Credit Facility is secured by a pledge of all or a portion
of the capital stock of certain of our subsidiaries, including substantially all
of our first-tier subsidiaries, and is partially secured by a security interest
in our assets and the assets of our domestic subsidiaries. In addition,
obligations under the amended Revolving Credit Facility are guaranteed by our
U.S. subsidiaries, all of which are directly owned by the borrower.
The
Term Loan due 2012 will share in the guarantees and the collateral package
offered in exchange for the amendment equally and ratably, in accordance with
the terms of the agreement. The amendment had no effect on the
maturity of the Term Loan due 2012.
AMERICAN
AXLE & MANUFACTURING HOLDINGS, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
14. SUPPLEMENTAL
GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
Holdings
has no significant assets other than its 100% ownership in AAM, Inc. and no
direct subsidiaries other than AAM, Inc. Holdings fully and
unconditionally guarantees the 5.25% Notes and 7.875% Notes, which are senior
unsecured obligations of AAM, Inc. The 2.00% Convertible Notes are
senior unsecured obligations of Holdings and are fully and unconditionally
guaranteed by AAM, Inc.
The
following Condensed Consolidating Financial Statements are included in lieu of
providing separate financial statements for Holdings and AAM, Inc. These
Condensed Consolidating Financial Statements are prepared under the equity
method of accounting whereby the investments in subsidiaries are recorded at
cost and adjusted for the parent’s share of the subsidiaries’ cumulative results
of operations, capital contributions and distributions, and other equity
changes.
Condensed
Consolidating Statements of Operations
Three
months ended, September 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
- |
|
|
$ |
278.7 |
|
|
$ |
249.4 |
|
|
$ |
- |
|
|
$ |
528.1 |
|
|
|
|
- |
|
|
|
9.8 |
|
|
|
16.8 |
|
|
|
(26.6 |
) |
|
|
- |
|
|
|
|
- |
|
|
|
288.5 |
|
|
|
266.2 |
|
|
|
(26.6 |
) |
|
|
528.1 |
|
|
|
|
- |
|
|
|
612.2 |
|
|
|
320.9 |
|
|
|
(26.6 |
) |
|
|
906.5 |
|
|
|
|
- |
|
|
|
(323.7 |
) |
|
|
(54.7 |
) |
|
|
- |
|
|
|
(378.4 |
) |
Selling,
general and administrative expenses
|
|
|
- |
|
|
|
41.6 |
|
|
|
1.4 |
|
|
|
- |
|
|
|
43.0 |
|
|
|
|
- |
|
|
|
(365.3 |
) |
|
|
(56.1 |
) |
|
|
- |
|
|
|
(421.4 |
) |
|
|
|
- |
|
|
|
(17.8 |
) |
|
|
(0.2 |
) |
|
|
- |
|
|
|
(18.0 |
) |
Investment
loss |
|
|
- |
|
|
|
- |
|
|
|
(3.7 |
) |
|
|
- |
|
|
|
(3.7 |
) |
Other
income (expense), net
|
|
|
- |
|
|
|
0.1 |
|
|
|
(1.5 |
) |
|
|
- |
|
|
|
(1.4 |
) |
|
|
|
- |
|
|
|
(383.0 |
) |
|
|
(61.5 |
) |
|
|
- |
|
|
|
(444.5 |
) |
Income
tax expense (benefit)
|
|
|
- |
|
|
|
(4.3 |
) |
|
|
0.9 |
|
|
|
- |
|
|
|
(3.4 |
) |
|
|
|
- |
|
|
|
- |
|
|
|
0.2 |
|
|
|
- |
|
|
|
0.2 |
|
Loss
from equity in subsidiaries
|
|
|
(440.9 |
) |
|
|
(71.9 |
) |
|
|
- |
|
|
|
512.8 |
|
|
|
- |
|
Net
loss before royalties and dividends
|
|
|
(440.9 |
) |
|
|
(450.6 |
) |
|
|
(62.2 |
) |
|
|
512.8 |
|
|
|
(440.9 |
) |
|
|
|
- |
|
|
|
9.7 |
|
|
|
(9.7 |
) |
|
|
- |
|
|
|
- |
|
Net
loss after royalties and dividends
|
|
$ |
(440.9 |
) |
|
$ |
(440.9 |
) |
|
$ |
(71.9 |
) |
|
$ |
512.8 |
|
|
$ |
(440.9 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
- |
|
|
$ |
511.4 |
|
|
$ |
262.9 |
|
|
$ |
- |
|
|
$ |
774.3 |
|
|
|
|
- |
|
|
|
16.4 |
|
|
|
23.3 |
|
|
|
(39.7 |
) |
|
|
- |
|
|
|
|
- |
|
|
|
527.8 |
|
|
|
286.2 |
|
|
|
(39.7 |
) |
|
|
774.3 |
|
|
|
|
- |
|
|
|
484.0 |
|
|
|
246.8 |
|
|
|
(37.7 |
) |
|
|
693.1 |
|
|
|
|
- |
|
|
|
43.8 |
|
|
|
39.4 |
|
|
|
(2.0 |
) |
|
|
81.2 |
|
Selling,
general and administrative expenses
|
|
|
- |
|
|
|
50.0 |
|
|
|
4.0 |
|
|
|
(2.0 |
) |
|
|
52.0 |
|
|
|
|
- |
|
|
|
(6.2 |
) |
|
|
35.4 |
|
|
|
- |
|
|
|
29.2 |
|
|
|
|
- |
|
|
|
(13.7 |
) |
|
|
(0.9 |
) |
|
|
- |
|
|
|
(14.6 |
) |
Investment
income |
|
|
- |
|
|
|
2.9 |
|
|
|
0.2 |
|
|
|
- |
|
|
|
3.1 |
|
|
|
|
- |
|
|
|
- |
|
|
|
(1.2 |
) |
|
|
- |
|
|
|
(1.2 |
) |
Income
(loss) before income taxes
|
|
|
- |
|
|
|
(17.0 |
) |
|
|
33.5 |
|
|
|
- |
|
|
|
16.5 |
|
Income
tax expense (benefit)
|
|
|
- |
|
|
|
(0.5 |
) |
|
|
3.5 |
|
|
|
- |
|
|
|
3.0 |
|
Earnings
from equity in subsidiaries
|
|
|
13.5 |
|
|
|
19.1 |
|
|
|
- |
|
|
|
(32.6 |
) |
|
|
- |
|
Net
income before royalties and dividends
|
|
|
13.5 |
|
|
|
2.6 |
|
|
|
30.0 |
|
|
|
(32.6 |
) |
|
|
13.5 |
|
|
|
|
- |
|
|
|
10.9 |
|
|
|
(10.9 |
) |
|
|
- |
|
|
|
- |
|
Net
income after royalties and dividends
|
|
$ |
13.5 |
|
|
$ |
13.5 |
|
|
$ |
19.1 |
|
|
$ |
(32.6 |
) |
|
$ |
13.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AMERICAN
AXLE & MANUFACTURING HOLDINGS, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Condensed
Consolidating Statements of Operations
Nine
months ended, September 30,
|
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|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
- |
|
|
$ |
702.0 |
|
|
$ |
904.2 |
|
|
$ |
- |
|
|
$ |
1,606.2 |
|
|
|
|
- |
|
|
|
33.8 |
|
|
|
48.1 |
|
|
|
(81.9 |
) |
|
|
- |
|
|
|
|
- |
|
|
|
735.8 |
|
|
|
952.3 |
|
|
|
(81.9 |
) |
|
|
1,606.2 |
|
|
|
|
- |
|
|
|
1,652.2 |
|
|
|
929.5 |
|
|
|
(81.9 |
) |
|
|
2,499.8 |
|
|
|
|
- |
|
|
|
(916.4 |
) |
|
|
22.8 |
|
|
|
- |
|
|
|
(893.6 |
) |
Selling,
general and administrative expenses
|
|
|
- |
|
|
|
134.8 |
|
|
|
2.5 |
|
|
|
- |
|
|
|
137.3 |
|
|
|
|
- |
|
|
|
(1,051.2 |
) |
|
|
20.3 |
|
|
|
- |
|
|
|
(1,030.9 |
) |
|
|
|
- |
|
|
|
(47.4 |
) |
|
|
(1.0 |
) |
|
|
- |
|
|
|
(48.4 |
) |
Investment
income (loss) |
|
|
- |
|
|
|
2.2 |
|
|
|
(1.7 |
) |
|
|
- |
|
|
|
0.5 |
|
|
|
|
- |
|
|
|
- |
|
|
|
0.2 |
|
|
|
- |
|
|
|
0.2 |
|
Income
(loss) before income taxes
|
|
|
- |
|
|
|
(1,096.4 |
) |
|
|
17.8 |
|
|
|
- |
|
|
|
(1,078.6 |
) |
|
|
|
- |
|
|
|
28.4 |
|
|
|
5.4 |
|
|
|
- |
|
|
|
33.8 |
|
|
|
|
- |
|
|
|
- |
|
|
|
0.2 |
|
|
|
- |
|
|
|
0.2 |
|
Loss
from equity in subsidiaries
|
|
|
(1,112.2 |
) |
|
|
(26.4 |
) |
|
|
- |
|
|
|
1,138.6 |
|
|
|
- |
|
Net
income (loss) before royalties and dividends
|
|
|
(1,112.2 |
) |
|
|
(1,151.2 |
) |
|
|
12.6 |
|
|
|
1,138.6 |
|
|
|
(1,112.2 |
) |
|
|
|
- |
|
|
|
39.0 |
|
|
|
(39.0 |
) |
|
|
- |
|
|
|
- |
|
Net
loss after royalties and dividends
|
|
$ |
(1,112.2 |
) |
|
$ |
(1,112.2 |
) |
|
$ |
(26.4 |
) |
|
$ |
1,138.6 |
|
|
$ |
(1,112.2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
- |
|
|
$ |
1,686.0 |
|
|
$ |
807.0 |
|
|
$ |
- |
|
|
$ |
2,493.0 |
|
|
|
|
- |
|
|
|
42.0 |
|
|
|
76.1 |
|
|
|
(118.1 |
) |
|
|
- |
|
|
|
|
- |
|
|
|
1,728.0 |
|
|
|
883.1 |
|
|
|
(118.1 |
) |
|
|
2,493.0 |
|
|
|
|
- |
|
|
|
1,562.0 |
|
|
|
763.6 |
|
|
|
(112.8 |
) |
|
|
2,212.8 |
|
|
|
|
- |
|
|
|
166.0 |
|
|
|
119.5 |
|
|
|
(5.3 |
) |
|
|
280.2 |
|
Selling,
general and administrative expenses
|
|
|
- |
|
|
|
149.1 |
|
|
|
11.3 |
|
|
|
(5.3 |
) |
|
|
155.1 |
|
|
|
|
- |
|
|
|
16.9 |
|
|
|
108.2 |
|
|
|
- |
|
|
|
125.1 |
|
|
|
|
- |
|
|
|
(44.1 |
) |
|
|
(2.7 |
) |
|
|
- |
|
|
|
(46.8 |
) |
Investment
income |
|
|
- |
|
|
|
5.5 |
|
|
|
0.5 |
|
|
|
-
|
|
|
|
6.0 |
|
|
|
|
- |
|
|
|
(5.4 |
) |
|
|
- |
|
|
|
- |
|
|
|
(5.4 |
) |
Income
(loss) before income taxes
|
|
|
- |
|
|
|
(27.1 |
) |
|
|
106.0 |
|
|
|
- |
|
|
|
78.9 |
|
|
|
|
- |
|
|
|
7.6 |
|
|
|
7.5 |
|
|
|
- |
|
|
|
15.1 |
|
Earnings
from equity in subsidiaries
|
|
|
63.8 |
|
|
|
65.2 |
|
|
|
- |
|
|
|
(129.0 |
) |
|
|
- |
|
Net
income before royalties and dividends
|
|
|
63.8 |
|
|
|
30.5 |
|
|
|
98.5 |
|
|
|
(129.0 |
) |
|
|
63.8 |
|
|
|
|
- |
|
|
|
33.3 |
|
|
|
(33.3 |
) |
|
|
- |
|
|
|
- |
|
Net
income after royalties and dividends
|
|
$ |
63.8 |
|
|
$ |
63.8 |
|
|
$ |
65.2 |
|
|
$ |
(129.0 |
) |
|
$ |
63.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AMERICAN
AXLE & MANUFACTURING HOLDINGS, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Condensed
Consolidating Balance Sheets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$ |
- |
|
|
$ |
366.7 |
|
|
$ |
87.5 |
|
|
$ |
- |
|
|
$ |
454.2 |
|
|
|
|
- |
|
|
|
36.5 |
|
|
|
80.7 |
|
|
|
- |
|
|
|
117.2 |
|
|
|
|
- |
|
|
|
106.1 |
|
|
|
150.1 |
|
|
|
- |
|
|
|
256.2 |
|
AAM – GM Agreement receivable
|
|
|
- |
|
|
|
60.0 |
|
|
|
- |
|
|
|
- |
|
|
|
60.0 |
|
|
|
|
- |
|
|
|
75.2 |
|
|
|
108.6 |
|
|
|
- |
|
|
|
183.8 |
|
|
|
|
- |
|
|
|
37.3 |
|
|
|
38.8 |
|
|
|
- |
|
|
|
76.1 |
|
|
|
|
- |
|
|
|
681.8 |
|
|
|
465.7 |
|
|
|
- |
|
|
|
1,147.5 |
|
Property,
plant and equipment, net
|
|
|
- |
|
|
|
413.0 |
|
|
|
680.0 |
|
|
|
- |
|
|
|
1,093.0 |
|
|
|
|
- |
|
|
|
- |
|
|
|
147.8 |
|
|
|
- |
|
|
|
147.8 |
|
Other
assets and deferred charges
|
|
|
- |
|
|
|
38.2 |
|
|
|
29.3 |
|
|
|
- |
|
|
|
67.5 |
|
Investment
in subsidiaries
|
|
|
169.8 |
|
|
|
728.8 |
|
|
|
- |
|
|
|
(898.6 |
) |
|
|
- |
|
|
|
$ |
169.8 |
|
|
$ |
1,861.8 |
|
|
$ |
1,322.8 |
|
|
$ |
(898.6 |
) |
|
$ |
2,455.8 |
|
Liabilities
and Stockholders’ Equity (Deficit)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
- |
|
|
$ |
136.1 |
|
|
$ |
151.1 |
|
|
$ |
- |
|
|
$ |
287.2 |
|
|
|
|
- |
|
|
|
327.7 |
|
|
|
46.6 |
|
|
|
- |
|
|
|
374.3 |
|
Total
current liabilities
|
|
|
- |
|
|
|
463.8 |
|
|
|
197.7 |
|
|
|
- |
|
|
|
661.5 |
|
Intercompany
payable (receivable)
|
|
|
306.7 |
|
|
|
(572.9 |
) |
|
|
266.2 |
|
|
|
- |
|
|
|
- |
|
|
|
|
0.4 |
|
|
|
1,249.8 |
|
|
|
50.6 |
|
|
|
- |
|
|
|
1,300.8 |
|
Other
long-term liabilities
|
|
|
- |
|
|
|
551.3 |
|
|
|
79.5 |
|
|
|
- |
|
|
|
630.8 |
|
|
|
|
307.1 |
|
|
|
1,692.0 |
|
|
|
594.0 |
|
|
|
- |
|
|
|
2,593.1 |
|
Stockholders’
equity (deficit)
|
|
|
(137.3 |
) |
|
|
169.8 |
|
|
|
728.8 |
|
|
|
(898.6 |
) |
|
|
(137.3 |
) |
Total
liabilities and stockholders’ equity (deficit)
|
|
$ |
169.8 |
|
|
$ |
1,861.8 |
|
|
$ |
1,322.8 |
|
|
$ |
(898.6 |
) |
|
$ |
2,455.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$ |
- |
|
|
$ |
223.5 |
|
|
$ |
120.1 |
|
|
$ |
- |
|
|
$ |
343.6 |
|
|
|
|
- |
|
|
|
141.3 |
|
|
|
122.7 |
|
|
|
- |
|
|
|
264.0 |
|
|
|
|
- |
|
|
|
123.4 |
|
|
|
119.4 |
|
|
|
- |
|
|
|
242.8 |
|
|
|
|
- |
|
|
|
23.3 |
|
|
|
69.6 |
|
|
|
- |
|
|
|
92.9 |
|
|
|
|
- |
|
|
|
511.5 |
|
|
|
431.8 |
|
|
|
- |
|
|
|
943.3 |
|
Property,
plant and equipment, net
|
|
|
- |
|
|
|
959.8 |
|
|
|
736.4 |
|
|
|
- |
|
|
|
1,696.2 |
|
|
|
|
- |
|
|
|
- |
|
|
|
147.8 |
|
|
|
- |
|
|
|
147.8 |
|
Other
assets and deferred charges
|
|
|
- |
|
|
|
121.8 |
|
|
|
14.3 |
|
|
|
- |
|
|
|
136.1 |
|
Investment
in subsidiaries
|
|
|
1,190.5 |
|
|
|
763.7 |
|
|
|
- |
|
|
|
(1,954.2 |
) |
|
|
- |
|
|
|
$ |
1,190.5 |
|
|
$ |
2,356.8 |
|
|
$ |
1,330.3 |
|
|
$ |
(1,954.2 |
) |
|
$ |
2,923.4 |
|
Liabilities
and Stockholders’ Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
- |
|
|
$ |
174.9 |
|
|
$ |
138.9 |
|
|
$ |
- |
|
|
$ |
313.8 |
|
|
|
|
- |
|
|
|
144.3 |
|
|
|
53.5 |
|
|
|
- |
|
|
|
197.8 |
|
Total
current liabilities
|
|
|
- |
|
|
|
319.2 |
|
|
|
192.4 |
|
|
|
- |
|
|
|
511.6 |
|
Intercompany
payable (receivable)
|
|
|
288.4 |
|
|
|
(516.0 |
) |
|
|
227.6 |
|
|
|
- |
|
|
|
- |
|
|
|
|
2.7 |
|
|
|
799.8 |
|
|
|
55.6 |
|
|
|
- |
|
|
|
858.1 |
|
Other
long-term liabilities
|
|
|
- |
|
|
|
563.3 |
|
|
|
91.0 |
|
|
|
- |
|
|
|
654.3 |
|
|
|
|
291.1 |
|
|
|
1,166.3 |
|
|
|
566.6 |
|
|
|
- |
|
|
|
2,024.0 |
|
|
|
|
899.4 |
|
|
|
1,190.5 |
|
|
|
763.7 |
|
|
|
(1,954.2 |
) |
|
|
899.4 |
|
Total
liabilities and stockholders’ equity
|
|
$ |
1,190.5 |
|
|
$ |
2,356.8 |
|
|
$ |
1,330.3 |
|
|
$ |
(1,954.2 |
) |
|
$ |
2,923.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AMERICAN
AXLE & MANUFACTURING HOLDINGS, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Condensed
Consolidating Statements of Cash Flows
Nine
months ended September 30,
(in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash provided by (used in) operating activities
|
|
$ |
- |
|
|
$ |
(211.9 |
) |
|
$ |
114.6 |
|
|
$ |
- |
|
|
$ |
(97.3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases
of property, plant and equipment
|
|
|
- |
|
|
|
(40.1 |
) |
|
|
(62.7 |
) |
|
|
- |
|
|
|
(102.8 |
) |
Reclassification
of cash equivalents to short-term
|
|
|
- |
|
|
|
(36.5 |
) |
|
|
(80.7 |
) |
|
|
- |
|
|
|
(117.2 |
) |
Proceeds
from sale of property, plant and
equipment
|
|
|
- |
|
|
|
1.0 |
|
|
|
1.3 |
|
|
|
- |
|
|
|
2.3 |
|
Net
cash used in investing activities
|
|
|
- |
|
|
|
(75.6 |
) |
|
|
(142.1 |
) |
|
|
- |
|
|
|
(217.7 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
447.8 |
|
|
|
(4.9 |
) |
|
|
- |
|
|
|
442.9 |
|
|
|
|
17.4 |
|
|
|
(18.0 |
) |
|
|
0.6 |
|
|
|
- |
|
|
|
- |
|
Purchase
of treasury stock
|
|
|
(0.1 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(0.1 |
) |
Employee
stock option exercises,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
0.9 |
|
|
|
- |
|
|
|
- |
|
|
|
0.9 |
|
|
|
|
(17.3 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(17.3 |
) |
Net
cash provided by (used in) financing activities
|
|
|
- |
|
|
|
430.7 |
|
|
|
(4.3 |
) |
|
|
- |
|
|
|
426.4 |
|
Effect
of exchange rate changes on cash
|
|
|
- |
|
|
|
- |
|
|
|
(0.8 |
) |
|
|
- |
|
|
|
(0.8 |
) |
Net
increase (decrease) in cash and cash
equivalents
|
|
|
- |
|
|
|
143.2 |
|
|
|
(32.6 |
) |
|
|
- |
|
|
|
110.6 |
|
Cash
and cash equivalents at beginning of period
|
|
|
- |
|
|
|
223.5 |
|
|
|
120.1 |
|
|
|
- |
|
|
|
343.6 |
|
Cash
and cash equivalents at end of period
|
|
$ |
- |
|
|
$ |
366.7 |
|
|
$ |
87.5 |
|
|
$ |
- |
|
|
$ |
454.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash provided by operating activities
|
|
$ |
- |
|
|
$ |
208.4 |
|
|
$ |
123.2 |
|
|
$ |
- |
|
|
$ |
331.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases
of property, plant and equipment
|
|
|
- |
|
|
|
(37.6 |
) |
|
|
(95.3 |
) |
|
|
- |
|
|
|
(132.9 |
) |
Net
cash used in investing activities
|
|
|
- |
|
|
|
(37.6 |
) |
|
|
(95.3 |
) |
|
|
- |
|
|
|
(132.9 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
164.0 |
|
|
|
3.3 |
|
|
|
- |
|
|
|
167.3 |
|
|
|
|
25.7 |
|
|
|
(29.7 |
) |
|
|
4.0 |
|
|
|
- |
|
|
|
- |
|
|
|
|
- |
|
|
|
(7.5 |
) |
|
|
- |
|
|
|
- |
|
|
|
(7.5 |
) |
Employee
stock option exercises,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
15.2 |
|
|
|
- |
|
|
|
- |
|
|
|
15.2 |
|
|
|
|
(23.8 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(23.8 |
) |
Purchase
of treasury stock
|
|
|
(1.9 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1.9 |
) |
Net
cash provided by financing activities
|
|
|
- |
|
|
|
142.0 |
|
|
|
7.3 |
|
|
|
- |
|
|
|
149.3 |
|
Effect
of exchange rate changes on cash
|
|
|
- |
|
|
|
- |
|
|
|
0.6 |
|
|
|
- |
|
|
|
0.6 |
|
Net
increase in cash and cash equivalents
|
|
|
- |
|
|
|
312.8 |
|
|
|
35.8 |
|
|
|
- |
|
|
|
348.6 |
|
Cash
and cash equivalents at beginning of period
|
|
|
- |
|
|
|
0.5 |
|
|
|
13.0 |
|
|
|
- |
|
|
|
13.5 |
|
Cash
and cash equivalents at end of period
|
|
$ |
- |
|
|
$ |
313.3 |
|
|
$ |
48.8 |
|
|
$ |
- |
|
|
$ |
362.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
This
management’s discussion and analysis (MD&A) should be read in conjunction
with the unaudited condensed consolidated financial statements and notes
appearing elsewhere in this Quarterly Report and our Annual Report on Form 10-K
for the year ended December 31, 2007.
Unless
the context otherwise requires, references to "we," "our," "us" or "AAM" shall
mean collectively (i) American Axle & Manufacturing Holdings, Inc.
(Holdings), a Delaware corporation, and (ii) American Axle & Manufacturing,
Inc. (AAM, Inc.), a Delaware corporation, and its direct and indirect
subsidiaries. Holdings has no subsidiaries other than AAM,
Inc.
COMPANY
OVERVIEW
We are a
Tier I supplier to the automotive industry. We manufacture, engineer,
design and validate driveline and drivetrain systems and related components and
chassis modules for trucks, sport utility vehicles (SUVs), passenger cars and
crossover utility vehicles. Driveline and drivetrain systems include
components that transfer power from the transmission and deliver it to the drive
wheels. Our driveline, drivetrain and related products include axles,
chassis modules, driveshafts, power transfer units, transfer cases, chassis and
steering components, driving heads, crankshafts, transmission parts and
metal-formed products.
We are
the principal supplier of driveline components to General Motors Corporation
(GM) for its rear-wheel drive (RWD) light trucks and SUVs manufactured in North
America, supplying substantially all of GM’s rear axle and front four-wheel
drive and all-wheel drive (4WD/AWD) axle requirements for these vehicle
platforms. Sales to GM were approximately 73% of our total net sales
in the first nine months of 2008 as compared to 77% for the first nine months of
2007 and 78% for the full-year 2007.
We are
the sole-source supplier to GM for certain axles and other driveline products
for the life of each GM vehicle program covered by a Lifetime Program Contract
(LPC). Substantially all of our sales to GM are made pursuant to the
LPCs. The LPCs have terms equal to the lives of the relevant vehicle
programs or their respective derivatives, which typically run 6 to 10 years, and
require us to remain competitive with respect to technology, design and
quality. We have been successful in competing, and we will continue
to compete, for future GM business upon the expiration of the LPCs.
We are
also the principal supplier of driveline system products for the Chrysler
Group’s heavy-duty Dodge Ram full-size pickup trucks (Dodge Ram program) and its
derivatives. Sales to Chrysler LLC (Chrysler) were approximately 11%
of our total net sales in the first nine months of 2008 as compared to 12% for
the first nine months of 2007 and the full-year 2007.
In
addition to GM and Chrysler, we supply driveline systems and other related
components to PACCAR Inc., Ford Motor Company (Ford), SsangYong Motor Company,
Harley-Davidson and other original equipment manufacturers (OEMs) and Tier I
supplier companies such as The Timken Company, Jatco Ltd., Koyo Machine
Industries Co., Ltd. and Hino Motors, Ltd. Our net sales to customers
other than GM were $433.4 million in the first nine months of 2008 as compared
to $562.1 million for the first nine months of 2007.
In the second quarter of
2008, we resolved an 87 day strike called by the International UAW at our
original U.S. locations in Michigan and New York. The new labor agreements
negotiated for these locations substantially improved our operating flexibility
and U.S. labor cost structure from the previous agreements. The details of these
new agreements are further described in the section entitled “RESULTS OF
OPERATIONS –– NINE MONTHS ENDED SEPTEMBER 30, 2008 AS COMPARED TO NINE MONTHS
ENDED SEPTEMBER 30, 2007.”
In addition, we continued our ongoing restructuring efforts in the first nine
months of 2008 in order to realign and resize our production capacity and cost
structure to meet current and projected operational and market demands. As a
result of these restructuring actions, we incurred significant special charges
and non-recurring operating costs in the three and nine months ended September
30, 2008. The impact of these charges is explained in the section entitled
“RESULTS OF OPERATIONS.”
Our
largest customers continue to react to current market conditions such as lower
projected U.S. industry volumes and rapid shifts in consumer preferences away
from products that we support. GM recently announced and accelerated plans to
significantly reduce production capacity for several of AAM’s major light truck
product programs in response to the market changes described above. AAM
will continue to evaluate market conditions and our underutilized U.S. capacity
and may take further restructuring actions. These potential future actions could
result in future special charges, including additional asset
impairments.
RESULTS
OF OPERATIONS –– THREE MONTHS ENDED SEPTEMBER 30, 2008 AS COMPARED TO THREE
MONTHS ENDED SEPTEMBER 30, 2007
Net Sales Net sales
were $528.1 million in the third quarter of 2008 as compared to $774.3 million
in the third quarter of 2007.
As
compared to the third quarter of 2007, our sales in the third quarter of 2008
reflect a decrease of approximately 44% in production volumes for the major
full-size truck and SUV programs we currently support for GM and Chrysler and a
decrease of approximately 43% in products supporting GM’s mid-size light truck
and SUV programs. These decreases reflect the general decline in
consumer spending as a result of the deteriorating global economic conditions
and uncertain credit markets, the reduction in consumer demand for the customer
programs we support and customer decisions to restrict production and reduce
inventories of unsold vehicles.
Our content-per-vehicle (as
measured by the dollar value of our products supporting GM’s North American
light truck platforms and the Dodge Ram program) increased 11.6% to $1,453 in
the third quarter of 2008 as compared to $1,303 in the third quarter of
2007. The increase is due to higher customer pricing pass
throughs (including metal market adjustments), increased content on the GM
full-size programs and mix shifts favoring full-size trucks and SUV
programs. Our 4WD/AWD penetration rate was 62.4% in the third quarter
of 2008 as compared to 62.8% in the third quarter of 2007.
Gross Profit (Loss) Gross
profit (loss) was a loss of $378.4 million in the third quarter of 2008 as
compared to profit of $81.2 million in the third quarter of
2007. Gross margin was negative 71.7% in the third quarter of 2008 as
compared to 10.5% in the third quarter of 2007. The decrease in gross
profit and gross margin in the third quarter of 2008 reflects the impact of
lower sales and special charges and other non-recurring operating costs, as
shown below (in millions):
Asset impairments
and indirect inventory obsolescence |
|
$ |
255.9 |
|
U.S. hourly
workforce and benefit reductions |
|
|
83.7 |
|
Acceleration of the
Buydown Program (BDP) expense |
|
|
51.9 |
|
Signing
bonus |
|
|
0.4 |
|
U.S. salaried
workforce reductions |
|
|
0.9 |
|
Other |
|
|
6.6 |
|
Total special charges and
non-recurring operating costs |
|
$ |
399.4 |
|
U.S. hourly workforce and benefit
reductions We offered the SSP to UAW represented associates at
the original U.S. locations in the second quarter of 2008. Under this
voluntary separation program, we offered retirement and buyout incentives to
approximately 3,650 eligible hourly associates. We recorded a special
charge of $83.7 million for this program in the third quarter of 2008 for
associates who have accepted the SSP subsequent to June 30,
2008. This charge includes $99.6 million related to estimated
postemployment costs, $24.1 million of special termination pension and other
postretirement benefits (OPEB) and a credit of $40.0 million for the curtailment
of certain pension and OPEB.
Asset Impairments In
the second quarter of 2008, we identified the following impairment
indicators:
|
a
significant decline in current and projected market demand and future
customer production schedules for the major North American light truck
programs we currently support and
|
·
|
changes
in the extent to which assets at our original U.S. locations will be used
as a result of management’s long-term plant loading decisions made
subsequent to the new labor agreements with the International
UAW.
|
We recorded asset impairment
charges of $294.8 million in the second quarter of 2008 associated with the
permanent idling of certain assets and an impairment analysis of certain assets
that were “held for use” as of June 30,
2008.
In the
third quarter of 2008, we identified these additional impairment
indicators:
·
|
the
general decline in consumer spending as a result of the deteriorating
global economic conditions and uncertain credit markets, which further
negatively affected our projected future production
requirements;
|
·
|
the
announcement of accelerated customer production capacity reductions
for programs that we support; and
|
· |
future
sourcing and product planning decisions that were announced and
communicated by some of our customers in the third quarter of
2008, which adversely affected our Colfor Manufacturing
subsidiary. |
We recorded asset impairment charges of
$246.5 million in the third quarter of 2008 associated with the permanent idling
of certain assets and an impairment analysis of certain assets that were “held
for use” as of September 30, 2008. We also reduced the remaining
useful lives of certain “held for use” assets as part of this
analysis.
As a
result of the reduction in the projected usage of machinery and equipment due to
the impairment indicators discussed above, certain machine repair parts and
other materials classified as indirect inventory was determined to be obsolete.
We recorded a charge of $9.4 million related to the write down of the net book
value of these assets to their estimated net realizable value at September 30,
2008.
Acceleration of the BDP
expense
In the third quarter of 2008, we recorded a special charge of $51.9
million for the estimated amount of BDP payments to be paid to permanently idled
associates throughout the new labor agreements. This represents
management’s best estimate of the portion of the total buydown payment that will
not result in a future benefit to the Company.
Signing bonus In
the third quarter of 2008, we recorded a special charge of $0.4 million
of lump-sum ratification bonuses to certain associates represented by
the International Association of Machinists (IAM).
U.S salaried workforce
reductions In the third quarter of 2008, we recorded a special
charge to cost of sales of $0.9 million for our salaried workforce
reductions. This relates primarily to the proportional amount of
expense for service related to future transition payments to salaried workers at
our facilities under plant closure agreements.
Other Other special charges and
nonrecurring operating costs of $6.6 million primarily includes plant closure
costs, charges related to the redeployment of assets to support capacity
utilization initiatives, estimated postemployment benefits to be paid to
associates in our European operations and restructuring accrual
adjustments.
Gross
profit in the third quarter of 2007 includes $7.8 million in special charges,
primarily related to the redeployment of assets to support capacity utilization
initiatives.
Selling, General and
Administrative Expenses (SG&A) SG&A (including
research and development (R&D)) was $43.0 million or 8.1% of net sales
in the third quarter of 2008 as compared to $52.0 million or 6.7% of net sales
in the third quarter of 2007. The decrease in SG&A in the
third quarter of 2008 reflects lower profit sharing accruals and stock based
compensation expense. SG&A in the third quarter of 2008 includes
a credit of $1.4 million which primarily relates to adjustments to the
accrual for estimated postemployment costs related to salaried workforce
reductions. R&D was $21.2 million in the third quarter of
2008 as compared to $22.2 million in the third quarter of 2007.
Operating Income
(Loss) Operating income (loss) was a loss of
$421.4 million in the third quarter of 2008 as compared to income of $29.2
million in the third quarter of 2007. Operating margin was negative
79.8% in the third quarter of 2008 as compared to 3.8% in the third quarter of
2007. The decreases in operating income and operating margin were due
to the factors discussed in Gross Profit (Loss).
Interest
Expense Interest expense was $18.0 million in the third
quarter of 2008 as compared to $14.6 million in the third quarter of
2007. The increase in interest expense reflects higher average
borrowings in the third quarter of 2008 compared to the third quarter of 2007,
which was partially offset by the effects of lower average interest rates and
higher average cash balances in the third quarter of 2008 as compared to the
third quarter of 2007.
Investment Income (Loss) Investment income (loss) was a
loss of $3.7 million in the third quarter of 2008 as compared to income of $3.1
million in the third quarter of 2007. Investment income (loss)
includes dividends earned on cash and cash equivalents during the period.
Investment loss in the third quarter of 2008 also includes a loss of
$5.4 million for a decline in the net asset value of certain short-term
investments as of September 30, 2008.
Other Expense Other
expense was $1.4 million in the third quarter of 2008 as compared to $1.2
million in the third quarter of 2007.
Income Tax Expense (Benefit) Income tax
expense (benefit) was a benefit of $3.4 million in the third quarter of 2008 as
compared to expense of $3.0 million in the second quarter of
2007. Our effective income tax rate was 0.8% in the third quarter of
2008 as compared to 18.2% in the third quarter of 2007. The effective
tax rate in the third quarter of 2008 reflects the impact of not recording an
income tax benefit for current tax losses in the U.S.
Net Income (Loss) and Earnings (Loss)
Per Share (EPS) Net income (loss) was a loss of
$440.9 million in the third quarter of 2008 as compared to income of $13.5
million in the third quarter of 2007. Diluted earnings (loss) per
share was a loss of $8.54 in the third quarter of 2008 as compared to earnings
of $0.25 in the third quarter of 2007. Net income (loss) and EPS for
the third quarters of 2008 and 2007 were primarily impacted by the factors
discussed in Net Sales, Gross Profit (Loss) and Income Tax Expense
(Benefit).
RESULTS
OF OPERATIONS –– NINE MONTHS ENDED SEPTEMBER 30, 2008 AS COMPARED TO NINE MONTHS
ENDED SEPTEMBER 30, 2007
Impact
and Resolution of International UAW Strike
On February 25, 2008, the
four-year master labor agreement between AAM and the International United
Automobile, Aerospace and Agricultural Implement Workers of America (UAW) that
covered approximately 3,650 associates at our original five facilities in
Michigan and New York expired. The International UAW called a strike
at these facilities upon expiration of this agreement. On May 23, 2008, UAW
represented associates at these locations ratified the master and local labor
agreements. The strike had a significant adverse impact on the results of
operations for the nine months ended September 30, 2008, as shown below (in
millions):
|
|
|
|
Loss
of Net Sales
|
|
$ |
414.0 |
|
Increase
in Gross Loss
|
|
|
129.4 |
|
Increase
in Net Loss
|
|
|
132.5 |
|
The new labor agreements:
·
|
established
a new wage and benefit package for eligible current and newly hired UAW
represented associates;
|
·
|
included
a Special Separation Program (SSP) to all UAW represented associates at
our original U.S. locations. This voluntary separation program
offered a range of retirement or buyout incentives to eligible
associates;
|
·
|
created
an involuntary Buydown Program (BDP), which was initiated for associates
that do not elect to participate in the SSP. Under the BDP, we
will make three annual lump-sum payments to associates in connection with,
among other things, a base wage decrease. The total buydown
payments are expected to average approximately $91,000 per associate and
will not exceed $105,000 per
associate;
|
·
|
included
the closure of our Buffalo Gear, Axle & Linkage facility (Buffalo) and
Tonawanda and Detroit forging facilities within the next six to twelve
months; and
|
·
|
provided
improved operating flexibility through Innovative Operating
Agreements.
|
We incurred significant special charges and other operating costs related to the
SSP and BDP in the first nine months of 2008. We currently expect the
total cost of the SSP and BDP to be approximately $425 million. In
addition, we expect a total credit for related pension and OPEB curtailments of
approximately $80 million.
These new labor agreements will
structurally and permanently reduce our U.S. labor cost structure. We
expect to achieve total annual structural cost reductions of up to $300 million
resulting from these agreements.
Net Sales Net sales
were $1,606.2 million in the first nine months of 2008 as compared to $2,493.0
million in the first nine months of 2007. We estimate the adverse
impact of the International UAW strike on net sales in the first nine months of
2008 was $414.0 million.
As
compared to the first nine months of 2007, our sales in the first nine months of
2008 reflect a decrease of approximately 42% in production volumes for the major
full-size truck and SUV programs we currently support for GM and Chrysler and a
decrease of approximately 47% in products supporting GM’s mid-size light truck
and SUV programs. In addition to the strike called by the
International UAW, these decreases reflect the general decline in consumer
spending as a result of the deteriorating global economic conditions and
uncertain credit markets, the reduction in consumer demand for the customer
programs we support and customer decisions to restrict production and reduce
inventories of unsold vehicles.
Our content-per-vehicle (as
measured by the dollar value of our products supporting GM’s North American
light truck platforms and the Dodge Ram program) increased 5.3% to $1,360 in the
first nine months of 2008 as compared to $1,291 in the first nine months of
2007. The increase is due to higher customer pricing pass throughs
(including metal market adjustments), increased content on the GM full-size
programs and mix shifts favoring full-size trucks and SUV programs. This
increase also reflects an increase in our 4WD/AWD penetration rate, which was
64.5% in the first nine months of 2008 as compared to 63.5% in the first nine
months of 2007.
Gross Profit (Loss) Gross
profit (loss) was a loss of $893.6 million in the first nine months of 2008 as
compared to profit of $280.2 million in the first nine months of
2007. Gross margin was negative 55.6% in the first nine months
of 2008 as compared to 11.2% in the first nine months of 2007. The
decrease in gross profit and gross margin in the first nine months of 2008
reflects the impact of the International UAW strike, which is estimated at
$129.4 million, lower sales, and special charges and other non-recurring
operating costs, as shown below (in millions):
Asset
impairments, indirect inventory obsolescence and idle leased
assets |
|
$ |
585.8 |
|
U.S. hourly
workforce and benefit reductions |
|
|
221.0 |
|
Acceleration
of BDP expense |
|
|
51.9 |
|
Signing
bonus |
|
|
19.5 |
|
Supplemental
Unemployment Benefits (SUB) |
|
|
18.0 |
|
U.S. salaried
workforce reductions |
|
|
7.0 |
|
Other |
|
|
17.5 |
|
Total special
charges and non-recurring operating costs |
|
$ |
920.7 |
|
U.S. hourly workforce and benefit
reductions We offered the SSP to UAW represented associates at
the original U.S. locations in the second quarter of 2008. Under this
voluntary separation program, we offered retirement and buyout incentives to
approximately 3,650 eligible hourly associates. In addition, certain
IAM represented associates at our facilities under plant closure agreement
became eligible for termination benefits. We recorded special charges
of $221.0 million in the first nine months of 2008 for these hourly workforce
reductions. These charges include $218.7 million related to estimated
postemployment costs, $61.7 million of special and contractual termination
pension and other postretirement benefits (OPEB) and a credit of $59.4 million
for the curtailment and settlement of certain pension and
OPEB.
Asset Impairments In
the second quarter of 2008, we identified the following impairment
indicators:
|
a
significant decline in current and projected market demand and future
customer production schedules for the major North American light truck
programs we currently support and
|
·
|
changes
in the extent to which assets at our original U.S. locations will be used
as a result of management’s long-term plant loading decisions made
subsequent to the new labor agreements with the International
UAW.
|
We recorded asset impairment
charges of $294.8 million in the second quarter of 2008 associated with the
permanent idling of certain assets and an impairment analysis of certain assets
that were “held for use” as of June 30,
2008.
In the
third quarter of 2008, we identified these additional impairment
indicators:
·
|
the
general decline in consumer spending as a result of the deteriorating
global economic conditions and uncertain credit markets, which further
negatively affected our projected future production
requirements;
|
·
|
the
announcement of accelerated customer production capacity reductions
for programs that we support; and
|
· |
future
sourcing and product planning decisions that were announced and
communicated by some of our customers in the third quarter of
2008, which adversely affected our Colfor Manufacturing
subsidiary. |
We recorded asset impairment charges of
$541.3 million in the first nine months of 2008 associated with the permanent
idling of certain assets and an impairment analysis of certain assets that were
“held for use” as of September 30, 2008. We also reduced the
remaining useful lives of certain “held for use” assets as part of this
analysis.
As a
result of the reduction in the projected usage of machinery and equipment due to
the impairment indicators discussed above, certain machine repair parts and
other materials classified as indirect inventory was determined to be obsolete.
We recorded a charge of $39.8 million in the first nine months of 2008 related
to the write down of the net book value of these assets to their estimated net
realizable value at September 30, 2008.
We also
recorded a special charge of $4.7 million for the fair value of obligations for
assets under operating leases that were idled in the first nine months of
2008.
Acceleration of the BDP
expense
In the third quarter of 2008, we recorded a special charge of $51.9
million for the estimated amount of BDP payments to be paid to permanently idled
associates throughout the new labor agreements. This represents
management’s best estimate of the portion of the total BDP payments that will
not result in a future benefit to the Company.
Signing Bonus As
part of our new labor agreements, we recorded a special charge of $19.5 million
of lump-sum ratification bonuses paid to UAW and IAM represented associates in
the first nine months of 2008.
SUB In the first nine
months of 2008, we recorded a special charge of $18.0 million relating to
supplemental unemployment benefits (SUB) to be payable to current UAW
represented associates during the new labor agreements that expire in February
2012. The new labor agreements between AAM and the International UAW
contain a SUB provision, pursuant to which we are required to pay eligible idled
workers certain benefits. Under the new agreement, our obligation for
SUB payments is limited to $18.0 million. Once this limit is
reached, the SUB program will be terminated. As of September 30,
2008, it was probable and estimable that we will pay the full amount during the
contract period.
U.S. salaried workforce
reductions In the second quarter of 2008, we also approved a
plan to reduce the salaried workforce by approximately 350 associates in the
U.S. We recorded a special charge to cost of sales of $7.0 million
for this reduction.
Other Other special charges
and nonrecurring operating costs of $17.5 million primarily includes plant
closure costs, charges related to the redeployment of assets to support capacity
utilization initiatives, estimated postemployment benefits to be paid to
associates in our European operations and restructuring accrual
adjustments.
Gross
profit in the first nine months of 2007 includes $17.7 million in special
charges, which includes $7.2 million of costs related to redeployment of assets
to support capacity utilization initiatives and $10.5 million of costs related
to attrition program activity.
Selling, General and Administrative
Expenses (SG&A) SG&A (including research and
development (R&D)) was $137.3 million or 8.5% of net sales in the first
nine months of 2008 as compared to $155.1 million or 6.2% of net sales in the
first nine months of 2007. The decrease in SG&A in the first nine
months of 2008 reflects lower profit sharing accruals and stock based
compensation expense. SG&A in the first nine months of 2008
includes $2.0 million of special charges primarily related to the estimated
postemployment costs related to salaried workforce
reductions. R&D was $63.4 million in the first nine months of
2008 as compared to $61.9 million in the first nine months of 2007.
Operating Income
(Loss) Operating income (loss) was a loss of $1,030.9 million
in the first nine months of 2008 as compared to income of $125.1 million in the
first nine months of 2007. Operating margin was negative 64.2% in the
first nine months of 2008 as compared to 5.0% in the first nine months of
2007. The decreases in operating income and operating margin were due
to the factors discussed in Gross Profit (Loss).
Interest
Expense Interest expense was $48.4 million in the first nine
months of 2008 as compared to $46.8 million in the first nine months of
2007. The increase in interest expense reflects higher average
borrowings in the first nine months of 2008 compared to the first nine months of
2007, which was partially offset by the effects of lower average interest rates
and higher average cash balances in the first nine months of 2008 as compared to
the first nine months of 2007.
Investment Income
Investment income was $0.5 million in the first nine months of
2008 as compared to $6.0 million in the first nine months of 2007.
Investment income includes dividends earned on cash and cash equivalents
during the period. Investment income in the first nine months of 2008
also includes a loss of $5.4 million for the decline in the net asset value of
certain short-term investments as of September 30,
2008.
Other Income
(Expense) Other income (expense) was income of $0.2
million in the first nine months of 2008 as compared to expense of $5.4 million
in the first nine months of 2007. Other expense in the first nine
months of 2007 includes the expense of $5.5 million of unamortized debt issuance
costs and premiums in the first nine months of 2007 related to the voluntary
prepayment of our Term Loan due 2010.
Income Tax Expense In the second
quarter of 2008, several events occurred that led us to significantly revise the
near-term projected future operating results of our U.S.
operations. These events included:
·
|
a
significant decline in current and projected market demand and future
customer production schedules for the major North American light truck
programs we currently support;
|
·
|
management’s
long-term plant loading decisions made subsequent to the new labor
agreements with the International UAW;
and
|
·
|
the
impact of significant charges resulting from our restructuring actions in
the second quarter of 2008.
|
We
reviewed the likelihood that we would be able to realize the benefit of our U.S.
deferred tax assets as of June 30, 2008, based on the revised near-term
projected future operating results of our U.S. operations. We
concluded that it is no longer “more likely than not” that we will realize our
net deferred assets in the U.S. and recorded a charge to income tax expense in
the second quarter of 2008 of $54.4 million to establish a full valuation
allowance against these assets. We recorded an additional valuation
allowance of $366.7 million as of September 30, 2008 to offset the deferred tax
benefits resulting from U.S. losses incurred in the second and third quarters of
2008.
If, in
the future, we generate taxable income in the U.S. on a sustained basis, our
current estimate of the recoverability of our deferred tax assets could change
and result in the future reversal of some or all of the valuation
allowance.
Income
tax expense was $33.8 million in the first nine months of 2008 as compared to
$15.1 million in the first nine months of 2007. Our effective income
tax rate was negative 3.1% in the first nine months of 2008 as compared to 19.1%
in the first nine months of 2007. Our income tax expense and
effective tax rate for the first nine months of 2008 reflects the effect of the
valuation allowance that was recorded in the second quarter of 2008 and the
ongoing impact of this allowance in the third quarter of 2008.
Net Income (Loss) and Earnings (Loss)
Per Share (EPS) Net income (loss) was a loss of $1,112.2
million in the first nine months of 2008 as compared to income of $63.8 million
in the first nine months of 2007. Diluted earnings (loss) per share
was a loss of $21.55 in the first nine months of 2008 as compared to earnings of
$1.21 in the first nine months of 2007. Net income (loss) and EPS for
the first nine months of 2008 and 2007 were primarily impacted by the factors
discussed in Net Sales, Gross Profit (Loss) and Income Tax Expense.
Our
primary liquidity needs are to fund capital expenditures, debt service
obligations and working capital investments. We also need to fund
ongoing attrition programs as well as restructuring programs included in the new
labor agreements with the International UAW. We believe that
operating cash flow, available cash, cash equivalent and short-term investment
balances and borrowings under our Revolving Credit Facility will be sufficient
to meet these needs. On November 7, 2008, we amended our existing
Revolving Credit Facility. Refer to the "Financing Activities" section
below for more information on the amendment.
Operating
Activities Net cash used in operating activities was $97.3
million in the first nine months of 2008 as compared to net cash provided by
operating activities of $331.6 million in the first nine months of
2007. This was mainly a result of lower sales and payments
related to our restructuring actions. In the first nine months of
2008, we made cash payments of $120.1 million related to restructuring actions
as compared to $31.9 million in the first nine months of 2007. In
addition, we paid $50.8 million for the first lump-sum BDP payment and $19.5
million of signing bonus to UAW and IAM represented associates in the first nine
months of 2008.
We expect
to fund approximately $275 million to $300 million in 2008 related to SSP and
BDP obligations in 2008. The remainder of the payments under these
programs will be made between 2009 and 2012.
Investing Activities Net
cash used in investing activities was $217.7 million in the first nine months of
2008 as compared to $132.9 million in the first nine months of
2007. Capital expenditures were $102.8 million in the first nine
months of 2008 as compared to $132.9 million in the first nine months of
2007. We expect our capital spending in 2008 to be approximately $150
million. These expenditures include support for the future launch of
new vehicle programs within our business backlog and the expansion of our global
manufacturing footprint.
In the
third quarter of 2008, certain money-market and other similar funds that we
invest in temporarily suspended redemptions. Accordingly, we reclassified $117.2
million from cash and cash equivalents to short-term investments on our
Condensed Consolidated Balance Sheet as of September 30, 2008. The
decrease in cash and cash equivalents that occurred as a result of this
reclassification is classified as a cash outflow from investing activities on
our Condensed Consolidated Statement of Cash Flow for the nine months ended
September 30, 2008.
Financing
Activities Net cash provided by financing activities was
$426.4 million in the first nine months of 2008 as compared to $149.3 million in
the first nine months of 2007. Total long-term debt outstanding
increased $442.7 million in the first nine months of 2008 to
$1,300.8 million as compared to $858.1 million at year-end
2007. The increase in debt relates principally to higher borrowing
under the Revolving Credit Facility.
At
September 30, 2008, we had $105.2 million available under the Revolving
Credit Facility. This availability reflects a reduction of $44.8
million for standby letters of credit issued against the facility. We
also utilize foreign credit facilities to finance working capital
needs. At September 30, 2008, $42.4 million was outstanding and $95.3
million was available under such agreements.
On November 7, 2008, we amended our existing Revolving Credit Facility to extend
certain of the revolving credit commitments thereunder from April 2010 to
December 2011, among other things. After giving effect to a 25%
commitment reduction for lenders consenting to the amendment, the amended
Revolving Credit Facility will provide up to $476.9 million of revolving bank
financing commitments through April 2010 and $369.4 million of such revolving
bank financing commitments through December 2011.
Under
the amended Revolving Credit Facility, we will be required to comply with
revised financial covenants related to secured indebtedness leverage and
interest coverage. The amended Revolving Credit Facility imposes
limitations on our ability to make certain investments, declare or pay dividends
or distributions on capital stock, redeem or repurchase capital stock and
certain debt obligations, incur liens, incur indebtedness, or merge, make
acquisitions or sell assets. Borrowings under
the amended Revolving Credit Facility will continue to bear interest
at rates based on LIBOR or an alternate base rate, plus an applicable
margin. The applicable margin for a LIBOR based loan for lenders
who have consented to the amendment is currently 500 basis points. The
applicable margin did not change for lenders who have not consented. All
borrowings under the amended Revolving Credit Facility are subject to a
collateral coverage test.
The amended Revolving Credit Facility is secured by a pledge of all or a portion
of the capital stock of certain of our subsidiaries, including substantially all
of our first-tier subsidiaries, and is partially secured by a security interest
in our assets and the assets of our domestic subsidiaries. In addition,
obligations under the amended Revolving Credit Facility are guaranteed by our
U.S. subsidiaries, all of which are directly owned by the borrower.
The
Term Loan due 2012 will share in the guarantees and the collateral package
offered in exchange for the amendment equally and ratably, in accordance with
the terms of the agreement. The amendment had no effect on the
maturity of the Term Loan due 2012.
In the
first nine months of 2007, we issued $300.0 million of 7.875% senior unsecured
notes due 2017. Net proceeds from these notes were used for general
corporate purposes, including payment of amounts outstanding under our Revolving
Credit Facility. We paid debt issuance costs of $5.2 million related
to the 7.875% Notes in 2007.
The weighted-average interest rate of our long-term debt outstanding in the
first nine months of 2008 was 7.2% as compared to 8.2% for the year ended
December 31, 2007.
CYCLICALITY
AND SEASONALITY
Our
operations are cyclical because they are directly related to worldwide
automotive production, which is itself cyclical and dependent on general
economic conditions and other factors. Our business is also
moderately seasonal as our major OEM customers historically have a two-week
shutdown of operations in July and an approximate one-week shutdown in
December. In addition, our OEM customers have historically incurred
lower production rates in the third quarter as model changes enter
production. Accordingly, our quarterly results may reflect these
trends.
LITIGATION
AND ENVIRONMENTAL MATTERS
We are
involved in various legal proceedings incidental to our
business. Although the outcome of these matters cannot be predicted
with certainty, we do not believe that any of these matters, individually or in
the aggregate, will have a material adverse effect on our financial condition,
results of operations or cash flows.
We are
subject to various federal, state, local and foreign environmental and
occupational safety and health laws, regulations and ordinances, including those
regulating air emissions, water discharge, waste management and environmental
cleanup. We will continue to closely monitor our environmental conditions to
ensure that we are in compliance with all laws, regulations and
ordinances. GM has agreed to indemnify and hold us harmless against
certain environmental conditions existing prior to our purchase of the assets
from GM on March 1, 1994. GM’s indemnification obligations terminated
on March 1, 2004 with respect to any new claims that we may have against
GM. We have made, and will continue to make, capital and other
expenditures (including recurring administrative costs) to comply with
environmental requirements. Such expenditures were not significant in
the first nine months of 2008, and we do not expect such expenditures to be
significant for the remainder of 2008.
EFFECT
OF NEW ACCOUNTING STANDARDS
On January 1, 2007, we adopted the
provisions of FASB Interpretation No. 48 (FIN 48), “Accounting for Uncertainty in
Income Taxes.” FIN 48 clarifies the accounting for uncertainty
in income taxes recognized in an enterprise’s financial statements in accordance
with FASB Statement No. 109, “Accounting for Income
Taxes.” This interpretation prescribes a “more likely than
not” recognition threshold and measurement attribute for the financial statement
recognition and measurement of a tax position taken or expected to be taken in a
tax return. This interpretation also provides guidance on
derecognition, classification, interest and penalties, accounting in interim
periods, disclosure, and transition. We adopted FIN 48 on January 1,
2007 and the impact of adoption was not significant.
In September 2006, the FASB issued
Statement No. 158 (SFAS 158), “Employers Accounting for Defined
Benefit Pension and Other Postretirement Plans.” This
statement amended FASB Statement Nos. 87, 88, 106 and 132R. We
adopted the balance sheet recognition provisions of SFAS 158 on December 31,
2006. The effective date for plan assets and benefit obligations to
be measured as of the date of the fiscal year-end statement of financial
position is January 1, 2008. We elected to early adopt the
measurement date provisions on January 1, 2007. As a result, we
recorded a transition adjustment of $12.0 million in the first quarter of 2007
to the opening retained earnings balance related to the net periodic benefit
cost for the period between September 30, 2006 and January 1, 2007.
In September 2006, the FASB issued
Statement No. 157 (SFAS 157), “Fair Value
Measurements.” This statement clarifies the definition of fair
value and establishes a fair value hierarchy. SFAS 157, as originally
issued, was effective for us on January 1, 2008. In February 2008,
the FASB issued FASB Staff Position (FSP) FAS 157-b, which defers the effective
date of SFAS 157 for nonfinancial assets and nonfinancial liabilities, except
for items that are recognized or disclosed at fair value in an entity’s
financial statements on a recurring basis. The effective date for us
under this FSP is January 1, 2009. As allowed by FSP FAS 157-b, we
partially adopted SFAS 157 on January 1, 2008 and the impact of adoption was not
significant. We do not expect the impact of applying SFAS 157 to the
remaining assets and liabilities on January 1, 2009 to be material.
In February 2007, the FASB issued
Statement No. 159 (SFAS 159), “The Fair Value Option for Financial
Assets and Financial Liabilities.” This statement permits entities to
measure many financial instruments and certain other items at fair value that
are not currently required to be measured at fair value. SFAS 159 was
effective for us on January 1, 2008 and we did not elect to measure any
additional assets or liabilities at fair value.
In
December 2007, the FASB issued Statement No. 160 (SFAS 160), “Noncontrolling Interests in
Consolidated Financial Statements — An Amendment of ARB
No. 51.” SFAS 160 establishes new accounting
and reporting standards for the noncontrolling interest in a subsidiary and for
the deconsolidation of a subsidiary. SFAS 160 is effective for us on
January 1, 2009. We are currently assessing the impact of adopting this
statement.
In
December 2007, the FASB issued Statement No. 141 (Revised) (SFAS
141R), “Business
Combinations.” This statement replaces FASB Statement No. 141 and
establishes principles and requirements for how the acquirer:
a.
Recognizes and measures in its financial statements the identifiable assets
acquired, the liabilities assumed, and any noncontrolling interest in the
acquiree
b.
Recognizes and measures the goodwill acquired in the business combination or a
gain from a bargain purchase
c.
Determines what information to disclose to enable users of the financial
statements to evaluate the nature and financial effects of the business
combination.
SFAS 141R is effective for us prospectively for any acquisitions made on or
after January 1, 2009.
In March 2008, the FASB issued Statement No. 161, “Disclosures about Derivative
Instruments and Hedging Activities - an amendment of FASB Statement No.
133.” This statement requires qualitative disclosures about
objectives and strategies for using derivatives, quantitative disclosures about
fair value amounts of and gains and losses on derivative instruments, and
disclosures about credit-risk-related contingent features in derivative
agreements. SFAS 161 is effective for us prospectively on January 1,
2009.
In June
2008, the FASB issued FSP No. EITF 03-6-1, “Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating
Securities.” This staff position notes that unvested
share-based payment awards that contain nonforfeitable rights to dividends or
dividend equivalents are participating securities and shall be included in the
computation of EPS pursuant to the two-class method. FSP No. EITF
03-6-1 is effective for us retrospectively on January 1, 2009 and we are
currently assessing the impact of this FSP.
MARKET
RISK
Our
business and financial results are affected by fluctuations in world financial
markets, including interest rates and currency exchange rates. Our
hedging policy has been developed to manage these risks to an acceptable level
based on management’s judgment of the appropriate trade-off between risk,
opportunity and cost. We do not hold financial instruments for
trading or speculative purposes.
Currency Exchange
Risk From time to time, we use foreign currency forward
contracts to reduce the effects of fluctuations in exchange rates, primarily
relating to the Mexican Peso, Euro, Pound Sterling, Brazilian Real and Canadian
Dollar. At September 30, 2008, we had currency forward contracts with
a notional amount of $53.5 million outstanding.
Future
business operations and opportunities, including the expansion of our business
outside North America, may further increase the risk that cash flows resulting
from these activities may be adversely affected by changes in currency exchange
rates. If and when appropriate, we intend to manage these risks by
utilizing local currency funding of these expansions and various types of
foreign exchange contracts.
Interest Rate
Risk We are exposed to variable interest rates on certain
credit facilities. From time to time, we use interest rate hedging to
reduce the effects of fluctuations in market interest
rates. Generally, we designate interest rate swaps as effective cash
flow hedges of the related debt and reflect the net cost of such agreement as an
adjustment to interest expense over the lives of the debt
agreements. We have hedged a portion of our interest rate risk by
entering into an interest rate swap with a notional amount of $200.0
million. This notional amount reduces to $100.0 million in December
2008 and expires in April 2010. The interest rate swap converts
variable rate financing based on 3-month LIBOR into fixed U.S. dollar rates. The
pre-tax earnings and cash flow impact of a one-percentage-point increase in
interest rates (approximately 15% of our weighted-average interest rate at
September 30, 2008) on our long-term debt outstanding at September 30, 2008
would be approximately $5.4 million on an annualized basis.
Under the
direction of our Chief Executive Officer and Chief Financial Officer, we
evaluated our disclosure controls and procedures and internal control over
financial reporting and concluded that (1) our disclosure controls and
procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Securities
Exchange Act of 1934 (the “Exchange Act”)) were effective as of September 30,
2008, and (2) no change in internal control over financial reporting occurred
during the quarter ended September 30, 2008 that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.
Except
for the risk factors set forth below, there have been no material changes to the
risk factors disclosed in Item 1A of Part 1 in our Form 10-K for the year ended
December 31, 2007 (“Form 10-K”). The risk factors set forth below were disclosed
in our Form 10-K, but have been updated to provide additional information or to
reflect subsequent events.
Changes in general economic conditions may have an adverse impact on our
operating performance and results of operations and our customers’ operating
performance and results of operations, which may affect our ability and our
customers’ ability to raise capital.
The recent global financial crisis has impacted our business and our customers’
business in the U.S. and globally. Longer term disruptions in the
capital and credit markets could adversely affect our customers' and our ability
to access needed liquidity for working capital. In addition,
purchases of our customers' products may be limited by their customers ability
to obtain adequate financing for such purchases. Continued
weakness in the U.S. or global economy that results in a significant
reduction of automotive production and sales by our largest customers may
continue to adversely affect our business, financial condition and results of
operations. Additionally, in a down-cycle economic environment, we
may experience the negative effects of increased competitive pricing pressure
and customer turnover.
In
addition, any sustained weakness in the general economic conditions and/or
financial markets in the U.S. or globally could adversely affect our ability and
our customers’ ability to raise capital on favorable terms. From time
to time we have relied, and may also rely in the future, on access to financial
markets as a source of liquidity for working capital requirements, acquisitions
and general corporate purpose not satisfied by cash-on-hand or operating cash
flows. The inability to raise capital on favorable terms,
particularly during times of uncertainty in the financial markets similar to
that which is currently being experienced in the financial markets, could impact
our ability to sustain and grow our businesses and would likely increase our
capital costs.
Our business may be adversely affected by a violation of financial
covenants.
Our
Amended and Restated Revolving Credit Facility (the “Amended and Restated
Revolving Credit Facility”) contains revised financial covenants related to
secured indebtedness leverage and interest coverage. The Amended and Restated
Revolving Credit Facility imposes limitations on our ability to make certain
investments, declare dividends or distributions on capital stock, redeem or
repurchase capital stock and certain debt obligations, incur liens, incur
indebtedness, or merge, make acquisitions of sell all or substantially all of
our assets. Obligations under the Amended and Restated Revolving
Credit Facility are guaranteed by our U.S. subsidiaries. In addition,
the Amended and Restated Revolving Credit Facility is secured by all or
substantially all of our assets, the assets of AAM and each guarantor’s
assets, including a pledge of capital stock of our U.S. subsidiaries and a
portion of the capital stock of the first tier foreign subsidiaries of AAM, Inc.
and each guarantor. A violation of any of these covenants or agreements
could result in a default under this facility, which would permit the lenders to
accelerate the repayment of any borrowings outstanding at that time and levy on
the collateral package granted in connection with the Amended and Restated
Revolving Credit Facility. A default or acceleration under the
Amended and Restated Credit Facility may result in increased capital costs and
defaults under our other debt agreements and may adversely affect our ability to
operate our business, our subsidiaries and guarantors’ ability to operate their
business and our results of operations and financial condition. For
more information regarding the materials terms of the Amended and Restated
Revolving Credit Facility please refer to our Current Report on Form 8-K filed
with the SEC on November 10, 2008.
Item 2. Unregistered Sales of Equity Securities and Use of
Proceeds
In the
third quarter of 2008, we withheld and repurchased shares to pay taxes due upon
the vesting of certain individuals’ restricted stock. The
following table provides information about our equity security purchases during
the quarter ended September 30, 2008:
ISSUER
PURCHASES OF EQUITY SECURITIES
Period
|
|
|
Total
Number of Shares (Or Units) Purchased
|
|
|
Average
Price Paid per Share (or Unit)
|
|
|
Total
Number of Shares (or Units) Purchased as Part of Publicly Announced Plans
or Programs
|
|
|
Maximum
Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be
Purchased Under the Plans or Programs
|
|
July
2008
|
|
|
|
- |
|
|
$ |
- |
|
|
|
- |
|
|
|
- |
|
August
2008
|
|
|
|
2,630 |
|
|
|
5.77 |
|
|
|
- |
|
|
|
- |
|
September
2008
|
|
|
|
829 |
|
|
|
5.47 |
|
|
|
- |
|
|
|
- |
|
Total
|
|
|
|
3,459 |
|
|
$ |
5.70 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibits
required by Item 601 of Regulation S-K are listed in the Exhibit
Index.
|
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 thereunto duly authorized.
AMERICAN
AXLE & MANUFACTURING HOLDINGS, INC.
(Registrant)
Group
Vice President - Finance & Chief Financial
Officer
|
(also in
the capacity of Chief Accounting Officer)
November
10, 2008
Number
|
Description of
Exhibit
|
|
|
|
|
|
|
|
*31.1
|
Certification
of Richard E. Dauch, Co-Founder, Chairman of the Board & Chief
Executive Officer Pursuant to Rule 13a-14(a) of the Securities Exchange
Act
|
|
|
|
|
|
*31.2
|
Certification
of Michael K. Simonte, Group Vice President – Finance &
Chief
Financial Officer Pursuant to Rule 13a-14(a) of the Securities Exchange
Act
|
|
|
|
|
|
*32
|
Certifications
of Richard E. Dauch, Co-Founder, Chairman of the Board & Chief
Executive Officer and Michael K. Simonte, Group Vice President – Finance
& Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
|
|
|
|
|
|
|
|
* Filed
herewith